More to come on minimum wage…but let’s start here on a rainy Sunday:
29 thoughts on “Robert Reich on Job Creators and the Minimum Wage”
Comments are closed.
More to come on minimum wage…but let’s start here on a rainy Sunday:
Comments are closed.
Ed, thanks.
Reich’s lecture is “capitalism 101.”
“…Demand leakages are unspent income. For a given currency, if any agent doesn’t spend his income, some other agent has to spend more than his income, or that much output doesn’t get sold. So if the non government sectors collectively don’t spend all of their income, it’s up to government to make sure its income is less than its spending, or that much output doesn’t get sold. This translates into what’s commonly called the ‘output gap,’ which is largely a sanitized way of saying unemployment….”
http://www.huffingtonpost.com/warren-mosler/demand-leakages-the-800lb_b_1646916.html
Lost output since 2008
http://www.lostoutputclock.com/
If money in the pocket is the driver of wealth, why not give everyone in the USA $10 million or whatever is deemed the exact amount necessary to grow the economy? The government prints the money. I wonder if any country has ever successfully printed its way to wealth.
ROTFLMAO
“Driver of wealth,” is a concept in discussions about economics? There are the owners of wealth, producers/creators of wealth and distribution of wealth, different definitions of wealth, but somebody is, “driving,” it? How’s that work aside from money in a Brinks truck transported between banks?
The resident troll cannot even begin a comment that first, has anything to do with the topic, second, is even an economic concept. Follows with an appeal to the absurd and ridiculous ($10M gift to everyone) as the basis for beginning a meaningless argument, only to finish up with an unequivocal non sequitur.
Perfect record still unblemished by even one fact or anything of value to offer to the discussion.
ROTFLMAO
“Driver of wealth,” is a concept in discussions about economics? There are the owners of wealth, producers/creators of wealth and distribution of wealth, different definitions of wealth, but somebody is, “driving,” it? How’s that work aside from money in a Brinks truck transported between banks?
The resident troll cannot even begin a comment that first, has anything to do with the topic, second, is even an economic concept. Follows with an appeal to the absurd and ridiculous ($10M gift to everyone) as the basis for beginning a meaningless argument, only to finish up with an unequivocal non sequitur.
Continuing your perfect record still unblemished by even one fact or anything of value to offer to any discussion.
Worth repeating, going to drive my wealth over to the grocery store to trade for the fixin’s for three day’s worth of brown bag lunches.
I see that you have focused on the word “driver” to avoid a substantive conversation on the topic. RR has stated repeatedly in the clip that money in the pocket of consumers is what creates, drives, initiates, causes, is the impetus for, you choose non,… wealth. if that is the case, why not just give boatloads of money to everyone? Or just take the easy way out and find a grammatical error above and harp on that for a while.
Denis,
If you give every person in the U.S. (children too), $10,000,000, how are you going to get anyone to work?
You just pushed the wage scale deep into infinity.
Do you support Sen. Johnson’s Guest Worker program?
http://www.kttc.com/story/27420940/2014/11/18/senator-ron-johnson-proposing-guest-worker-program-for-immigrants
I strongly recommend this very accessible 48 minute video from Stephanie Kelton, Ph.D. “Fiscal Space and Financial Stability: A Differential Analysis”
http://www.fields.utoronto.ca/video-archive/2013/11/221-2524
The slides are excellent.
What has to balance are the three economic sectors, private (domestic), foreign, and public. Of those three, only the (federal) public sector (country issues its own currency (US, Japan, Great Britain..), that’s why Europe and Greece are in such trouble. Since they’re on the Euro, individual countries cannot issue their own currency). If the private sector and the foreign sector are broke, (federal) the public sector has to spend.
A factor that you failed to mention is that the U.S. is currently the world’s reserve currency. How do you see that impacting your $10 million to every American plan?
In addition to a $15/hour minimum wage, a federal job guarantee and a negative income tax (basic income guarantee of (for example) $1,000/month to every ADULT U.S. citizen are ideas that imho deserve serious attention).
I’d also like to see Warren Mosler’s plan for health care adopted. Get rid of the employer and individual mandates.
“If you give every person in the U.S. (children too), $10,000,000, how are you going to get anyone to work?”
Good question John, but you are asking the wrong person. We should be asking RR. Maybe he would have a good answer, I don’t know. But if we, like RR, elevate the importance of consumers and their spending, then we should I think consider giving them money to spend in order to drive (sorry non) economic growth.
But I think you pose a good question if we pursue RR’s words to their logical conclusion. Giving people money that they didn’t earn can seriously impair someone’s desire to work. And this of course will harm worker productivity and that would drag down the economy rather than spur growth. Likewise when we take too much from productive people in the form of taxes and redistribute it to others. That too hurts economic growth.
Denis, please provide the time stamp where Reich said that we should give everyone $10,000,000.
No one has gotten more welfare than Wall Street CEO’s. I haven’t heard of any of them quitting. Do you have a link?
Federal investment in health care, education, and infrastructure makes sense. It’s a way to fairly distribute productivity improvements.
I never said that he said that John. I am inferring it from his other statements. And not $10 million necessarily, that was just a random #. But if you agree with RR, I think a fair follow up question is: If money in the pocket is so important, why doesn’t the government put money in people’s pockets? Your suggestion to invest in health care etc… puts money in some pockets but is somewhat indirect. Wouldn’t direct cash transfers be better? And wouldn’t more be better than less to grow the economy?
Denis,
This is Warren Mosler’s proposal for health care:
“…As a matter of economics and public purpose it is counter productive for health care to be a marginal cost of production.
No economist will disagree with this. Unless going to work makes one more prone to needing health care, making the cost
a marginal cost of production distorts the price structure and results in sub optimal outcomes.
Long term vision subject to revised details:
Everyone gets a ‘medical debit card’ with perhaps $5000 in it to be used for qualifying medical expenses (including dental) for the year.
Expenses beyond that are covered by catastrophic insurance.
At the end of the year, the debit card holder gets a check for the unused balance on the card, up to $4,000, with the $1,000 to be spent on preventative measures not refundable.
The next year, the cards are renewed for an additional $5,000.
Advantages:
Doctor/patient time doubled as doctor/insurance company time is eliminated.
The doctor must discuss the diagnosis and options regarding drugs, treatments, and costs with the patient rather than an insurance company.
Individuals have a strong incentive to keep costs down.
Doubling the time doctors have available for patients increases capacity and service without increasing real costs.
Total nominal cost of approx. $1.5 trillion ($5,000×300 million people) is about 10% of GDP which is less than being spent today, so even when catastrophic costs are added the numbers are not financially disruptive and can easily be modified.
Eliminates medical costs from businesses, removing price distortions and medical legacy costs.
May obviate the need for Medicare and other current programs.
Eliminates issues regarding receivables and bad debt for hospitals and doctors.
Eliminates the majority of administrative costs for the nation as a whole for the current system.
Patients can ‘shop’ for medical services and prices as desired.
http://moslereconomics.com/2009/03/02/mosler-health-care-proposal/
Not only would this be a boon to health care providers: physicians, hospitals, nurses, allied health professionals, Big Pharma, and medical device makers, it would be free up Americans to spend on other stuff.
John , are you endorsing this as an alternative to Obamacare? At the risk of actually agreeing with you, there is a lot that I like in the proposal, particularly the medical debit card. It creates incentives for people to spend their money wisely and take better care of themselves. Not altogether different than the Health Savings Account that has since been made illegal by the president who falsely promised that I could keep my health care plan.
Denis,
Yes, I strongly support Mosler’s plan.
I hate the mandates in Obamacare. Jane Hamsher at Firedoglake accurately predicted that the individual mandate was un-Constitutional. Doesn’t matter what Justice Roberts said, the government can’t force Americans to buy something. Blue Cross/Well Point/Cigna and the rest of the health insurance oligopoly wrote Obamacare. It allowed them to conscript the IRS as their sales force and compel Americans to buy their LOUSY coverage.
In the polling I think Obama and the Dems have gotten credit for being more open to universal coverage, something I strongly support.
I’ve called Sen. Ron Johnson’s office about this and got nowhere, similar story with Sen. Baldwin. Perhaps you’ll have more luck.
Wow, who knew pigs actually do fly! I especially agree with the un-constitutionality of forced private sector purchases. I don’t support universal coverage, ie government as insurer or worse, health care provider. The medical debit card idea is far more tolerable as it would free individuals to choose their own insurance and or health care while incentivizing thrift and healthy choices. Vouchers, if you will, are far better than fully socialized medicine,
by a long shot.
I understood the clip perfectly and have nothing to argue with RR about there. Other of his ideas, not always so much.
You’ve yet to make any statement or argument, substantive or otherwise, regarding the topic, which is what I just pointed out previously. Nothing there to take, “the easy way out,” of.
You may get another response from me when you indicate you understood anything in my first comment. Otherwise just STFU if all you have is to heap on personal abuse, insinuating cowardice.
Maybe Ed or Zach will take a stab at defending Reich from what objective individuals would regard as a fair question. If money in the pocket of consumers is the primary cause or creator of wealth, and since the US prints its own money, why not just give money ($10 mill was merely an example) to people so that they can spend it, thereby creating demand and therefore economic growth?
Denis,
Defending Reich from what?
You claim not to understand that “capitalism runs on sales.” You claim not to understand the DEMAND side of the Supply/Demand equation.
http://en.wikipedia.org/wiki/Supply_and_demand
What part of that don’t you get?
AFAIK, the primary wealth driver is productivity increases. When humans learned how to use the wheel, it took a lot fewer people to move stuff. That created a lot of unemployment. Those low skilled workers had to learn new skills. But, everyone agreed that society as a whole was helped by the productivity increases from adopting the wheel.
One of the consequences of keeping the minimum wage too low, is that it destroys incentives for businesses to automate. It’s that adoption of automation which rewards higher skilled labor, they make the robots/machines that perform labor saving/mind-numbing tasks. Automation opens up the possibility that the middle class could achieve financial security on a 30-hour work week, or a 20-hour work week. In order for folks to be able to afford to get married, buy a home, have kids, educate them, wages have to go north. In order for that to happen, worker productivity increases have to head north too. It’s in this context that ideas like a federal job guarantee and a negative income tax make a lot of sense.
Look at what wealth transfers did for Wall Street CEO’s and the elites: “Bank Of America Dumps $75 Trillion In Derivatives On U.S. Taxpayers With Federal Approval”
http://seekingalpha.com/article/301260-bank-of-america-dumps-75-trillion-in-derivatives-on-u-s-taxpayers-with-federal-approval
To put $75 trillion in perspective, US GDP in 2012 was around $16.5 trillion. We blew a lot more than the $6 trillion they’re claiming in Iraq and Afghanistan. Social Security’s Trust Fund is around $2.3 trillion. Bank of America is just one Wall Street bank. They all have derivative exposure. I’ve seen estimates of $700 trillion, but I don’t think anyone knows.
If you take the adult population of the US (2012) as at around 162 million, iirc you could send everyone a check for $1,000 each month for less than two trillion dollars. It’s not welfare. Warren Buffett, Bill Gates, all the elites get the same $1,000 check each month that every other adult gets.
“Four Reasons to see the deficit as your surplus”
http://www.forbes.com/sites/johntharvey/2014/02/24/deficit-as-your-surplus/
“If you can have full employment killing Germans …”
http://bilbo.economicoutlook.net/blog/?p=25857
We are getting a bit sidetracked, buy do you really want to increase the minimum wage to increase productivity and to eliminate low skill jobs via technology improvements? What happens to all the unemployed in the lower class?
Nobody is sidetracked except you. Nobody is proposing to increase worker productivity by increasing the minimum wage. Productivity of wealth by labor performing work, long ago outpaced fair and just financial compensation for those laborers, the actual, *productive,* people. Plain and simple fact.
Enough of your asinine, moronic assumptions, presented as claims of fact in the form of even more asinine questions, incessantly repeated. You want slave labor, you’ve said it, we all know that. You want the minimum wage removed, you said that, we already knew that. Nobody else participating here desires those things that you want. Kindly STFU and take your harassment somewhere else.
On the contrary non. JC is proposing productivity increases via the minimum wage. First he noted that the invention of the wheel caused unemployment, but that “everyone agreed that society as a whole was helped by the productivity increases from adopting the wheel.” He went on to say that a low minimum wage “destroys incentives for businesses to automate.” Therefore, increasing the minimum wage will force automation, which in turn “opens up the possibility that the middle class could achieve financial security on a 30-hour work week, or a 20-hour work week.”
So it is JC who is proposing productivity increases via minimum wage increases. If you don’t like that idea, I suggest you take it up with JC, not me.
Innovations like the wheel immediately allowed for more employment to develop, wheel makers, cart makers, farming improvements, hauling to more distant markets, road builders, creating vastly more wealth in a larger economy which was not ever equitably distributed to the laborers actually producing the increased wealth through their work. Not much has changed. Surprise, you are wrong again.
Again to your 6:16 am bullshit. As I said, YOUR asinine questions because you are either ignoring, deliberately misconstruing or are just completely clueless about what JC was describing at 9:20 pm Sunday.
Nothing for me to like or dislike, or to take up with JC, so yet another misplaced jerk-bait presumption and accusation on your part.
Ed,
Reich is wonderful at explaining the problems but refuses to ever touch on mentioning the solutions which would actually do go against his patrons, the 1%, their self-interests, and the several other root causes of the extreme financial disparity that exists.
Might be possible at some point to discuss these things were it not for the royal jerk-bait trolling by every time in the same derailleur gear insisting on argument over non-existent conditions.
Actually non it is possible to infer a solution from the way RR described the problem. RR said the problem was no money in the pockets of consumers. Therefore a possible solution would be putting money in the pockets of consumers via government transfers. Yes we could possibly discuss this stuff if you could get a handle on your knee jerk hostility toward me.
Wrong, nothing knee-jerk about my reaction to repeated intentional harassment as trolling. Accurately and honestly naming harassment for what it is, doesn’t equate to hostility, so wrong there, and wrong yet again, you have repeatedly demonstrated your failure to understand what an actual discussion entails or to ever participate in one, here.
Are we at 19 strikes and you’re out, yet? Mods?
Zach, you seem to be a pretty reasonable guy, political beliefs aside. I suggest reading through the comments here and determining just who is the abusive troll. Non started with a bizarre and irrelevant rant about my use of the word “drive” instead of “create” or “stimulate” or whatever. He twice told me to Shut The Fuck Up, accused me of personal abuse (presenting arguments that he doesn’t like and can’t counter I suppose falls with his rather expansive definition of abuse), called me asinine, moronic, jerk-bait, etc… and then amazingly suggests that I have 19 strikes and should be banned. I think a rebuke of nonquixote is needed here if you intend to fairly enforce decorum on this site. Thank you for your consideration.
A few personal comments and some housekeeping.
I would have stepped in a bit earlier today with a far different comment…except my employer takes a dim view of posting to social media no matter how important I might value it…believe it or not, I don’t do this for a living…grin.
But I do expect all of the commenters here to be civil and I do expect disagreements to break out…and quite frankly that’s a good thing. But you can’t let it get personal or worse make it personal. I am not going to edit comments today. I will let them stand and let the chips fall as they may. And I don’t really want to ask Zach to put all commenters on my posts on moderation. It’s a lot of work and if they have to wait until I have time in the evening, they don’t appear in a timely manner and the conversational value of this whole enterprise gets lost.
SO…please keep a civil tongue in your keyboard. If you think someone is a troll or the wicked witch of the west…just flat out don’t engage him/her. That should take care of it.
And now on to the next bit of housekeeping. I post what I want to post. Zach has no idea what I intend to post and has absolutely no input in what I select to write about. He doesn’t dictate policy here nor tell me to toe a company line. So he isn’t about to defend my posts…and he has commented in opposition when he has disagreed with me. The majority of the time he doesn’t see this stuff until the moment I hit the publish key…the same time the rest of you do. It’s great that he lets me do this…it is even better that he lets me write exactly what I want…and I appreciate the opportunity.
Things are freeing up for me was we enter the fall and winter season and I hope to be able to post more often than I have the past 9 or 10 months. Let’s have some interesting conversations…there’s going to be plenty of stuff to disagree about coming up!
Some other links to my posts on the minimum wage:
http://bloggingblue.com/2014/09/economic-trend-supports-raising-the-minimum-wage/
http://bloggingblue.com/2013/12/minimum-wage-versus-the-cost-of-labor/
http://bloggingblue.com/2014/05/another-point-on-the-true-cost-of-labor/
Perhaps we all could use a refresher on what constitutes trolling/abusive/unacceptable behavior, and I’d encourage you all to read Ed’s comment from 7:40 p.m., because it sums up my feelings on things.
To elaborate just a bit, I fail to understand the need for name-calling and personal insults, because those types of comments aren’t going to foster a good discussion. If any of you can’t figure out how to pull yourselves in line with what I expect, then perhaps you’re better off leaving on your own before I have to start moderating.
Zach, thank you for your response. I don’t think moderation of comments is the answer and I haven’t called for it. Rather I was hoping non would be called out as I have been earlier. Recall that after two incidents that could be fairly described as grammar trolling, I called JC a douchebag. I should not have and you rightly called me out, even saying I was acting like a jerk. I noted to myself that calling someone a jerk is not that much different than calling someone a douchebag, but whatever.
Now fastforward to nons unprovoked aggressive behavior towards me and you suggest that “we all could use a refresher on what constitutes trolling/abusive/unacceptable behavior.” I just wanted to point out the double standard, but hey, its your blog.
Anyway, there is a larger message here, a political one. Recall the heated discussions about the last election results. The fringe on your side needs to be marginalized, but instead they have taken control. Non is symptomatic of the problem. So are the crazies in Ferguson who I am sure, to the extent they vote, are voting Democratic. And let us not forget some of the more outrageous behavior directed towards Scott Walker. Yes both sides have their crazies to some extent but I think those on the left have taken over the party. Regular folks who are just living their lives can and I think are being turned off by some of the more outrageous behavior, including some actions taken by President Obama. In sum, do what you want with non, ignore or align with the extremes, and continue to lose elections. Or distance yourself from the fringe and become a party that regular folks can once again identify with and support.