Tax the Rich: An Animated Fairy Tale

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_Analytics
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Re: Tax the Rich: An Animated Fairy Tale

Post by _Analytics »

cinepro wrote:If we have to assign the "bulk of the blame" to someone, then I vote for the credit ratings agencies (Moody's, S&P and Fitch). At the end of the day, they had set themselves up as the authorities on risk, and the reliable source of information about risk. If they had accurately rated the mortgaged backed securities, there would have been less ignorance in the system. And in order for a free market to operate efficiently, there has to be good information.

http://www.bloomberg.com/news/2012-10-0 ... tings.html

Other people saw what was happening during the bubble and tried to warn us. The fact that the credit ratings agencies dropped the ball is absurd, and I can't believe they are still in business.

Great points, but they bring to mind the words of Obi Wan Kenobi: who's more foolish, the fool, or the fool who follows him?

The folks who were buying the securities were sophisticated investors who did their own research and have to take responsibility for their own actions.

But yes, it is absurd that the rating agency tools are still in business.
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_moksha
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Re: Tax the Rich: An Animated Fairy Tale

Post by _moksha »

cinepro wrote:What countries are you thinking of that have a lower cost for health services while maintaining the quality and speed (i.e. length of time to schedule appointments and procedures) of the US system?


You got to get some return when you put the most money into caring from the least number of people.
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_Kevin Graham
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Re: Tax the Rich: An Animated Fairy Tale

Post by _Kevin Graham »

Of course I am. Why wouldn't I be.

Because you adhere to conservative "policies" (attack unemployment insurance, attack unions, attack every assistance program known to help those in need, etc) that do not have their interests in mind. They are geared to serve primarily corporations seeking to screw both their employees and their customers, the wealthy looking to get a free lunch at every turn, etc. You're proving my point in this very thread while ignorantly attacking "liberal policies" even though you cannot seem to form a coherent argument why any of these programs are bad. I'm still waiting for you to explain to us why social security was a bad idea when it has saved millions of elderly folks from poverty. Fourteen million just last year, and more than a hundred million since it began. Go ahead and try to match up some cons that could outweigh those pros. When you're done, you will have further proved my point that you, being consistent with conservative values, don't really give a damn about the well being of any of these people.
It's called a "Price Floor", and if you can show that raising the price floor for labor doesn't effect demand, you would most certainly get a Nobel Prize in economics.

Of course, but how does this help business? You seem to presume that wages have nothing to do with quality of work. I can assure you that employees making $18/hour will outperform someone making $8/hour. Wages should rise as production rises, should it not? If not, then please explain how this is justified. The fact is production in the US workforce has been increasing while wages have been falling. And you can thank the birth of modern-day Conservative values for that, beginning with Ronald Reagan.
Image
The report, “The Sad But True Story Of Wages In America,” by economists Lawrence Mishel and Heidi Shierholz, finds that American workers across the board -- whether in the private or public sector, high school- or college-educated –- "have suffered from decades of stagnating wages despite large gains in productivity." The trend isn’t new, either. Between 1979 and 2009, EPI says, U.S. productivity increased by 80 percent, while the hourly wage of the median worker has only gone up by 10.1 percent.

But you think it is somehow a great idea to keep wages low that way a company can afford to screw multiple employees with low wages instead of just one. Well that's just brilliant!
If the price floor were adjusted too high (say, to $20/hr, or $40/hr), then it would wreak havoc on the regular employment market, and suddenly it would influence the larger unemployment figure as employers scrambled to find cheaper alternatives for labor, be it outsourcing or robots or something else.

Oh really, so you're telling me that fast food places cannot afford to pay $20/hour for all four employees they have running the place at any given time? The fact is these companies are already trying to squeeze profit from every crook and cranny by making these workers do more and more work. They've been screwing them for decades this way. Ever notice nowadays that when you go through a drive-thru at Burger King they tell you to drive around to the "second" window? That's because they closed the first window after they decided to make the worker who was once responsible for one job, take up the duties of the other guy for no extra pay. Oftentimes I see one person running back and forth from the grill to the cash register, to the window, doing three jobs at once. And you think this has to do with the raise in minimum wages over the years? Of course not. Companies are constantly trying out new ways to squeeze more productivity from workers while not paying them more. This is more a testament to unregulated capitalism than anything else. Your conservative "policies" benefit them while screwing the workers. For instance, it isn't a coincidence that Elizabeth Warren, our modern-day champion for consumer rights, is a Democrat. It isn't a coincidence that Unions tend to support Democrats.

If you want to argue that the societal benefit of raising minimum wage a small amount (say, $.50) is worth the cost to society, that's fine. But to argue that there is no cost is absurd.


Sure there is a cost. Nothing is free. But in these examples the one paying for the increase in minimum wage is the company who is doing the hiring, as it should. There is no reason to expect a rise in minimum wage to have a negative effect on overall employment.

A significant body of academic research has found that raising the minimum wage does not result in job losses even during hard economic times. There are at least five different academic studies focusing on increases to the minimum wage—including increases ranging from 7 percent to 12.3 percent made during periods of high unemployment—that find an increase in the minimum wage has no significant effect on employment levels. The results are likely because the boost in demand and reduction in turnover provided by a minimum wage counteracts the higher wage costs.

Similarly, a simple analysis of increases to the minimum wage on the state level, even during periods of state unemployment rates above 8 percent, shows that the minimum wage does not kill jobs. Indeed the states in our simple analysis had job growth slightly above the national average. [...]

All the studies came to the same conclusion—that raising the minimum wage had no effect on employment.

You cited a highly biased CATO study that has you up at night worried about those poor teenagers, but did this study control for conditions in the regional economy?
One recent study, for example, used the same methodology as earlier studies finding a small disemployment effect on teenagers, but the newer study controlled for the condition of the regional economy, something previous studies had failed to do. Additionally, other recent studies have examined U. S. counties that border one another but had different minimum wages (because they are in different states). All the studies came to the same conclusion—that raising the minimum wage had no effect on employment. Moreover, all of the studies included cases where the minimum wage was raised during a period of high unemployment. These studies should go a long way in assuaging policymakers’ fears and boost their willingness to raise the minimum wage.


Now you turn your ridiculous quips towards Social Security:

Obviously taking money from workers and giving it to retirees makes the retirees richer. How could it not? .

You obviously do not understand Social Security or you're just being flat out dishonest in your misrepresentation. There is no "taking money from workers" and "giving" it to anyone else. The people who receive Social Security benefits are those who paid into it, but your propensity for conservative thinking keeps re-framing the situation as if it were one completely different group mooching off another.
The problem is that the system is unsustainable.

Idiots have been saying this for decades, and yet the system remains useful and there is yet to be Armageddon. The traditional Conservatives use gloom and doom predictions by the anti-Government nut jobs, basing their analysis on current pay roll deductions coupled with an exaggerated estimate of future beneficiaries, to come to their illicit conclusions about how the program is going to somehow cause the earth to explode.
If our only concern is making old people rich, then we could make social security payments much higher, say, $10k/month. Why not?

Because it was never designed to make anyone rich.
Then the program would be even more successful

There's no such thing as "more" successful when the goal is to keep people out of poverty. You're either out of poverty or you're not. It is either successful or it isn't. And it is. So where is your argument against Social Security? Leave it to the conservative mind to be obsessed with endless wealth while ignoring the fact that millions of lives have been saved/improved as a result of the program.
If only we had companies that provided health care and insurance that weren't focused on making a profit.

Exactly! And since that is impossible in free market capitalism, the only real option is a single payer system provided by the government.
We could even call them "un-profit" companies, or "zero-profit" companies, or maybe "non-profit" companies?

Or the National Health Care Program?
That's a great idea, and you should think about promoting it. You might even get another Nobel Prize for inventing the idea of a private company that isn't focused on profits. That's two prizes in one thread!

Why does it have to be a "private company"? Oh wait, because despite the obvious benefits that you unwittingly conceded above to taking the profit motive out of the equation, we can't let the government get involved in something like that because then the next step is Communism. Is that about right? Because if there were ever a country on the edge of Communism, it is those providing a universal health care system.
What countries are you thinking of that have a lower cost for health services while maintaining the quality and speed (i.e. length of time to schedule appointments and procedures) of the US system?

Seriously? There are currently 37 countries whose health care system ranks higher than ours: http://en.wikipedia.org/wiki/World_Heal ... th_systems

I've enjoyed health care in several countries, including third world Brazil. I broke my knee playing football. Everything was paid for. Sure, the hospital didn't have the nicest walls, and the wait time was something like an hour, but just knowing it wouldn't cost me a dime, and I wouldn't have to worry about going bankrupt because of an accident (which happens every day in the USA), made that wait tolerable. And you exaggerate about the quality of US health care. The USA is good at providing millionaires around the world with the privatized "country club" health care, which is where most people get the idea of "top quality care" matched nowhere else in the world. But there is no evidence that people come from Canada for the sole purpose of getting health care because it isn't provided in their system back home.
_cinepro
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Re: Tax the Rich: An Animated Fairy Tale

Post by _cinepro »

Kevin Graham wrote:Sure there is a cost. Nothing is free. But in these examples the one paying for the increase in minimum wage is the company who is doing the hiring, as it should. There is no reason to expect a rise in minimum wage to have a negative effect on overall employment.


It all comes down to math Kevin.

Let's take your Burger King. Suppose the owner decided that he wanted to employ as many people, even to the point of making no profit. So he looks at his books and sees that his monthly non-wage expenses average about $100k (rent, food and supplies, equipment and maintenance, licenses etc.). He sees that he usually brings in a total of $150k in sales. So that leaves him $50k to spend on payroll. At the end of the month, he'll have no profit, but he'll know that he helped the community by providing jobs.

His restaurant is open 70 hours a week (280 hours/month). Now, we'll ignore peak and non-peak staffing, as well as hours spent for training. He has $50k per month for payroll, and 280 hours that the restaurant will be open. That works out to $179 per hour for wages.

As the restaurant owner, how would you decide how many people to hire, and what to pay them?


But if we then look at peak/ off-peak staffing, that raises another question. If Thursday morning is usually your slowest morning and you can satisfactorily serve your customers with 3 employees, and Saturday evenings are your busiest time and you need 8 employees to maintain good service, how many employees will you schedule for Thursday morning? 3? 5? 8?
_Kevin Graham
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Re: Tax the Rich: An Animated Fairy Tale

Post by _Kevin Graham »

Let's take your Burger King. Suppose the owner decided that he wanted to employ as many people, even to the point of making no profit. So he looks at his books and sees that his monthly non-wage expenses average about $100k (rent, food and supplies, equipment and maintenance, licenses etc.). He sees that he usually brings in a total of $150k in sales. So that leaves him $50k to spend on payroll. At the end of the month, he'll have no profit, but he'll know that he helped the community by providing jobs.


No business person in his right mind would do that, so what's your point?

You refer me to math but in reality it all comes down to understanding how a business works. Case in point:

His restaurant is open 70 hours a week (280 hours/month). Now, we'll ignore peak and non-peak staffing, as well as hours spent for training. He has $50k per month for payroll, and 280 hours that the restaurant will be open. That works out to $179 per hour for wages.

As the restaurant owner, how would you decide how many people to hire, and what to pay them?


You're approaching this backwards. No business "begins" with income. It begins with employment. You hire workers and then you see how well business goes, and later you can get a fair grasp of what kind of income your business will average on a monthly basis. You seem to be living in this dream world where income isn't affected by quality employment. As if all employees are equal. As if they just serve the same kind of purpose as a conveyor belt, just passing along commercial transactions that are somehow guaranteed for the business no matter how well or poorly they do their job.

When we built our English school we initially hired teachers based on what the market was generally paying. As business picked up we increased their pay and then began hiring people with advanced experience with salaries well above what the market was offering. The results were subtle at first, but then overwhelming after about a year. Business picked up because word got around that this was an English school where people would be taught by an American or someone who used to live in the USA. This was a school where you'll actually learn to speak the language, not just sit through class confused by someone who barely speaks the language. So many of our customers had already completed entire 3-4 year courses at the other schools and still couldn't put together a single coherent sentence in English. In a culture where English schools were on just about every corner, and they were failing the consumer demand, our school was a refreshing change because people quickly learned they were going to get their money's worth. Of course we had help because I coached an American football team of 60 players and so networking through them and their families had begun before we had actually built the school.

But anyway, there is your problem. You simply do not understand or appreciate how quality employees affect business, nor do you understand or appreciate how the quality of a worker can be influenced by higher/lower salary. If you have a bunch of teenagers working in an industry (Fast Food) that gives them just enough money (usually Minimum Wage) to squander on weekend parties, then clearly they're not going to put a lot of effort into it. I know, I used to manage a few fast food places while I was in college. The turnover ratio was ridiculous because they knew they could quit whenever they got bored with it and if they really needed to they could just get another job making the same crap pay, at some other fast food place.

A perfect example of this is the demise of Circuit City, which used to pay its sales persons on commission basis. Back in the mid-90's I made close to $60,000 one year selling nothing but computers for Circuit City. The bulk of that income was from commissions. Our competitor at the time was Best Buy, who paid their sales people just a tad above minimum wage. At some point around 2002 Circuit City decided it would go the Best Buy route, betting on the assumption that quality, high paid sales persons didn't really make a difference. Well, they were wrong. And the company finally went under around 2008. There are of course a number of factors that can be attributed to the company's downfall, but several of them have to do with its decision to substitute quality employment with low pay employees.

Anyway, when you get around to it, I'd love for you to make an argument about why Social Security, that "liberal policy," was a horrible idea. You still keep dodging the issue. I've yet to see a single conservative make a case, let alone a compelling one, that the costs involved never outweighed the benefits.
_cinepro
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Re: Tax the Rich: An Animated Fairy Tale

Post by _cinepro »

Kevin Graham wrote:No business person in his right mind would do that, so what's your point?


There is a limited amount of money for payroll. My theoretical takes the "profit motive" out of the equation, and illustrates the choices that must be made in deciding how many employees to hire and how much to pay them. Raising the minimum wage effects this equation for anyone who would employ people at the bottom of the pay scale in entry level or unskilled jobs.

But anyway, there is your problem. You simply do not understand or appreciate how quality employees affect business, nor do you understand or appreciate how the quality of a worker can be influenced by higher/lower salary. If you have a bunch of teenagers working in an industry (Fast Food) that gives them just enough money (usually Minimum Wage) to squander on weekend parties, then clearly they're not going to put a lot of effort into it. I know, I used to manage a few fast food places while I was in college. The turnover ratio was ridiculous because they knew they could quit whenever they got bored with it and if they really needed to they could just get another job making the same crap pay, at some other fast food place.


The problem is that minimum wage doesn't change the quality of employees. It only raises the cost for the same employees, and therefore fewer of them will get jobs. If minimum wage were $4/hr, then the worst employees would make $4/hr and those that showed greater potential would make more (like at your school). But if minimum wage raises the starting wage to $8/hr, then it will be much harder for unskilled workers to get those entry level jobs.

A perfect example of this is the demise of Circuit City, which used to pay its sales persons on commission basis. Back in the mid-90's I made close to $60,000 one year selling nothing but computers for Circuit City. The bulk of that income was from commissions. Our competitor at the time was Best Buy, who paid their sales people just a tad above minimum wage. At some point around 2002 Circuit City decided it would go the Best Buy route, betting on the assumption that quality, high paid sales persons didn't really make a difference. Well, they were wrong. And the company finally went under around 2008.


I'm not sure what your point is in this case. If the government comes in and raises the price floor for unskilled and entry level jobs, that doesn't suddenly make all those workers more productive.

Obviously, Circuit City blundered in its assumption that selling electronics was an unskilled job (and of course they also took away the "profit incentive" of commissions from their salespeople). Salespeople can have a great influence over their productivity, and so it is logical to compensate them proportionally. That's usually not the case for jobs in which minimum wage is an issue.

Besides, since neither Best Buy nor Circuit City were even paying their employees minimum wage, it's a terrible example, not a "perfect" one. A "perfect" example would be a business that pays their employees minimum wage, and then after the government raises the minimum wage, the employees get more productive or the business is able to hire even more employees.


Anyway, when you get around to it, I'd love for you to make an argument about why Social Security, that "liberal policy," was a horrible idea. You still keep dodging the issue. I've yet to see a single conservative make a case, let alone a compelling one, that the costs involved never outweighed the benefits.


I don't think the idea of social security is "horrible". It's the implementation that's the problem.

http://www.youtube.com/watch?v=stWI9kmZbF8

http://www.youtube.com/watch?v=m_hz5HFmA6A

Or from the horse's mouth:

The long-run actuarial deficits of the Social Security and Medicare programs worsened in 2012, though in each case for different reasons. The actuarial deficit in the Medicare Hospital Insurance program increased primarily because the Trustees incorporated recommendations of the 2010-11 Medicare Technical Panel that long-run health cost growth rate assumptions be somewhat increased. The actuarial deficit in Social Security increased largely because of the incorporation of updated economic data and assumptions. Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers.


I actually strongly support the idea of keeping social security funds firewalled from the federal government and not allowing the money to be loaned for non-social security uses. If this could be done, I think the situation would be much better in principle.

But Medicare is much worse, so if I had to choose, I'd say don't touch social security and focus on fixing Medicare.
_Analytics
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Re: Tax the Rich: An Animated Fairy Tale

Post by _Analytics »

honorentheos wrote:...that type of over-simplified model is also behind the views of the conservatives I hear complaining about Dodd-Frank. It's just mirrored.

It's another example of how polarized we are and how this polarization f***s the whole country. Like f*****g kids bickering at a table trying to place blame on everyone or anyone else.

Seriously, where did the grown-ups go?

That’s ironic.

The University of Georgia did some research on this question, sponsored by the Society of Actuaries:

The Financial Crisis and Lessons for Insurers

In this 94-page paper, they say:

We argue that the primary cause of the crisis lay in the widely held belief that housing prices could not decline significantly on a national basis.


If free-market investors wouldn’t have held that belief, they (and their models) wouldn’t have come to the conclusion that investing trillions of dollars into sub-prime mortgages was a good investment. If they wouldn’t have wanted to invest their money that way, the radio waves, TV waves, mailboxes, and billboards of America wouldn’t have been saturated with mortgage originators begging people to buy homes, refinance, and take out second mortgages. If all that wouldn’t have happened, there wouldn’t have been a bubble.

The paper goes on to say there are five secondary causes:

1- The regulatory regime in the U.S. was ineffective

2- Incentive problems that the free-market investment banks put into the securities they invented and that their free-market clients purchased

3- Free market players over-relying on the credit agencies

4- Free market players having too much faith in the Federal Reserve

5- Subsidization of home mortgages by the government. This includes the implicit government guarantee of GSA securities, and the home mortgage interest tax deduction.

That’s what the real grownups think happened--they don't blame everybody else--they take responsibility for their own decisions.
It’s relatively easy to agree that only Homo sapiens can speak about things that don’t really exist, and believe six impossible things before breakfast. You could never convince a monkey to give you a banana by promising him limitless bananas after death in monkey heaven.

-Yuval Noah Harari
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