Low Wages Cause Unemployment

exactly, inflation has happened sense my childhood I can tell ya that, and will continue to happen

 

Much of this is a myth. Only a small fraction of the wealth of the wealthy is in the form of money. If inflation starts appearing, interests rates usually automatically go up also. Inflation can help the poor pay off fixed loans, but remember that the set interest rates on these loans to begin with is, to some extent, based on future expectations of inflation. Causing inflation now could hurt poor people looking for fixed loans in the future.

The whole idea that wealthy people have hoards of paper money that will suddenly lose value with inflation is mostly erroneous.

Just look at the historical high rates of inflation in Chile and Argentina. Experience seems to show it especially hurts the poor.

What inflation does do is to augment taxation. The effect of inflation is really not much different from just raising the income tax. Introducing more money will mean people will have to work more for this new money to pay their taxes with.

 

I already knew you would be incapable of referring to a study that successfully shows that protectionism increases employment. That's the nature of the nationalistic curse: there is no attempt at rational comment

 

You are obviously from the "free-trade" ideology. Not all economists agree, but the free-traders have nearly taken over the whole economics wing of academia, and are indoctrinating their ideologies into a new generation of young economists, presenting their ideology as undisputed fact in the textbooks.

The free-traders are almost like a conspiracy, holding international meetings, sometimes secret meetings, and completely paranoid about what they call "protectionism" - basically any views which oppose their beliefs. Ian Fletcher is one of the rare economists who have spoken against blind support of free trade, believing that it is not always mutually beneficial, or in some instances even mutually harmful.
http://www.huffingtonpost.com/ian-fletcher/the-theory-thats-killing-_b_846452.html

If any Americans are wondering why the politicians outsourced all their jobs, you have no further than to look at the blight which has taken hold in the university economics departments. These are the people consulting your president. Free trade typically gives most of its benefits to the owners of capital, rather than wage earners.

 

Wrong! I'm from the "economic rationality" sense stakes. Blanket trade liberalisation is of course problematic. We see that, for example, with how 'free trade' (via the Washington Consensus) has increased poverty in sub-saharan countries. This is easily understood with economic analysis. One can refer to the 'infant industry hypothesis', using economies of scale to understand the difference between static and dynamic comparative advantage. Note, however, that I can defend my argument with both trade analysis and empirical evidence (the bit on sub-saharan Africa comes ironically straight from the World Bank)

This is pathetic anti-intellectualism and the standard comment I'd expect from the nationalist curse.

 

this is not true, because most of the debt, is owed by the middle and lower class, but regardless it's perfectly acceptable to "risk" higher interest rates in the future, if you can even call that a real risk?

 

Great article. You notice he didn't even read it. I try to tell people academia is as genuine as media, but with society barely catching on to the fact media is propaganda and nothing more, it will take more time as to the other. Even if you present learned men who argue against free trade such as Chomsky, they will just attack the messenger. That is why I emphasize it all comes down to "we can and we are going to, and no one can stop us". Only with removal of the global regime from power can the path of destruction America is on be thwarted.

 

Nice summary of the required anti-intellectualism required to be an economic nationalist

 

Thank you. See I can cherry pick too.

 

You can't, however, defend your argument with anything resembling economic sense

 

For the world economy free trade is good. For an individual economy unlimited free trade is very bad unless it is also fair and equal trade!

The issue is people. They can look no further than their noses. They fail to see that their shopping habits are the issue. People (*)(*)(*)(*)(*) about it but all the free trade in the world does not make the lemmings buy cheap (*)(*)(*)(*) their greed, selfishness and lack of forethought are the biggest contributors.

 

99% of the world are nationalists. We care about our homes, not the "global economy" as a whole. And last I checked, the global economy isn't doing too well either. Europe is (*)(*)(*)(*)ing collapsing as fast as America is. Being that your ideals rule the day, what exactly are you holding up as proof of its merit? China? Well yippy skippy. Good for (*)(*)(*)(*)ing them.

 

I agree. However, the great majority of products are not made here. When you choose where to shop, you are picking who has the lowest cost made in China goods. I would love for someone to open a only made in America store, like the dollar store focuses on cheap products. If someone would open such a chain, watch them wipe the floor with the others. This is a subject on the tip of everyone's tongue, Archer. People are pissed.

 

Oh it has taken years to get this way. I guess what I covered is what did happen. Honestly we could boycott all products made in countries that do not hold the bar high enough and do not practice fair and equal trade. We would still trade but not like we do now.

Buying American is key to a few things:

increased federal revenue by increasing the tax base
decreased federal expenditures by decreasing the welfare roles
decreased trade deficits and bringing back trade equilibrium
paying down the debt with monies saved and increased tax receipts
lower fuel costs
...

It is real but impossible for this generation to do because they like the Kool Aid. When America finally is destroyed by its materialistic attitude perhaps it can come back stronger and smarter.

 

The distinction between free and fair trade is almost entirely focused on the developing world. We see, for example, resource exploitation that actually reduces well-being. The nationalists from developed countries are typically just ignorant of the gains from trade, be it inter-industry (and understood via the increase in consumption by specialising according to opportunity costs) or intra-industry (typically between similar countries where we ensure a more innovative framework that drives choice and value)

 

Reiver, I think broadening your statement into the actual exploitation of those economies by US and other blood traders would go a long way. Few realize that it is the big powers, like the US (power players and politicians that are there because of the people), and the rampant, irresponsible, immature, greedy and selfish shopping habits of the people residing in those countries is the real issue. People like to blame the Economists (I do not blame them but I do disagree with the majority because they can not control the human variable), their own governments and foreign governments for the issues their own dollars caused.

 

The consumer isn't the issue, nor is the profit motive. The problem is simply an inappropriate set of multilateral rules. That can be traced back to the failure to introduce the International Trade Organisation and the failures within GATT and subsequently the WTO

 

So you think that the consumers are just lemmings? I know I do but I never thought we would be so close in our views. I personally blame the utter stupidity of the people for lacking the ability to see past tomorrow. I am not saying you are incorrect in many of your observations but I simply look at the rotten core and the fact is the only way people gain power and authority is by the will of other people who are lower on the food chain. No dictator ever took power alone. No dictator ever held power without support.

 

Nope. The point is simple: selfish consumerism isn't a problem. Indeed, given the impact on wage rates in poor countries, it is arguably the most effective means to reduce absolute poverty. The problem is actually a market failure, whereby extra-market interference is a vital aspect for economic development. It is multilateralism that is the key, with radical changes to the WTO vital

 

Well I think it is part of the issue but it is also a moot point because it is human nature so we will leave the philosophical conversation about sorry humans out of this.

I agree there need be a major reworking of things. Stop the wealth redistribution from wealthier countries and start helping the poorer countries generate their own wealth where possible. The issue is those stupid selfish human keep getting in the way of things. They cant work together to exploit their strengths because they fail to see the big picture. They fight (Africa, South America) for limited resources instead of working to expand the resource pool.

 

I'm assuming you're referring to aid here. There is no rationale to eliminate such aid. It provides a means, for example, to subsidise public good provision. Tariffs have traditionally been employed as they are bureaucratically a painless means to revenue raise. Using aid instead does allow the use of protectionism with more finesse. A particularly important point given the need to use short term protectionism to allow infant industries to grow.

One has to be careful with blanket statements. Its this type of view that encouraged the West to impose military expenditure cuts on developing countries. End result? Lots of well armed unemployed with a distaste for the current regime! A recipe for greater internal strife.

 

I am fairly certain most people do not support unlimited free trade. Unfortunately, most of the economists the universities have been churning out do. It is these prejudiced economists that are advising our politicians on the complex economic issues.

For those of you who are conservative, one of the main policy tenants of the Republican party leadership has been to create a global market place without trade barriers. I do not think the Republican constituents fully realise the policy aims of their own party. Of course, it has not been just conservative politicians.



The leadership of both parties are going to face an insurrection from discontent voters.

 

Reiver I am not talking aid I am talking deals where the populous are slaves and the US (and others) get dirt cheap products. The money we spend does not help the workers.

 

Basic myth! There is an abundance of evidence that wages increase. Of course that's expected, with the Heckscher-Ohlin model showing that labour gains in a labour abundant country (as specialisation towards labour intensive product increases the bargaining power of workers)

 

I think we are going a little too broad here as it pertains to the topic at hand. I feel that low wages do not increase unemployment.