However, much of that goes directly into the pockets of land owners.
Ultimately the winners in QE are those that own the finite resources.
That's not the issue. The issue is the Fed tilted the game in the favor those already winning the game. And as a friendly reminder, no one elected the Fed.
When people are rejecting reproduction and family to play video games and go on vacation, that’s an impact.
Obviously, propping up the economy in that way has helped to spark socio-political issues. Long to short, the Fed is "against" the middle class and immigrants are taking the brunt of the blame for it.
FYI - It was my comment this sub-tread is from.
Personally, I grew up in a rural area in NY that is basically being systematically wiped away, because of these policy decisions made in a vacuum that few people understand.
People blame "the other" and get caught up in racist nonsense. Meanwhile, we're reverting into ancient latifundia and turning into a society where basic human needs aren't being met.
As for Japan's economic stagnation of the last couple decades? Relatively low immigration.
We need a way to restore manufacturing industry to the US, the loss of which played a large role in the erosion of the middle class. Protecting manufacturing and factory jobs used to be a selling point for Democrats but things have been a little turned upside down lately.
Maybe a patchwork of all sorts of federal programs, better Medicare here, some more govt jobs there, etc? A direct refund would probably work much better.
Tarrifs directly benefit American workers and factories, who find their prices 20% more competitive.
They don't, though. Here's a great map of the net negative effects tariffs have on the state of your choosing: https://www.uschamber.com/tariffs
The first two states checked out were funky. That there are $659M of wireless phone exports from Calif to China doesn't pass the smell test. It's an incredible claim requiring incredible proof but there's nothing there despite the state being colored in as suffering Extremely Significant Damage. Another state, Florida, gets off more easily and only suffers Very Significant Damage. Drilling down it turns out the goods being tariffed aren't good at all: The tariffed items are literally scrap gold jewelry and scrap metals.
California's stealthy cellphone export I'm pretty sure don't exist. I'd argue that Florida's scrap exports are resources better kept in country as feedstock to help spur on-shore manufacturing.
I'm going out on a limb and expect the remaining 48 states are showing tariffs on bulk minerals, ag products, trash, and make-believe products. Tariffs on these items are positives insofar as they keep input costs low for domestic producers.
The loss of those jobs disproportionately affected minorities. Increases in corporate tax is easily avoided by domicile changes. Tariffs are a simple way to restore balance. Build it here. Hire here. No tariffs.
If someone who is already rich gets even more, it won't be spent in a way that is good for someone poor. More likely, the excess money will be invested in a way that provides yield, like buying real estate, driving up prices and rent. Or merging businesses to lower competition and costs. Leading to money streming 'up' instead of trickling down.
The trickle down story is a hoax that needs to die.
Nobody actually argues for 'trickle-down' policies. It's a sneer term signifying a deliberately oversimplified version of right-wing economic policies. It's not a real position people hold and push for.
I guess it's a lot easier and more fun to feel righteous attacking strawmen than it is to do the work of interacting with real ideas with serious intellectual backing and real influence.
The US Fed's inflation target is symmetric about 2%, though it has almost consistently undershot it in recent years.
Some argue that higher inflation is less scary than deflation because "interest rates can always go higher", but I would agree the Fed does seem to be more worried about upside inflation risks. Possibly because monetary policy has been "accommodative" (in their view) for so long, and "normalisation" has been a clear long-run goal. There are signs those tendencies have changed, though -- they've been talking about being "data driven" since last year, and recent messaging has smoothed the road to possible rate cuts too.
Disclosure: Former researcher at the Federal Reserve Board
So higher automation per worker but lower automation per capita.
If you have a job which can be automated at a cost equivalent to a $10/hour wage, it doesn't get automated when the wage is $9 and does when it's $11. The money doesn't inherently come at the cost of some other automation, it may (and if the other automation is profitable, more likely does) come from selling some bonds or other assets you own, or by borrowing it from a bank which just creates the new money from nothing as banks do.
You're also ignoring a number of other effects like the higher demand for automation allowing fixed costs to be spread over more units and lowering the purchase price of the automation equipment.
A lot of these things are actually good -- if people sell real estate to buy automation equipment then housing prices come down. If four people get replaced by four machines and one person to look after them, the person who knows how to look after the machines may get paid more than any of them would have before the automation.
But the other three are still out of a job, and are then in a wasteful competitive signaling game with all the other newly unemployed to overpay for degrees and credentials because none of them are allowed to compete by accepting lower compensation anymore.
Here's the Wikipedia definition:
>>In economics, capital consists of an asset that can enhance one's power to perform economically useful work. For example, in a fundamental sense a stone or an arrow is capital for a caveman who can use it as a hunting instrument, while roads are capital for inhabitants of a city.
and
>>Capital is distinct from land (or non-renewable resources) in that capital can be increased by human labor. At any given moment in time, total physical capital may be referred to as the capital stock (which is not to be confused with the capital stock of a business entity).
Increases in capital essentially mean increases in automation.
>>If you have a job which can be automated at a cost equivalent to a $10/hour wage, it doesn't get automated when the wage is $9 and does when it's $11. The money doesn't inherently come at the cost of some other automation, it may (and if the other automation is profitable, more likely does) come from selling some bonds or other assets you own, or by borrowing it from a bank which just creates the new money from nothing as banks do.
Not inherently, but generally. There's generally an opportunity cost. If the business has to pay $11 instead of $10, that extra $1 represents more resources being expended on accomplishing that task, which leaves less resources for other things.
Yes there are always situations where some extra cost leads to a business or a combination of businesses unlocking productivity that was otherwise dormant, but there will be cases of the opposite, of an extra cost exacerbating wastage, beyond the value of the extra cost.
You can't assume that an extra cost will lead to more efficiency gains than efficiency losses. The reasonable assumption is that the two variables will balance each other out, and on average, a $1 an hour increase in the cost of accomplishing a task will mean $1 less resources going into other productive tasks.
>>A lot of these things are actually good -- if people sell real estate to buy automation equipment then housing prices come down.
That's an overly optimistic and unsupported assumption. The profitability of holding real estate will not go down relative to investing in manufacturing as a result of manufacturing costs increasing.
But then your whole argument doesn't work, because it's possible to convert financial capital (e.g. land holdings or corporate shares) into economic capital (automation) by selling it and using the money to buy machines. The machines don't have to be diverted from some other use, they can be created when they wouldn't otherwise have existed.
> If the business has to pay $11 instead of $10, that extra $1 represents more resources being expended on accomplishing that task, which leaves less resources for other things.
You're assuming that money directly represents current-day resource allocation with a lack of flexibility.
Suppose there is a 25 year old guy who builds machines, gets paid a lot to do it, and currently works 40 hour weeks. If you want more machines, he has to put in more labor and you have to pay him enough for that. When you decide to do it, he instead works 60 hour weeks and gets paid even more, but only saves the money to put his kids through college or have a more secure retirement some decades in the future, or uses it to buy other labor instead of other capital.
You spent money, but that isn't an economic resource, it's a financial one. The person spending the economic resource is the person making the machines, and that isn't being reallocated from making other machines, it's being reallocated from going bowling and watching Netflix.
> That's an overly optimistic and unsupported assumption. The profitability of holding real estate will not go down relative to investing in manufacturing as a result of manufacturing costs increasing.
But that's exactly what you're arguing. You're currently making revenue equivalent to $15/hour on labor cost of $9/hour. You could make the $15/hour on automation cost of $10/hour instead if the labor cost rises to $11, and you will, because you still want the $15 which is enough more than $10 to be worth your investment.
The financial capital to pay for that has to come from somewhere, so it does, and demand for competing investments like real estate declines because the investors have to use more of their profits to pay for automation instead of having them to use for land speculation.
Of course, that's capital formation. You're not going to get more capital formation as a result of artificially raising manufacturing costs.
>>You're assuming that money directly represents current-day resource allocation with a lack of flexibility.
I don't understand what you mean and how it relates to my point.
>>But that's exactly what you're arguing. You're currently making revenue equivalent to $15/hour on labor cost of $9/hour. You could make the $15/hour on automation cost of $10/hour instead if the labor cost rises to $11, and you will, because you still want the $15 which is enough more than $10 to be worth your investment.
If my profit margin goes down, it's possible I close shop and invest the financial capital in real estate. Making manufacturing cost more does not cause more to be spent on manufacturing.
Let's imagine for a moment that all capital was automation capital, and that the only kind of investment was investment into new automation machinery. Will you acknowledge that in this scenario, a rise in minimum wage would lead to less output, and less investment into new automation?
another is that our debt to GDP ratio is something like 90-100%, but Japan's is more like 200%. yet another is that we don't have the sort of nationalized healthcare system Japan has. also, Japan's been playing the "managed trade" game for decades now and they know how to do it well, whereas the US has been practicing a consumer driven economy better characterized by "free trade."
in order to really become like Japan, we'd have to enlarge our federal level trade negotiation bureaucracy and become more mercantilistic, improve literacy rates and secondary school quality, and become more racially and culturally and linguistically homogeneous, as well as implement extremely strong gun control laws and lower the murder rate.
we'd also need to increase government job-creation spending on infrastructure to the point where we're building bridges to nowhere all over the place, plenty of underutilized airports, etc and create even tighter restrictions on immigration than we have now (yeah, I know Japan is liberalizing immigration, but not very much).
I'm not sure what you are trying to say in the last two paragraphs? That we are somehow so fundamentally different, that the fiscal picture is not comparable?
They’re the canary in the coal mine for all of us.