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hardnox
Advisor

Krugman may be wrong on this

Said that the hit wouldn't be too severe by his calculations and devaluation might help a bit.

 

But there's this- the supposition that because the UK is resource poor they import most of the inputs for manufactured goods so don't get much competitive benefit from the deval.

 

May end up just selling the rest of London off to foreigners. Independence Day!

 

http://www.nakedcapitalism.com/2016/06/the-sterling-depreciation-of-2007-2008-and-its-implications-f...

34 Replies
BA Deere
Honored Advisor

Re: Krugman may be wrong on this

Vacations in the UK just went on bargain basement prices. And they export high tech and pharmaceuticals, finance they have some of our debt. France is also thinking ofgoing Galt as is I'm sure the hardworking krauts. They don't want to carry the retiring at 55 PIIGS all alone..
r3020
Senior Advisor

Re: Krugman may be wrong on this

Nox, if you pray real real hard, and maybe fast a couple of times, things might get as bad as you hope they get.

hardnox
Advisor

Re: Krugman may be wrong on this

But according to you guys and the fellow who is pontificating at Marketing, the last 7.5 years have already been a nightmare.

 

Yeah, I think it is going to get bad. I just don't know the timeline.

Red Steele
Veteran Advisor

Epidemic of non-workers in the USA

Several building sites close to where I farm are occupied by young 

families where the able bodied husbands( well, maybe "partner"

might be more apt) are35- 40 years old and not in the work force.

 

These guys are doing the math and figuring it out....to go from the

sweet spot they are in...free healthcare, EIC credits, food stamps,

etc.....to having a better life by pursuing work would take $30 per 

hour or more. Plus they would not be able to eat doritos and watch

cable TV all day, and surf porn while the wife is out making the

dollars to get the EIC credits from. And they are free to hunt and 

fish, too.

 

Nice work if you can get it.

 

and maybe, they might even qualify for disability or SSi social security,too.

Just think what its like in the inner city, where this is a multi generational

way of life if this is happening in hard working southern MN.

 

If the statistic about one in twenty people of work force age in the USA

being on disabilty social security is true, how high will SS rates have to

go to maintain an ever shifting status quo?

 

Lots of Bernie Sanders supporters out there....more guys like Sanders than

like Trump when it comes to role models.

 

We should be thankful to the Clinton camp of crooks for keeping him off the

fall ballot...I think he would win a national campaign of America as it now

is. 

Milligan Hay - Iowa d:^)
Veteran Advisor

Re: Epidemic of non-workers in the USA

Here , watch this five minute video clip of what happens when their EBT cards don't work , due to a computer clinch. 

 

https://youtu.be/lhPmcmZu0Wo

hardnox
Advisor

Re: Epidemic of non-workers in the USA

The falling LFPR is interesting if you want to question current headline unemployment rate numbers. But it is fairly problematic for the case that there are oodles of jobs out there but nobody wants them because they're on the dole. There's a mismatch between total jobs and the former number employed- it is a mathy thing. (Cue the anecdotes).

 

As I've discussed here before, for a working class family with children a second job at minimum wage is a loser. The breakeven for the second job is probably around $10-12, approximately the going rate in light industry here. If the businesses needed more workers they could pay more but they don't have to.

 

The policy goal ought to be to push the general level of wages above that threshold.

 

However you do it it would constitute a fairly regressive tax on consumers- or more accurately a withdrawal of the global labor arb subsidy. But you can balance that out by making the income tax more progressive.

 

Anyhow, it is like I told Hobby over at marketing. Farming isn't an easy business but it is a relatively simple one. Believing things that aren't altogether true can be valuable if it permits you to avoid any distracting thoughts, and nose to the wheel.

BA Deere
Honored Advisor

Re: Epidemic of non-workers in the USA

This is why I favor tariffs to level the playing field, you probably saw the exchange between Canuck and I where it evolved into Canuck being upset because tariffs made tires higher priced.  Well, there you go, even a socialist like Canuck is a cheapskate. 

 

What has to be realized is that it costs X-amount of dollars to produce a good and any deviation from that only shifts costs....free trade isn`t free and neither is immigration.  If a US factory is moved to another country so they can abuse their workers and environment and displace our workers, then dump those "cheap" goods here, there is a cost to the taxpayers.  Because the workers that lost their $25/hr job and take a $10/hr job with no bennefits, then it`s on the back of the taxpayers to make up the short fall in them not getting a living wage, the abuse of the workers and environment in other countries notwithstanding.

 

Masons and sheetrockers had excellent paying jobs back in the day as were packinghouse jobs, homes were bought, cars bought, kids put through college. But today, illegals or immigrants on the bottom rung do those jobs for a little of nothing. 

 

You can not correct this globalism caused, wealth inequities without a cap on immigration and tariffs contained within the solution.  Subsidizing low wages only throws gasoline on the fire...it`s simple in the extreme, however if you favor a global utopia, I suppose the remedy does throw a monkey wrench in that euphoria.

hardnox
Advisor

Re: Epidemic of non-workers in the USA

If you're serious I'd suggest some of the policy considerations to make it work.

 

Tariffs will, of course, create a type of regressive taxation as the subsidy from the global wage arb is taken away.

 

And I suggest making it across the board- including resources such as oil.

 

So they would need to be phased in so that production has a chance to move onshore in an orderly way. Maybe an across the board 10% tariff rising to a top of 30% in the third year.

 

The tariff would raise a lot of money and I'd direct that to progressive tax cuts to offset the higher cost of living experienced a lot more significantly by lower income groups. Probably pay the bottom end of FICA for everybody and expand EITC a little for the not unsubstantial group who aren't going to see much immediate benefit.

 

No matter how hard you try it can't be totally neutral for everybody, there will be winners and losers. And there will be retaliation against US exports.

 

There's probably be a huge boom from building factories and for the engineers and techs who build the robots to make things in them. After that, I guess you think of something else.

hardnox
Advisor

Re: Epidemic of non-workers in the USA

That would include imported fertilizer as well.