Cutting taxes on those who have (almost) no money isn't the solution either, IMO. What we need to do is greatly increase taxes on those who have (almost) all of it.
Unfortunately, because they do, the latter can just say "nah". And that, barring significant changes, is the end of it.
Refundable tax credits are technically a tax cut but it's basically just giving people money. The poorest income earners typically pay a negative income tax rate.
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AegisFear My DanceOvershot Toronto, Landed in OttawaRegistered Userregular
Cutting taxes on those who have (almost) no money isn't the solution either, IMO. What we need to do is greatly increase taxes on those who have (almost) all of it.
Unfortunately, because they do, the latter can just say "nah". And that, barring significant changes, is the end of it.
Refundable tax credits are technically a tax cut but it's basically just giving people money. The poorest income earners typically pay a negative income tax rate.
Is this bad though? Up here we have the Child Care Benefit, GST/HST Sales Tax Credit, Working Income Tax Benefit, Disability Tax Credit, and Child Disability Benefit, all of which are refundable tax credits aimed at lower income individuals and families. And then on top of that are rebates, generally geared towards Seniors and property taxes.
This type of strategy seems to be a way to offset that problem of tax cuts not really doing anything.
Cutting taxes on those who have (almost) no money isn't the solution either, IMO. What we need to do is greatly increase taxes on those who have (almost) all of it.
Unfortunately, because they do, the latter can just say "nah". And that, barring significant changes, is the end of it.
Refundable tax credits are technically a tax cut but it's basically just giving people money. The poorest income earners typically pay a negative income tax rate.
My point is that moving pennies around is theater and busywork when others are sitting on stacks of gold bars. But since they aren't budging, that's what we're left with.
Supply-side theory is bullshit because simply giving money to the rich doesn't encourage increase in supply but giving to consumers almost universally does encourage spending.
While I agree that the political forces that have laid claim to the term "supply-side economics", i.e. your "trickle down" types, are overstating the benefit of decreases in marginal tax rates, it's not like tax cuts are the only type of supply-side policy that exists. Investing money in education, for example, is also a supply-side policy. A nation's potential output is determined by the factors of production it has and the level of technology that's available. A common, simplified, theoretical expression of this is that the major components of potential output are:
Labor, Natural Resources, physical capital (structures, equipment, etc), human capital, and the level of technology.
A supply-side policy would be anything that attempts to boost those in our economy, e.g. investments in human capital (education), R&D funding (technology), etc.
Investment(govt or not) is typically on the demand side. I agree that those things are valuable but when economists say “supply side”, especially in the public vernacular, they do not mean “fiscal solutions but different fiscal solutions than what were doing now”. They mean “non fiscal solutions”
I am not current on the literature but this is my understanding of the body of new keynesian work as well. At least in terminology. If its not then you need a new terminology, because your policy prescriptions are being read as “reduce taxes and cut investment” and not “increase spending”
I'm talking long-run aggregate supply shifts right. Basically economic growth literature, Solow and going forward. Capital investment shifts LRAS to the right. YsubN = AxF(K,L,H,N). The most vanilla of macroeconomics.
Yeah, of course the investment spending itself has AD affects as well. C + I + G + NX. But it increases potential output as opposed to being pure stimulus.
i am aware. But i dont think your fellow macroeconomists are promoting in in that way. Theyre more likely to say that govt investment crowds out and is a net negative rather than saying that it can have stimulating effects.
While that has only been my experience with the most hyperconservative of economists I chat with, for example even a "regular conservative" like Greg Mankiw seems to think that government spending on R&D increases LRAS, we are getting a little off track here anyway. The point I'm trying to teach is much simpler.
There is a widespread sentiment around here that tax cuts for poor people are always a good idea because poor people spend more of their income and that will grow the economy. While I think there are many fine arguments for given tax cuts to poor people, increasing consumer spending only grows the economy when there is an output gap. If we are at the natural rate of output already, we need the supply-side of the economy to move for economic growth.
EDIT: In simpler terms: I read a lot of comments around here that suggest LRAS is horizontal. I think it's a lot more reasonable to think of it as vertical.
That's a pretty significant if, though, and one I do not really see as meritorious. We haven't had an accelerating rate of wage/price inflation since the late 90's. That was a literal generation ago. Inflation can hardly break 2% now, and top line unemployment is ~4%. There's a disconnect somewhere (or a lot of somewheres) that suggest a significant gap still exists. Likely from hysteresis over the '08 collapse, but possibly other factors including monopsony in a lot of sectors. Regardless, the risk of overheating the economy seems pretty low compared to keeping it tepid. It would also help to undo some of the damage from a decade of underperforming.
I agree with just about all of this. Inflation has been pretty low. I’m even lefty enough to think we might need a higher inflation target than the current 2%.
But I think all this has also created the impression that stimulating demand is always the right move. So I want to get across some fundamentals about aggregate demand vs aggregate supply.
The biggest inflation has been in assets like housing that aren't tracked by inflation indices. Its a failure in the Fed's inflation model.
In fact, if a bunch of consumer income is being eaten by housing costs, then that would drag down inflation on everything else. Then loosening money that just causes further asset inflation would barely budge consumer inflation while pushing up housing costs more.
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The biggest inflation has been in assets like housing that aren't tracked by inflation indices. Its a failure in the Fed's inflation model.
In fact, if a bunch of consumer income is being eaten by housing costs, then that would drag down inflation on everything else. Then loosening money that just causes further asset inflation would barely budge consumer inflation while pushing up housing costs more.
? Housing costs are part of both CPI and the Feds's preferred Core PCE index.
The biggest inflation has been in assets like housing that aren't tracked by inflation indices. Its a failure in the Fed's inflation model.
In fact, if a bunch of consumer income is being eaten by housing costs, then that would drag down inflation on everything else. Then loosening money that just causes further asset inflation would barely budge consumer inflation while pushing up housing costs more.
? Housing costs are part of both CPI and the Feds's preferred Core PCE index.
Oh really? I thought it didn't track that. My mistake then.
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"Orkses never lose a battle. If we win we win, if we die we die fightin so it don't count. If we runs for it we don't die neither, cos we can come back for annuver go, see!".
In fact, housing cost are the biggest component of CPI. Over 40%. There are a ton of misconceptions/conspiracy theories about official inflation numbers out there though (unemployment rates too). So nobody should feel bad for having the wrong idea.
That’s one of the nice things about this here our forum. You can genuinely learn a lot from it. And it’s a forum about a webcomic about video games!
The way they're tracking it now lags behind the real housing market, so housing inflation looks muted during the inflation of the bubble, and looks high when the bubble is popping.
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@encore the laffer curve is also valid in certain conditions. We're nowhere near full consumer efficiency at the low end, so saying it always works will be valid until it doesn't, which is a long way off given current consumer debt load and flat wage growth for so long.
The way they're tracking it now lags behind the real housing market, so housing inflation looks muted during the inflation of the bubble, and looks high when the bubble is popping.
It's true that for owner occupied units we use imputed rent. Is that distorting inflation values? I don't know.
Here's a graph of Case-Shiller Home Price Index, versus rents in CPI, versus imputed rents (for the owner-occupieds) in CPI.
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ElldrenIs a woman dammitceterum censeoRegistered Userregular
Cutting taxes on those who have (almost) no money isn't the solution either, IMO. What we need to do is greatly increase taxes on those who have (almost) all of it.
Unfortunately, because they do, the latter can just say "nah". And that, barring significant changes, is the end of it.
Refundable tax credits are technically a tax cut but it's basically just giving people money. The poorest income earners typically pay a negative income tax rate.
Is this bad though?
No.
Just giving people money has a pretty strong multiplier
Cutting taxes on those who have (almost) no money isn't the solution either, IMO. What we need to do is greatly increase taxes on those who have (almost) all of it.
Unfortunately, because they do, the latter can just say "nah". And that, barring significant changes, is the end of it.
Refundable tax credits are technically a tax cut but it's basically just giving people money. The poorest income earners typically pay a negative income tax rate.
Is this bad though? Up here we have the Child Care Benefit, GST/HST Sales Tax Credit, Working Income Tax Benefit, Disability Tax Credit, and Child Disability Benefit, all of which are refundable tax credits aimed at lower income individuals and families. And then on top of that are rebates, generally geared towards Seniors and property taxes.
This type of strategy seems to be a way to offset that problem of tax cuts not really doing anything.
Many tax incentives while available to all low income citizens, may not actually be obtained due to unfamiliarity with the tax code and or lack of a professional for tax preparation.
In fact, housing cost are the biggest component of CPI. Over 40%. There are a ton of misconceptions/conspiracy theories about official inflation numbers out there though (unemployment rates too). So nobody should feel bad for having the wrong idea.
That’s one of the nice things about this here our forum. You can genuinely learn a lot from it. And it’s a forum about a webcomic about video games!
Housing has gotten 50 percent more expensive in the last decade. Have we had 20 percent inflation over the same period?
In fact, housing cost are the biggest component of CPI. Over 40%. There are a ton of misconceptions/conspiracy theories about official inflation numbers out there though (unemployment rates too). So nobody should feel bad for having the wrong idea.
That’s one of the nice things about this here our forum. You can genuinely learn a lot from it. And it’s a forum about a webcomic about video games!
Housing has gotten 50 percent more expensive in the last decade. Have we had 20 percent inflation over the same period?
Before anybody gets confused about the numbers, rent in the US has gone up 33% over the last decade (2009-05-01 to 2019-05-01) as measured by the CPI. Over the same time period, home prices (as measured by Case-Shiller which I think is biased towards larger cities; please somebody correct me if I'm wrong) have increased 42%.
Also when I say that "housing cost" makes up more than 40% of the CPI, that isn't just shelter, it also includes utilities and such. Strictly the shelter component (rent or imputed rent for owners) is about 30% of the CPI.
Normally I try not to get so nitty gritty into the economic data, but I hope for this topic it's interesting to someone.
Do recall ten years ago the housing market was literally falling into a vortex so the market rebounding and not yet hitting a downturn is going to lead to a net increase bigger then most ten year windows.
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Do recall ten years ago the housing market was literally falling into a vortex so the market rebounding and not yet hitting a downturn is going to lead to a net increase bigger then most ten year windows.
yeah but that vortex was a reaction to an historic bubble. Like, where we bottomed out was more in line with historical norms of pricing.
In fact, housing cost are the biggest component of CPI. Over 40%. There are a ton of misconceptions/conspiracy theories about official inflation numbers out there though (unemployment rates too). So nobody should feel bad for having the wrong idea.
That’s one of the nice things about this here our forum. You can genuinely learn a lot from it. And it’s a forum about a webcomic about video games!
Housing has gotten 50 percent more expensive in the last decade. Have we had 20 percent inflation over the same period?
Before anybody gets confused about the numbers, rent in the US has gone up 33% over the last decade (2009-05-01 to 2019-05-01) as measured by the CPI. Over the same time period, home prices (as measured by Case-Shiller which I think is biased towards larger cities; please somebody correct me if I'm wrong) have increased 42%.
Also when I say that "housing cost" makes up more than 40% of the CPI, that isn't just shelter, it also includes utilities and such. Strictly the shelter component (rent or imputed rent for owners) is about 30% of the CPI.
Normally I try not to get so nitty gritty into the economic data, but I hope for this topic it's interesting to someone.
So I looked up what imputed rent means but still don’t get it- are you referring to the amount an owner would get if they rented the home vs lived in it?
In fact, housing cost are the biggest component of CPI. Over 40%. There are a ton of misconceptions/conspiracy theories about official inflation numbers out there though (unemployment rates too). So nobody should feel bad for having the wrong idea.
That’s one of the nice things about this here our forum. You can genuinely learn a lot from it. And it’s a forum about a webcomic about video games!
Housing has gotten 50 percent more expensive in the last decade. Have we had 20 percent inflation over the same period?
Before anybody gets confused about the numbers, rent in the US has gone up 33% over the last decade (2009-05-01 to 2019-05-01) as measured by the CPI. Over the same time period, home prices (as measured by Case-Shiller which I think is biased towards larger cities; please somebody correct me if I'm wrong) have increased 42%.
Also when I say that "housing cost" makes up more than 40% of the CPI, that isn't just shelter, it also includes utilities and such. Strictly the shelter component (rent or imputed rent for owners) is about 30% of the CPI.
Normally I try not to get so nitty gritty into the economic data, but I hope for this topic it's interesting to someone.
So I looked up what imputed rent means but still don’t get it- are you referring to the amount an owner would get if they rented the home vs lived in it?
Imputed rent is a way to try and calculate housing monthly costs when they can be extremely variable for effectively the same place due to a lot of impossible to control for factors.
My condo is the literal mirror of the one across the courtyard. However, my monthly expenses are probably very different because we bought ours 2 years ago with 20% down and a 4.375 interest rate. I don't know what circumstances they paid for theirs. They might have bought at the peak of the bubble with a shitty interest rate and still have PMI, they might own it free and clear because they've been there for decades and just have to pay HOA fees and electricity, third reasonable possibility. How do you track our monthly housing costs to compare for macroeconomic purposes? Shift it to what our likely rent would be to live in these residences and it will average out across the entire population to be pretty close.
I hope we get a little bit of a dip next year, because with a small dip the vacation market usually takes an exaggerated hit and I want to buy a ski cabin.
There is a supply problem in the US for housing cause there's a supply shortage in the places want (read: need) to live. If all locations were equally valued, the US would be awash in houses at super cheap rates. But you don't see a ton of suburban homes in Wyoming and Montana because the value of living there isn't the same as the value of living in major cities. What's needed is policy that can increase the amount of housing units available at a large rate while also not displacing currently affordable units. That's a hard needle to thread.
Example of such a policy: developers want to tear down a plot of land that's previously held affordable student housing. Roughly 1700 units. That's a lot. They want to build a mixed-use development with retail, some office space, some hotel space, etc. Luxury housing right? But they're putting 4700 units there in total, not counting hotel space and everything else. One way to deal with that is to require a certain percentage of affordable housing units targeting the sub 80% LMI rate, say 30% of the units. That's a policy that my city has been doing a lot over the last few years and it's working (somewhat) to maintain affordable housing units while also adding the general housing stock.
Lot of it also comes down to zoning. California is horrendous for that.
There is a supply problem in the US for housing cause there's a supply shortage in the places want (read: need) to live. If all locations were equally valued, the US would be awash in houses at super cheap rates. But you don't see a ton of suburban homes in Wyoming and Montana because the value of living there isn't the same as the value of living in major cities. What's needed is policy that can increase the amount of housing units available at a large rate while also not displacing currently affordable units. That's a hard needle to thread.
Example of such a policy: developers want to tear down a plot of land that's previously held affordable student housing. Roughly 1700 units. That's a lot. They want to build a mixed-use development with retail, some office space, some hotel space, etc. Luxury housing right? But they're putting 4700 units there in total, not counting hotel space and everything else. One way to deal with that is to require a certain percentage of affordable housing units targeting the sub 80% LMI rate, say 30% of the units. That's a policy that my city has been doing a lot over the last few years and it's working (somewhat) to maintain affordable housing units while also adding the general housing stock.
Lot of it also comes down to zoning. California is horrendous for that.
There is a supply problem in the US for housing cause there's a supply shortage in the places want (read: need) to live. If all locations were equally valued, the US would be awash in houses at super cheap rates. But you don't see a ton of suburban homes in Wyoming and Montana because the value of living there isn't the same as the value of living in major cities. What's needed is policy that can increase the amount of housing units available at a large rate while also not displacing currently affordable units. That's a hard needle to thread.
Example of such a policy: developers want to tear down a plot of land that's previously held affordable student housing. Roughly 1700 units. That's a lot. They want to build a mixed-use development with retail, some office space, some hotel space, etc. Luxury housing right? But they're putting 4700 units there in total, not counting hotel space and everything else. One way to deal with that is to require a certain percentage of affordable housing units targeting the sub 80% LMI rate, say 30% of the units. That's a policy that my city has been doing a lot over the last few years and it's working (somewhat) to maintain affordable housing units while also adding the general housing stock.
Lot of it also comes down to zoning. California is horrendous for that.
A big part of the problem is how local zoning is.
Agreed, but at the same time I'm very much not wanting the state of Texas to step up to the plate on zoning. They'll just fuck things up more.
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silence1186Character shields down!As a wingmanRegistered Userregular
So is the solution more apartment buildings in cities and outlying areas, along with a robust public transportation network to take people from the outlying areas where they live into the city center where most jobs are? Suburban sprawl seems untenable long term, but maybe urban sprawl is inevitable as people gravitate to where the jobs/money is concentrated?
On the other hand, it doesn't matter where you live if you telecommute most every day, so maybe encouraging white collar workers to work from help would help. That said, there's real social costs to isolating a large part of the population from other human beings.
Working from home is impractical on a social level with current internet speeds. Whenever I have meetings via Google Hangouts (really quite a good piece of tech) it feels like speaking to a deaf grandma with ADHD due to the bad audio and cutting out.
Working from home is impractical on a social level with current internet speeds. Whenever I have meetings via Google Hangouts (really quite a good piece of tech) it feels like speaking to a deaf grandma with ADHD due to the bad audio and cutting out.
I ran my whole D&D session remote this week on my phone, with Google hangouts, while I walked around downtown Salem. I've been supporting remote players for years with hangouts. Almost all audio interference on it is caused by interference on mics... next time you're running into trouble get everyone to mute themselves and one by one add back into the conversation and you'll find who's mic setup is fuckin up your whole meeting and needs to be muted and fixed.
...next time you're running into trouble get everyone to mute themselves and one by one add back into the conversation and you'll find who's mic setup is fuckin up your whole meeting and needs to be muted and fixed.
Not exactly seamless, hmm?
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silence1186Character shields down!As a wingmanRegistered Userregular
One thing I've seen near me that I really like is an office for freelancers/telecommuters. No one works at the same company, it's just a bunch of desks/offices for people to work at in a professional setting instead of at their homes. They still get the social interaction with their associates. Also it has a daycare, which is amazing because parents can see their kids on lunch break and it saves their commute time a ton.
...next time you're running into trouble get everyone to mute themselves and one by one add back into the conversation and you'll find who's mic setup is fuckin up your whole meeting and needs to be muted and fixed.
Not exactly seamless, hmm?
I mean me traveling 20 to 30 miles a day to a community I only tangentially, and somewhat esotericly, give a shit about that overcharges me for everything isn't really seamless either.
When I work from home I can better connect with the community I actually live in, and bring money in to be circulated around the place we live. I frequent our local businesses and because I'm not spending 3 hours of my day on transit I can actually take a minute to like talk to my neighbors, or the other regulars at the gym.
Spending 3 hours of my day on transit is far less seamless than a quick "who needs to mute themselves?" check (the right answer is that everyone should always be muted unless they are talking).
There is a supply problem in the US for housing cause there's a supply shortage in the places want (read: need) to live. If all locations were equally valued, the US would be awash in houses at super cheap rates. But you don't see a ton of suburban homes in Wyoming and Montana because the value of living there isn't the same as the value of living in major cities. What's needed is policy that can increase the amount of housing units available at a large rate while also not displacing currently affordable units. That's a hard needle to thread.
Example of such a policy: developers want to tear down a plot of land that's previously held affordable student housing. Roughly 1700 units. That's a lot. They want to build a mixed-use development with retail, some office space, some hotel space, etc. Luxury housing right? But they're putting 4700 units there in total, not counting hotel space and everything else. One way to deal with that is to require a certain percentage of affordable housing units targeting the sub 80% LMI rate, say 30% of the units. That's a policy that my city has been doing a lot over the last few years and it's working (somewhat) to maintain affordable housing units while also adding the general housing stock.
Lot of it also comes down to zoning. California is horrendous for that.
A big part of the problem is how local zoning is.
Agreed, but at the same time I'm very much not wanting the state of Texas to step up to the plate on zoning. They'll just fuck things up more.
Probably not honestly. Local zoning control is the height of NIMBYism at the expense of basically ... everything.
I work from home, too, but meeting software objectively sucks right now. It's finicky, it breaks up, and you spend half your time saying "You cut out there, could you repeat that?"
I'm not saying "Let's abandon it" but rather "When the technology is better, more people will use it."
For instance, it would be a lot better if everyone didn't need to manually mute and unmute themselves to talk. The conversation would flow more naturally.
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OrcaAlso known as EspressosaurusWrexRegistered Userregular
I work from home, too, but meeting software objectively sucks right now. It's finicky, it breaks up, and you spend half your time saying "You cut out there, could you repeat that?"
I'm not saying "Let's abandon it" but rather "When the technology is better, more people will use it."
For instance, it would be a lot better if everyone didn't need to manually mute and unmute themselves to talk. The conversation would flow more naturally.
Push-to-talk is a thing for a reason when gaming. An interface like that would make it so much easier.
The other problem is the latency for meeting software is awful. That's part of what makes it so damned awkward.
Is it really as simple as 70% of our GDP is consumers so give money to people that will spend it?
That’s been my uneducated take on how to charge the economy for over 20 years but I’m mostly just a loud dipshit about stuff
That's exactly how it works - in a consumerist economy if you want to maximise growth, you want the most money possible to the people who will spend it, which is NOT the rich. Money given to the poor goes straight back into the economy which drives growth, money given to the rich disappears offshore.
It's not that simple. Our economy has a supply side and a demand side. A simplified expression of Keynesian economics (I consider myself a New Keynesian) is that stimulating demand (spending) is useful in boosting real GDP (growth) when the economy is operating below its potential level of output. However, boosting supply (land, labor, capital, technology, etc) is necessary for growth beyond closing the gap between actual and potential GDP.
To me, saying that giving consumers money to boost the economy is always the right move is just as silly as the supply-siders who argue that lowering marginal tax rates is always the right move. The correct policy depends on current economic conditions.
Yeah but if demand increases, supply will also increase because as the demand increases, the cost for the good/service will go up, and more people/companies will want to enter the market because of the greater price.
Supply can be constrained by exogenous factors. Drought, famine, locusts, war (closing the Straits of Hormuz will immediately spike oil prices, which touches literally everything), or more banalities like regulations or Government policy. No amount of demand will allow the corner Walgreens to stock Cuban cigars, or the tony suburbs to build midrise affordable apartments.
I concede that certain traded items cannot increase in supply due to fixed availability (inelastic supply) such as land.
I disagree with your oil example. Closing the Straits of Hormuz is decreasing supply, which causes an increase in cost because while demand may reduce some, there is an amount of current demand that is required for global economies to work. But this leads to an increase in long term oil production, as we saw in the 2000s when oil was $130 a barrel. Technologies like oil sands extraction and fraking need a price of $70 a barrel to become economical, and will once again be brought online if a global shortage occurs. It is certainly not an instantaneous response, but if oil supply is constrained somewhere, then the demand will be met by alternate sources.
I also disagree with your cuban cigars example. If sufficient public demand existed for cuban cigars, then laws would be revised to allow the import of cuban cigars. Wal Greens would certainly lobby for a legal import route if there was sufficient profit incentive. Currently there isn't a sufficient demand to warrant such action.
By Tony Suburbs, you mean the richest suburbs in the nation? If so, then the reason you can't build affordable apartments is because the rich own all of the land and will not let this occur. Which shows that non-monetary values can overwhelm monetary considerations. Especially for people who are so wealthy that they can ignore monetary considerations without negatively impacting their livelihood. This is certainly not normal. Supply/demand economics don't really work in this situation.
Is it really as simple as 70% of our GDP is consumers so give money to people that will spend it?
That’s been my uneducated take on how to charge the economy for over 20 years but I’m mostly just a loud dipshit about stuff
That's exactly how it works - in a consumerist economy if you want to maximise growth, you want the most money possible to the people who will spend it, which is NOT the rich. Money given to the poor goes straight back into the economy which drives growth, money given to the rich disappears offshore.
It's not that simple. Our economy has a supply side and a demand side. A simplified expression of Keynesian economics (I consider myself a New Keynesian) is that stimulating demand (spending) is useful in boosting real GDP (growth) when the economy is operating below its potential level of output. However, boosting supply (land, labor, capital, technology, etc) is necessary for growth beyond closing the gap between actual and potential GDP.
To me, saying that giving consumers money to boost the economy is always the right move is just as silly as the supply-siders who argue that lowering marginal tax rates is always the right move. The correct policy depends on current economic conditions.
Yeah but if demand increases, supply will also increase because as the demand increases, the cost for the good/service will go up, and more people/companies will want to enter the market because of the greater price.
Supply can be constrained by exogenous factors. Drought, famine, locusts, war (closing the Straits of Hormuz will immediately spike oil prices, which touches literally everything), or more banalities like regulations or Government policy. No amount of demand will allow the corner Walgreens to stock Cuban cigars, or the tony suburbs to build midrise affordable apartments.
I concede that certain traded items cannot increase in supply due to fixed availability (inelastic supply) such as land.
I disagree with your oil example. Closing the Straits of Hormuz is decreasing supply, which causes an increase in cost because while demand may reduce some, there is an amount of current demand that is required for global economies to work. But this leads to an increase in long term oil production, as we saw in the 2000s when oil was $130 a barrel. Technologies like oil sands extraction and fraking need a price of $70 a barrel to become economical, and will once again be brought online if a global shortage occurs. It is certainly not an instantaneous response, but if oil supply is constrained somewhere, then the demand will be met by alternate sources.
Sure, long term. Most people need to fill their tank back up at the end of a couple weeks, not in the long term. A solution that's five years away doesn't solve an immediate problem and so mining the Straits of Hormuz is a supply shock.
I also disagree with your cuban cigars example. If sufficient public demand existed for cuban cigars, then laws would be revised to allow the import of cuban cigars. Wal Greens would certainly lobby for a legal import route if there was sufficient profit incentive. Currently there isn't a sufficient demand to warrant such action.
Yes, supply constraints created by Government policy can be eliminated by changing policy. That is what supply side stimulus is. Jimmy Carter is the reason we have craft beer. But until that change in law occurs it doesn't matter what the demand is, something that is illegal to sell won't be sold except what supplies can evade detection to be sold on the black market. The law is a very real thing, not a fake construct that doesn't actually constrain actions. It can create as well as destroy markets.
By Tony Suburbs, you mean the richest suburbs in the nation? If so, then the reason you can't build affordable apartments is because the rich own all of the land and will not let this occur. Which shows that non-monetary values can overwhelm monetary considerations. Especially for people who are so wealthy that they can ignore monetary considerations without negatively impacting their livelihood. This is certainly not normal. Supply/demand economics don't really work in this situation.
Yeah, that's my point. Demand on its own is not enough to make supply appear when supply is constrained. It can be constrained for shitty racist and classiest reasons that shouldn't be allowed to exist, but that doesn't mean those restrictions don't exist exist and supply isn't constrained.
There is a supply problem in the US for housing cause there's a supply shortage in the places want (read: need) to live. If all locations were equally valued, the US would be awash in houses at super cheap rates. But you don't see a ton of suburban homes in Wyoming and Montana because the value of living there isn't the same as the value of living in major cities. What's needed is policy that can increase the amount of housing units available at a large rate while also not displacing currently affordable units. That's a hard needle to thread.
Example of such a policy: developers want to tear down a plot of land that's previously held affordable student housing. Roughly 1700 units. That's a lot. They want to build a mixed-use development with retail, some office space, some hotel space, etc. Luxury housing right? But they're putting 4700 units there in total, not counting hotel space and everything else. One way to deal with that is to require a certain percentage of affordable housing units targeting the sub 80% LMI rate, say 30% of the units. That's a policy that my city has been doing a lot over the last few years and it's working (somewhat) to maintain affordable housing units while also adding the general housing stock.
Lot of it also comes down to zoning. California is horrendous for that.
A big part of the problem is how local zoning is.
Agreed, but at the same time I'm very much not wanting the state of Texas to step up to the plate on zoning. They'll just fuck things up more.
Probably not honestly. Local zoning control is the height of NIMBYism at the expense of basically ... everything.
Given the work Austin has been doing to combat nimbyism and changing zoning and how the state routinely fucks with local governance yeah I don't want them rooting around in our shit.
So is the solution more apartment buildings in cities and outlying areas, along with a robust public transportation network to take people from the outlying areas where they live into the city center where most jobs are? Suburban sprawl seems untenable long term, but maybe urban sprawl is inevitable as people gravitate to where the jobs/money is concentrated?
On the other hand, it doesn't matter where you live if you telecommute most every day, so maybe encouraging white collar workers to work from help would help. That said, there's real social costs to isolating a large part of the population from other human beings.
Suburban sprawl is untenable period. Urban areas subsidize suburban sprawl through property taxation and the net cost of infrastructure.
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Refundable tax credits are technically a tax cut but it's basically just giving people money. The poorest income earners typically pay a negative income tax rate.
Is this bad though? Up here we have the Child Care Benefit, GST/HST Sales Tax Credit, Working Income Tax Benefit, Disability Tax Credit, and Child Disability Benefit, all of which are refundable tax credits aimed at lower income individuals and families. And then on top of that are rebates, generally geared towards Seniors and property taxes.
This type of strategy seems to be a way to offset that problem of tax cuts not really doing anything.
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[5e] Dural Melairkyn - AC 18 | HP 40 | Melee +5/1d8+3 | Spell +4/DC 12
Vertical in the price level. Of course increases in factors of production or technology shift it to the right.
Ye standard old AD-AS model.
No.
I agree with just about all of this. Inflation has been pretty low. I’m even lefty enough to think we might need a higher inflation target than the current 2%.
But I think all this has also created the impression that stimulating demand is always the right move. So I want to get across some fundamentals about aggregate demand vs aggregate supply.
In fact, if a bunch of consumer income is being eaten by housing costs, then that would drag down inflation on everything else. Then loosening money that just causes further asset inflation would barely budge consumer inflation while pushing up housing costs more.
"Orkses never lose a battle. If we win we win, if we die we die fightin so it don't count. If we runs for it we don't die neither, cos we can come back for annuver go, see!".
? Housing costs are part of both CPI and the Feds's preferred Core PCE index.
Oh really? I thought it didn't track that. My mistake then.
"Orkses never lose a battle. If we win we win, if we die we die fightin so it don't count. If we runs for it we don't die neither, cos we can come back for annuver go, see!".
That’s one of the nice things about this here our forum. You can genuinely learn a lot from it. And it’s a forum about a webcomic about video games!
https://www.nytimes.com/2011/04/02/business/02charts.html
The way they're tracking it now lags behind the real housing market, so housing inflation looks muted during the inflation of the bubble, and looks high when the bubble is popping.
"Orkses never lose a battle. If we win we win, if we die we die fightin so it don't count. If we runs for it we don't die neither, cos we can come back for annuver go, see!".
It's true that for owner occupied units we use imputed rent. Is that distorting inflation values? I don't know.
Here's a graph of Case-Shiller Home Price Index, versus rents in CPI, versus imputed rents (for the owner-occupieds) in CPI.
Just giving people money has a pretty strong multiplier
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Housing has gotten 50 percent more expensive in the last decade. Have we had 20 percent inflation over the same period?
Before anybody gets confused about the numbers, rent in the US has gone up 33% over the last decade (2009-05-01 to 2019-05-01) as measured by the CPI. Over the same time period, home prices (as measured by Case-Shiller which I think is biased towards larger cities; please somebody correct me if I'm wrong) have increased 42%.
Also when I say that "housing cost" makes up more than 40% of the CPI, that isn't just shelter, it also includes utilities and such. Strictly the shelter component (rent or imputed rent for owners) is about 30% of the CPI.
Normally I try not to get so nitty gritty into the economic data, but I hope for this topic it's interesting to someone.
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yeah but that vortex was a reaction to an historic bubble. Like, where we bottomed out was more in line with historical norms of pricing.
So I looked up what imputed rent means but still don’t get it- are you referring to the amount an owner would get if they rented the home vs lived in it?
Imputed rent is a way to try and calculate housing monthly costs when they can be extremely variable for effectively the same place due to a lot of impossible to control for factors.
My condo is the literal mirror of the one across the courtyard. However, my monthly expenses are probably very different because we bought ours 2 years ago with 20% down and a 4.375 interest rate. I don't know what circumstances they paid for theirs. They might have bought at the peak of the bubble with a shitty interest rate and still have PMI, they might own it free and clear because they've been there for decades and just have to pay HOA fees and electricity, third reasonable possibility. How do you track our monthly housing costs to compare for macroeconomic purposes? Shift it to what our likely rent would be to live in these residences and it will average out across the entire population to be pretty close.
There is a supply problem in the US for housing cause there's a supply shortage in the places want (read: need) to live. If all locations were equally valued, the US would be awash in houses at super cheap rates. But you don't see a ton of suburban homes in Wyoming and Montana because the value of living there isn't the same as the value of living in major cities. What's needed is policy that can increase the amount of housing units available at a large rate while also not displacing currently affordable units. That's a hard needle to thread.
Example of such a policy: developers want to tear down a plot of land that's previously held affordable student housing. Roughly 1700 units. That's a lot. They want to build a mixed-use development with retail, some office space, some hotel space, etc. Luxury housing right? But they're putting 4700 units there in total, not counting hotel space and everything else. One way to deal with that is to require a certain percentage of affordable housing units targeting the sub 80% LMI rate, say 30% of the units. That's a policy that my city has been doing a lot over the last few years and it's working (somewhat) to maintain affordable housing units while also adding the general housing stock.
Lot of it also comes down to zoning. California is horrendous for that.
A big part of the problem is how local zoning is.
Agreed, but at the same time I'm very much not wanting the state of Texas to step up to the plate on zoning. They'll just fuck things up more.
On the other hand, it doesn't matter where you live if you telecommute most every day, so maybe encouraging white collar workers to work from help would help. That said, there's real social costs to isolating a large part of the population from other human beings.
I ran my whole D&D session remote this week on my phone, with Google hangouts, while I walked around downtown Salem. I've been supporting remote players for years with hangouts. Almost all audio interference on it is caused by interference on mics... next time you're running into trouble get everyone to mute themselves and one by one add back into the conversation and you'll find who's mic setup is fuckin up your whole meeting and needs to be muted and fixed.
Not exactly seamless, hmm?
I mean me traveling 20 to 30 miles a day to a community I only tangentially, and somewhat esotericly, give a shit about that overcharges me for everything isn't really seamless either.
When I work from home I can better connect with the community I actually live in, and bring money in to be circulated around the place we live. I frequent our local businesses and because I'm not spending 3 hours of my day on transit I can actually take a minute to like talk to my neighbors, or the other regulars at the gym.
Spending 3 hours of my day on transit is far less seamless than a quick "who needs to mute themselves?" check (the right answer is that everyone should always be muted unless they are talking).
Probably not honestly. Local zoning control is the height of NIMBYism at the expense of basically ... everything.
I'm not saying "Let's abandon it" but rather "When the technology is better, more people will use it."
For instance, it would be a lot better if everyone didn't need to manually mute and unmute themselves to talk. The conversation would flow more naturally.
Push-to-talk is a thing for a reason when gaming. An interface like that would make it so much easier.
The other problem is the latency for meeting software is awful. That's part of what makes it so damned awkward.
I concede that certain traded items cannot increase in supply due to fixed availability (inelastic supply) such as land.
I disagree with your oil example. Closing the Straits of Hormuz is decreasing supply, which causes an increase in cost because while demand may reduce some, there is an amount of current demand that is required for global economies to work. But this leads to an increase in long term oil production, as we saw in the 2000s when oil was $130 a barrel. Technologies like oil sands extraction and fraking need a price of $70 a barrel to become economical, and will once again be brought online if a global shortage occurs. It is certainly not an instantaneous response, but if oil supply is constrained somewhere, then the demand will be met by alternate sources.
I also disagree with your cuban cigars example. If sufficient public demand existed for cuban cigars, then laws would be revised to allow the import of cuban cigars. Wal Greens would certainly lobby for a legal import route if there was sufficient profit incentive. Currently there isn't a sufficient demand to warrant such action.
By Tony Suburbs, you mean the richest suburbs in the nation? If so, then the reason you can't build affordable apartments is because the rich own all of the land and will not let this occur. Which shows that non-monetary values can overwhelm monetary considerations. Especially for people who are so wealthy that they can ignore monetary considerations without negatively impacting their livelihood. This is certainly not normal. Supply/demand economics don't really work in this situation.
Sure, long term. Most people need to fill their tank back up at the end of a couple weeks, not in the long term. A solution that's five years away doesn't solve an immediate problem and so mining the Straits of Hormuz is a supply shock.
Yes, supply constraints created by Government policy can be eliminated by changing policy. That is what supply side stimulus is. Jimmy Carter is the reason we have craft beer. But until that change in law occurs it doesn't matter what the demand is, something that is illegal to sell won't be sold except what supplies can evade detection to be sold on the black market. The law is a very real thing, not a fake construct that doesn't actually constrain actions. It can create as well as destroy markets.
Yeah, that's my point. Demand on its own is not enough to make supply appear when supply is constrained. It can be constrained for shitty racist and classiest reasons that shouldn't be allowed to exist, but that doesn't mean those restrictions don't exist exist and supply isn't constrained.
Given the work Austin has been doing to combat nimbyism and changing zoning and how the state routinely fucks with local governance yeah I don't want them rooting around in our shit.
Suburban sprawl is untenable period. Urban areas subsidize suburban sprawl through property taxation and the net cost of infrastructure.
I would say yeah that is the answer though.