The new oil and gas production in the United States was supposed to solve the trade deficit problem, and it did decrease the trade deficit by a small amount, but the trade deficit has begun to rise again. Since we are borrowing from foreign public and private sources to pay for the trade deficit, and to pay for the interest of various kinds on money previously borrowed, our debt to foreign lenders is increasing rapidly and is compounded. Borrowing to create new production capacity is one thing. However, when an individual, a business, or a nation borrows in a major way to pay for consumption, and then borrows to pay all the interest on old debt, that leads to bankruptcy, or a finessed equivalent to bankruptcy. The American economy will end up being wrecked if we don't eliminate the trade deficit, and that would be especially difficult for people because becoming poor after having had a good income is worse than being poor from birth. Yet, with this looming in the future, voters aren't pushing the government to solve the problem. One solution would be an international minimum wage equal to the American minimum wage, because that would make American labor competitive. It is doubtful that all nations would get on board a proposal to create an international minimum wage, but there is an alternative. I am calling the alternative option an "international trade minimum wage", and it could be established unilaterally by just the United States. The international trade minimum wage legislation would establish a requirement that any business would have to follow in order to do any business in the United States. A business which didn't meet the international trade minimum wage requirement could not sell products nor services in the United States, nor could it have its products nor services sold in the United States by a third party. The trade minimum wage would be equal to the American minimum wage. The requirement would be that any business, domestic or foreign, would be required to pay its lowest paid employee anywhere in the world the American minimum wage or more. This requirement could not be considered to be a violation of any trade agreements because the requirement would be exactly the same for both domestic and foreign businesses. There is precedent. Nations levy sales taxes on both domestic and imported products. No one would try to demand that a nation could only levy sales taxes on domestic products, while allowing imports to be sold without the sales tax. The obvious counterargument would be that that would make imported products more expensive. However, American wages would adjust so that it would do no harm to the standard of living of Americans. The historical data is that in the most recent years when the American economy was self-sufficient, Americans had a somewhat higher standard of living than we do now. So even if we didn't have cheap imports, we could still have a high standard of living. Note also that the cheap imports aren't really as inexpensive as we think they are. The reason is that the economy has borrowed money from foreign lenders to pay for the cheap imports. We are all part of the American economy, so what happens to the American economy in the long run happens to us. What is happening is that, after we pay for an imported product at a store, we still owe money on it as part of the American economy, because the economy has borrowed from foreign lenders. Furthermore, we have to pay interest on the loan as part of the American economy. That means that we will have a lower standard of living in the future. So the imports we buy aren't really as inexpensive as it looks from just the store price. If on the other hand, we were to buy somewhat more expensive American made products, that money would go directly to our businesses, which would then be able to hire more people, and pay them higher wages. The higher future wages would make it possible for people to buy just as many American made products as the imports they could buy when they had a lower income. To avoid disruptions, an international minimum wage would need to be phased in somewhat gradually. Probably it would be adequate if the trade minimum wage would be 20% of the American minimum wage the first year, 40% of the American minimum wage the second year, 60% of the American minimum wage the third year, 80% of the American minimum wage the fourth year, and 100% of the American minimum wage for all future years. This would not harm other nations, but would rather help other nations, so once they understand that, they would have no grounds to protest the international trade minimum wage. What would happen is that as their wages were increased due to the trade minimum wage, they would be able to buy more goods and services in their own nations, and that would cause new and additional economic growth of their own nations. It could work out for trade also. With a higher standard of living in foreign nations, they could buy more American made products,which would make it possible for us to buy more imports again. What is important is for America to not have a trade deficit so we don't make the debt to foreign lenders worse. But we could have higher trade all around if we had a balance of trade so that we didn't have a deficit.
The cost of living is different in all areas of the USA and the world...any concept of a minimum wage cannot be 'one-size-fits-all'. Even in the USA the minimum wage varies from state-to-state and city-to-city...because...different cost of living indexes. Not to mention that it would be impossible to have the world's nations find consensus in such an idea!
In the long run, the cost of living will adjust itself to the level of wages. For example, housing prices will fall if most people cannot afford higher priced housing. Therefore, cost of living is not a relevant variable. One size fits all is necessary because it is the only way to stop a race to the bottom of wages as corporations move production from higher wage nations, and states, to lower wage nations and states. This applies to middle class jobs also. Notice that many engineering and computer programming jobs have been exported to low wage nations, precisely because their wages are lower. Further, the race to the bottom in wages doesn't help the corporations and the wealthy because as wages drop, people won't be able to buy as many goods and services as before, so corporations will shrink, drying up the wealth of the wealthy. You last point could only have been made if you didn't actually read the message all the way through. If you weren't interested, that is of course OK. However, I will note that the international trade minimum wage wouldn't require a consensus of all nations, although all nations would benefit from it. The trade minimum wage could be established by the United States alone. The reason is that the mechanism for enforcing the trade minimum wage is permission to do business in the United States, such as permission to have a business's products sold in the United States, either directly or indirectly, the right to borrow or lend money in America, and so forth. Corporations which didn't want to pay all their employees the America minimum wage or more could opt out of doing business in the United States. However, most probably wouldn't because a quarter of the Gross World Product is the American Gross National Product, so the American market is too large to opt out of if business owners are rational and intelligent. We wouldn't need any businesses which paid lower wages, because American wages would be competitive with the wages in any foreign business which would ve allowed to deo business in the United States. For our wage levels, it would be the same as if all other nations adopted the American minimum wage, because we simply wouldn't be dealing with any businesses which did not meet the requirement. In addition, the trade minimum wage would be beneficial to businesses because rising wages would increase sales, and therefore increase profits. At the moment, even if a business owner understands that raising wages will cause business expansion, while falling wages will cause businesses to shrink, that knowledgeable owner still doesn't dare increase wages on his or her own. Why? The reason is that if one or a few businesses raise wages voluntarily, then other businesses which do not raise wages will gain a competitive edge. So business owners in the know are unable to raise wages voluntarily, no matter how beneficial to businesses increasing everyone's wage would be. Business would gain a tremendous benefit from increasing wages, but the only way it can be done is for all businesses to be forced by law to raise wages together.
The cost of living is always a relevant factor. In many cases jobs go offshore for the cost savings...equally jobs go offshore because we don't have the resources in the USA. You cannot mandate a minimum wage to all the world based on USA metrics?! Permission to do business? It is essential to have our current imports...if not then you can close the doors on just about every retail business...Walmart, Kmart, Target, Ace Hardware, Macy's, Sear's, on and on and on! Businesses do not care about wages! Business only cares about cost being less than income to sustain and grow profits. If this requires labor cost adjustments then so be it but there's no business model or conspiracy other than sound business decisions based on fundamental metrics. Sorry but your idea is way out in left field and not practical...
OldManOnFire:::The cost of living is always a relevant factor. In many cases jobs go offshore for the cost savings...equally jobs go offshore because we don't have the resources in the USA. Protowisdom:::Yes, jobs go offshore for labor cost savings, but that is slowly destroying the American economy. The basic point of the trade minimum wage is that it would increase offshore costs so that American workers would become competitive. Resources can of course always be imported if necessary. OldManOnFire:::You cannot mandate a minimum wage to all the world based on USA metrics?! Protowisdom:::One can because an increase in the income of employees in other nations will change their nations to something equivalent to the American metric. Increasing income produces economic growth, because then the people with increased incomes buy more goods and services from businesses, which males it possible for businesses to expand. Consider that if there is no additional market for the goods and services a business makes, it isn't possible for the business to expand for there will be no additional customers out there. There are now a lot of factories set up in foreign nations. They would continue to produce, but the wages they pay their employees would be gradually increased over five years, under the proposal. I think we still have that much of a grace period. As their wages increased, they would be able to buy the products now being imported into America, while America would build new factories in the United States which would give good wages to everyone. Essentially, the Gross World Product which is now about 60 trillion dollars per year would grow, some of that new money going to people in other nations, and part going to people in the United States. OldManOnFire::ermission to do business? It is essential to have our current imports...if not then you can close the doors on just about every retail business...Walmart, Kmart, Target, Ace Hardware, Macy's, Sear's, on and on and on! Protowisdom:::Those retailers could just as easily sell goods made in America. About fifty years ago, retailers did just that, and it worked well. It is not essential to have our current imports because we could make those items ourselves. We did it 50 years ago quite successfully, and we could do it now. OldManOnFire:::Businesses do not care about wages! Business only cares about cost being less than income to sustain and grow profits. Protowisdom:::Businesses also don't care about the health of the American economy. They are a little like the owner of a walnut orchard. The owner decides to cut all the walnut trees down in order to sell the wood and make some quick money. But the owner then doesn't have any more walnuts to sell in future years because he or she cut down and sold the trees. Businesses cannot continue to exist or do well, depending, if the economy is not healthy. OldManOnFire::: If this requires labor cost adjustments then so be it but there's no business model or conspiracy other than sound business decisions based on fundamental metrics. Protowisdom:::By "labor cost adjustments", you mean reducing wages to a level about equal to a third world nation like India, Haiti, etc. The problem is that if the labor costs adjustments are done, it will wreck the American economy because employees will no longer be able to buy the products produced by the corporations and sold by the stores. And if labor costs in other nations are kept down, American businesses won't have markets there either. With negative economies of scale coming in, a large percentage of American corporations will then go bankrupt and the rest will shrink. Pity the poor sap who owns stock. Of course, when the United States becomes a third world nation like Bangladesh, we will no longer be a world power. We won't even be a second rate power. We will instead be a third rate power. That is what those labor cost adjustments will do to the United States. Of course there is no conspiracy. If business owners are too out of touch with reality to know that they have to have customers to survive, then they are certainly not able to conspire effectively. However, they don't have to conspire to wreck themselves and others. Most of them just want the wages of their employees reduced, and that common desire just naturally is wrecking the economy. OldManOnFire:::Sorry but your idea is way out in left field and not practical... Protowisdom::: The idea isn't left field at all because it would save American businesses. I'm not talking about the government taking over the businesses, which is the socialist policy. My idea would SAVE American businesses. What is really not practical is business as usual, including labor cost adjustments. What could possibly be practical about America becoming a third world nation like Bangladesh?
This is a really really really horrible idea. Firstly protectionism is pretty horrible always and everywhere due to creation of deadweight losses and making the economy more inefficient. Secondly, this would have a terrible horrible effect on the third world. Their labor costs have to be lower because their productivity is much lower. By attempting to set a huge increase in the labor costs would remove the capacity for their advantage through being cheaper and destroy their international competitiveness. Mandating other countries to pay US minimum would not increase their standard of living it would simply create mass unemployment. This suggestion has a complete lack of understanding of any kind of economics.
It's not making other countries in total to pay the minimum wags. It's a requirement that businesses which export to the United States pay at least the American minimum wage. Businesses which export to the United States have a special advantage so they could. You are forgetting that a raise in the minimum wage for some people in a nation would spur economic growth, because those people could buy more goods and services in their nations. This is only partial protectionism, altered to help both sides. The idea that protectionism is automatically bad is a scam idea perpetrated by the corporations, because they are making money via imports. However, the fact that this is causing such a large trade deficit means that it is slowly destroying the American economy. Many other nations the last 50 years have had their economies wrecked once their foreign debt reaches a certain level at which nobody is willing to lend them money to keep on covering the interest costs. This happens to many individual Americans too. They borrow and borrow, including borrowing to pay the interest, and eventually they owe so much that they go bankrupt. What we are doing is borrowing about 600 billion dollars per year, sometimes more, sometimes a bit less, from foreign lenders to pay for the trade deficit. Then. we borrow to pay the interest on our past borrowing, so our debt to foreign lenders increases at a compound rate. We already owe many trillions of dollars. Once a nation is getting into trouble, lenders charge higher interest rates on loans to pay interest. Let us say that this might happen to the United States when our debt will have grown to 15 trillion dollars, the amount of our total Gross Domestic Product. At that point, foreign lenders would be charging 20% interest or more. At the 20% rate, the United States would have a bill for 3 trillion dollars in interest. So the lenders demand payment. Very quickly, our interest costs rise to 6 trillion dollars per year, and keep on skyrocketing. Once this goes on long enough, the American economy will collapse to a third world level, at which it will be even harder to pay the 6 trillion dollars or more in interest. Perhaps foreign lenders would allow us to repay with all our assets, all our houses, all our businesses, so many of our food crops that millions of American's would starve to death. Or we might decide to simply not pay. In that case, we would be out of the world economy. Nobody would export anything to us. If we tried to sell something to other nations, the payments would be seized before they reached America, to pay the foreign lenders. So business as usual will take us to disaster. There is one good thing that it would do. For future centuries, America would be a bad example warning other nations of what not to do. The horrible nightmare is that this will probably happen because most people are saying that nothing is wrong, To say something trite, most Americans are hiding their heads in the sand. I really have very little hope. I just keep on going because there is perhaps one chance in a thousand that the warning will go viral and people will pay attention. But it probably won't. All I can say is "Oh, you poor people".
I'm sorry, I'm not going to try to respond to that post, it's just irrational. Raising the minimum wage in other nations wouldn't spur economic growth, you can't just declare everyone should get higher income and expect real benefits from this. Take an econ course. No. US bond rates will not reach 20%. Take an econ course. You have a fundamental misunderstanding of the difference between trade deficit and budget deficit and a fundamental misunderstanding of how much of the budget deficit is borrowed from other countries (very little right now) Protectionism and trade rules like this are very bad ideas and completely unworkable. I'm sorry but this is just nonsense.
sacredfool:::Raising the minimum wage in other nations wouldn't spur economic growth, you can't just declare everyone should get higher income and expect real benefits from this. Take an econ course. Protowisdom:::If you are talking about raising the minimum wage for everyone in a foreign nation, not just in businesses exporting to the United States as in my proposal, then the economic growth depends on how fast the minimum wage is increased. Remember that raising the minimum wage causes economic growth because people have extra money with which to buy goods and services from businesses, and when businesses can sell more goods and services, they grow. I was talking about this 15 years ago on message boards, and now many economists are beginning to say the same thing now. Probably, however, that doesn't mean my idea spread. It probably means that the economists thought up the same idea because the causal relationship is correct. Now, if the minimum wage is raised faster than production can be increased, that causes inflation. If the minimum wage is raised too little, the economy doesn't grow as fast as it should. The trick is to raise the minimum wage exactly as much as production can be increased, or very close. In that way, as people's incomes go up, more goods and services are produced to match their increased earnings. sacredfool:::No. US bond rates will not reach 20%. Take an econ course. Protowisdom::: In reality, the past doesn't always predict the future. It all depends. American bond rates have been reasonable because the United States has had a top credit rating. However, if the debt to foreign lenders becomes too high, the American credit rating will fall, and as the credit rating falls, bond yields will have to be increased or nobody will buy them. The twenty percent I mentioned has happened to other nations when their debt has risen too high. Of course, the rising interest rates they must pay make the situation even worse. Remember that the former USSR fell because her foreign debt reached too high a level. The lenders foreign to the USSR then demanded that the USSR adopt a free enterprise system as the price of the lenders continuing to lend the USSR money to pay the interest on her debts. Recently, we have seen this happen to Greece and some other nations. Extremely high interest when credit ratings collapse is something that has happened again and again. We can expect the same thing to happen to the United States if we let our debt to foreign lenders rise too high, and therefore, get reduced to junk bond standing with a crashed credit rating. The only way we can prevent this is to halt the increase in our debt to foreign lenders. There may be some confusion in some people's minds about borrowing money. Borrowing to expand a business, borrowing to invest, works if there is good management and a bit of luck. Borrowing to consume tends to lead to disaster. Once something has been consumed, one has nothing left, but still has the debt. sacredfool:::You have a fundamental misunderstanding of the difference between trade deficit and budget deficit and a fundamental misunderstanding of how much of the budget deficit is borrowed from other countries (very little right now) Protowisdom::: Actually not, but that point hasn't come up in the discussion so far. There can be a trade deficit with no budget deficit. As you correctly say, they aren't particularly related to one another. Also, the national debt is a different slice than the debt to foreign lenders. We borrow from foreign lenders in many ways other than direct government bonds which increase the national debt. The debt to foreign lenders and the national debt overlap to some extent, but in other ways, they are two different things. Debt to foreign lenders can include money borrowed by private companies from foreign banks to finance imports. It can include the purchase by foreign lenders of real estate, because the rents go out of the country. It can include the purchase by foreign buyers of American stocks, because the dividends go out of the country. It can include the purchase of mortgage bundles by foreign lenders. Any money which comes from foreign sources which leads to money going out of the country as interest or interest equivalent, is part of the debt to foreign lenders. sacredfool::rotectionism and trade rules like this are very bad ideas and completely unworkable. I'm sorry but this is just nonsense. Protowisdom::: I do approve of free trade IF THE TRADE IS IN BALANCE. However it isn't true that protectionism is unworkable. Fifty years ago, we were very protectionist with many tariffs, and American employees had a higher wage in real dollars than they do now. So the movement away from protectionism has actually made things worse. Then, over past centuries, protectionism has often worked quite will for a nation. Protectionism has worked again and again in history. But there are advantages to free trade if it is done right. My concern is that it be done right.
Just a quick note, as I forgot to say at the end of my last post. I'm sure you think you understand stuff and you think this is a great idea but it's just so ridiculous and you are so far from reality with what you are saying that it is completely pointless attempting to debate you, so I'm going to stop.
It's a myth that companies go overseas because labor is cheaper. Labor is cheaper in other countries because it is less productive. That's a zero sum gain. What is cheaper is all the costs imposed by the government on businesses in the US. If a worker is nominally paid $20 an hour, he really only gets $12 or $13 after all taxes, and the real cost is more like $25 when you add in the employer's SS and other costs imposed by regulation. It's government that makes us poor. Looking to the government to make us wealthier is like an abused wife turning to her husband for protection.
Your idea IMO will not fly...I will never accept policy which increases costs, causes inflation, and meddles with the private sector...
Applying wage standards to international trade is one of the planks of the Green Party. That people generally do not support the Green Party or its ideas should be a clue as to how impractical and insane the idea is.
That is certainly what people are being told. But just because the media owned by corporations is saying that doesn't make it true. If taxes are spent in a proper way, they produce an expansion of the economy. If they are spent in an unwise way, they don't. I do think that there are areas in which government could spend money more more efficiently, but there are other areas where the government already does quite well. We should be researching the question of how to spend tax money which produces the maximum possible economic growth. A general point is that when government spends money, the money comes back and increases the sales of the businesses which pay it. Therefore, the tax money from businesses is used in ways that help the businesses themselves grow, because in increases their sales. An increase in sales also produces economies of scale, so he cost of each unit the business sells becomes less to them, and their profit increases. The taxes are not lost, like a chicken dinner one eats and then it is gone. The taxes actually come back to the businesses via increases sales and economies of scale.
I don't think that most people know what the platform of the Green Party is. The news media certainly doesn't educate the public on this. Therefore, if people don't know what the Green Party platform is, whether or not they support the Green Party doesn't mean anything about the ideas involved. For the most part, people believe in a two party system, so they don't give very much support to any minority party. The public, for example, doesn't support the Libertarian Party either. I really do think that private businesses will wreck the American economy if they continue exactly as they are. However, I think that with some minor modifications, this problem could be corrected, so that private businesses would no longer be wrecking the economy. From another perspective, I think we should keep the good parts of private businesses, and reform the bad parts.
For the most part, increased costs come back to the private sector in the form of increased sales, and due to the economies of scale, a bit more comes back to the businesses than they paid out. That will not be very efficient however if some businesses have to have increased costs while other businesses do not. The increased costs need to be the same for all businesses. In terms of meddling with the private sector, the private sector has already done massive damage.The private sector is like a group of children going around destroying everything in a house where they are having a party. But the children still have potential to do much that is constructive. The private sector has done grave damage to the American economy by exporting so many jobs to other nations that we have a huge trade deficit. It wasn't the government which exported the jobs. It was the private sector which did it. We pay for the trade deficit by borrowing from foreign lenders, and then borrow again from foreign lenders to pay the interest (of various kinds) on the loans (and loan equivalents). Other nations have done the same thing in the past and their economies as a consequence have collapsed. Many individuals have borrowed to pay for consumption, and then borrowed again to pay the interest on past loans. They have gone bankrupt fairly quickly. So the private sector is doing the exact thing that in the past has led to bankruptcies and collapsed economies. Then, the private sector did something even worse which caused the recent really serious downturn. The private sector invented something called a credit default swap. The public is encouraged not to try to think about credit default swaps, because the private sector hasn't wanted the public to know what they do. Essentially, a credit default swap is investment insurance plus more. The more is that anyone can take out a credit default swap on an investment they don't own. It is like what would happen if all the neighbors could take out fire insurance on one's home, and then hire someone to set one's home on fire. The insurance company would be paying dozens of people the value of one's house. Then, people started taking out credit default swaps on mortgage bundles Now we come to the final part of the scam by the private sector. Banks began issuing mortgage bundles guaranteed to fail. The banks then told important customers, friends, and relatives which mortgage bundles were guaranteed to fail. In that way, a number of people had credit default swaps on the same mortgage bundles guaranteed to fail. For awhile, people made a lot of money from the credit default swaps on mortgage bundles guaranteed to fail. Some people made on the order of a billion dollars in a short period of time. However, soon, the companies issuing the credit default swaps couldn't pay the flood of claims. AIG was an example, and over a hundred billion dollars was needed to bail it out. AIG owns a large number of insurance companies so if it had gone into bankruptcy, most people would have just lost their annuity pensions, most people would have lost life insurance, fire insurance, and so forth. It was also noticed that the total number of credit default swaps outstanding were a number of times more than the economies of all the world's nations together. That put the economies of nations all over the world into free fall. Bush and Obama bailed us all out, at quite a price, by buying bad mortgages out of the mortgage bundles guaranteed to fail, so that they didn't fail after all. That no doubt disappointed the holders of the outstanding credit default swaps that they thought were sure thing investments. However, those investors themselves would have been worse off if the world economy had collapsed completely. So that is what the private sector did. The private sector has proven that it can't be trusted with operating without some supervision to make sure that wealthy people and businesses don't commit crimes. If we don't meddle with the private sector, the private sector will destroy us all. The question is that of how to meddle in a wise way, so the private sector is kept from committing crimes, but is still free enough to be efficient.
Wrong. The corporate owned media says what you say: that government spending can grow the economy. "Stimulus" spending is talked about all the time and because of the corporate owned media, that nonsense has widespread traction. False. Governments cannot spend taxes money in a "proper way." They have no profit and loss statements to tell them how to spend money. Also, they are people. People do not magically become altruistic robots when they become government officials. They spend the money to benefit themselves, to ensure re-election, to benefit their supporters and to increase their power. People in the government are just as evil and greedy as people in the private sector. The difference is, people in the private sector have to offer you something of value to get your money, whereas the government can just take it by force. False. The magical multiplier effect does not exist. You aren't seeing the other side of the coin--where does that money come from? You talk about the magical positive effects of government spending, but those are more than offset by the negative effects of taking that money out of the economy in the first place. If you tax the people's money away, that's money that isn't spent or invested. What you're talking about is taking money out of your left pocket and putting in your right pocket and calling yourself richer. It's just silly and obviously so.
Sorry...but I have no use for the US minimum wage much less an international minimum wage... - - - Updated - - - Sorry...but I have no use for the US minimum wage much less an international minimum wage...
Old Protowisdom:::That is certainly what people are being told. But just because the media owned by corporations is saying that doesn't make it true. Liberty_One:::Wrong. The corporate owned media says what you say: that government spending can grow the economy. "Stimulus" spending is talked about all the time and because of the corporate owned media, that nonsense has widespread traction. Protowisdom::: One can't just hold that the media says something, and that means it is promoting that something it is reporting. The media reports news with words which have connotations. When the media quotes someone saying that government spending will increase growth, the media reports that with negative connotations. When the media reports someone saying that government spending doesn't promote growth, the media reports that with positive connotations. The media also selects party candidates for the presidency that way. It reports things about the candidates the media likes with positive connotations and things about candidates they don't want with negative connotations. Of course, almost nobody looks at the connotations of the words that the media use, so this doesn't enter into the analysis that most people make of the news. Old Protowisdom:::If taxes are spent in a proper way, they produce an expansion of the economy. Liberty_One:::False. Governments cannot spend taxes money in a "proper way." They have no profit and loss statements to tell them how to spend money. Also, they are people. People do not magically become altruistic robots when they become government officials. They spend the money to benefit themselves, to ensure re-election, to benefit their supporters and to increase their power. People in the government are just as evil and greedy as people in the private sector. The difference is, people in the private sector have to offer you something of value to get your money, whereas the government can just take it by force. Protowisdom:::Government spending isn't that arbitrary. Effects on the economy are regularly and frequently being calculated by experts using the best computer models available. Congresspersons and the President don't just decide to spend so much money here and so much there. One can argue how accurate a computer model is, of course, and there is too little public discussion of how accurate the current computer models are. The private sector avoids giving good value by all the businesses manufacturing about the same quality and charging about the same prices. For example, there is something that used to be called planned obsolescence. Items are manufactured to last only about as long as the warranty, or a bit longer. This was at one time not the case, and things lasted much longer then. The private sector gives the customer no choice, because better items are not made available. The private sector seems to force people more than the government does. For example, people receiving social security have the right to spend the money any way they want. The private sector, in contrast, gives people limited options. Look at clothing, for example. At one time, dyes were colorfast, and for a period, were advertised as such. Now, dyes are being used which are not colorfast, and there is no advertising warning the customer of that. Clothing used to fade very slowly. Now clothing fades quickly. Clothing used to remain all the same color. Now, very quickly, white spots develop in clothing. This is forced on customers by the private sector not providing better options and/or keeping better options secret from customers. Old Protowisdom:::A general point is that when government spends money, the money comes back and increases the sales of the businesses which pay it. Therefore, the tax money from businesses is used in ways that help the businesses themselves grow, because in increases their sales. An increase in sales also produces economies of scale, so he cost of each unit the business sells becomes less to them, and their profit increases. Liberty_One:::False. The magical multiplier effect does not exist. You aren't seeing the other side of the coin--where does that money come from? You talk about the magical positive effects of government spending, but those are more than offset by the negative effects of taking that money out of the economy in the first place. If you tax the people's money away, that's money that isn't spent or invested. What you're talking about is taking money out of your left pocket and putting in your right pocket and calling yourself richer. It's just silly and obviously so. Protowisdom:::Your point assumes that money is a kind of absolute which it really isn't. Many people also think that money is an absolute, which means that the educational system isn't doing a good job. For example, economists make use of measures of the velocity of money. That is to say, if the same amount of money circulates slowly, the velocity of money is slow, while if that same amount of money circulates quickly, the velocity of money is fast. When the velocity of money is fast, the same amount of money produces a larger economy. If the velocity of money is increased, then there is economic growth. An increase in the amount of money also produces economic growth, so the situation is complex. In addition, too much of an increase in the amount of money produces rising inflation, which has other effects which are negative. Thus, the situation is even more complex. That is one reason economists develop computer models, to handle the complexity. Most government programs produce a higher velocity of money, so the negative effects of taxes don't have a negative effect on the economy. Since the velocity of money is increased, the people who pay taxes end up with extra income which compensates for the tax increase. Conversely, if taxes are cut, that slows the velocity of money, so the people who received the tax cuts end up with a lower income. Again, many complexities have to be added to this. It would be more effective politically to try to analyze whether or not government programs increase the velocity of money, and so forth, as efficiently as is possible, or there would be ways that the efficiency of government programs could be improved. - - - Updated - - - Why do you have no use for the minimum wage?
