Yep, the former Treasury Secretary is/was always looking out for the average American...Riiiiggghhhtt.
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Around a half hour into the discussion, Sandberg asks Paulson about income inequality. Here’s what happens next:
Sandberg: “Yeah, so let’s follow up on a bunch of the things we were [talking about]. Let’s start with income inequality.”
Paulson: “Ok, well.. income inequality. I think this is something we’ve all thought about. You know I was working on that topic when I was still at Goldman Sachs..”
Rubin: “In which direction? You were working on increasing it.”
Paulson then bursts out laughing: "Yeah! We were making it wider!"
http://www.zerohedge.com/news/2015-09-06/we-made-it-wider-hank-paulson-bursts-out-laughing-when-asked-about-wealth-inequality
Comments
Policymakers for both parties have been "working for this" for +3 decades now, at the behest of the top 1%.
Free trade + open borders = restrained wage growth + income INequality
On trade:
https://www.whitehouse.gov/sites/default/files/docs/cea_trade_report_final_non-embargoed_v2.pdf
Borders:
http://www.forbes.com/forbes/2010/0628/special-report-immigration-opening-borders-mexico-let-them-in.html
Permanently doubling nationwide the end cost vegetables/fruits and TVs, to name just two items, sure does nothing for working families.
We have the idea of a large middle class as the norm. A large middle class is a function or post WWII USA. The middle class has been shrinking since the 1970s and will continue to shrink.
What is going on is the reversion to the mean - a lot of rich, small middle class and a lot of poor.
Free trade and open borders have serious, lasting, well-recognized, quantifiable benefits for everyone (not only benefits, of course; it's a complex world economically and most other ways) and especially for middle-income families. A great many of the jobs that have been lost the last 50y would have been lost anyway: technology changes. I thought I would for once not post Krugman, who has written extensively about this as well of course. The first, CEA report can be gotten (the heart of it) in the opening summary points, and proceeding through the first 12 or so pages gives much good substantiation. The Forbes article is journalism, for heaven's sake.
Here is something short and pithy on trade deficit, but at the end broadens to general benefits:
http://blogs.piie.com/trade/?p=109
Free trade and open borders have downsides, but you do not want their opposite, not at all.
It is what has happened and what will happen. The USA - companies, workers - can not compete with low tax, low social benefit, low wage countries. Any country needs a diverse work place that can provide jobs from low skill assembly, manufacture to high skill.
In addition read all of what Edmond wrote including: " immigrants (legal or illegal) has as a natural --and IMO, an intended-- consequence of tamping down wage income, and thus, increasing income INequality." There are more variables then the single variable of trade. US workers are getting screwed by offshoring, illegal immigrants, high taxation on workers and corporation ( a regressive tax, they just collect taxes from the final purchaser).
Illegal immigrants, suppress wages and take work away from citizens - not mentioned in your post. Also, not mentioned in your post factoring in how low wages increase entitlement benefits for underpaid workers and deny them the opportunity to improve their economic life and that of their children.
Regarding illegal immigrants' low wages increasing "entitlement" benefits, I find that a hard argument to swallow. Why blame the underpaid workers instead of the companies that underpay them? I don't get the impression that illegal immigrants make up the bulk of workers at companies like Walmart and McDonald's who need to get Food Stamps and other assistance because their pay is so poor. I also doubt when you collect your capital gains and dividends from funds owning these stocks that you're complaining about them underpaying their workforce and delivering more profits to you as a result.
Entitlements - companies pay what the market demands - more workers, less they have to pay. Do you go to the store and ask to pay the most you can for a product when there are lower cost items of similar quality?
Think of it this way - if illegal immigration is such a great idea - why not allow it for all jobs - COO, CFO, VPs, school teachers, college professor, investment advisor, home inspectors, doctors, nurses, lawyers, accountants, news reporters etc. (and of course the illegal immigrant is qualified for the position).
It appears Dex has not actually read the arguments, to keep repeating how harmful it is. Not that it is not, in some ways and to some extent. No one questions that. The point is the alternatives are much worse.
" I don't get the impression that illegal immigrants make up the bulk of workers at companies like Walmart and McDonald's who need to get Food Stamps and other assistance because their pay is so poor."
I'm sure this has happened in places other than Seattle. Workers who recently benefited from the new $15/hr minimum wage are now finding out that they no longer qualify for the govt benefits they were receiving. Many workers have asked their managers for a decrease in hours so they can get back on the dole. Now I could say a lot of things here but that might start a war of words so I'll just say this, Those in the govt dependent class need a wake up call on reality.
http://www.foxnews.com/politics/2015/07/22/seattle-sees-fallout-from-15-minimum-wage-as-other-cities-follow-suit/
http://mediamatters.org/blog/2015/07/23/fox-cites-misleading-anecdotes-about-workers-on/204557
Since they chose to talk about the effect on restaurants on the west coast, I wonder why they didn't look at Healthy San Francisco. In 2007, San Francisco began offering direct health care (not health insurance) to all uninsured residents, and required places with more than 20 employees to provide spending toward employee's healthcare.
Many restaurants added a surcharge to their bills, clearly identifying the purpose as to comply with the law. Not a big deal, and customers seemed accepting of a charge that went directly to help employees. (There was some confusion about the law and what you could do with surcharges, but San Francisco concluded there was no fraud.)
You ask "what is different about this wave of immigrants?" -- And then go on to hint at dark motives of those who you disagree with you. I will however answer you on point:
Here are some differences:
a) Entitlements. Government handouts. -- Which is funded by current-and future-taxpayers, and which incents un-economic behaviours on those receiving it. This did not exist in the pre-1930's immigration. So THIS is a difference.
b. The land was empty (-ish). It no longer is. People were needed to settle a vast open frontier, and typically, to cultivate & settle the land. Not too many citizen-farmers coming today. Cities are crowded, roads are crowded, schools are crowded. This too is a difference. (the crowding effect again works to increase income INequality as real estate values are inflated and rent rolls rise).
c. In the past, the USA controlled immigration. Today, we don't. Again, a difference. [ILlegals may be ~ 3.5% of the population (noone really knows) but about 36% of Federal criminal convictions. I suspect this too is a difference.
d. Mexican gangs basically own the drug trade in this country, trafficking drugs from Mexico throughout the country. Modern mobility & telecommunications -- combined with open borders -- has facilitated a ghastly epidemic of addiction in this country. This too is different -- none of this would have been logistically possible in 19th century America.
You asked for differences, there you are!
Whatever benefits you see, I will point out the immigrant population of the USA is now ~ 15%. -- Enough is enough, your side has "won" - do your victory lap, and your :"high 5s", but close the golden door.
edit: There is a similarity -- as in prior waves of immigration, the elites very deliberately use immigrant labor to undercut the wages of "natives". That IS a constant.
Economics is not physics. The answer to what might work economically depends on who you ask. A neo-Smithian, a Keynesian, an Austrian, a Supply-Sider, a Monetarist would each give you a somewhat different and nuanced answer. Each has something to contribute and each fails under certain circumstances. An integration of some components from each school is likely to be very productive.
N. Gregory Mankiw is an MIT educated Professor of Economics at Harvard University. His textbook “Principles of Macroeconomics” is terrific. Economics can be very complex and its research papers confusing with a heavy dose of mathematics and statistics. In his first chapter, Mankiw simplifies the complexity down to 10 central concepts. Here is that list of 10 basic principles:
1.People Face Tradeoffs.
2. The Cost of Something is What You Give Up to Get It.
3. Rational People Think at the Margin.
4. People Respond to Incentives.
5. Trade Can Make Everyone Better Off.
6. Markets Are Usually a Good Way to Organize Economic Activity.
7. Governments Can Sometimes Improve Market Outcomes.
8. A Country's Standard of Living Depends on Its Ability to Produce Goods and Services.
9. Prices Rise When the Government Prints Too Much Money.
10. Society Faces a Short-Run Tradeoff Between Inflation and Unemployment.
Principle number 5 relating to the benefits of trade addresses some of the issues discussed on this MFO exchange. Just about all the economic schools represented earlier support trade in a positive manner going way back to the original Adam Smith tome. Trade permits specialization into fields that each society can do most efficiently thus generating the largest output of goods and services. Trade is a win-win game.
The USA has always accepted immigrants and there has always been some segment of our population that has protested this “invasion”. Historically, this debate has raged since our independence from the British, and often that debate centers on job competition.
Economists like to correlate unemployment with the inverse of inflation rates (Principle number 10). That’s the controversial Phillips curve. It is a weak economics correlation with many exceptions. I don’t trust it whatsoever.
Our GDP growth depends primarily on two components, population and productivity (Principle number 8). Typically, our GDP growth rate hovers around 3% with about 1% related to population growth and roughly 2% attributed to productivity enhancements. That’s the generic historical data. Currently, our internal birth rate is barely sufficient to maintain a constant population. We need immigrants to keep our population growing at its historic levels.
I favor legal immigration since that permits us to control the details of the flow. The government (Principle number 7) is necessary to protect property rights and to effectively police the laws. It has failed to do so with respect to the immigration issue.
The immigration numbers appear to be staggering, but not so when contrasted against our huge total population. The current population of illegal immigrants is large but manageable. They can be successfully integrated into our society just as we have successfully demonstrated in the past.
We do need better control of our borders to substantially reduce the human leakage. This is not a major crisis. It is not the same magnitude crisis we have successfully navigated in the past like World War II or like our infamous Depression. We just need to do it.
It is not unexpected that an “Inequality Gap” exists and that it is getting larger as our prosperity increases. That is an inherent characteristic of a Capitalistic economic system. You might not like it, but that is its natural flow of wealth. The good news is that the pie is bigger for everyone.
I’m not an economist, and I might be way off base on these issues. But that doesn’t translate into no opinion on the matter. To quote Moliere: “It infuriates me to be wrong when I know I'm right.” But my sensitivities aside, I am interested in your comments.
Best Regards.
Keeping a bank of economists on the payroll is not a luxury available to a typical American household. I will point out too the pro-trade lobby used these same arguments for NAFTA – telling us how so many American jobs would be created by it. --- Now +20 years since enactment, I saw precious few post-mortems done on the effect of that trade law—though its generally conceded (very quietly) that net job LOSSES were incurred --- quite to the contrary of what the learned (i.e. bought and paid for) economists said. Perot was right.
As for immigration and "growth" --- Growth is not always good for a typical American family. "Growth" is usually shorthand for "more GDP". However GDP is a very POOR measure of economic welfare. Its statistical predecessor (GNP) was developed during WWII to measure production of goods for the war effort. GDP is essentially "spending" - but spending can be good or bad. Spending on the funeral of a loved one, or paying for a divorce attorney, or being treated for a cancer, will count toward GDP, however, generally deaths, disease, and family breakups would not be deemed improvement in economic welfare.. “Growth” aids corporate profits, but that does not necessarily translate into general prosperity – or wage-growth (the topic of this thread). It may have once upon a time, but not for a few decades now…
Immigrants increase GDP because they represent a new household unit which "spends" The spending may be through their own productivity or from govt handouts. Poor immigrants, to the extent they compete with for low-wage jobs against Americans with (or without) a high-school diploma, and do so in large numbers, they depress wages and wage growth. So GDP "growth" goes up, but wages stagnate. Would Ferguson and Baltimore have burned if those rioting knew they were expected to be at work the next day? More than likely, immigrants were given the jobs they would otherwise have had.
By the way, with an immigrant population of ~14% , open borders, +30 years of ever more free-trade agreements and our GDP at record levels, I note that ~ 46 million are on food stamps. How much more “success” and “growth” can this nation stomach?
If illegal immigration is such a great idea - why not allow it for all jobs - COO, CFO, VPs, Human Resources, school teachers, college professor, investment adviser, home inspectors, doctors, nurses, lawyers, accountants, news reporters etc. (and of course the illegal immigrant is qualified for the position).
For Extra Credit:
If illegal immigration is such a great idea, why have any laws restricting it?
The myth of 'American exceptionalism' implodes
http://www.theguardian.com/commentisfree/cifamerica/2011/jan/17/economics-globalrecession
"The rich, however, have got much richer since the 1970s, as every measure of US income and wealth inequality attests. The explanation is simple: while workers' average real wages stayed flat, their productivity rose (the goods and services that an average hour's labour provided to employers). More and better machines (including computers), better education, and harder and faster labour effort raised productivity since the 1970s. "
"Over the last 30 years, the vast majority of US workers have, in fact, gotten poorer, when you sum up flat real wages, reduced benefits (pensions, medical insurance, etc), reduced public services and raised tax burdens. In economic terms, American "exceptionalism" began to die in the 1970s."
http://www.epi.org/publication/a-decade-of-flat-wages-the-key-barrier-to-shared-prosperity-and-a-rising-middle-class/
"According to every major data source, the vast majority of U.S. workers—including white-collar and blue-collar workers and those with and without a college degree—have endured more than a decade of wage stagnation. Wage growth has significantly underperformed productivity growth regardless of occupation, gender, race/ethnicity, or education level."
No one is proposing an alternative. We are pointing out the results and what has happened and what will happen.
So if you are for 'free trade' and illegal immigration - you won. If you have money enjoy your victory, your living costs will be kept down and you will make money from your investments. At the same time, the middle class will continue to shrink. The poor will become poorer. Young people will not have the opportunities of their parents. ENJOY!
cato.org/publications/commentary/immigrant-welfare-queen-myth
Here is a link to the more liberal CNN refuting it:
money.cnn.com/2014/11/20/news/economy/immigration-myths/
cato.org/publications/commentary/immigrant-welfare-queen-myth
Here is a link to the more liberal CNN refuting it:
money.cnn.com/2014/11/20/news/economy/immigration-myths/
Try Breitbart.com.
Or just google "%age of immigrants in Federal crimes" (or something to that effect.
An older stat (which I have not googled for some time, but did +15 years ago) is how much tax money goes to pay for schooling of illegals. LA county (my former stomping ground) is substantially illegal kids --- so you have "nativist" tax payers whose property taxes are going to pay for illegals --- rather than say, constructing desalinization plants for a water-starved state...
wsj.com/articles/the-mythical-connection-between-immigrants-and-crime-1436916798if
Or google search this: https://google.com/?gws_rd=ssl#q=The+Mythical+Connection+Between+Immigrants+and+Crime
Here is an excerpt from the article:
"They might start by pointing out that numerous studies going back more than a century have shown that immigrants—regardless of nationality or legal status—are less likely than the native population to commit violent crimes or to be incarcerated. A new report from the Immigration Policy Center notes that while the illegal immigrant population in the U.S. more than tripled between 1990 and 2013 to more than 11.2 million, “FBI data indicate that the violent crime rate declined 48%—which included falling rates of aggravated assault, robbery, rape, and murder. Likewise, the property crime rate fell 41%, including declining rates of motor vehicle theft, larceny/robbery, and burglary.”
A separate IPC paper from 2007 explains that this is not a function of well-behaved high-skilled immigrants from India and China offsetting misdeeds of Latin American newcomers. The data show that “for every ethnic group without exception, incarceration rates among young men are lowest for immigrants,” according to the report. “This holds true especially for the Mexicans, Salvadorans, and Guatemalans who make up the bulk of the undocumented population.”
It also holds true in states with large populations of illegal residents. A 2008 report by the Public Policy Institute of California found that immigrants are underrepresented in the prison system. “The incarceration rate for foreign-born adults is 297 per 100,000 in the population, compared [with] 813 per 100,000 for U.S.-born adults,” the study concludes. “The foreign-born, who make up roughly 35% of California’s adult population, constitute 17% of the state prison population.”
Some people object to all immigration, as Lewis explained. Others object to illegal immigration (on ethical grounds, on the grounds that "I followed the rules, so everyone should", etc.). Interesting point - If the problem is the illegality, just make it legal, or at least make the path to permanent residency less onerous so few people will be here illegally.
Entitlements - one needs "papers" to receive these, one can't be undocumented.
For example, the USDA writes: http://www.fns.usda.gov/sites/default/files/Non-Citizen_Guidance_063011.pdf
Crime (aside from being here in violation of some law)?
Looking past sensationalist headlines, one needs to delve into the figures to see what they represent, how reliable the statistics are (e.g. immigrants in prison likely don't all admit to their residency status), how well the figures measure what they claim (e.g. looking at federal crime statistics is almost meaningless when violent crimes are almost all state crimes), and distortions (we have been hearing lots about how minorities are stopped/arrested/convicted disproportionately).
USA Today: Voices: How violent are undocumented immigrants?