As things in the economy go from manipulated to ultra-manipulated, make sure you're ready for totally extreme changes. Although only a few companies are driving the stock indexes, they are heavily dependent on policy decisions and the aggressive addition of more fiat units into..
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$600/wk Unemployment Insurance cannot deliver the benefits of a $600/wk Job Guarantee. From the outset, I should say JG is not a replacement for UI, no matter what you may have heard. I’ll get to this later, but read this long 🧶 w/ that in mind.
Automatic stabilization: Both $600/wk UI and JG will provide counter cyclical spending. But UI will be weaker. Counter-cyclical stabilization is not just about the absence of income. It is also about the transmission and structure of economy
Firms don't like to hire the unemployed. Mass and long-term unemployment make the problem worse. JG would recover labor markets much faster than a UI of the same amount, both b/c of the higher direct, induced & tertiary employment effects & b/c of private firm hiring preferences.
JG stabilizes spending patterns better. Uncertain job prospects may mean more cautious spending from the unemployed compared to those w/ guaranteed jobs.
UI is temporary, which makes matters worse. Even if it were permanent, it still won't resolve the problem of job scarcity.
Nations who once achieved tight full employment through active labor market policies demonstrate that unemployment does NOT fluctuate the same way it does w/o them. Direct employment, ELR type policies diminish drastically/even eliminate these amplitudes (eg postwar Japan/Sweden)
Surprised so many smart people bought into the idea that $600/wk UI is the same as $600/wk job guarantee (or better) or that JG jobs must be inherently inessential. I\u2019ve addressed this many times & will post a thread later. Trying not to spend precious family time on Twitter.
— Pavlina R Tcherneva (@ptcherneva) December 29, 2020
Automatic stabilization: Both $600/wk UI and JG will provide counter cyclical spending. But UI will be weaker. Counter-cyclical stabilization is not just about the absence of income. It is also about the transmission and structure of economy
Firms don't like to hire the unemployed. Mass and long-term unemployment make the problem worse. JG would recover labor markets much faster than a UI of the same amount, both b/c of the higher direct, induced & tertiary employment effects & b/c of private firm hiring preferences.
JG stabilizes spending patterns better. Uncertain job prospects may mean more cautious spending from the unemployed compared to those w/ guaranteed jobs.
UI is temporary, which makes matters worse. Even if it were permanent, it still won't resolve the problem of job scarcity.
Nations who once achieved tight full employment through active labor market policies demonstrate that unemployment does NOT fluctuate the same way it does w/o them. Direct employment, ELR type policies diminish drastically/even eliminate these amplitudes (eg postwar Japan/Sweden)
1/ To add a little texture to @NickHanauer's thread, it's important to recognize that there's a good reason why orthodox economists (& economic cosplayers) so vehemently oppose a $15 min wage:
The min wage is a wedge that threatens to undermine all of orthodox economic theory.
2/ Orthodox economics is grounded in two fundamental models: a systems model that describes the market as a closed equilibrium system, and a behavioral model that describes humans as rational, self-interested utility-maximizers. The modern min wage debate undermines both models.
3/ The assertion that a min wage kills jobs is so central to orthodox economics that it is often used as the textbook example of the Supply/Demand curve. Raise the cost of labor and businesses will buy less of it. It's literally Econ 101!
4/ Econ 101 insists that markets automatically set an efficient "equilibrium price" for labor & everything else. Mess with this price and bad things happen. Yet decades of empirical research has persuaded a majority of economists that this just isn't
5/ How can this be? Well, either the market is not a closed equilibrium system in which if you raise the price of labor employers automatically purchase less of it... OR the market is not automatically setting an efficient and fair equilibrium wage. Or maybe both. #FAIL
The min wage is a wedge that threatens to undermine all of orthodox economic theory.
1/4 Most people, especially academic economists, think that the controversy over the minimum wage is a contest over facts. It's not. It's a contest over power, status, and wealth. It is just like the contest over racial and gender justice.
— Nick Hanauer (@NickHanauer) January 17, 2021
2/ Orthodox economics is grounded in two fundamental models: a systems model that describes the market as a closed equilibrium system, and a behavioral model that describes humans as rational, self-interested utility-maximizers. The modern min wage debate undermines both models.
3/ The assertion that a min wage kills jobs is so central to orthodox economics that it is often used as the textbook example of the Supply/Demand curve. Raise the cost of labor and businesses will buy less of it. It's literally Econ 101!
4/ Econ 101 insists that markets automatically set an efficient "equilibrium price" for labor & everything else. Mess with this price and bad things happen. Yet decades of empirical research has persuaded a majority of economists that this just isn't
5/ How can this be? Well, either the market is not a closed equilibrium system in which if you raise the price of labor employers automatically purchase less of it... OR the market is not automatically setting an efficient and fair equilibrium wage. Or maybe both. #FAIL
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I’m torn on how to approach the idea of luck. I’m the first to admit that I am one of the luckiest people on the planet. To be born into a prosperous American family in 1960 with smart parents is to start life on third base. The odds against my very existence are astronomical.
I’ve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the person’s part, whereas “smart” luck involved awareness followed by action before the circumstances changed.
So, was I “lucky” to be born when I was—nothing I had any control over—and that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write “What Works on Wall Street?” Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
Ironies of Luck https://t.co/5BPWGbAxFi
— Morgan Housel (@morganhousel) March 14, 2018
"Luck is the flip side of risk. They are mirrored cousins, driven by the same thing: You are one person in a 7 billion player game, and the accidental impact of other people\u2019s actions can be more consequential than your own."
I’ve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the person’s part, whereas “smart” luck involved awareness followed by action before the circumstances changed.
So, was I “lucky” to be born when I was—nothing I had any control over—and that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write “What Works on Wall Street?” Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.