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EK1949

EK1949
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  • The Cost Of $15 Min. Wage: For Fast-Food Giants, Nothing. For Employees, Their Jobs [View article]
    "By your logic we should then just give the government everything we make in taxes right?"

    Never mind my logic, what about what I say? Cutting spending increases taxes, not by "leading to" a tax increase, it is a tax increase, in exactly the same way that a tax cut is a spending increase. The net position of the private sector (all users of the currency, strictly speaking) to the public sector (the currency issuer) is the same either way.

    What effect a spending cut would have compared to a corresponding tax increase is a question of distribution. That's important, but by far the most important factor is, must be, the magnitude of the loss to the private sector.

    Do you still think I have a logic problem?
    Aug 24, 2015. 06:09 PM | Likes Like |Link to Comment
  • The Cost Of $15 Min. Wage: For Fast-Food Giants, Nothing. For Employees, Their Jobs [View article]
    "I would cut all government spending by 20% and cut taxes for everyone earning below 200k."

    There would be a depression in weeks, maybe days. No one would have more income, not even the rich.

    "With more after tax income people will spend more, creating growth and jobs."

    This would be true nowhere on Earth. The world economy would be wrecked.
    Aug 24, 2015. 01:57 PM | 2 Likes Like |Link to Comment
  • The Cost Of $15 Min. Wage: For Fast-Food Giants, Nothing. For Employees, Their Jobs [View article]
    "They raise the minimum wage, and it cuts the job market for low paying jobs."

    Yes, the cost/benefit will tend to favor more skill and higher wages. Businesses will be forced to train workers up more and demand more education from local governments. The replacement jobs will require that, but we have to get the ball rolling. I think any minimum wage increase that doesn't have any job loss in it is too small to create replacement jobs in sufficient numbers, but any rise will create some.
    Aug 24, 2015. 01:15 PM | 2 Likes Like |Link to Comment
  • The Cost Of $15 Min. Wage: For Fast-Food Giants, Nothing. For Employees, Their Jobs [View article]
    "Best way to help the poor is to help the middle class."

    It's the other way around, actually. The hollowing out of the middle class is worsened if not caused by the erosion of the wage pyramid from the bottom and the consequent low demand from the sector of the economy that spends more of its income than any other, while incomes rise for the fraction that spends the least. That's why tax cuts on spending are so effective, like the payroll tax holiday, while tax cuts on high earner savings is so ineffective.
    Aug 24, 2015. 01:10 PM | 2 Likes Like |Link to Comment
  • The Cost Of $15 Min. Wage: For Fast-Food Giants, Nothing. For Employees, Their Jobs [View article]
    "I would also point out that if you raise the bottom strata of society's income the VERY FIRST THING THEY WILL DO IS SPEND IT..."

    Decades of wage stagnation at the bottom will have the effect of hollowing out the middle, hurting both the fast food and mid level restaurants. What business thrives on the impoverishment of its customers?
    Aug 24, 2015. 10:28 AM | Likes Like |Link to Comment
  • The Cost Of $15 Min. Wage: For Fast-Food Giants, Nothing. For Employees, Their Jobs [View article]
    "If there is a genuine movement within the fast-food industry on behalf of, or by the workers themselves, to earn wages at $15 per hour or greater, our capitalistic society allows for this to happen already without any more government intervention."

    A declining minimum wage is government intervention. It's also a genuine movement against the worker component of capitalism. I find that people who think they are capitalists rarely support what's good, but instead want a version of autonomy that robs it from others. They want to win a zero sum fight with labor for control and will sacrifice aggregate gain for all to get it.

    The workers are "within the fast food industry". Their movement is genuine, as is the movement to stop them.
    Aug 24, 2015. 10:05 AM | 2 Likes Like |Link to Comment
  • The Cost Of $15 Min. Wage: For Fast-Food Giants, Nothing. For Employees, Their Jobs [View article]
    Higher wages for low wage workers will help to shed the jobs we least want to keep, those that can be replaced by technology, while the income increase will create new jobs. If low demand means fewer jobs with stagnant wages, what will higher demand mean? It's not a trick question.

    For decades we chose to suppress wages while productivity rose, until labor became so cheap that the struggle for productivity gains to offset higher wages was rendered obsolete. Maybe we're going to start the upward cycle again by forcing increased productivity by means of higher pay, costing the worst jobs now to get better ones. Time to get smart again.
    Aug 24, 2015. 09:26 AM | 3 Likes Like |Link to Comment
  • Time To Get Mad? Really? [View article]
    "I don't see the unwinding of QE as a problem:"

    Will we know it when it's unwound or is it going to be a "while you were out the balance sheet shrank" kind of thing?
    Aug 23, 2015. 08:42 PM | Likes Like |Link to Comment
  • Time To Get Mad? Really? [View article]
    Hollowing out the middle is related to undersubsidy. There's not enough spending and tax cutting to replace lost mid level jobs. Low level jobs have to come back for the new low level economy, but it needs less mid level jobs and will continue like that until the issue is forced with enough spending and tax cutting to get the private sector to invest out of necessity. Job creation is a last resort for "job creators", and the only way to force their hand is high enough demand that they have no other choice but to hire more and pay more.
    Aug 23, 2015. 05:49 PM | Likes Like |Link to Comment
  • The Fed Would Be Nuts To Raise Rates [View article]
    "Well, the FED is kinda nutty. They will not be able to raise rates until at least 2017, if even then."

    Someone is nutty because of this, but it's not the Fed, they're playing the hand fiscal conditions dealt them. Why not blame an anemic recovery on its authors? The Fed can't net spend, only print. If printing worked it would have by now.

    Don't expect Fed linebackers to score your touchdowns. That's what spending and tax cutting are for. Fed scapegoating is a political strategy to immobilize efforts to use government action. That's why it makes so little economic sense while providing a convenient smokescreen for the Insane Klown Posse in Congress.
    Aug 23, 2015. 11:56 AM | 1 Like Like |Link to Comment
  • Time To Get Mad? Really? [View article]
    "Since this represents almost 20% of the economic activity for the year in this country, the opportunity for something to go wrong is quite substantial."

    If QE didn't stimulate the economy, and no one thinks it did, how can you argue that who owns bonds matters anywhere near as much as spending enough to lower the price and raise yields in a non-administrative way? In current conditions almost any net spending/tax cutting would be positive, considering we have both an income problem and an investment/infrastructure problem.

    Are we supposed to prove the solutions to these problems would also go to solve the growth problem, too? I don't think so, they are the same problem. The decades long decline in the share of productivity going to labor is as integral as the other factors.

    All of these factors are linked to falling deficits in a weak recovery. What has the Fed balance sheet size done? For good or ill, very little, for in growth terms it's pretty close to neutral from reduced interest payments taken from the private sector to "save dollars". Low cost borrowing is a defensive measure that can't raise demand and therefore demand for the loans. That requires an income component to the strategy, the missing part.
    Aug 22, 2015. 11:43 AM | Likes Like |Link to Comment
  • Time To Get Mad? Really? [View article]
    "We don't understand Fed critics like Gayed. They almost invariably have a finance, rather than a macro-economic background, exactly the people are favored by the present circumstances (at least that's what they themselves claim)."

    Oh yes we do. :-)

    If it's all the Feds fault it isn't anyone else's.

    "Gayed argues that it's difficult to make money on the markets"

    It's difficult to make money with your politics warping your view of how the economy works, by imaging that the Fed isn't in it because it's "not supposed to be" but IS in it AND "not supposed to be. The people who did make money, though, just took the Fed as just "in here, with us", so no problem and no distorted view. No wonder they did better.
    Aug 21, 2015. 11:50 AM | Likes Like |Link to Comment
  • The Fed Would Be Nuts To Raise Rates [View article]
    I don't think we need higher rates, we need the conditions for higher rates, then we'll want higher rates. How do we get the conditions? It takes more spending and less taxing.

    Now, the question of where to cut taxes and where to spend is an important one, but we can start with the general observation that aggregate spending/tax cutting will work, but to what extent is dependent on distribution. On the spending side distribution tends to be positive, that is spending to build, social welfare spending, aid to local government that keeps taxation down all promote efficiency by sending dollars or dollar benefits to those who need it.

    So, the preference to spend over tax cutting is rational when you consider that cutting taxes can be very weakly positive as it often is engineered to be so, especially by means of subsidy to "job creators" which encourages them not to create jobs. A positive tax cut policy would instead cut taxes on spending, that is spenders, who are low to middle income earners. That's where the bang for buck lies. That's why the payroll was usefully rescinded, and harmfully restored. Also see Japanese consumption tax.

    What does a consumption tax do to a savings/debt glut like Japan has had for so long? Were they trying to "save yen"? I thought that was the problem, vast savings and correspondingly weak consumption in an economy designed for export conditions that have deteriorated from competition. For decades economists have been saying Japan must strengthen its domestic economy (now China must, too). Has the point been missed? How is that possible?
    Aug 21, 2015. 11:26 AM | Likes Like |Link to Comment
  • 3 Things I Think I Think - Weekend Edition [View article]
    "The benefit of a public bank is that private profit is no longer extracted from public finance. That is both a benefit and a problem. The benefits I discussed in my original comment. The problem is that interest paid to the private sector by the government is a form of support for the overall economy."

    That's how I see it, and why I think QE is problematic. What kind of stimulus reduces a deficit already falling? Anyway, an interest rate-centric strategy isn't chosen because it's better at proving jobs, infrastructure and income, it's chosen because direct ways are blocked. It's a weak tool at best.
    Aug 20, 2015. 11:58 AM | 1 Like Like |Link to Comment
  • 3 Canaries In A Coal Mine: The Global Government Bond Bust Is Finally Underway [View article]
    "Oh, I forgot, the government can just print more $$. What's the Debt Clock say now vs 2008?"

    Yes, that's right, it always can and will, and not to put too fine a point on it, it always does. When will it stop? You know the answer, but do you know why it won't? It helps if you do. :-)

    "By the way, it's not free - someone has to work to pay the taxes to give them this free stuff."

    Spending, not taxing, is the "pay for". Taxing takes the "pay for" back. Because this is true we spend more than we tax for sound reasons, and because what we are really doing is extending the lag between money created and money destroyed so the economy has enough. Enough means for everyone, regardless of whether they work or not.

    However many work for production everyone works for consumption. The best way to optimize both production and consumption is to optimize them relative to each other. What other way is there? Oh, I guess you could use annual budget balances and debt clocks. That doesn't work very well, though.
    Aug 20, 2015. 09:12 AM | Likes Like |Link to Comment
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