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Thread: Unemployment benefits extension clears hurdle

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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by Redress View Post
    That is not what is happening. We are borrowing money from other countries, not taking it from other people in this country. Eventually it will have to be handled, but economic growth will limit the impact in hopefully fairly short order. The Broken Window fallacy does not work because it is not a relatively closed community.
    The world economy is a closed community. Borrowing money from other countries makes no difference. These nations must acquire American dollars before they can lend them back to Washington. Foreign countries can acquire American dollars by either:

    1)Attracting American investments in their country. In that instance, the dollars leaving America match the dollars lent back to America. The net flow of saving circulating through the U.S. economy does not increase.
    2) Selling goods and services to Americans and receiving American dollars in return. For the United States, these imports raise the trade deficit and thus reduce domestic demand. The government's subsequent borrowing back and spending of these dollars merely offsets the increased trade deficit.

    In either situation, American dollars must first leave the country before they can be lent back into the U.S. economy. The balance of payments between America and other nations must net zero. Consequently, government spending funded from foreign borrowing does not provide stimulus.

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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by NolaMan View Post
    Many prominent economists have admitted that paying people not to work takes away their incentive to find work. Alan Krueger, the current Assistant Secretary of the Treasury for Economic Policy, and Lawrence Summers, current director of the White House's National Economic Council both have made comments to this regard. Even Paul Krugman states, "Do unemployment benefits reduce the incentive to seek work? Yes: workers receiving unemployment benefits are likely to be slightly more choosy about accepting new jobs." While he goes on to argue that "slightly" is key, he does admit that it makes them more choosy.
    Underemployment has significant effects upon the economy. Hence why the BLS reports the U6 number. You are going to have to explain why making workers more choosey is a bad thing.

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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by drz-400 View Post
    Obviously unemployment benefits can effect structural unemployment. The fact is we are 3-4% higher than the natural rate of unemployment. Unemployment benefits increase consumption, which in turn increases income. Therefore they are effective at reducing the output gap and returning us to full employment (ie the natural rate).



    This is mathematically impossible.

    A tax or transfer payment has a multiplier effect of

    MPC x 1/(1-MPC)

    whereas government spending will have a multiplier of:

    1/(1-MPC)

    Government spending does not go through a round of saving before it is initally spent (and therefore increase income).

    However, in another thread I stated that unemployment benefits are paid to people who have a higher MPC, which would mean that they have a larger multiplier effect than other similar policies (ie an across the board tax cut).
    I am not an economist, but it seems to be grounded in a rational argument for the Federal Reserve Bank of San Francisco to make it, does it not? At the very least, I would argue the multipliers would be the same, but again, not an economist.

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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by drz-400 View Post
    Underemployment has significant effects upon the economy. Hence why the BLS reports the U6 number. You are going to have to explain why making workers more choosey is a bad thing.
    It cannot go both ways. If the argument is we need to extend benefits because people cannot find a job, then perhaps the problem is they are being to choosy? If the argument, which you seem to indicate it should be, is that we need to extend benefits so people can find the job they want, then I think that is a political lost cause and certainly not a responsibility of the government.

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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by Chappy View Post
    The differences between the Democrats and the Republicans could not be more stark: support for extending benefits to unemployed workers during the worst economic conditions since the 1930s versus support for extending hundreds of billions of dollars in tax breaks to the wealthiest among us. Yes, let's campaign on that.
    dems seem to think that handouts are the same as tax breaks to those who already pay too much in taxes and if allowed to keep more of their OWN money might actually spend it which creates JOBS

    keeping people sucking on the public teat and dependent on their dem masters might win your overlords elections but it sure buggers up the USA in the long run



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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by NolaMan View Post
    The world economy is a closed community. Borrowing money from other countries makes no difference. These nations must acquire American dollars before they can lend them back to Washington. Foreign countries can acquire American dollars by either:

    1)Attracting American investments in their country. In that instance, the dollars leaving America match the dollars lent back to America. The net flow of saving circulating through the U.S. economy does not increase.
    2) Selling goods and services to Americans and receiving American dollars in return. For the United States, these imports raise the trade deficit and thus reduce domestic demand. The government's subsequent borrowing back and spending of these dollars merely offsets the increased trade deficit.

    In either situation, American dollars must first leave the country before they can be lent back into the U.S. economy. The balance of payments between America and other nations must net zero. Consequently, government spending funded from foreign borrowing does not provide stimulus.
    This goes against your argument of crowding out though. If the US sells treasuries to a foriegn country, this increases the demand for US dollars, which would increase the exchange rate. An increase in the exchange rate would cause the current account to fall (more imports less exports) and the capital account to rise (capital inflows).

    The savings rate is:

    S = Ps + Gs + Cap.

    Ps is private saving, Gs is government saving (- if a deficit), and Cap is capital inflows (which would increase it the US sells assets to foriegners).

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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by drz-400 View Post
    This goes against your argument of crowding out though. If the US sells treasuries to a foriegn country, this increases the demand for US dollars, which would increase the exchange rate. An increase in the exchange rate would cause the current account to fall (more imports less exports) and the capital account to rise (capital inflows).

    The savings rate is:

    S = Ps + Gs + Cap.

    Ps is private saving, Gs is government saving (- if a deficit), and Cap is capital inflows (which would increase it the US sells assets to foriegners).
    But the point is those dollars have to come from somewhere to buy US treasuries right? For foreign countries to obtain US dollars, it is basically the same scenario as dollars leaving the country, just to come back in, resulting in no net gain... right?

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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by Chappy View Post
    The differences between the Democrats and the Republicans could not be more stark: support for extending benefits to unemployed workers during the worst economic conditions since the 1930s versus support for extending hundreds of billions of dollars in tax breaks to the wealthiest among us. Yes, let's campaign on that.
    The GOP is not against unemployment benefits they are against increasing the debt. If the dems would abide by their pay go law the GOP would support it

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    Re: Unemployment benefits extension clears hurdle

    Quote Originally Posted by NolaMan View Post
    It cannot go both ways. If the argument is we need to extend benefits because people cannot find a job, then perhaps the problem is they are being to choosy? If the argument, which you seem to indicate it should be, is that we need to extend benefits so people can find the job they want, then I think that is a political lost cause and certainly not a responsibility of the government.
    To me they go hand in hand. If people get a job, it would be best if they get the one they are good at, especially if they were seperated from their previous job due to the business cycle.

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    Re: Unemployment benefits extension clears hurdle

    So ... why did they vote FOR it under President Bush, but against it under President Obama?

    Quote Originally Posted by ptif219 View Post
    The GOP is not against unemployment benefits they are against increasing the debt. If the dems would abide by their pay go law the GOP would support it

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