3 ms·

This is the evil of fiscal policy. Inflation is targeted not at 2%, but 2% plus erasing all the non-fiscal economoc gains of improved technology.

dragonwriter 7y ago
> This is the evil of fiscal policy. Inflation is targeted not at 2%, but 2% plus erasing all the non-fiscal economoc gains of improved technology. This is a very confused comment. The part that's coherent enough to clearly identify what is wrong is that it refers to “fiscal policy” when it means “monetary policy”, which is the policy targeted at particular inflation rates. But even aside from that, the whole claim is incoherent.
- mindslight 7y ago
  The comment may be poorly worded, but the point is sound. Every bit of technological progress or economic optimization should result in naturally decreasing prices, just as we've come to expect in the technology sector. This goes for both offshoring in general as well as Walmart's replacement of locally-run businesses. Lower consumer prices would help make up for the reduced demand for labor. But rather than this being allowed to just happen, the overt policy is to keep labor from realizing these gains so that everyone keeps working "full time".
  - dragonwriter 7y ago
    > Every bit of technological progress or economic optimization should result in naturally decreasing prices Not in dollar terms, especially when dollars are being deliverately managed so that the dollar cost of a labor hour increases over time. In terms of labor-hours, sure. > Lower consumer prices would help make up for the reduced demand for labor. No, lower nominal (dollar) prices would not. Lower real prices are an incoherent concept. Lower labor-hour-equivalent prices would if and only if lower labor demand meant equal employment but reduced hours, otherwise it would just exacerbate the tangible inequality resulting from reduced labor demand. > But rather than this being allowed to just happen, the overt policy is to keep labor from realizing these gains so that everyone keeps working "full time". But, it's not: that's not what targeting low positive inflation is. That would only be the overt policy if there was an overt policy to reatrict real wage gains. While I do think (at least large portions of) one of the two major parties is actively and deliberately pursuing policies with that goal, it's very much not an overt policy.
    - mindslight 7y ago
      > Not in dollar terms, especially when dollars are being deliverately managed so that the dollar cost of a labor hour increases over time. This is sophomoric relativism - achieving lower day-to-day prices is exactly how market competition works. It's tautological to justify a policy of changing the value of a dollar by rejecting analysis in terms of an unchanged dollar. When creating a new variable, you have to analyze it in terms of existing variables. > lower nominal (dollar) prices would not [help make up for the reduced demand for labor] It very clearly would if businesses said "we're going to reduce everyone's hours by 20%" while everyone's expenses went down 20% - everyone's budget would remain the same. I'll give you that this won't happen so pleasantly uniformly. But posit E who remains employed, and U who is laid off. If the expenses of four such E's go down, they now have extra money to spend locally to create a new job for U. Whereas if the E's expenses remain the same, then U's only options to get money are to head towards where it is being printed or compete with the E's in a race to the bottom (which is why the price of easily-interchangeable labor is now set by "minimum wage" rather than the market). > that's not what targeting low positive inflation is. An explicit goal of inflationary monetary policy is to drive "full employment". So yes, pushing everyone to keep working full time is one of its overt goals. A goal that is regressive in the face of needing ever-less labor. I'm obviously not going to convince you on the merits of this, especially in a few comments, and that's fine. It's just fundamentally dishonest to discard a political viewpoint by condescending from a paradigm that rules out said political viewpoint by construction.
      - dragonwriter 7y ago
        > achieving lower day-to-day prices is exactly how market competition works. That's true, but irrelevant. You are using microlevel concepts on a macro level where they are by-definition cannot apply. > It's tautological to justify a policy of changing the value of a dollar by rejecting analysis in terms of an unchanged dollar. You can't have lower overall consumer prices against an unchanged dollar, because the definition of a constant or unchanged dollar is that it is corrected for price-level changes. You can have lower nominal prices (deflation) which doesn't have the effects you attribute to lower prices at all, and you can have lower consumer prices relative to wages, which, as I've explained, do what you want if and only if the reduction in labor hours is spread evenly. Which there is little reason to think it would be absent direct regulation; what you'd normally expect is increased unemployment, because transaction costs of hiring scale with number employed, not hours worked, so it's usually more efficient for business to have fewer full-time (or even overtime) workers rather than more short-hours workers. Regulation can change this, of course, by reducing number of hours worked before additional overtime compensation is owed and increasing overtime premiums. > An explicit goal of inflationary monetary policy is to drive "full employment". So yes, pushing everyone to keep working full time is one of its overt goals. That's...not what “full employment” means. I know that some people like to point to the product of labor force participation rate times the employment rate and call it the real rate of employment, but that's not what policymakers consider employment to be or what they are targeting maximizing with “full employment”. It's to stimulate a level of economic activity at which there is a labor demand such that all the labor that people want to sell is sold (which is full employment, because employment rate is people selling labor divided by people trying to sell labor) less transactional inefficiencies, it is not intended to increase real costs to force everyone into the labor force (which wouldn't actually support full-employment, but a higher labor-force participation rate.) When you get to the point of articulating an idea that can be clearly understood, it seems to always be a misunderstanding caused by misinterpreting basic economic terminology.

dragonwriter 7y ago

> This is the evil of fiscal policy. Inflation is targeted not at 2%, but 2% plus erasing all the non-fiscal economoc gains of improved technology. This is a very confused comment. The part that's coherent enough to clearly identify what is wrong is that it refers to “fiscal policy” when it means “monetary policy”, which is the policy targeted at particular inflation rates. But even aside from that, the whole claim is incoherent.

mindslight 7y ago
The comment may be poorly worded, but the point is sound. Every bit of technological progress or economic optimization should result in naturally decreasing prices, just as we've come to expect in the technology sector. This goes for both offshoring in general as well as Walmart's replacement of locally-run businesses. Lower consumer prices would help make up for the reduced demand for labor. But rather than this being allowed to just happen, the overt policy is to keep labor from realizing these gains so that everyone keeps working "full time".
- dragonwriter 7y ago
  > Every bit of technological progress or economic optimization should result in naturally decreasing prices Not in dollar terms, especially when dollars are being deliverately managed so that the dollar cost of a labor hour increases over time. In terms of labor-hours, sure. > Lower consumer prices would help make up for the reduced demand for labor. No, lower nominal (dollar) prices would not. Lower real prices are an incoherent concept. Lower labor-hour-equivalent prices would if and only if lower labor demand meant equal employment but reduced hours, otherwise it would just exacerbate the tangible inequality resulting from reduced labor demand. > But rather than this being allowed to just happen, the overt policy is to keep labor from realizing these gains so that everyone keeps working "full time". But, it's not: that's not what targeting low positive inflation is. That would only be the overt policy if there was an overt policy to reatrict real wage gains. While I do think (at least large portions of) one of the two major parties is actively and deliberately pursuing policies with that goal, it's very much not an overt policy.
  - mindslight 7y ago
    > Not in dollar terms, especially when dollars are being deliverately managed so that the dollar cost of a labor hour increases over time. This is sophomoric relativism - achieving lower day-to-day prices is exactly how market competition works. It's tautological to justify a policy of changing the value of a dollar by rejecting analysis in terms of an unchanged dollar. When creating a new variable, you have to analyze it in terms of existing variables. > lower nominal (dollar) prices would not [help make up for the reduced demand for labor] It very clearly would if businesses said "we're going to reduce everyone's hours by 20%" while everyone's expenses went down 20% - everyone's budget would remain the same. I'll give you that this won't happen so pleasantly uniformly. But posit E who remains employed, and U who is laid off. If the expenses of four such E's go down, they now have extra money to spend locally to create a new job for U. Whereas if the E's expenses remain the same, then U's only options to get money are to head towards where it is being printed or compete with the E's in a race to the bottom (which is why the price of easily-interchangeable labor is now set by "minimum wage" rather than the market). > that's not what targeting low positive inflation is. An explicit goal of inflationary monetary policy is to drive "full employment". So yes, pushing everyone to keep working full time is one of its overt goals. A goal that is regressive in the face of needing ever-less labor. I'm obviously not going to convince you on the merits of this, especially in a few comments, and that's fine. It's just fundamentally dishonest to discard a political viewpoint by condescending from a paradigm that rules out said political viewpoint by construction.
    - dragonwriter 7y ago
      > achieving lower day-to-day prices is exactly how market competition works. That's true, but irrelevant. You are using microlevel concepts on a macro level where they are by-definition cannot apply. > It's tautological to justify a policy of changing the value of a dollar by rejecting analysis in terms of an unchanged dollar. You can't have lower overall consumer prices against an unchanged dollar, because the definition of a constant or unchanged dollar is that it is corrected for price-level changes. You can have lower nominal prices (deflation) which doesn't have the effects you attribute to lower prices at all, and you can have lower consumer prices relative to wages, which, as I've explained, do what you want if and only if the reduction in labor hours is spread evenly. Which there is little reason to think it would be absent direct regulation; what you'd normally expect is increased unemployment, because transaction costs of hiring scale with number employed, not hours worked, so it's usually more efficient for business to have fewer full-time (or even overtime) workers rather than more short-hours workers. Regulation can change this, of course, by reducing number of hours worked before additional overtime compensation is owed and increasing overtime premiums. > An explicit goal of inflationary monetary policy is to drive "full employment". So yes, pushing everyone to keep working full time is one of its overt goals. That's...not what “full employment” means. I know that some people like to point to the product of labor force participation rate times the employment rate and call it the real rate of employment, but that's not what policymakers consider employment to be or what they are targeting maximizing with “full employment”. It's to stimulate a level of economic activity at which there is a labor demand such that all the labor that people want to sell is sold (which is full employment, because employment rate is people selling labor divided by people trying to sell labor) less transactional inefficiencies, it is not intended to increase real costs to force everyone into the labor force (which wouldn't actually support full-employment, but a higher labor-force participation rate.) When you get to the point of articulating an idea that can be clearly understood, it seems to always be a misunderstanding caused by misinterpreting basic economic terminology.