Unemployment

[opebo]

One of the golden rules of economics: We cannot legislate away the laws of supply and demand.

Of course we can.
And we do in several areas of society. For example, firehouses and schools are not built and kept on the base of supply and demand.
And although you Americans seem to be afraid of that idea, in many countries the same is true for railway lines and hospitals.

It is just a political decision. The market is man-made, it is not a supernatural power.

That is not really relevant to the issue here. It is not as if we have done away with supply and demand merely because we have some public financing of certain services.

Actually demand is always created/regulated by the State, Gustaf, because 'demand' means 'money demand', not just someone wanting it.  In other words demand reflects power, not just desire.

[republicanism]

One of the golden rules of economics: We cannot legislate away the laws of supply and demand.

Of course we can.
And we do in several areas of society. For example, firehouses and schools are not built and kept on the base of supply and demand.
And although you Americans seem to be afraid of that idea, in many countries the same is true for railway lines and hospitals.

It is just a political decision. The market is man-made, it is not a supernatural power.

How are they not built on supply-and-demand?

You don't built a firehous because there is well-funded demand for it, but when it is needed. Not?

[republicanism]

One of the golden rules of economics: We cannot legislate away the laws of supply and demand.

Of course we can.
And we do in several areas of society. For example, firehouses and schools are not built and kept on the base of supply and demand.
And although you Americans seem to be afraid of that idea, in many countries the same is true for railway lines and hospitals.

It is just a political decision. The market is man-made, it is not a supernatural power.

That is not really relevant to the issue here. It is not as if we have done away with supply and demand merely because we have some public financing of certain services.

I was just arguing against the idea that supply and demand are some kinds of law of nature.

[Simfan34]

1.) Find a way to help people deleverage.

Inflation is the way to do this.   And by the way, yours in the only really spot-on point in this thread so far.

What is needed is not any lowering - lowering of costs, etc., but massive increases.  Increases in government expenditure, increases in economic activity, increases in wages, increases in fiat money being created and spent.

Here's the program:

1) Start printing money.  Massively.
 a) use it to buy up mortgages and forgive them
 b) buy up all credit card debt and student loan debt and forgive it
 c) buy housing and take it off the market.  buy whole neighborhoods and tear    them down.
 c) buy the Euro and the Renmenbi like a mother.
 d) buy long term Treasuries till the rate on the 10 year is zero.

2) Institute massive government works projects - the 1.5 trillion mentioned above isn't bad, but it should be quite a bit larger than that.  I envision replacing all the nation's bridges (requiring union wages at at least $35/hour minimum, and american made 100% on any products, machinery, or supplies used), new subways and rail, power plants, etc.

3) Set up a generous dole of around $1,200/month per US citizen, regardless of location.

4) Full national health care with private health care made illegal

5) increase taxes on the rich to approximately double their current levels (this has no effect on growth obviously)

6) Lower the legally mandated working week to 32 hours initially, with double time required after that.

7) Institute a $15/hour minimum wage.

I'm going to vote for you and move to China, just to see what happens.

[opebo]

I'm going to vote for you and move to China, just to see what happens.

That's the spirit. 

[Gustaf]

One of the golden rules of economics: We cannot legislate away the laws of supply and demand.

Of course we can.
And we do in several areas of society. For example, firehouses and schools are not built and kept on the base of supply and demand.
And although you Americans seem to be afraid of that idea, in many countries the same is true for railway lines and hospitals.

It is just a political decision. The market is man-made, it is not a supernatural power.

That is not really relevant to the issue here. It is not as if we have done away with supply and demand merely because we have some public financing of certain services.

I was just arguing against the idea that supply and demand are some kinds of law of nature.

Well...it depends on how you define law of nature. It is true that if you, for example, lower prices artificially there will be over-demand/under-supply.

For instance, Stockholm has rent-regulation on apartments. Hence, the waiting lines to get an apartment are at something like 10 or 20 years. As a consequence, people make money on the black market renting out illegally, thus getting the price to where supply and demand actually meet. And of course, well-connected politicians and the like will be able to get cheap apartments in great locations, effectively being subsidized by the less well-connected people living outside of the city (such as immigrants).

In that sense, supply and demand are hard to get around. Of course, in some cases where we have nothing even approaching a free market it is rather different. For example, demand for schools is a non-issue at least in Sweden, since elementary schooling is mandatory. However, now that we have voucher schools one does see schools popping up where people want to go. And a public high school that a friend of mine went to was actually placed in Stockholm, even though the kids attending lived in a municipality well outside the city limits. Presumably because there was a demand for hanging in the city.

And things like fire-fighting and police services are, I think, also prohibited for private actors to engage in. So there is no supply in the typical sense. 

[Peeperkorn]

1.) Find a way to help people deleverage.

Inflation is the way to do this.   And by the way, yours in the only really spot-on point in this thread so far.

What is needed is not any lowering - lowering of costs, etc., but massive increases.  Increases in government expenditure, increases in economic activity, increases in wages, increases in fiat money being created and spent.

Here's the program:

1) Start printing money.  Massively.
 a) use it to buy up mortgages and forgive them
 b) buy up all credit card debt and student loan debt and forgive it
 c) buy housing and take it off the market.  buy whole neighborhoods and tear    them down.
 c) buy the Euro and the Renmenbi like a mother.
 d) buy long term Treasuries till the rate on the 10 year is zero.

2) Institute massive government works projects - the 1.5 trillion mentioned above isn't bad, but it should be quite a bit larger than that.  I envision replacing all the nation's bridges (requiring union wages at at least $35/hour minimum, and american made 100% on any products, machinery, or supplies used), new subways and rail, power plants, etc.

3) Set up a generous dole of around $1,200/month per US citizen, regardless of location.

4) Full national health care with private health care made illegal

5) increase taxes on the rich to approximately double their current levels (this has no effect on growth obviously)

6) Lower the legally mandated working week to 32 hours initially, with double time required after that.

7) Institute a $15/hour minimum wage.

I lol'd. Are you some sort of Antichrist trying to destroy the economy of your country?

[opebo]

I lol'd. Are you some sort of Antichrist trying to destroy the economy of your country?

No buddy, the economy was already destroyed by neoliberal capitalism. I'm just prescribing the cure.

[Filuwaúrdjan]

Well...it depends on how you define law of nature.

Not really. I think it's fairly obvious that the distribution of different species of squirrel in North Wales is not determined by market forces.

[True Federalist (진정한 연방 주의자)]

Well...it depends on how you define law of nature.

Not really. I think it's fairly obvious that the distribution of different species of squirrel in North Wales is not determined by market forces.

Given than human demand for red squirrels is causing money to be spent to eradicate the introduced gray squirrel, I'd say that even that is not immune to market forces.  Indeed, bounties have been paid for the tails of the pest in the past, tho that was abandoned as not providing sufficient control for the level of bounties that was being paid.

[Gustaf]

Well...it depends on how you define law of nature.

Not really. I think it's fairly obvious that the distribution of different species of squirrel in North Wales is not determined by market forces.

Well, I would argue that something does not have to determine the distribution of different species of squirrel in North Wales in order to be a law of nature.

Market forces obviously only apply to human beings, but then again, so does a lot of things, do they not?

[republicanism]

Well...it depends on how you define law of nature. It is true that if you, for example, lower prices artificially there will be over-demand/under-supply.

But you don't have to organize eeverything based on prices. Schools, Police, etc. are not organized that way.

And to your example with the Stockholm rents: I'm not arguing that without supply-and-demand in action, everything would be fine. But there is no superior force that implements "the law", that men have to follow. The market is man-made.

[Politico]

Market forces are forces of nature (human nature, if you want to be exact), and you ignore them at your own peril.

The laws of supply and demand cannot be legislated away. In order for the government to give anything to anybody, it must first take something from at least somebody, or many people, or everybody. These are observations, not opinions. I did not make this world; nobody did. This is just the way things are.

[Link]

Market forces are forces of nature (human nature, if you want to be exact), and you ignore them at your own peril.

The laws of supply and demand cannot be legislated away. In order for the government to give anything to anybody, it must first take something from at least somebody, or many people, or everybody. These are observations, not opinions. I did not make this world; nobody did. This is just the way things are.

Fine let's take away something from people like this...



and see what happens.  My hypothesis is they won't curl up in a ball and die of starvation.  Keep in mind the person that owns this house is 22.

[cavalcade]

It is a shame that such a promising thread has devolved so much.

[Link]

It is a shame that such a promising thread has devolved so much.

Its an pretty free wheeling forum.  If you don't like where a thread is going make a constructive contribution and set it on a track you feel is more appropriate.  You have to participate.

[Politico]

Market forces are forces of nature (human nature, if you want to be exact), and you ignore them at your own peril.

The laws of supply and demand cannot be legislated away. In order for the government to give anything to anybody, it must first take something from at least somebody, or many people, or everybody. These are observations, not opinions. I did not make this world; nobody did. This is just the way things are.

Fine let's take away something from people like this...



and see what happens.  My hypothesis is they won't curl up in a ball and die of starvation.  Keep in mind the person that owns this house is 22.

The Constitution means nothing to you? It is the United States, not the Soviet Union. Everybody pays enough in taxes from the richest who pay over 50% of all taxes collected to the poorest who rightfully pay nothing at all. The current problem is not people being taxed too little; the problem is too much spending on too much waste.

[Link]

Market forces are forces of nature (human nature, if you want to be exact), and you ignore them at your own peril.

The laws of supply and demand cannot be legislated away. In order for the government to give anything to anybody, it must first take something from at least somebody, or many people, or everybody. These are observations, not opinions. I did not make this world; nobody did. This is just the way things are.

Fine let's take away something from people like this...



and see what happens.  My hypothesis is they won't curl up in a ball and die of starvation.  Keep in mind the person that owns this house is 22.

The Constitution means nothing to you? It is the United States, not the Soviet Union. Everybody pays enough in taxes from the richest who pay over 50% of all taxes collected to the poorest who rightfully pay nothing at all. The current problem is not people being taxed too little; the problem is too much spending on too much waste.

With all due respect I don't think raising taxes on a 22 year old that lives in a house like that constitutes turning the United States into "the Soviet Union."  Even the Soviet Union isn't the Soviet Union anymore.  Take it easy.

What would you suggest cutting?

[Filuwaúrdjan]

Well, I would argue that something does not have to determine the distribution of different species of squirrel in North Wales in order to be a law of nature.

Market forces obviously only apply to human beings, but then again, so does a lot of things, do they not?

Yes, but then I tend to find attempts to find 'laws' in most aspects of human behavior to be so much laughable pseudo-positivist reductionist bullsh!t. Which is the point of the (admittedly rather silly) example. Which is quite different from saying that markets do not exist and can be freely ignored in all circumstances; that's obviously untrue as well.

[Filuwaúrdjan]

human nature

No such thing, except as an expression (in much the same way that 'common sense' is but a collection of personal prejudices).

[Gustaf]

Well...it depends on how you define law of nature. It is true that if you, for example, lower prices artificially there will be over-demand/under-supply.

But you don't have to organize eeverything based on prices. Schools, Police, etc. are not organized that way.

And to your example with the Stockholm rents: I'm not arguing that without supply-and-demand in action, everything would be fine. But there is no superior force that implements "the law", that men have to follow. The market is man-made.

You don't have to. But you are likely to create efficiencies. See, the idea of economics is fundamentally to describe human behaviour. Thus, the point is not to say that people should behave in accordance with supply and demand but rather that they tend to do. If you prohibit people from doing something they want they will try and circumvent it. That might still be worth it in some cases but one should always be aware of that cost.

Also, schools and police still depend on market forces in a lot of ways. For example, there is a discussion going on now in Sweden on whether we should raise wages for teachers. The supply of teachers will be higher if the price (wage) of teachers increases. Currently, there is a problem with too few people (especially those with any knowledge) becoming teachers. In a free market the demand for good teachers would likely push up wages quite substantially. Of course, some consumers would then likely be priced out, which we don't want. What happens instead is that the rich pay for private teachers for their kids (I've been one myself).

Thus, the idea that we can ignore demand for education and equalize everyone's education by having a state monopoly on it didn't really work out. The demand from high-income parents for good teaching found a supply somewhere else instead.

Of course, if one goes to political economy one would probably assume that this setup makes high-income parents less willing to pay higher taxes to improve public education since they can solve their problem on the side. So there is a lot you can discuss back and forth.

I think the general lesson economists would point out is that if we want to achieve a certain goal that cannot be solved by the market (say, equal opportunity through making education available to everyone) you want to do it in a way that interferes with the market as little as possible.

[Gustaf]

Well, I would argue that something does not have to determine the distribution of different species of squirrel in North Wales in order to be a law of nature.

Market forces obviously only apply to human beings, but then again, so does a lot of things, do they not?

Yes, but then I tend to find attempts to find 'laws' in most aspects of human behavior to be so much laughable pseudo-positivist reductionist bullsh!t. Which is the point of the (admittedly rather silly) example. Which is quite different from saying that markets do not exist and can be freely ignored in all circumstances; that's obviously untrue as well.

There is certainly a discussion going on within economics right now looking at experimental data from behavioural economics that challenges a lot of the traditional findings. Those on the other side would typically argue that their theories do not claim to predict individual behaviour, but aggregate behaviour. Thus, while we may not know that every person will act a certain way in a given situation we may still see an aggregate outcome and base policy on that. Such as saying that raising the price of a good will on average lead to less consumption of that good, even if not every single individual will buy less of it. And so on.

[All Along The Watchtower]

Well...it depends on how you define law of nature. It is true that if you, for example, lower prices artificially there will be over-demand/under-supply.

But you don't have to organize eeverything based on prices. Schools, Police, etc. are not organized that way.

And to your example with the Stockholm rents: I'm not arguing that without supply-and-demand in action, everything would be fine. But there is no superior force that implements "the law", that men have to follow. The market is man-made.

You don't have to. But you are likely to create efficiencies. See, the idea of economics is fundamentally to describe human behaviour. Thus, the point is not to say that people should behave in accordance with supply and demand but rather that they tend to do. If you prohibit people from doing something they want they will try and circumvent it. That might still be worth it in some cases but one should always be aware of that cost.

Also, schools and police still depend on market forces in a lot of ways. For example, there is a discussion going on now in Sweden on whether we should raise wages for teachers. The supply of teachers will be higher if the price (wage) of teachers increases. Currently, there is a problem with too few people (especially those with any knowledge) becoming teachers. In a free market the demand for good teachers would likely push up wages quite substantially. Of course, some consumers would then likely be priced out, which we don't want. What happens instead is that the rich pay for private teachers for their kids (I've been one myself).

Thus, the idea that we can ignore demand for education and equalize everyone's education by having a state monopoly on it didn't really work out. The demand from high-income parents for good teaching found a supply somewhere else instead.

Of course, if one goes to political economy one would probably assume that this setup makes high-income parents less willing to pay higher taxes to improve public education since they can solve their problem on the side. So there is a lot you can discuss back and forth.

I think the general lesson economists would point out is that if we want to achieve a certain goal that cannot be solved by the market (say, equal opportunity through making education available to everyone) you want to do it in a way that interferes with the market as little as possible.

Human behavior changes all the time. Economics in the modern era is focused on explaining the hows, but not the whys-why people act the way they do.

The economic system is not a reflection of human behavior.  Human behavior is a reflection of the economic system.

[All Along The Watchtower]

Market forces are forces of nature (human nature, if you want to be exact), and you ignore them at your own peril.

The laws of supply and demand cannot be legislated away. In order for the government to give anything to anybody, it must first take something from at least somebody, or many people, or everybody. These are observations, not opinions. I did not make this world; nobody did. This is just the way things are.

It may be the "way things are", but it's not how they always been, so it's a safe bet that it's not going to always be that way.

[True Federalist (진정한 연방 주의자)]

What would you suggest cutting?

He already suggested cutting 'waste' for which the definition in the skeptic's dictionary should probably be:

• waste n.
  1. Any government activity that does not meet the approval of whoever is currently talking about waste.  Often mentioned in conjunction with efficient.
  We need to get rid of government waste and save taxpayer money by making government efficient.
  2. When used by a politician a government activity which is purposely left undefined so each voter can believe the politician means what the voter considers to be waste (def. 1) instead of an essential government program.