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re Jeffrey Sachs... Everybody should read this: http://seekingalpha.com/instablog/436500-charlie-price/59559-why-only-investment-creates-saving-and-why-it-matters This discussion ignores the foreign sector which actually plays a key role in the current situation - BUT the point is that people cannot just choose to save (ex-post savings and ex-ante savings are quite different things). If investment is being limited by high interest rates, then it is possible that increased savings could eventually induce more investment by driving down interest rates - BUT we are not in that sort of situation at the moment. Savings is income that is not spent - and regardless of what model you have of consumption, consumption responds with a lag to changes in income, so that changes in income drive savings in the short run - NOT the other way around.
Toggle Commented 2 days ago on Links for 02-05-16 at Economist's View
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Jeff Sachs talking nonsense as happens far too often. "With higher saving rates, both public and private, invested into productive capital, the United States could overcome secular stagnation. The benefits of new scientific and technological breakthroughs — in genomics, nanotechnology, computation, robotics, renewable energy, and more — are certainly within grasp, but only if we invest in them. It is especially shocking that at a time when we need new clean energy sources, more nutritious foods, better educational strategies, and smarter cities, we have been cutting the share of national income that government devotes to basic and applied sciences." ummm... Has he not noticed that the full employment real interest rate has fallen below zero - and yet he thinks savings rates are the problem?
Toggle Commented 2 days ago on Links for 02-05-16 at Economist's View
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I get the feeling that many people really don't understand basic income (and the author of this piece clearly didn't). A few bullet points 1. Basic income could be introduced gradually as a small "national dividend" paid to every citizen (including children - although the recipient would be the legal guardian on their behalf - and the amount might be smaller). 2. Basic income is unconditional and tax free. 3. As basic income is increased, some other transfer payments would be reduced by the amount of the increase. 4. As basic income is increased some income tax deductions could (should) also be phased out. 5. As basic income is increased some taxes would be increased to pay for it. The most likely taxes to be increased would be environmental taxes and sales taxes (better VAT). The basic income would ensure progressivity of the entire transfer and tax system. (One very good way to start, would be a carbon tax whose entire revenue is distributed as a national dividend). 6. A basic income would eventually reach a level where ALL welfare payments except special subsidies for special needs (which might arguably be better given in kind) could be phased out. 7. A basic income would give people more choice about how and where to live their life. To some uncertain extent it would have a strong regional impact as people would choose to live where they can afford, rather than where they can find work, and jobs would (also to some uncertain extent) follow them. 8. Yes it would mean that people who were not wealthy could afford to live (in some places) without working, but my bet is that very few people would not work. Many more people would have jobs that they enjoy. 9. Without other decisions (such as for instance higher inheritance taxes, higher income tax rates on high incomes, higher subsidies for education etc) it is not obvious that this would have any impact on the distribution of wealth. 10. A basic income would tend to create to a much larger automatic stabiliser effect than is currently the case.
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Anne, what did you want to say?
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What I don't see listed here is FINITE resources. Why?
Toggle Commented 4 days ago on Economics is Changing at Economist's View
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"Monetary policy has also come under scrutiny. In the past, the Taylor rule was praised as responsible for the Great Moderation." A close look at "the Great Moderation" would have shown that the great moderation was not sustainable, because it included secular trends that would eventually cross important boundaries.
Toggle Commented 4 days ago on Economics is Changing at Economist's View
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Another point, I missed above is that wealth should include access to public wealth. If public wealth is privatised user-pays then this is also a redistribution of wealth.
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P.P.S. And top-up schemes do nothing about lack of bargaining power (in fact they do the opposite).
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P.S. Basic income (not guaranteed minimum income yuk) also rewards those who work (even those who work without pay).
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Avraam "Top Up is more politically salable than guaranteed income because it rewards those who work. It might be a good first step to help the poorest." Yes, but the main arguments against such schemes are: 1. They don't help everyone (particularly in difficult times) 2. They are administratively complex.
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By the way this "One way to do that, he said, would be to guarantee all citizens a minimum income. This would free millions from what can become “wage slavery,” he said, and allow people to follow passions and creative urges. McKanan acknowledged that such a scheme — which might be accomplished by expanding Social Security — is politically unlikely, but said it is the role of academics to think deeply about how to create a more moral and just society that works better. Though the resultant redistribution of wealth represented by McKanan’s idea would be too extreme for many Americans, Norton’s survey work on the topic does show that Americans want a more equal society than exists now." Is just odd. A basic income is mainly about risk and incentives - it is not by itself a massive redistribution of wealth (let alone an extreme one). What is the author talking about?
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Actually, I think the problem is more complicated than presented. First, what is wealth. Does it include expected future income (for instance due to human capital)? Is it net of debts (surely many people actually have negative net wealth). Does it include expected future pension income (or liabilities for instance expected health costs)? Does it include expected future inheritances? I know these are often right wing talking points, but I suspect they actually make the difference between social democratic societies and neo-liberal (in the European sense of the word) worse not better. The measurement is difficult, particularly when different cohorts are measured together. To me it seems that the problem lies more in the top part of the distribution than the bottom - a large concentration of wealth at the top implies also a large concentration of future income flows going to the top. When people say "what does it matter to me if so-is-so is richer", the answer really is rents. I'm going to have to pay him for access to resources in the future if I get access to them at all.
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What an expensive distracting lot of nonsense the US system is.
Toggle Commented 4 days ago on Predictions? at Economist's View
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I meant to say the "The US system is being used AS AN EXAMPLE to ..."
Toggle Commented 6 days ago on Links for 02-01-16 at Economist's View
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I've never made a secret of the fact that I'm not a fan of the American political system. But there is a new dynamic that I find particularly unfortunate. The US system is being used by every would be dictator in the world to concentrate power in troubling times. The most arrogant and disturbing is Erdogan in Turkey (he has no argument - his party has an absolute majority in parliament he can currently do as he pleases - what he wants is to continue doing as he pleases even when he no longer has an absolute majority).
Toggle Commented 6 days ago on Links for 02-01-16 at Economist's View
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Lee A Arnold to put it another way, the disutility we may feel from unnecessary suffering of others, is not a question of freedom at all, but something completely different. Freedom isn't everything (has being "free to starve" for instance an inherent value)?
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Lee A Arnold in an otherwise excellent comment - this grates: "I think it could be argued that this particular source of grief is an unnecessary curtailment of our emotional freedom, and thus it curtails our employments and enjoyments of physical and intellectual freedom. " "Curtailment of emotional freedom"? Really (who is stopping us from feeling)? I'm sure this could have been expressed better.
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P.P.S. I think the problem with the whole discussion of freedom is that it is couched in absolute (black/white) terms. Either you have it or not. Poppycock, all one can have is more of the freedom you really desire at the cost of less of the sort you don't care about so much.
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P.S. By the way the classical interpretation, negative freedom = properties rights is just wrong. Property rights (i.e. exclusive rights) are for 99.99999% of people coercion (to refrain from accessing something).
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Negative freedom I always find a bit odd. It doesn't really make much sense, because as far as I can see, taking into account the point that Carlo Graziani makes, freedom from coercion implies responsibility not to coerce (in the end it always comes down to coercion to refrain from coercion). When we say "freedom from", we also say freedom from need which then also feeds into freedom from coercion (because people in need are especially vulnerable to coercion). In order to ensure "freedom from need" we also need to redistribute. As I see it, freedom from coercion for all is not possible, because in a finite world, freedom for one IMPLIES restriction for others. The dream of freedom from coercion for all is really a dream of unlimited resources.
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Michael I was using "national dividend" as a politically preferred term for basic income. (If you like the community has a stake in the economy as a whole, and the national dividend is a payment to the community for that "ownership"). If somebody decided to make a jargon word from it, I find that unfortunate.
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Tyler "Federal tax cuts for the middle class are excellent stimulus." Yes but dollar for dollar a real helicopter drop (i.e. a "national dividend") is more effective and it will benefit the unemployed as well as the employed.
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At the very least they could make the measurement per capital.
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I can't say that I really like real median household income as a measure. It is a mishmash of completely different things shoved all together. If unemployed children on benefits move back home household income goes up.
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I recommend you to read "Updating Paul Krugman evolution groupie" http://evonomics.com/updating-paul-krugman-evolution-groupie-econ/. It is very interesting. But some odd things struck me. 1. Evolution as a word, connotes "gradual change". But actual change is not discussed at all. All that is discussed is the results of change, not change itself. 2. I don't think evolution itself is a sister field to economics, it is ecology that is the sister field. I don't quite understand why this is not understood. If economics took production and organisation seriously, perhaps it could be a sister field to evolution, but it doesn't tend to. Economics for some reason has concentrated on markets and utility.
Toggle Commented Jan 22, 2016 on Links for 01-22-16 at Economist's View
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