Economics
From iGeek
Economics isn't just about theoretical impacts to money, though many get caught up in that. It's about social engineering or understanding. You can't argue a policy change (or any change) intelligently if you don't think about the consequences of your actions -- and not just to the people you care about, but all people and the system as a whole. How will people react, how can the solution be gamed, sure you helped a few -- but what happened to the rest (and does the help outweigh the costs). Micro-economics is looking at one system, Macro-economics is looking at how that system impacts all the others.
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 This is of course hotly contested, but it breaks down into two camps: (1) "No" (2) Those who have a clue as to what they're talking about. The problem is (of course) that it doesn't always, and doesn't always immediately impact it. So there's some plausible deniability for the economics deniers out there to find edge cases and say, "see". But as soon as you look deeper than the surface, you find that it does suppress growth, or increase a decline, sometimes ahead of the law and sometimes well behind it but it happens, and it especially hits certain segments and groups of people harder than others (like teens, starting out, part time work, and so on). Let's dive into the evidence.  Ignoring the stupidity that there's one magic "livable wage" that would be equally fair on both sides of the same city, let alone country, the left tries to sell the gullible that setting a salary minimum will set a salary minimum, but it doesn’t. Progressives often see the choice as: (a) A livable minimum wage (b) A lower minimum wage.   Value (Money) is derived from the product of work (productivity/results), not based on what you paid for it. Thus the less you pay, the better off you are. The more you pay, the worse. This is why despite the doomsayers automation is good, and despite what the Social Justice Warriors (also known as economically illiterates) will tell you, minimum wage is not good. Despite the B.S. they're selling, you can't lose more money on every transaction and make it up in volume.  I hear all the time, that McDonald’s can afford to pay a “livable wage” without raising costs, or "it’s just a few cents a burger", by people that don’t understand basic economics, or business. Here’s some notables taken from the average McDonald's balance sheet:
 Poverty (and who makes minimum wage) gets even more complex:
Explain to me how raising minimum wage helps with any of those things? I can explain how fewer teenage jobs means more teenagers doing other things, like getting pregnant. Fewer opportunities for the less educated and immigrants doesn't help them out. And so on. So target the right people, instead of offering blanket subsidies to the wrong ones. Instead of raising the minimum wage, Congress should look at other ways to aid the working poor that actually focus on providing help to those who need it. And that' the first rule of economics: do no harm. If you can't show how you're making something better, and the other side can show how you're not, then you're wrong. Or don't knock down fences without understanding why they're there. |
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To the left, everything is about community organizing and their protests and self-righteous indignation. To the informed, those tantrums usually came late after the cultural tide was shifting and the Jonny-come-lately's did little but try to take credit for the success of others. Like Henry Ford (Capitalism) standardized on the 40 hour work-week, most others had adopted it, and then the Federal Government created a regulation that said we should adopt it for the very few remaining and took credit for something that was already done. Then the leftist media (like NBC) repeats the lie, and the gullible gobble it up. Thanks Unions for riding on the coat tails of others.
 A good example of government helping is what the FCC did for cell phones: it delayed them by 40 years. . In 1945 the Saturday Evening Post was talking about handle-talkies, which could have been done with transistor radios of the time. But while the technology was known for how to do it, as well as business plans and motivation, it took until 1982 for the FCC to allocate the spectrum to do it, and another 7 years (1989) to authorize licensing the service.
    
If you want to know why businesses flee the state, and why the rest of the nation think SF is a city of fascist morons, look no further than the just passed Prop D. This is a vacancy tax that penalizes landlords for the inability to find tenants for their storefronts, after the city has made it harder to find tenants for their storefronts.
  While discussing progressive "solutions" the other day, someone said my problem was that I saw government as a zero sum game. Where every dollar you used to help one person, came from the pocket of someone else, so there could never be a net win for society. I explained that it is much worse than that: when government is involved, because there's overhead, waste, fraud, work rules, politics, and other things that dissolve efficiency, freedom, pride and value, as part of the transaction, it is always a negative-sum (lose-lose) game. That isn't to say there aren't winners, there's just always far more losers: because of how the system works. |
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I'm not arguing government spending never produces anything good. It does. In theory, you can do things like invest billions in infrastructure, and that will benefit the economy in the long term. Hoover dam meant cheap power, and helped enable Vegas and L.A. So a few public works programs, do help, eventually. However, for each Hoover dam, there are a dozen Solyndra's, or government spending disasters. When you average them all in, you get far more weighing down your economy than helps it up, because: politics. So net net? Government spending fails more than it succeeds, and even when it succeeds, it generally succeeds by less than it would have if it was done/managed privately with profit motives -- but there are a few exceptions to the rule.
  
   The Keynesian version is that in recessions/depressions everything has to be perfectly efficient and instantaneous. Since it isn't, they see any lags, overreactions and inefficiencies as opportunities for government to step in and spend (stimulate) to where "things should have been", to smooth out the downturns. Nice theory. FDR tried it in the great depression (believing in his "brain trust"), and the results were extending the depression by a decade, and we have many more examples of the failures of planners to be more effective than the free market. So while it's a great theory, it has never actually worked in the real world. Keynes was a brilliant micro-economist, with delusions of being a macroeconomist, but his religion of collectivism (authoritarianism) got in the way of understanding human nature (how people and thus economies would react) or the nature of governments.  Now there can be intelligent debates on what helps the economy more: spending, cutting, and whether cutting at the top or the bottom helps more. But liars (polemics, fools and the media), will perverts that debate on what helps more, into some fraud that cutting taxes at the top doesn't work at all.  |
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 The idea is:
The problem is no one credible has really offered this as a "theory", because it's not economics, it's politics. And it doesn't explain anything, if you think it through. NOTE: No one doubts there were a few unsavory actors, or that Countrywide wasn't and aggressively selling LIAR/NINJA loans (preying on consumers that couldn't afford to pay them back). They were doing exactly what Fannie/Freddie and the CRA had demanded, and paid them for (by buying all those loans up, and putting them into MBS's in the first place). But these characters weren't the fundamental cause of the crash (all markets cycle), or the credit crunch caused by over-regulation, and it has nothing to do with Glass-Steagall which couldn't have done anything to stop it. So yes, there were over-aggressive players, taking advantage of the Democrat created credit traps -- and they slightly magnified the problem. But had they not existed, the same exact thing would have happened. And those that try to pin THE blame on these guys, are ignorant or dishonest. These were bad actors, but it's like blaming a pickpocket in the back of the plane for 9/11.
The reality is:
The GST theory is great at pointing fingers at who (by scapegoating evil bankers and sub-prime loans), it doesn't tell you the what, why, how like the CRAFFT theory does. Why would they do it (knowing that short term greed would kill the goose that made them rich)? Oh, because they had to by law, now that makes sense. What really happened? Credit markets froze. How did TARP help? By helping banks have enough liquidity (loan them money) to get around the governments own restrictions: it fixed their debt-equity ratios, and that let them loan again. So knowing CRAFFT, explains far more -- knowing GST means you can't explain anything, but you get to hate bankers and wallow in virtue (think more government could have fixed it).   
Most of all, if G-S was the problem, then during the collapse it would have been the unified banks that had the biggest problems (over-leveraged/under-capitalized). It wasn’t. The Unified banks outperformed the Commercial banks (Countrywide) and the Investment Banks went out of business (Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, Bear Stearns). The Unified banks bailed out the others; JP Morgan Chase (Unified) bailed out Bear Stearns (Investment), while B of A (Unified) helped by taking over Merrill Lynch (Investment) and Countrtywide (Commercial). This is backwards from what GST says should have happened! |
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 People on both sides of the dot-com bubble can be wrong at the same time. The Internet IS changing the global economy, and this IS NOT just a "flash-in-the-pan" fad that's going to be gone tomorrow. But the other side is that investors CAN overreact to hype, get way ahead of returns, and that can cause a big pullback. But in the long term, this is the new normal. The Keynesian version is that in recessions/depressions everything has to be perfectly efficient and instantaneous. Since it isn't, they see any lags, overreactions and inefficiencies as opportunities for government to step in and spend (stimulate) to where "things should have been", to smooth out the downturns. Nice theory. FDR tried it in the great depression (believing in his "brain trust"), and the results were extending the depression by a decade, and we have many more examples of the failures of planners to be more effective than the free market. So while it's a great theory, it has never actually worked in the real world. Keynes was a brilliant micro-economist, with delusions of being a macroeconomist, but his religion of collectivism (authoritarianism) got in the way of understanding human nature (how people and thus economies would react) or the nature of governments. Now there can be intelligent debates on what helps the economy more: spending, cutting, and whether cutting at the top or the bottom helps more. But liars (polemics, fools and the media), will perverts that debate on what helps more, into some fraud that cutting taxes at the top doesn't work at all. |
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