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Thread: Liberal minimum wage & tax-the-rich obsessions vs. the Guaranteed Basic Income

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    Liberal minimum wage & tax-the-rich obsessions vs. the Guaranteed Basic Income

    The problem conservatives have with the proposal below will boil down to the difficulty accepting the fact that the federal debt of a fiat currency nation does not work like any other type of debt.

    The problem liberals have with this has yet to be intelligently articulated, which is why I call them out in the thread title.

    It is an irrefutable fact that the Federal Reserve is explicitly mandated to achieve a dual-goal of price stability and full employment. The tools they are given to promote this are the ability to create money out of nothing and the ability to use this to set a federal funds rate by adding reserves to or draining reserves from the banking system.

    Liberals seem to favor government and its de facto 4th branch (the Fed) creating full employment, rather than letting the private sector determine the level of employment. They also seem to strongly favor government "safety net" expenditures to meet all the needs of the unemployed and needy. Yet at the same time, they favor policies that work against full employment, namely minimum wage hikes and other employer mandates that discourage private sector employment, all based in an apparent belief that the private sector has some inherent social responsibility to promote the general welfare.

    Minimum wage hikes and other mandates upon employers (e.g. PPACA, payroll taxes, etc.) do not promote full employment. They promote unemployment. There is no practical way to force people to buy something, let alone by also forcing them to overpay for it by setting prices.

    If you want full employment and for the needs of the needy to be met, why cling to policies that work against that?

    And to put a sharper point on my question, exactly how do you explain why the following proposal, as articulated by Warren Mosler (the MMT guy), is objectionable to you?

    "There is a very interesting fiscal policy option that is not under consideration, because it may result in a larger budget deficit. The Federal government could offer a job to anyone who applies, at a fixed rate of pay, and let the deficit float. This would result in full employment, by definition. It would also eliminate the need for such legislation as unemployment compensation and a minimum wage.

    This new class of government employees, which could be called supplementary, would function as an automatic stabilizer, the way unemployment currently does. A strong economy with rising labor costs would result in supplementary employees leaving their government jobs, as the private sector lures them with higher wages. (The government must allow this to happen, and not increases wages to compete.) This reduction of government expenditures is a contractionary fiscal bias. If the economy slows, and workers are laid off from the private sector, they will immediately assume supplementary government employment. The resulting increase in government expenditures is an expansionary bias. As long as the government does not change the supplementary wage, it becomes the defining factor for the currency- the price around which free market prices in the private sector evolve.

    A government using fiat money has pricing power that it may not understand. Once the government levies a tax, the private sector needs the government's money so it can pay the tax. The conventional understanding that the government must tax so it can get money to spend does not apply to a fiat currency. Because the private sector needs the government's money to meet its tax obligations, the government can literally name its price for the money it spends. In a market economy it is only necessary to define one price and let the market establish the rest. For this example I am proposing to set the price of the supplementary government workers.

    This is not meant to be a complete analysis. It is meant to illustrate the point that there are fiscal options that are not under consideration because of the fear of deficits."
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    Veteran Member Isalexi's Avatar
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    If people are making more money, that means they are spending more money and creating more jobs as well.
    Tell me why someone making $10 million a year would be hurt by paying more in taxes?
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    Quote Originally Posted by Isalexi View Post
    If people are making more money, that means they are spending more money and creating more jobs as well.
    Tell me why someone making $10 million a year would be hurt by paying more in taxes?
    Imagine if that were Warren Buffet. You'd be taking money away from America's premier investor, a person demonstrably good at allocating capital, and handing that money to the government, demonstrably bad at allocating capital. The governments at all levels are already spending $6.75tn, they're not making a good case to be given control over greater portions of our national income.

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    Quote Originally Posted by Neomalthusian View Post
    The problem conservatives have with the proposal below will boil down to the difficulty accepting the fact that the federal debt of a fiat currency nation does not work like any other type of debt.

    The problem liberals have with this has yet to be intelligently articulated, which is why I call them out in the thread title.

    It is an irrefutable fact that the Federal Reserve is explicitly mandated to achieve a dual-goal of price stability and full employment. The tools they are given to promote this are the ability to create money out of nothing and the ability to use this to set a federal funds rate by adding reserves to or draining reserves from the banking system.

    Liberals seem to favor government and its de facto 4th branch (the Fed) creating full employment, rather than letting the private sector determine the level of employment. They also seem to strongly favor government "safety net" expenditures to meet all the needs of the unemployed and needy. Yet at the same time, they favor policies that work against full employment, namely minimum wage hikes and other employer mandates that discourage private sector employment, all based in an apparent belief that the private sector has some inherent social responsibility to promote the general welfare.

    Minimum wage hikes and other mandates upon employers (e.g. PPACA, payroll taxes, etc.) do not promote full employment. They promote unemployment. There is no practical way to force people to buy something, let alone by also forcing them to overpay for it by setting prices.

    If you want full employment and for the needs of the needy to be met, why cling to policies that work against that?

    And to put a sharper point on my question, exactly how do you explain why the following proposal, as articulated by Warren Mosler (the MMT guy), is objectionable to you?

    "There is a very interesting fiscal policy option that is not under consideration, because it may result in a larger budget deficit. The Federal government could offer a job to anyone who applies, at a fixed rate of pay, and let the deficit float. This would result in full employment, by definition. It would also eliminate the need for such legislation as unemployment compensation and a minimum wage.

    This new class of government employees, which could be called supplementary, would function as an automatic stabilizer, the way unemployment currently does. A strong economy with rising labor costs would result in supplementary employees leaving their government jobs, as the private sector lures them with higher wages. (The government must allow this to happen, and not increases wages to compete.) This reduction of government expenditures is a contractionary fiscal bias. If the economy slows, and workers are laid off from the private sector, they will immediately assume supplementary government employment. The resulting increase in government expenditures is an expansionary bias. As long as the government does not change the supplementary wage, it becomes the defining factor for the currency- the price around which free market prices in the private sector evolve.

    A government using fiat money has pricing power that it may not understand. Once the government levies a tax, the private sector needs the government's money so it can pay the tax. The conventional understanding that the government must tax so it can get money to spend does not apply to a fiat currency. Because the private sector needs the government's money to meet its tax obligations, the government can literally name its price for the money it spends. In a market economy it is only necessary to define one price and let the market establish the rest. For this example I am proposing to set the price of the supplementary government workers.

    This is not meant to be a complete analysis. It is meant to illustrate the point that there are fiscal options that are not under consideration because of the fear of deficits."
    So who is this liberal you talk about that is making these assertions?

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    Veteran Member Isalexi's Avatar
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    Quote Originally Posted by publius3 View Post
    Imagine if that were Warren Buffet. You'd be taking money away from America's premier investor, a person demonstrably good at allocating capital, and handing that money to the government, demonstrably bad at allocating capital. The governments at all levels are already spending $6.75tn, they're not making a good case to be given control over greater portions of our national income.
    Warren Buffett is more than willing to pay more in taxes. He and several other billionaires are committed to giving away about 90% of their money.
    Years ago my husband and I paid over 60% in taxes and guess what our lives didn't change one bit, but thank you so much for fighting for me to keep money I do not need

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    Quote Originally Posted by Isalexi View Post
    If people are making more money, that means they are spending more money and creating more jobs as well.
    Tell me why someone making $10 million a year would be hurt by paying more in taxes?
    I will consider addressing this post if you answer the specific question I posed in the OP. Does the idea of full employment appeal to you? If so, why do you favor policies that disincentivize domestic employment, and why do you oppose Mosler's proposal?

    Quote Originally Posted by April15 View Post
    So who is this liberal you talk about that is making these assertions?
    What assertions? Liberals far and wide call for mandates on employers to pay more for labor. To force labor to cost more does not promote full employment, yet liberals seem to favor the idea of full employment, do they not? So either read the OP again and try to answer, or admit that you don't even know what I'm talking about.

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    Quote Originally Posted by Neomalthusian View Post
    Liberals seem to favor government and its de facto 4th branch (the Fed) creating full employment, rather than letting the private sector determine the level of employment.
    The private sector is woefully inadequate for determining the level of employment. The private sector's best interest is to end all employment, because zero employment means zero labor costs.

    They also seem to strongly favor government "safety net" expenditures to meet all the needs of the unemployed and needy. Yet at the same time, they favor policies that work against full employment, namely minimum wage hikes and other employer mandates that discourage private sector employment, all based in an apparent belief that the private sector has some inherent social responsibility to promote the general welfare.
    The private sector does have an inherent social responsibility to promote the general welfare. Everyone has that social responsibility.

    The alternative is called sociopathy.
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    Quote Originally Posted by Neomalthusian View Post
    The problem conservatives have with the proposal below will boil down to the difficulty accepting the fact that the federal debt of a fiat currency nation does not work like any other type of debt.

    The problem liberals have with this has yet to be intelligently articulated, which is why I call them out in the thread title.

    It is an irrefutable fact that the Federal Reserve is explicitly mandated to achieve a dual-goal of price stability and full employment. The tools they are given to promote this are the ability to create money out of nothing and the ability to use this to set a federal funds rate by adding reserves to or draining reserves from the banking system.

    Liberals seem to favor government and its de facto 4th branch (the Fed) creating full employment, rather than letting the private sector determine the level of employment. They also seem to strongly favor government "safety net" expenditures to meet all the needs of the unemployed and needy. Yet at the same time, they favor policies that work against full employment, namely minimum wage hikes and other employer mandates that discourage private sector employment, all based in an apparent belief that the private sector has some inherent social responsibility to promote the general welfare.

    Minimum wage hikes and other mandates upon employers (e.g. PPACA, payroll taxes, etc.) do not promote full employment. They promote unemployment. There is no practical way to force people to buy something, let alone by also forcing them to overpay for it by setting prices.

    If you want full employment and for the needs of the needy to be met, why cling to policies that work against that?

    And to put a sharper point on my question, exactly how do you explain why the following proposal, as articulated by Warren Mosler (the MMT guy), is objectionable to you?

    "There is a very interesting fiscal policy option that is not under consideration, because it may result in a larger budget deficit. The Federal government could offer a job to anyone who applies, at a fixed rate of pay, and let the deficit float. This would result in full employment, by definition. It would also eliminate the need for such legislation as unemployment compensation and a minimum wage.

    This new class of government employees, which could be called supplementary, would function as an automatic stabilizer, the way unemployment currently does. A strong economy with rising labor costs would result in supplementary employees leaving their government jobs, as the private sector lures them with higher wages. (The government must allow this to happen, and not increases wages to compete.) This reduction of government expenditures is a contractionary fiscal bias. If the economy slows, and workers are laid off from the private sector, they will immediately assume supplementary government employment. The resulting increase in government expenditures is an expansionary bias. As long as the government does not change the supplementary wage, it becomes the defining factor for the currency- the price around which free market prices in the private sector evolve.

    A government using fiat money has pricing power that it may not understand. Once the government levies a tax, the private sector needs the government's money so it can pay the tax. The conventional understanding that the government must tax so it can get money to spend does not apply to a fiat currency. Because the private sector needs the government's money to meet its tax obligations, the government can literally name its price for the money it spends. In a market economy it is only necessary to define one price and let the market establish the rest. For this example I am proposing to set the price of the supplementary government workers.

    This is not meant to be a complete analysis. It is meant to illustrate the point that there are fiscal options that are not under consideration because of the fear of deficits."
    Tell us about the recessions and depressions during the 19th and early 20th centuries.
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    Quote Originally Posted by Neomalthusian View Post
    I will consider addressing this post if you answer the specific question I posed in the OP. Does the idea of full employment appeal to you? If so, why do you favor policies that disincentivize domestic employment, and why do you oppose Mosler's

    What assertions? Liberals far and wide call for mandates on employers to pay more for labor. To force labor to cost more does not promote full employment, yet liberals seem to favor the idea of full employment, do they not? So either read the OP again and try to answer, or admit that you don't even know what I'm talking about.
    "Force labor to cost more". What an interesting turn of phrase!

    Fact is, that the cost to labor to provide labor has gone up. When this happens in other parts of the free market, we expect a price increase.

    I guess if we had no minimum wage we might have full employment, but what would the benefit be if workers couldn't provide for them.selves?
    Last edited by labrea; 17th March 2016 at 08:52 PM.
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    Quote Originally Posted by labrea View Post
    .

    Tell us about the recessions and depressions during the 19th and early 20th centuries.
    He'll say that Communism and left wing liberalism was at fault. LOL!!!
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