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Thread: Financing the Green New Deal

  1. #381
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    Re: Financing the Green New Deal

    Quote Originally Posted by Conaeolos View Post
    Isn't the benefit of private sector business to produce more? Would you mind reworking this hypothetical extremly over simplified story by your theory to give me a better idea of your conceptualizing it. Please don't be picky, it's extremely oversimplified on purpose, the numbers random picks to show basic relationships...I am trying to get your underlaying point.


    Where I am getting confused with MMT
    So in our mix economy simplification, it seems to me you are proposing pushing public employment and subsidized employment at the cost of the private.
    OK. There is nothing "socialist" about MMT. MMT is just an economic school of thought that rejects a lot of mainstream economic ideas. We have the mechanics of federal finance and banking correct - most economists will admit that much. It's the other stuff where we differ - theories of inflation, interest rates, capital, the usefulness of monetary policy, etc.

    Example - MMT says that inflation is purely a matter of the domestic economy not being able to meet demand, plus any outside forces that are probably beyond our control (oil prices, for ex.). This isn't a rejection of logical stuff; we understand that Apple products are popular, so they are going to price them where they want, etc. It is more a rejection of NAIRU and monetary policy being used to fight inflation. Mainstream thinking has the Fed balancing inflation against unemployment via interest rates. MMT thinks that is a ridiculous approach. Advanced economies haven't had inflation problems for 40 years; that's more a reflection of smoothly-operating economies with few shortages than it is of central banks tweaking interest rates.

    By the same reasoning, MMT is also a rejection of monetarism. The data is pretty clear - there is no relationship between any measure of the money supply and inflation. Mainstream economists were terrified that QE was going to lead to high inflation or even hyperinflation. Since their fears never panned out, they have been hard at work on inventing exceptions to their rules that would explain why QE wasn't inflationary. MMT did not have to change course one bit.

    I'm only bothering to explain these things because it is necessary to step outside the box a bit in order to properly judge something that exists outside the box.

    Among the takeaways of MMT is that government deficit spending is not true debt, so the cost/benefit analysis most people (and most economists) are doing in their heads is incorrect. There is no future debt to pay off, no future consumption that we must forego. There is simply an addition of dollars (and demand) via deficit spending, and a drain of dollars (and demand) caused by savings (and trade deficits, which is just savings by foreign parties). There is no recycling of these dollars, either - the national debt never gets any smaller, so those dollars are not re-entering the economy.

    So we see that the government can spend money without worrying about a debt constraint; the real constraint is inflation, and that is a function of our economy's ability to meet demand. It's actually pretty simple, compared to the dozens of inputs that mainstream economics tries to make sense of. Since we reject NAIRU and seek to maximize production, a Job Guarantee is often tied to MMT; using the government as the employer of last resort, involuntary unemployment is eliminated, the labor market is tightened up, the income pie is distributed more equitably, and deficit spending actually becomes less necessary as the overall savings rate decreases.

    Nowhere in any of this is the government competing with the private sector to produce any consumer goods or services. The only competition is for labor, and that's by design. Would people be pulled away from "productive" private sector jobs to work in the public sector? That's not the intention, but there are more productive public sector jobs than flipping burgers in the private sector. Just as the unemployed would gain from a tighter labor market, so too would the underemployed.

    Higher wages wouldn't really cost production in the private sector; they would just bring down profit margins, because labor is a cost. And that would be a great thing for the vast majority of people.
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    Re: Financing the Green New Deal

    Quote Originally Posted by JohnfrmClevelan View Post
    Because the government doesn't pay as well as the private sector. Also, the government doesn't bid on employees, they fish; there are well-defined grades of employment in the federal government, with narrow pay ranges and lots of restrictions. Private sector companies face no such restraints - if there is a person they want, and they are in competition with the government, they can just increase their offer.



    The U.S. lists its public sector at 16-18%, depending on the source. Other countries range anywhere from 10% to 40%. source I'm pretty sure that we used to employ more, though. The 2008 crisis hit state and local governments hard, and I don't think they ever built back up after cutting back. And the fed have been trying to privatize as much as possible, hiring contract workers whenever possible. So a lot depends on how you want to count "public sector" employees.
    Overall, total compensation for federal workers was 17 percent higher, on average, than for comparable workers in the private sector during 2011-2015, CBO found
    Overall Public-Private Sector Compensation Gap Has Widened, CBO Finds - Pay & Benefits - GovExec.com

    Unless you have a PHD, then the private sector is going to pay more.

  3. #383
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    Re: Financing the Green New Deal

    Thanks for taking the time to reply in detail. Unfortunately I do not have much to add as I think your argument is making a huge logical leap:

    Quote Originally Posted by JohnfrmClevelan View Post
    inflation is purely a matter of the domestic economy not being able to meet demand, plus any outside forces that are probably beyond our control
    A strong argument could be made.

    Mainstream thinking has the Fed balancing inflation against unemployment via interest rates. MMT thinks that is a ridiculous approach.
    A strong argument could be made.

    there is no relationship between any measure of the money supply and inflation.
    Getting iffier but sure that's possible…the disparities in between money supply growth and economic growth and the price distortions it creates is not distributed in such a linear fashion as to ignore this possibility. Economic bubbles are strange.

    There is no future debt to pay off, no future consumption that we must forego. There is simply an addition of dollars (and demand) via deficit spending, and a drain of dollars (and demand) caused by savings (and trade deficits, which is just savings by foreign parties).
    Again iffy, but sure in the broadest sense that could be said.

    the real constraint is inflation, and that is a function of our economy's ability to meet demand.
    That's a dangerous attitude, but it's not crazy. The only true limit of an economy is its ability to meet demand, true.

    seek to maximize production, a Job Guarantee is often tied to MMT; using the government as the employer of last resort, involuntary unemployment is eliminated, the labor market is tightened up, the income pie is distributed more equitably
    Wage differences alone don't cut it, but I appreciated the supporting evidence athough I question the methodology.

    The principle I am struggling to accept:
    The only competition is for labor
    Labor doesn't exist in isolation…I hope you are right. The government as an employer of last resort would be a great social development.

    there are more productive public sector jobs than flipping burgers in the private sector.
    Not quite the example I would use but just to be clear of course there are public sector jobs worth more to the economy than some private. And unproductive jobs in both. Private ownership alone does not automatically produce a functioning capitalist economy any more than being publicly funded makes it automaticly a net benefit because it might score some GDP metric.

    Higher wages wouldn't really cost production in the private sector; they would just bring down profit margins, because labor is a cost.
    And here is where we must downright depart. You can't increase a cost and say it will come out of profits. You can't say it will have a positive effect on wages through competition and say it's an employer of last resort. Profits are also good!

    The cost of labor matters. Especially when you are upping the cost without upping the quality. Humanitarian consideration aside, economically one has to be very careful this has real costs in terms of reduced investment, foreign outsourcing, illegality, leaner teams, more specialized labor…

    Now again, Public programs for low employability workers from ex-cons, the disabled, drug addicts to the high-school drop outs are great especially when you can minmize how much in demand labor your defering to run it. I only highlight the inevitably high rate you will be pulling engineers, researchers, doctors, managers, skilled-labor and upping their labor costs to put them toward (e.g. helping the poor, building a high-speed rail network to reduce plane travel, decommissioning functioning energy assets, over-educating the population)

    So we've displaced skilled-indemand-labor from the productive sector to do gooderisms. We've raised the costs of skilled-labor directly reducing working domestic investment. Lower profits discourging foreign and local investment. I take it we still have low intrest rates so private debt levels are still growing. And we've freed the public purse from it timid restraints since public spending is less checked as the adgenda far more economially hands-on. And all this in consideration, we are seriously predicting an uptick in domestic spending is going to net a gain because small increases in income and zero practical unemployment(most of whom currently have income)?

    I hope you're right and I am wrong. I truly do. Unfortunately, I doubt it. You'll just outlining how to shirk the total and raise the equality as if that was some noble aim or a complicated task. No thanks. I will keep working toward higher wages, higher profits, higher employment, higher investments and when the technology is ready a government fiscally stable enough to work with the private sector to deploy a proven improved environmental-human balance.
    Last edited by Conaeolos; 02-20-19 at 03:17 AM.

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    Re: Financing the Green New Deal

    Quote Originally Posted by JohnfrmClevelan View Post
    No, he was saying that both are financed in the same way. All deficit spending is financed in the same way. And financing the GND is the whole point of his article.
    .
    right.. whishkibble. Its useless. The merits and economic effect can only be decided when the details of the program and the economic effects are actually discussed in terms of the multiplier effects of that spending.

    These are not crazy proposals. They are common sense measures that a lot of other countries are already taking
    Great.. give me an detailed example of the proposals and its economic impact from the NEW GREEN DEAL. Good luck though.

    Oh, wait... I can. As RH already said, GND programs seek to greatly increase production in green technologies and power
    Right.. HOW?

    Do you contend that the same economic effect will be seen regardless of HOW they seek to increase of green technology and power?

    just like the claims on the right about the GND seeking to eliminate air travel, most similar complaints are wild exaggerations of what the plan actually seeks to accomplish. High speed trains are not meant to replace air travel, just to provide a feasible, greener alternative
    .

    Duh.. its not about eliminating air travel... its about whether those high speed trains are ACTUALLY effective in being greener, and are actually cost effective. Kind of like a bridge to nowhere. That's the problem with the liberals... just say "high speed rail".. and you fall over yourselfs saying "well how green". Not understanding that consequences of creating a train that people may not actually use enough to not only justify the cost.. but to justify the increase in greenhouse gases. that train is being powered by something. and the electricity that's power it.. is from the burning of fossil fuels?

    The UK is currently mulling over a high speed rail link between London and Birmingham, a city about 160 kilometers north-west of the capital. But according to official estimates, it's unlikely to lead to significant carbon dioxide cuts -- and may even increase climate-changing emissions.

    So what's stopping high speed rail being a major part of a greener transport future in Britain?

    First there's the electricity to power the trains. Over two thirds of the world's electricity comes from fossil fuels so until (or unless) power stations are weaned off fossil fuels, electric trains will still have a significant climate impact -- although rail travel is still better than flying or driving.
    Secondly, will high speed rail entice people off the roads and short-haul flights? French TGVs and the Channel Tunnel rail link have succeeded, but official calculations estimate that only 16 per cent of anticipated passengers for the London to Birmingham line will have swapped from planes or cars.

    One of the main factors is cost. Despite soaring fuel prices, motoring and flying are still expected to be cheaper than high speed rail. If faster rail travel is to become a realistic alternative it must be affordable too.
    The UK's high speed rail link is expected to cost a whopping $54 billion. But living as we do in cash-strapped times there's surely a strong case for investing some of that that money in less grandiose, but more effective, projects.
    Perhaps some high speed rail money could be diverted to upgrade commuter and longer-distance services, making life easier and cheaper for ordinary passengers -- and making a bigger and fast contribution to cutting emissions.

    But I think there is plenty of available farmland so that we wouldn't need to convert your acreage anytime soon. No reason for alarm.
    Hmmm... so you think that we can switch from meat production that's feeding people., and still feed the same number of people without an increase in either produce production per acre (more intense farming, more use of fossil fuels, more need for fertilizers), or converting more land to agriculture?

    Please detail how? Do you realize that doesn't even make sense?
    So we should put you down as supporting putting GPS trackers in everyone to "save lives"?
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  5. #385
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    Re: Financing the Green New Deal

    Quote Originally Posted by Conaeolos View Post
    And here is where we must downright depart. You can't increase a cost and say it will come out of profits. You can't say it will have a positive effect on wages through competition and say it's an employer of last resort. Profits are also good!
    Maximizing profits at the expense of labor is what got us into this mess. Laborers are also consumers. And ownership still made plenty of profits back when labor was able to command a larger share of the pie.

    Quote Originally Posted by Conaeolos View Post
    The cost of labor matters. Especially when you are upping the cost without upping the quality. Humanitarian consideration aside, economically one has to be very careful this has real costs in terms of reduced investment, foreign outsourcing, illegality, leaner teams, more specialized labor…
    Most things can't be outsourced, and those that can have already been.

    Other countries manage to pay their labor more, while still enjoying both functional economies and profits. Part of the reason is that workers that earn more also spend more.

    Quote Originally Posted by Conaeolos View Post
    Now again, Public programs for low employability workers from ex-cons, the disabled, drug addicts to the high-school drop outs are great especially when you can minmize how much in demand labor your defering to run it. I only highlight the inevitably high rate you will be pulling engineers, researchers, doctors, managers, skilled-labor and upping their labor costs to put them toward (e.g. helping the poor, building a high-speed rail network to reduce plane travel, decommissioning functioning energy assets, over-educating the population)
    What happens when there is a shortage of engineers? Pay goes up, and more students major in engineering. What happens when the demand for engineers is low? Pay goes down, fewer students major in engineering, and when we need engineers, we are forced to import them. High demand for labor is a sign of a healthy economy. I don't really care if businesses have to pay more to hire them. Maybe they can take funds from overpaid management and shift them to skilled labor.

    Quote Originally Posted by Conaeolos View Post
    So we've displaced skilled-indemand-labor from the productive sector to do gooderisms.
    1. That labor is not nearly "in demand" enough right now. We need more jobs for all sorts of skilled laborers, in pretty much every category I can think of.

    2. Working to improve our infrastructure, increase our technological know-how, and decreasing emissions is too important to write off as "dogooderisms." That's exactly the kind of dismissive attitude that is winning big business exactly zero sympathy at the moment.

    3. Looking to the private sector to solve our problems, both economic and otherwise, is a waste of time. That is not what they are there for. Business exists to profit ownership, and that is all. Any good they do is purely a by-product of profit-making.

    Quote Originally Posted by Conaeolos View Post
    ...And all this in consideration, we are seriously predicting an uptick in domestic spending is going to net a gain because small increases in income and zero practical unemployment(most of whom currently have income)?
    If you really believe this, you are seriously out of touch. The difference between a living wage (and a guaranteed job) and what the lower end is scraping by on now is huge. I don't know what you do for a living, but the economy stinks for pretty much everybody that earns a paycheck, compared with 30-40 years ago.

    Quote Originally Posted by Conaeolos View Post
    I hope you're right and I am wrong. I truly do. Unfortunately, I doubt it. You'll just outlining how to shirk the total and raise the equality as if that was some noble aim or a complicated task. No thanks. I will keep working toward higher wages, higher profits, higher employment, higher investments and when the technology is ready a government fiscally stable enough to work with the private sector to deploy a proven improved environmental-human balance.
    Does that include paying your employees more than market value? Because if that isn't part of the plan, then higher wages, higher employment, and all of your other goals (except higher profits) are not going to happen. Not without the government forcing some changes. Private sector types have been telling everybody to wait and see the results for decades now, while picking everybody's pockets along the way.
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    Re: Financing the Green New Deal

    Quote Originally Posted by Walking away View Post
    The Green New Deal sounds good when you hear it, but it is like dancing to the piper's music, the piper has to be paid, and the piper wants all of your money. Anything that is free will not be worth the price you have to pay later.
    I'm tired of demands made in bad faith, from people who never ask the same questions about tax cuts or who bumped up defense's budget by $80 billion, without any debate or cry about where the money will come from.
    “Those who can make you believe absurdities, can make you commit atrocities.” ― Voltaire

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    Re: Financing the Green New Deal

    Quote Originally Posted by JohnfrmClevelan View Post
    Does that include paying your employees more than market value?
    Yes, I do even the lower skilled ones. That is my choice and great for me and my employees, but not for the group you are concerned about. My lot would be mostly uneffected.

    This higher compensation economic choice though doesn't come without a cost. Our executive teams demand more, run smaller teams, spend less on things like office space and supplies and it takes more to get job security in one of my companies. That said these do grow and add more with each success.

    Big clunky low compensation employers are also good. I couldn't run one. Low quality ungrateful employees drive me nuts. That said, they hire more, they are easier to join, they care less when you have rough edges[of some types], they spend more, they are less quick to rid themselves of underperforming elements and bad hires.

    I make no illusions, the majority of the labor force is always going to be hired by the later not companies like mine. That is good. Most of the labor force wouldn't be happy in my companies.

    For example, when I have control, I don't allow politics. I don't believe in non participating mangers so roles are subjective. A junior or maintenance man accountable to their numbers not any boss. I'll pay someone to leave who isn't happy.Parents often bring their kids to work. Chaotic is the norm. We always rent our offices, so change is pretty normal. Starting to get a picture why it wouldn't be for everyone? Millennial mindset drives plenty of people even other millennials nuts.

    My style isn't the solution any more than any other. The point is I am allowed to operate my way and help every stakeholder improve by voluntary exchanges and agreements.

    I do fine GND or not. I do fine 99% tax or not. The whole though, that is what interests me when we talk politics. I wouldn't always have been fine and I don't forget the lean years, not one little bit!

    If you really believe this, you are seriously out of touch. The difference between a living wage (and a guaranteed job) and what the lower end is scraping by on now is huge. I don't know what you do for a living, but the economy stinks for pretty much everybody that earns a paycheck, compared with 30-40 years ago.
    Census data grounds my opinions on this topic but lots is subjective too. I am young, so I can't tell you about 40 years ago. I didn't even grow up in the united states to talk about 30 years ago, I grew up in Canada. I could only tell you about that or what I have heard.

    What's a living wage to you? When I say to someone that it means ~$50,000/yr per household which is under the current median household income. So more than 50% of households are good in this regard and more join every year. The others have some choices to make if they want to get above that…would you like me to explain?

    And a guaranteed job is meaningless if the job given aren't in their personal interests. The best way to ensure they might be: is give everyone freest possible choice in the freest possible job market.

    Anyway, 39 years ago was 1984. Table H-1, upper limit fifths with the last being the top 5% adjusted for inflation were:

    1984:
    $21,408, $40,066, $61,728, $93,247 & $154,360.

    2017:
    $24,638, $47,110, $77,552, $126,855 & $237,034.

    The prime interest rate for buying above your station:

    1984:
    13.7%-10.4%

    2019:
    5.5%

    H-17, distribution:
    1984:
    Households above $50,000 (current dollars): 50.3%
    Households above $150,000 (current dollars): 5.4%

    2017:
    Households above $50,000 (current dollars): 58.2%
    Households above $150,000 (current dollars): 14.7%

    But what about personal wage income being frozen since then?

    True, but that is a bit deceiving, wages have never had less of an impact on household income[the only metric which matters], the growth mostly from the group making earnings but not income. 2nd, the biggest growth in male wages happened with the shift from agriculture (the lowest paying industry) as that trend stabilized so did wages. There have been other drops and peaks with slight changes in industries our biggest strides since this stabilizing being in women who traditionally low compensation fields have been raising, fields like waitresses, childcare, teaching and nursing. Sales and marketing(communications) being the area where they thrived most. All of this does not account for increases in the social safety net both private and public in that time.

    No I am not seeing the issue, I see equal pay for equal work at play.

  8. #388
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    Re: Financing the Green New Deal

    Quote Originally Posted by JohnfrmClevelan View Post
    Most things can't be outsourced, and those that can have already been.
    Oh I be mighty careful challenging that if I were you…in a country like America where we have so many different regions, people and resources. It's usually policy and labor force disparities that leads to outsourcing.

    Other countries manage to pay their labor more, while still enjoying both functional economies and profits. Part of the reason is that workers that earn more also spend more.
    We could pay our workers more. That's not the issue. The issue is the context of why we do:

    Let's suppose we hire 1 retail worker to work a a cart in a mall for 2000 hr a year:
    Sales he averages per day: $500.
    Other costs: $350
    I pay him: $56/day ($8)
    Profit: $94/day

    Let's say I am comfortable keeping it open as long as I make $24/day.
    I can pay him up-to $15.75 per hour. It's just less lucrative and I invest less, so I need a reason.

    Your suggesting:
    Sales now average per day: $600.
    Other costs: $450
    I pay him: $120/day ($15)
    Profit: $30/day

    The issue is not I am going to suffer, my cart is maintaining. I might not close the cart but you must see why it seriously effects the probability I open a second cart right? It's not a very lucrative investment.

    Suppose instead, I have multiple carts that looking like those above above but I have one:

    Sales now average per day: $1000
    Other costs: $600
    I pay him: $56/day ($8)
    Profit: $344/day

    Yeah, I am ery likely to worry I going to lose that guy[if it is the guy not location]:
    I take action:

    Sales now average per day: $1000
    Other costs: $600
    I pay him: $160/day ($20)
    Profit: $240/day

    Everyone very happy! There's a difference between forced increases and market increases. We want to encourage the later not the former. The part of your plan that targets low demand worker could do that not so much for the high demand ones.

    What happens when there is a shortage of engineers? Pay goes up, and more students major in engineering. What happens when the demand for engineers is low? Pay goes down, fewer students major in engineering, and when we need engineers, we are forced to import them. High demand for labor is a sign of a healthy economy. I don't really care if businesses have to pay more to hire them. Maybe they can take funds from overpaid management and shift them to skilled labor.
    The problem is diminishing return. Let use IQ as an example of ability/potential.

    Say a job requires an IQ of 110+, that only 26.6% of a population. Say they are all employed. You'd need to take another high IQ field. You'll always have shortages at this level. There is no net gain without a net loss.

    Now, a low skill labor job requires 80+. So the pool is 89.5% of the population. Here where it get interesting. If you shrink the relative difference in income to the above, at what percentage do you drain the above to the below….there absolutely nothing stoping anyone 110+ to say, engineering is to much pressure and too demanding, I'd rather work for 50% digging holes...

    If we are importing, you can't really predict if one is 110 or 80. Or if their family is…it just one of those things about life. Some have it, some don't. IQ might be measureable but it is exmaple not what we're really talking about.

    If when all is said in done you tend average import say 100 or less, you actually make your employmet problem worse not better.

    Working to improve our infrastructure, increase our technological know-how, and decreasing emissions is too important to write off as "dogooderisms." That's exactly the kind of dismissive attitude that is winning big business exactly zero sympathy at the moment.
    I don't need sympathy I need realistic solutions. I actual want to use these things! I'd love to deploy every infrastructure idea in the GND. I like high speed trains, I like renewable energy, I like airships, I like everyone being employed and poverty being reduced….that's not the issue. It not even cost. It that it's an unlikely gamble most likely to make the problems worse.
    Last edited by Conaeolos; 02-21-19 at 08:05 PM.

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