tag:blogger.com,1999:blog-1141932539860553199.post6975545276167035376..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: Deadweight loss of excess inequality.Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-1141932539860553199.post-70306569948093625172015-09-08T18:26:43.525+01:002015-09-08T18:26:43.525+01:00Well they would, wouldn't they? Whoever wrote...Well they would, wouldn't they? Whoever wrote that article originally is just as convinced that you are wrong as you are that they are wrong. Perhaps you should write a new article called Money Creation (MMT) and append whatever theory the writers of the original article are following to their title. Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-51334515659733806552015-09-07T20:49:15.526+01:002015-09-07T20:49:15.526+01:00I did. They reverted it. That's why I'm pi...I did. They reverted it. That's why I'm pissed off.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-3856510253114191072015-09-07T18:54:04.973+01:002015-09-07T18:54:04.973+01:00R, it's Wikipedia. If you think it's wron...R, it's Wikipedia. If you think it's wrong, put it right. That's how Wikipedia works.Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-16376893287824486862015-09-06T14:31:41.621+01:002015-09-06T14:31:41.621+01:00L, true. I am explaining to MW, so trying to make ...L, true. I am explaining to MW, so trying to make posts accounting-y.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-45078696494094327312015-09-06T08:46:56.961+01:002015-09-06T08:46:56.961+01:00R, there are different multipliers.
The 'fisc...R, there are different multipliers.<br /><br />The 'fiscal multiplier' relates to the impact of government spending.<br /><br />The multiplier they are referring to above is a different multiplier.<br /><br />L, thanks.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-35513028724279335772015-09-06T07:22:59.262+01:002015-09-06T07:22:59.262+01:00Oh, I forgot. and FWIW LVT-ing the UK would likel...Oh, I forgot. and FWIW LVT-ing the UK would likely deal with all sorts of inequalities, since the vast majority of those stem from rent seeking from land. Combine that with small government/low taxes/very little intervention, which would go a long way to stop cronyism, and you'd have more real competition. Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-73753480427580681442015-09-06T07:18:21.252+01:002015-09-06T07:18:21.252+01:00MW "all rental income is ransom value. It is ...MW "<i>all rental income is ransom value. It is no different to kidnapping. High time rates are bad for the economy.</i>" I like that way of thinking. No-one has any choice but to rent somewhere. You cannot live nowhere.<br /><br />However the point about the black death that is really being made is one about competition. Landlords had to <b>compete</b> for tenants.<br /><br />This, IMHO, is key. And a key part of LVT. LVT ought to increase the supply of land, since the tax would be paid if land was tenanted or not, landlords would be incentivised to get it on the market PDQ. Rationing would be discouraged. The greater supply would both ensure competition and increase demand (the 'supply creating its own demand thing').<br /><br />R. Your posts are far too complex. People buy things that can be simply explained and in the aggregate simple things, especially simple solutions, are the ones that work best. MMT does not fall into this category.<br /><br />So, we need to 'sell' LVT to the demos. MW point about being held to ransom has potential when communicating the benefits of LVT.<br /><br />We need USP's.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-88340653131028221382015-09-05T22:49:02.059+01:002015-09-05T22:49:02.059+01:00Really? What were you talking about when you said:...Really? What were you talking about when you said:<br />"Ah,… here we go:<br /><br />"Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.<br /><br />These pennies add up considerably on $26.7 billion in earnings. If the $26.7 billion Wall Streeters pulled in on bonuses in 2013 had gone to minimum wage workers instead, our GDP would have grown by about $32.3 billion, over triple the $10.4 billion boost expected from the Wall Street bonuses.""<br />Twas that comment I was responding too :bRandomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-88826632614542401692015-09-05T22:00:50.241+01:002015-09-05T22:00:50.241+01:00R, the fiscal multiplier is nonsense, but that is ...R, the fiscal multiplier is nonsense, but that is not what they are talking about.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-23073052659044447732015-09-05T21:59:51.464+01:002015-09-05T21:59:51.464+01:00"I think that basically you would put it in t..."I think that basically you would put it in the bank in other words lend it back to people."<br />Banks don't lend out reserves. The bank would receive an asset (vault cash or reserves) and a liability (demand deposit.)<br />When a bank lends it expands both sides of its balance sheet.<br />Banks want most their assets to be loans, rather than reserves or cash.<br />They would most likely swap it for govt bonds.<br />The problem is you are thinking in a microeconomic perspective. Think macro. Aggregates.<br />The money you got must have come from somewhere. It came from bank lending or govt spending (sources of money creation.)<br />Banks with excess vault cash and reserves will lend to banks with less via the interbank market.<br />If a bank is short of reserves it borrows from the banks with excess or the central bank via the so-called "discount window."<br />When govt deficit spends, banks as a whole have an excess of reserves. This drives the interbank rate down to its "natural rate" (zero.)<br />Govt sells bonds that can are purchased by either people or banks to push the rate up.<br />MMT says just let things stay at the "natural rate."Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-90802819107256646412015-09-05T20:31:12.542+01:002015-09-05T20:31:12.542+01:00Mark, Wren Lewis, Krugman etc misuse the fiscal mu...Mark, Wren Lewis, Krugman etc misuse the fiscal multiplier. It is totally debunked here:<br />http://www.3spoken.co.uk/2013/05/the-misuse-of-fiscal-multiplier.html?m=1<br />Since govt spending "costs" less than tax cuts, we need more govt spending according to the geniuses. People may save money or even pay back bank loans with their tax cuts. Shock horror! It is never mentioned that this results in higher spending in the future due to them feeling more secure.<br />The end result of this taken to its logical conclusion is 100% govt in other words communism.<br />MMT on the other hand is compatible with any size of govt although most MMT "proponents" are Large Govt.<br />Hence why right-libertarian groups funding the "debt crisis" meme is unhelpful.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-67737206737251103932015-09-05T20:11:38.261+01:002015-09-05T20:11:38.261+01:00BJ, so if I burn all the money I earn it has no ef...BJ, so if I burn all the money I earn it has no effect on aggregate demand.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-19911815403324052382015-09-05T19:48:10.468+01:002015-09-05T19:48:10.468+01:00@mw
The fact that poor people spend vs rich peopl...@mw<br /><br />The fact that poor people spend vs rich people saving is a separate issue to the one I'm trying to highlight. Although I dare say exacerbates things.<br /><br />I'm really trying provide a watertight proof for the theory we can empirically say that fairness and efficiency are one and the same thing.<br /><br />Just tidying up the loose ends :) <br /><br /> benjhttps://www.blogger.com/profile/11544297406005346095noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-63542440208877694782015-09-05T19:28:50.231+01:002015-09-05T19:28:50.231+01:00This comment has been removed by the author.benjhttps://www.blogger.com/profile/11544297406005346095noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-328803324387647742015-09-05T19:23:33.913+01:002015-09-05T19:23:33.913+01:00@R
Over the long run, and all else being equal ag...@R<br /><br />Over the long run, and all else being equal aggregate demand can only shrink because of a deadweight loss.<br /><br />So, although inequality doesn't cause a deadweight loss, excess inequality due to an unfair distribution of the factors of production does.<br /><br />As does a load of other things, like taxes on production, and the mis-allocation of land due to owner occupiers imputing rent instead of paying it, conditional welfare benefits etc, etc.<br /><br />It's quite easy to calculate if we do have excess inequality simply by comparing the taxes people currently pay (% of total tax) compared to the rental value of land they own (% of total land rent).<br /><br />And low and behold it turns out the top 1% of households own twice as much land than they currently pay in tax.<br /><br />In other words, their tax liabilities should be around £80-£100bn per year more than they are now if we had a fair distribution of the factors of production. This is how wealth and welfare trickles up to the top 1% (or rather a minority within that minority) not only creating excess inequality but economic dysfunction too. <br /><br />LVT really should be called the bird killer.<br /><br /><br /><br />benjhttps://www.blogger.com/profile/11544297406005346095noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-31461306370835527022015-09-05T19:22:40.797+01:002015-09-05T19:22:40.797+01:00Ah,… here we go:
"Every extra dollar going i...Ah,… here we go:<br /><br />"Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.<br /><br />These pennies add up considerably on $26.7 billion in earnings. If the $26.7 billion Wall Streeters pulled in on bonuses in 2013 had gone to minimum wage workers instead, our GDP would have grown by about $32.3 billion, over triple the $10.4 billion boost expected from the Wall Street bonuses."<br /><br />From <a href="http://www.ips-dc.org/wall_street_bonuses_and_the_minimum_wage/" rel="nofollow">here</a>.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-25898347347566055842015-09-05T19:08:44.181+01:002015-09-05T19:08:44.181+01:00Agreed, but R makes a similar point to mine of yes...Agreed, but R makes a similar point to mine of yesterday. You wouldn't spend it all. I think that basically you would put it in the bank in other words lend it back to people.<br /><br />To your main point, all rental income is ransom value. It is no different to kidnapping. High time rates are bad for the economy.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-48535298827413292562015-09-05T18:55:48.162+01:002015-09-05T18:55:48.162+01:00"incentives to produce have not changed eithe..."incentives to produce have not changed either, so despite the now massive gap in equality between me and everyone else, GDP should remain the same."<br />If people have little money there is low aggregate demand and/or a credit/debt bubble is needed to fill demand.<br />MMT primer on profits and where they come from (macro/in aggregate):<br />http://www.nakedcapitalism.com/2011/08/philip-pilkington-profits-in-a-capitalist-economy-%E2%80%93-where-do-they-come-from-where-do-they-go.html<br />Surprisingly dividends ADD to profits. Dividends are counted as distributed profits but are then spent and generate profits.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-33425425281821775642015-09-05T18:52:31.891+01:002015-09-05T18:52:31.891+01:00"the point where feudalism died "
Haha.
..."the point where feudalism died "<br />Haha.<br />New shifts grow within old ones and never really die out. When they do the shift ain't pretty and usually violent.<br />Rent seekers save most of their money, resulting in inadequate demand. This results in the govt stepping in by running larger deficits.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.com