Comments by "whyamimrpink78" (@whyamimrpink78) on "Newt Gingrich: Climate Change Agreement Hurts The Very Poor" video.
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"Inflation is nothing more than a signal of how the economy is
performing. If people are spending their money, they are positive about
the economic outlook and are buying goods and making investments. "
Not necessarily. They can be spending more money out of necessity as they need a particular good or with government force. If you increase the min. wage you are forcing employers to pay more meaning they will raise prices to compensate. Or with Obamacare, you force people to buy insurance the price will go up and it did. It can also be artificial as in with college tuition. With the federal loan program it increased demand for colleges with money that simply did not exist and thus prices went up.
" Yes, that means higher costs, but that's only because of the rising
aggregate demand and falling aggregate supply of services, good and
materials. That's all."
I agree to a point, but that also means that businesses will push for more goods and services which will lower prices increasing the number of customers they have and thus more profits in a competitive market.
"
What you're doing is only looking at products going up in price. But
there's more too it than that, if the products inflate in price too
fast, then yes it can cause a recession because buyers cannot keep up
with the rising price levels. But if it's stable and slow, then that
wouldn't have as great an impact as an asset bubble inflating and then
"popping" leading to a downturn."
You are right to a degree, but it has to be natural. With the min. wage you are forcing it. You are forcing employers to pay workers more then they are worth leading to inflation that is not slow but instead amplified.
"And how am I illiterate by using the actual theory of economists? "
Because you are not using it correctly. Inflation that occurs naturally is fine. But when forced it isn't. Those workers are paid that rate because that is all they are worth. To make them worth more a business has to raise prices. That is forced inflation which is not good. The inflation you are talking about that is OK is when people pursue a particular good or service and thus prices go up briefly. But eventually companies will invest in that particular good or service creating more of it that is better.
Look at cars for example. When it first was invented people demanded it, but there weren't many, so they were expensive. Henry Ford found a way to make more cars at a faster rate lowering the price so more can afford it. That demand led to a higher price, but eventually a lower one. With the min. wage it will lead to higher prices that will not go down.
"Inflation does signify growth."
We had massive inflation in the late 70s and we had a recession.
"Growth occurs when people spend and real GDP rises"
Growth occurs when wealth is being created. If a company hires someone at $8/hr they are producing no less then $8/hr. Say they are producing $9/hr. OK, now raise the min. wage to $10/hr. That company is now losing money because that workers is not more productive. Thus the company has to raise prices. You spread that across the entire economy and you have higher prices. Giving people a raise when they are not producing more causes inflation.
"Real GDP rises only when demand does."
Demand is always there as people demand better goods and services. The car was invented because people wanted something better. No one could afford it but it was still invented. Same with the cell phone. People demand better goods and services. Very few could afford the pocket calculator, but it was still made. Now they are essentially free.
In the very end you can't consume what you don't produce. If you give people more money but do not increase the amount of goods and services we have then prices will go up, period.
"Boy, you really don't understand economics. A growing economy means prices are falling? No, that means the economy is in a recession."
Not so. A growing economy means the dollar is worth more and there is more wealth.
You need to study more economics buddy.
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John Edgar
"Yes, it did rise with Obamacare, but it was rising SLOWER than it was before the ACA was implemented. "
It was passed on the idea of lowering costs. Even at that the slower rate was because of the recession when everything else was stagnate. Healthcare cost should have been stagnate, but instead it went up during a recession. That is not good.
"You earlier insinuated that people here were cherry picking information.
Well, saying that just because insurance costs rose under Obamacare
proves that it had a negative effect on private insurance costs is doing
the exact same thing."
No, during a recession where everything was stagnate or dropping in prices healthcare costs should do the same. For example, rent dropped around 2007 because of the recession.
"
Obamacare SLOWED the rise in private insurance costs."
The recession did that.
"Also, your point about productivity vs. hourly wage. If the minimum wage
WERE tied to average productivity, it should be at about ~20/hr. As the
rise in average productivity of the American worker has risen MUCH
faster than the minimum wage has. "
Read what I wrote about productivity to bryan s.
"Even if you tied minimum wage to inflation, it should be ~15/hr."
And your cell phone will cost $4000. And the Blockbuster employee will still be employed. Or, in reality, not everything inflates. The Model T cost $18,000 in today's money. Just looking, a new Fiat Hatchback cost $12,000 in my city. Now not only looking at cost, that Fiat is way better in many ways then a Model T. Why don't cars cost more? According to you everything should inflate.
"I won't even get into the whole point that if you have families with
adult "children" living at home, perhaps the reason they are doing so is
because they can't afford to live on their own, thereby limiting their
possible contribution to the economy through either renting or home
ownership."
Or more children are enrolling in college delaying buying a home.
"So yes, stating that 50% of working adults make less than $30,000 a year is a significant and relevant statistic."
No its not as you are ignoring several important variables.
"Would raising the minimum wage increase costs of consumer good? Yes, but
not NEARLY to the same degree that incomes would be increased.
In Seattle, before they increased their minimum wage, naysayers were
shouting about how restaurants (which operate on a thin profit margin)
would all go out of business. Did it happen? Nope, because they found
that when people had some extra money to spend, they tended to go out
and eat more, which kept that profit margin alive."
Seattle is a poor example. Look at the top employers of Seattle
http://www.edc-seaking.org/service/economic-data/economic-basics
Private industries that pay a lot. They already pay a lot in Seattle. You can't just look Seattle and make a conclusion. The Nebraska Cornhusker won a national championship running the option. Should the Denver Broncos run the option?
"Capitalism is, at it's core, a pyramid structured economy. money flows
from the bottom to the top through private spending up to business
spending"
Not true. In capitalism you have to sell something to earn a profit. A business owner just doesn't get rich. They sell something people want. If they don't have anything to sell then they will not get rich. What you are describing is socialism.
"Look at the tax income pie chart for the United States in the 50's and
60's (when the US was in it's highest growth periods). Corporations
contributed the biggest slice, and the wealthy were taxes at rates above
50%. The minimum wage (as intended) supported a family of 3 with a
house, and college could be supported by a minimum wage part-time job
without financial aid."
We can get into detail about how you are wrong there. But, as a whole, the economy is vastly different today then it was in the 50s and 60s. For a few points. in that time we had no
1. EPA
2. OSHA
3. Department of Ed
4. The payroll tax that we have today
"Now, the lower 90% of Americans are the biggest source of tax revenue?"
The top 10% pay 70% of federal income taxes.
"Student loan debt is the largest source of debt,"
A problem the federal government created.
"It has been proven, time and again, that if you give the lowest of the
economy the ability to support themselves (not get rich, but enough to
survive without handouts) the economy as a whole enriches."
It is much more complicated then that.
"Single payer healthcare is cheaper overall than private"
I will link you a book on that issue here after this.
" Because as soon as profit is tossed into the mix,"
Businesses are motivated to offer something better.
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TheUltimateBeing01, economics is very simple. There are only two things you have to consider. They are
1. There is no such thing as a free lunch
2. To have the strongest growth economically you have to get the most out of your resources.
That's it. People who try to complicate the issue do irritate me. Same with those who are taking physics for the first time. With Newtonian physics all you have are
1. Conservation of energy and momentum
2. Newton's three laws
That's it. As a scientist I push to simplify things. Those who study physical science and engineering do that, they simplify problems and issues which is why we have so many CEOs with engineering degrees. You can say the same thing about a piano, it is simply a series of octaves that repeats itself. Nothing too complicated.
Now you said that you studied many theories of economics, which is fine. But you should be able to see that they all can be reduced to those two simple standards I gave. Now let us break that down,by the way, I am giving you an econ lesson here as you clearly need it.
On point one. This is known. If you can't accept that in order to gain something you have to give up something then you are a done. Everything cost something, period.
On point two, this is things get messy as it can be both subjective and objective. Let us look at something that is objective. If we were to take a bunch of chemistry grad students and give them jobs digging holes in the desert and filling them back in we know that is a waste of a valuable resource. Their talents should be in an lab. Objectively we know that asking chem grad students to frivolously dig holes is a waste.
Now an example of something that is subjective. If I were to spend $300 in a strip club I could personally see that as a wise investment. Others could see that as a waste. It all depends on the person. The is why Milton Friedman has said that government spending should be as local as possible as people have to see if they are getting their money's worth. This is why conservatives push for smaller, more local government as it gives people the chance to see if they are getting their money's worth.
Now how does that tie into what you are saying? We are discussing two things here, the min. wage and inflation. First, the min. wage. Those who support the min. wage increase do so in an subjective way because when broken down nothing good comes from it. At that point supporters of it do so in a manner of preaching about the poor single mom. They don't have any numbers to support them. You tried to by crying inflation, but what you fail to realize is that a business owner will objectively realize they can't afford the higher wage and thus will
1. cut hours
2. raise prices
In both cases that hurts the middle and lower class. The price increase causes inflation which is not good.
Now with inflation being good. That is subjective. Sure, if people are spending more prices will go up, but if wealth is going up as well then people value what they buy and will buy it. But that is on their own free will. It isn't done by force. The government is not forcing people to buy things. If the government were to raise taxes on a certain item that item will cost more, thus the price inflates. But if people don't value it at that price they won't buy it, so the economy does not grow. So to simply say that inflation means the economy is growing is completely false.
Now to break down some points in your comment.
"They could be "spending out of necessity"? Sure, but that doesn't take
away from the fact they are spending more and raising prices! "
They are spending more on some items meaning they have less to spend on other items. If they spend more on something then they will have less to spend on say, going to the movies. Or eating out. Or buying a new car, etc. Thus other areas of the market are now hurt. Let us look at something else besides money. Say someone is working 8 hours a day. Now say you force them to work 10 hours a day but they earn the same amount in the end (not per hour, per day). They now have less time to do other activities they subjectively feel behooves them. Thus you limit growth. It is the same with money. People are paying more for the same thing, thus they have less money for other things.
"Obamacare's cost went up because insurers had to raise prices (premiums and deductibles) to provide coverage to claimants."
So people are paying more for healthcare and thus have less money for other things. That is a problem. They have less money for rent, a new car, new clothes, etc. They might even have to pick up another job to make up the difference. So instead of doing activities they subjectively enjoy, which can relieve stress and have them develop new skills, they have to work now to do something they objectively have to do.
" "Artificial"? What does that even mean? Are you saying inflation is "artificial"? Okay, if so, in what context? "
Artificial as it was created by government.
"And Stafford Loans do not increase demand "for school," "
Yes it did. People were getting these loans and were subjectively going to college because they felt it was needed. Colleges objectively knew that they have to build more classrooms, dorms, and buy new equipment, and they need to hire more professors, TAs, tutors and other works. Thus they have to increase tuition.
"demand for education loans went up because people need degrees and career training for better jobs! "
Not necessarily. Many degrees are worthless as you can teach yourself. You can teach yourself history. If left alone people will go after degrees that are worth more if they were forced to invest their own money into it. They will both subjectively and objectively know that a degree in the STEM field is worth more then a history degree. Unless they like history a lot, they will go where the money is at. At that point choosing history is a subjective choice.
Now where is your chart? The problem with inflation calculation is that it covers only a small portion of the economy. Many things are far cheaper and better then in the past. Look at technological advancement. We can have this discussion where 20 years ago we can't. The internet is affordable and fast and thus has dropped in price. The same is cars, cell phones, iPods, computers, etc. Yes, GDP went up for years. But with inflation that covers a very small portion of the economy. People's lives are better in many ways because goods and services are better and available to far more people. Life expectancy is up, overall wealth is up for people who are in poverty compared to a few decades ago, productivity is up. That is the problem with inflation calculation, it does not cover the entire economy. We can objectively say that things are better for people now then they were decades ago because technology is not only better, it is readily available to more people. That means the cost went down, not up.
Look at areas in the market that inflated the most
1. college tuition
2. healthcare
3. housing
They are areas where the federal government messed around with the most
1. the student loan program
2. the payroll tax, medicare and medicaid, and now Obamacare
3. the FHA
When left alone goods and services, for the most part, get better and cheaper. Sure, you may say a pound of sugar cost more now then it did 10 years ago, but other areas of the market are much better meaning prices are still lower overall.
You have a lot to learn about economics. You need to dig deeper and not just go off of what you are told.
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TheUltimateBeing01, you are saying that forced inflation is good. You will be hard pressed to find an economist to agree with you. Now time to break down your disaster of a comment.
"Right. That increases the supply of those commodities and brings down
their price. But as the scarcity is reduced, so is the economic value of
these items to people. Eventually, once everyone's needs are met,
demand falls and lowers the price of the good or service. It's the law
of diminishing marginal returns. Thing is the way it impacts returns is a
complex matter in and of itself. But usually, if there is ample supply
of a good and everyone's needs are met, sales will fall and so would
returns. That's a recession and that's price deflation."
That is not a recession as with goods either people will use up the goods needing more or a company will develop a better product. In both cases that is wealth creation.
"Labor costs rise, but that doesn't necessarily lead to unemployment you buffoon. "
When it is natural it doesn't. When it is forced it does. Labor cost rises because those workers become more productive or through competition are valued higher.
"You guys on the right forget that if you increase pay, you're increasing
it for low wage earners across the spectrum of labor industries."
If you set an artificial price on labor then businesses won't hire workers as they are not worth that much. If someone produces only $5/hr they will not be hired. Put it like this, say if you were to fly to a job on a plane and spend $400 and you earned $300 at that job, was it worth it? No, as you are now $100 in the hole. Ok, now a business hires someone at $10/hr and they only produce $8/hr, they are now in the hole $2/hr. It makes no sense to hire that person.
" If people have more income available to them, that's likely to lead to an increase in spending. "
If the good and services are not there then you can't buy anything. With your thought process we might as well give everyone $500,000 to buy homes. But the reality is the homes do not exist. All you have done is jack up the price in real estate.
"The same business paying higher wage costs would also be seeing increasing demand for their products! "
And they will have workers that still produce at the same rate meaning prices will go up.
" Explain that using the fallacious argument that higher minimum wages leads to business losses! "
Easy. A business, with their workers say produces $100 worth of goods an hour and demand is $95 worth of goods an hour (you want a safety stock at times). Now, because of a policy you pass, demand shoots up to $150 worth of goods per hour, but the company still only produces $100 worth of goods because the current workers they have are not producing more. In order to earn a profit they have to raise prices.
"ou're also ignoring the very publicly known fact that most employers
paying substandard wages are actually MULTIBILLION dollar corporations.
Wal-Mart anyone? McDonald's rings a bell?"
McDonalds are franchised and Walmart simply can't afford higher wages. They have to keep shareholders happy. Why don't you complain about Hy Vee and Raley's who have workers that are paid similar wages? And they also hire far fewer employees.
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"Dude, what the hell are "natural" and "forced" inflation? "
Natural is when the government does not perturb they system in a way that society does not value. There is a desire to have government involved in the economy, but the people have to value the policies they implement. Force inflation is when the government perturbs the economy because they passed a policy that was not valuable to society. For example, if the government were to place pass a spending bill building bridges in the state of CA the people of CA will be happy as they are getting jobs and building. But the entire country won't be as they are not seeing if they are benefiting or not from that spending. If the state of CA were to do it then only CA and the people there will see the results.
" There's no such concepts in economic policy and theory,"
There is. But you are the one who does not understand what money is. You feel that more money means a stronger economy when in reality it is more wealth.
"unless it was something made up by some lousy economist! "
Considering how little you understand economics you don't have much room to talk. You feel that Mcdonalds, who is franchised, can afford higher wages. At the same time you don't complain about smaller companies that pay low wages. You only point to the big guys.
"And did you really try to compare the worth of a person to their bank account and income?"
No I did not.
"No, businesses don't raise prices to make their workers worth more, "
Yes they do. If someone cooks 100 hamburgers a day and, for simplicity, each hamburger brings in $1 a profit, that is a $100 a day for the company. Now say that worker earns $80 of that at $8/hr at 10 hours a day. Now you raise the min. wage to $11/hr. That worker earns $110 a day but only produces $100 a day. So the company raises the price of the hamburger to a price where they earn $1.30 in profits per burger. That company raised prices.
Seriously, tell me this. Where do you think the money comes from? Do you think the company just magically had it?
"hat may be because they are incurring higher operating or production costs,"
Such as higher cost of labor.
"As for your Ford example the only reason why the prices were lowered is
because they were able to eventually mass produce those cars, everyone
bought them and the demand for them lowered. They also had to keep them
lowered to keep sales going. But I don't see what this has to do with
inflation."
People demanded cars but could not afford them. Ford found a way to produce more and thus offered it at a lower price. Other companies came and offered different cars at an affordable price as well. More people bought it and the price went down despite demand going up. But according to you the price of the car should have went up. And no new cars should exist as everyone's needs were met.
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