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Well we’ve had QE and tax cuts for the rich for a good long while now, pendulum swinging the other way feels warranted. You know what’s crazy? The solution is

Well we’ve had QE and tax cuts for the rich for a good long while now, pendulum swinging the other way feels warranted. You know what’s crazy? The solution is very simple. Pay workers more. The minimum wage is not a living wage. Heavily fine companies that attempt to run models that cannot support paying a living wage. The uninformed think that this will stop innovation, but it will only slow it, and that’s OK. Innovation is fueled by need or greed, and the VCs who complain about mandated high wages will indeed be greedy enough to fund the next batch of companies, because even if your returns go from 1000x to 100x (when you win), the returns still beat a lot of other investment vehicles.

Ericson2314 5y ago
No, raising the minimum wage subsidizes innovation. It's better for the people and the technology. The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better.
- hardwaresofton 5y ago
  > No, raising the minimum wage subsidizes innovation. It's better for the people and the technology. I agree with that as a long term result, but what I'm arguing against is the common refrain of the immediate detrimental effect on current business of increasing minimum wages to living wages. Higher wages for society does lots of great things I didn't get into, but the common refrain is that it will "hurt small businesses". More people that can take more shots at innovating (also, producing culture which is an exportable good if not valuable in and of itself) is a great thing. > The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better. I don't understand the point here on illegal work -- could you lay out the scenario? I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere. The best people get at is "competition", but very few "free" markets are as competitive as people think they are. Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends), and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit. Remember that time that the government gave out $X checks and a lot of products magically became just around $X (in the recent years, very large TVs and stuff)? The market does react when it sees the government give out free money and I'm not sure why people think UBI will be any different. Don't add some new system that will be broken in new novel ways -- just help the people at the bottom of the economy right now, we know how to do it, we just won't because right now we are valuing economic growth more than stability/societal benefit. [EDIT] - I want to add a personal anecdote -- I have business owners in my family and during the pandemic, and we disagreed over a few things: - which businesses are really "essential" - the fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here). - The "job creator" narrative really is so ingrained at this point that it was hard to argue my point that businesses do not create jobs, demand creates jobs. Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods) -- most of the time smart businesses actually do their best to remove jobs (make their operations "lean"). Somewhat out of left field, but a lot has been said about the decline of the music industry -- but if you can get 1% of America to listen to your music, and give you a $1 for an album, that is 3 million dollars. It gets easier and easier to charge the more wages people make -- $5 a lot easier to pay when it's maybe 15mins of work for a worker. This kind of rising tide lifts all boats.
  - XorNot 5y ago
    > I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere. Inflation is persistent - the Fed has an inflation target of 2%! Year over year, that's the inflation rate and they manipulate spending and money issuance to hit it. If you are holding onto large amounts of cash and not getting a 2% return, you are losing money and that's intentional because the government wants you to either spend it or invest it.
    - hardwaresofton 5y ago
      I should have been more clear on that, I should have written even more persistent inflation (than normal). I see UBI as just a add-more-inflation button. Also side note isn't it great that the Fed, which is trying to get to full employment is now targeting an average inflation target of 2%? I know that it's more complicated than this (if we allow the dollar to become too weak or too strong there are serious consequences for other counties who rely on it as a reserve currency), but inflation disproportionately damages the working class. So the signal is basically we're going to get people into as many jobs as possible, even if we're devaluing that work with our actions.
      - pashamur 5y ago
        I'm going to refer to Lyn Alden's guide here (https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/), but not all inflation damages the lower class. In fact, the wealth gap was smallest (relatively) at the end of the 1940s and 1970s, both decades with the most inflation in the 20th century. It all depends on the power of labor vs capital. That's why capital has fought so much against unions - if you bring back unions, inflation can return and it can benefit the lower classes at the expense of the rich.
        hardwaresofton 5y ago
        Thanks! Lyn Alden's a great source of information -- I'm familiar with her work. That said, I don't see how any of what you've said points to a problem in my theory -- the power of labor vs capital has been heavily tilted in the favor of capital for a long time now, unions got essentially systematically busted a while ago. I assumed that would be obvious as context. I assume that you're not suggesting the lower classes are immune to the coming variant of inflation?
Aunche 5y ago
Quantitative easing prevents the economy from completely shutting down, which helps everyone, not just the rich. If the Government can issue trillions of dollars in debt that mainly goes into regular people's pockets (stimulus checks, umemployment, 60% of PPP loans/grants, wages for pork jobs), then the Federal Reserve buying off an equal amount of debt shouldn't be seen as a stimulus for the rich.
- hardwaresofton 5y ago
  > Quantitative easing prevents the economy from completely shutting down, which helps everyone, not just the rich. Could you describe "the economy completely shutting down"? Certain parts would absolutely shut shut down and be adversely affected, but I'm not convinced of the doomsday scenario here. Yes, lots of restaurants and services would close down (as they have, but in greater numbers), but this is the cost of not being prudent, buying insurance (if it was possible, and it certain was after SARS and MERS, etc), and saving for a rainy day. The economy will start up again, because there is always money to be made, and people are motivated to make that money. The problem is that it's "helping" everyone, but disproportionately helping the rich, with no return on investment in the government. The highest ROI (in GDP terms) on investment by government usually comes from infrastructure last I checked (there's also been a really weird perturbation of what "infrastructure" means by the Biden administration), so propping up balance sheets for companies that should have saved for a rainy day is absurd. Let them fire who they need to fire, then help those citizens directly, via the government programs that are literally built to do just that. 2T is enough to pay A LOT of money out to all citizens (again, some % of the full/part-time work force, which is some % of the total population of ~350M), and definitely tide them over for a year. Strategic/truly essential businesses (let's say hospitals, airlines, freight, etc) are given extra help, and that's that. I am a layman to be fair, so of course it's not this simple but I sure would have been more behind 2T given straight to people who became unemployed as a result, and letting that money trickle up back into the economy. > If the Government can issue trillions of dollars in debt that mainly goes into regular people's pockets (stimulus checks, umemployment, 85% of PPP loans/grants, wages for pork jobs), then the Federal Reserve buying off an equal amount of debt shouldn't be seen as a stimulus for the rich. This is wrong on it's face, and I think it's due to intentional misinformation by political actors. That first 2T stimulus (a lot of press was made about that number, it was almost fetishized) contained something like ~700B to households/household-adjacent programs, but what people overlooked was that the ~500B that went to businesses was leveraged up to 6x[0]: > “We’ll have up to $4 trillion of liquidity that we can use to support the economy. And that’s —those are broad-based lending programs under Section 133. We can leverage our equity working with the Federal Reserve,” Mnuchin said on "Fox News Sunday," referring to a section of the Federal Reserve Act that gives the agency broad power to issue loans to borrowers who cannot secure loans. When you take into account that these loans are going to be given at sweetheart rates, and maybe may not even be repaid (picking good lessees is hard), the popularly cited stat that "more money was allocated to households than businesses" is absolute bullshit. This is absolutely stimulus for the rich, who didn't need it to begin with, and arguably companies should have been just as prudent as we expect people to be. [0]: https://thehill.com/homenews/senate/488879-fight-over-500-billion-corporate-loan-funding-holds-up-coronavirus-stimulus https://thehill.com/homenews/senate/488879-fight-over-500-bi...

Ericson2314 5y ago

No, raising the minimum wage subsidizes innovation. It's better for the people and the technology. The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better.

hardwaresofton 5y ago
> No, raising the minimum wage subsidizes innovation. It's better for the people and the technology. I agree with that as a long term result, but what I'm arguing against is the common refrain of the immediate detrimental effect on current business of increasing minimum wages to living wages. Higher wages for society does lots of great things I didn't get into, but the common refrain is that it will "hurt small businesses". More people that can take more shots at innovating (also, producing culture which is an exportable good if not valuable in and of itself) is a great thing. > The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better. I don't understand the point here on illegal work -- could you lay out the scenario? I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere. The best people get at is "competition", but very few "free" markets are as competitive as people think they are. Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends), and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit. Remember that time that the government gave out $X checks and a lot of products magically became just around $X (in the recent years, very large TVs and stuff)? The market does react when it sees the government give out free money and I'm not sure why people think UBI will be any different. Don't add some new system that will be broken in new novel ways -- just help the people at the bottom of the economy right now, we know how to do it, we just won't because right now we are valuing economic growth more than stability/societal benefit. [EDIT] - I want to add a personal anecdote -- I have business owners in my family and during the pandemic, and we disagreed over a few things: - which businesses are really "essential" - the fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here). - The "job creator" narrative really is so ingrained at this point that it was hard to argue my point that businesses do not create jobs, demand creates jobs. Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods) -- most of the time smart businesses actually do their best to remove jobs (make their operations "lean"). Somewhat out of left field, but a lot has been said about the decline of the music industry -- but if you can get 1% of America to listen to your music, and give you a $1 for an album, that is 3 million dollars. It gets easier and easier to charge the more wages people make -- $5 a lot easier to pay when it's maybe 15mins of work for a worker. This kind of rising tide lifts all boats.
- XorNot 5y ago
  > I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere. Inflation is persistent - the Fed has an inflation target of 2%! Year over year, that's the inflation rate and they manipulate spending and money issuance to hit it. If you are holding onto large amounts of cash and not getting a 2% return, you are losing money and that's intentional because the government wants you to either spend it or invest it.
  - hardwaresofton 5y ago
    I should have been more clear on that, I should have written even more persistent inflation (than normal). I see UBI as just a add-more-inflation button. Also side note isn't it great that the Fed, which is trying to get to full employment is now targeting an average inflation target of 2%? I know that it's more complicated than this (if we allow the dollar to become too weak or too strong there are serious consequences for other counties who rely on it as a reserve currency), but inflation disproportionately damages the working class. So the signal is basically we're going to get people into as many jobs as possible, even if we're devaluing that work with our actions.
    - pashamur 5y ago
      I'm going to refer to Lyn Alden's guide here (https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/), but not all inflation damages the lower class. In fact, the wealth gap was smallest (relatively) at the end of the 1940s and 1970s, both decades with the most inflation in the 20th century. It all depends on the power of labor vs capital. That's why capital has fought so much against unions - if you bring back unions, inflation can return and it can benefit the lower classes at the expense of the rich.
      - hardwaresofton 5y ago
        Thanks! Lyn Alden's a great source of information -- I'm familiar with her work. That said, I don't see how any of what you've said points to a problem in my theory -- the power of labor vs capital has been heavily tilted in the favor of capital for a long time now, unions got essentially systematically busted a while ago. I assumed that would be obvious as context. I assume that you're not suggesting the lower classes are immune to the coming variant of inflation?

Aunche 5y ago

Quantitative easing prevents the economy from completely shutting down, which helps everyone, not just the rich. If the Government can issue trillions of dollars in debt that mainly goes into regular people's pockets (stimulus checks, umemployment, 60% of PPP loans/grants, wages for pork jobs), then the Federal Reserve buying off an equal amount of debt shouldn't be seen as a stimulus for the rich.

hardwaresofton 5y ago
> Quantitative easing prevents the economy from completely shutting down, which helps everyone, not just the rich. Could you describe "the economy completely shutting down"? Certain parts would absolutely shut shut down and be adversely affected, but I'm not convinced of the doomsday scenario here. Yes, lots of restaurants and services would close down (as they have, but in greater numbers), but this is the cost of not being prudent, buying insurance (if it was possible, and it certain was after SARS and MERS, etc), and saving for a rainy day. The economy will start up again, because there is always money to be made, and people are motivated to make that money. The problem is that it's "helping" everyone, but disproportionately helping the rich, with no return on investment in the government. The highest ROI (in GDP terms) on investment by government usually comes from infrastructure last I checked (there's also been a really weird perturbation of what "infrastructure" means by the Biden administration), so propping up balance sheets for companies that should have saved for a rainy day is absurd. Let them fire who they need to fire, then help those citizens directly, via the government programs that are literally built to do just that. 2T is enough to pay A LOT of money out to all citizens (again, some % of the full/part-time work force, which is some % of the total population of ~350M), and definitely tide them over for a year. Strategic/truly essential businesses (let's say hospitals, airlines, freight, etc) are given extra help, and that's that. I am a layman to be fair, so of course it's not this simple but I sure would have been more behind 2T given straight to people who became unemployed as a result, and letting that money trickle up back into the economy. > If the Government can issue trillions of dollars in debt that mainly goes into regular people's pockets (stimulus checks, umemployment, 85% of PPP loans/grants, wages for pork jobs), then the Federal Reserve buying off an equal amount of debt shouldn't be seen as a stimulus for the rich. This is wrong on it's face, and I think it's due to intentional misinformation by political actors. That first 2T stimulus (a lot of press was made about that number, it was almost fetishized) contained something like ~700B to households/household-adjacent programs, but what people overlooked was that the ~500B that went to businesses was leveraged up to 6x[0]: > “We’ll have up to $4 trillion of liquidity that we can use to support the economy. And that’s —those are broad-based lending programs under Section 133. We can leverage our equity working with the Federal Reserve,” Mnuchin said on "Fox News Sunday," referring to a section of the Federal Reserve Act that gives the agency broad power to issue loans to borrowers who cannot secure loans. When you take into account that these loans are going to be given at sweetheart rates, and maybe may not even be repaid (picking good lessees is hard), the popularly cited stat that "more money was allocated to households than businesses" is absolute bullshit. This is absolutely stimulus for the rich, who didn't need it to begin with, and arguably companies should have been just as prudent as we expect people to be. [0]: https://thehill.com/homenews/senate/488879-fight-over-500-billion-corporate-loan-funding-holds-up-coronavirus-stimulus https://thehill.com/homenews/senate/488879-fight-over-500-bi...