Skip to main content

View Diary: Austerity doesn't work: New IMF report details the damage (167 comments)

Comment Preferences

  •  Let's try Living Wages and Salary Caps first (13+ / 0-)

    We'll promise to willingly be subjected to the worst that austerity policies can do, but only if the Friedmanites will allow us to set tax rates and wage minimums and maximums - I'm thinking no business owner should make more than 100 times the hourly rate of his lowest-paid employee - for a period of, say, three years.  After that, we'll see if the people still want to go up Galt's Gulch.

    •  It is an interesting thought with historical ... (7+ / 0-)

      ... precedent.  Most people seem to have forgotten that the last time we were engaged in a war against an existential threat (yeah, remember the wars?  Where were they again...?), the government instituted a Command Economy.  Prices and wages were frozen and then controlled by the government until the threat was eliminated.  And then an unbelievably progressive tax system helped to bring the war debt under control.  Of course, the enormous economic growth that sprang from a newly released but well-managed command economy didn't hurt.  

      Imagine how quickly our wars would end if every time we fought one we instituted price and wage controls.  In fact, we might not ever fight one again.

      Please do not be alarmed. We are about to engage... the nozzle.

      by Terrapin on Thu Jan 03, 2013 at 04:45:30 PM PST

      [ Parent ]

    •  I've argued that we take the carrot part (11+ / 0-)

      of that approach.

      I'm all for lower business taxes, if those lower business taxes are directly tied to addressing income inquality. The lower the gap between your hour employees and management, the lower your taxes.

      In the 1950s, CEOs made about 20 times their average worker. In the 1980s, it was about 42 times. Now it's 380 times.

      If companies want a 20% tax rate, let them use the 20-to-1 ratio. If a CEO wants to take advantage of that rate and still pay herself $1MM, then the hourly employee takes home 50K a year. Since most American business gross $2.4 million or less, and since most CEOs at that level don't have the 380x gap anyway and are in all likelihood closer to a 5x or 10x gap, you're lower takes on these true job-creators while adding stimulating the economy via increased payrolls. Where the policy would hurt, of course, is at the upper level where billion-dollar CEOs face a choice of tapping out at the highest tax rate (whatever it's set at -- 45%?) or putting more of their own salary into the company.

      It's a nifty idea in theory but I've gotten into it many times on lack of implementation feasibility, which is true. Still, something along those lines would be a win-win for Dems. We get to fight for lower taxes for true mom-and-pop shops while pressing for increased wages.

      •  Warren/Logothetis 2016 (1+ / 0-)
        Recommended by:
        melo

        There's our win-win!  ;-)

        Wage & price controls would be difficult to implement, not in the least because they fly in the face of everything for which the Austrian School stands.  Those guys are going to fight this level of Keynesianism to the last ditch, but I'm with you - I think it makes sense, lowers and raises taxes in the right places, and compels the greedheads to put profits back into actually creating jobs as opposed to pocketing them.

        Now, we just need a few powerful legislators...

        •  ? (0+ / 0-)

          Are wage/price controls Keynesian?

          •  He was more about government stimulus (1+ / 0-)
            Recommended by:
            melo

            and deficit spending; I'm using it here as a kind of shorthand for "government intervention in the economy," which is how our Hayek-following adversaries would see it.  Keynes was writing at a time when there were actual Communist (in name only) states, so his ideas about wage and price controls would have been colored by contemporaneous views of Stalin, but given the broad outline of his theories, I'm not certain he'd be opposed to these sorts of controls under a democratic regime - at least, nothing on the front page of maynardkeynes.org seemed to outright preclude them:

                Keynes argued that full employment could not always be reached by making wages sufficiently low. Economies are made up of aggregate quantities of output resulting from aggregate streams of expenditure - unemployment is caused if people don't spend enough money.

                In recessions the aggregate demand of economies falls. In other words, businesses and people tighten their belts and spend less money. Lower spending results in demand falling further and a vicious circle ensues of job losses and further falls in spending. Keynes's solution to the problem was that governments should borrow money and boost demand by pushing the money into the economy. Once the economy recovered, and was expanding again, governments should pay back the loans.

                Economically and socially successful economies have significant contributions from both the government and the private sectors.

                Keynes's view that governments should play a major role in economic management marked a break with the laissez-faire economics of Adam Smith, which held that economies function best when markets are left free of state intervention.

            http://www.maynardkeynes.org/...

            •  he would probably be so incensed (1+ / 0-)
              Recommended by:
              Unitary Moonbat

              at the idiocies of the American republican party, including the ever-popular sport of Debt Ceiling Crashing, that he'd be happy to smack them with something like wage controls.

              (I don't really know that. It's just a pleasant, cathartic image. Keynes himself would probably be bemused that he's being held up as a left-wing icon.)

              if necessary for years; if necessary, alone

              by SouthernLiberalinMD on Sat Jan 05, 2013 at 12:56:22 AM PST

              [ Parent ]

      •  or lower taxes in return for (0+ / 0-)

        investing here in the real economy--for building factories and railroads and shit like that, as opposed to rewarding these bastards for hoarding--and weird obscure forms of international gambling.

        if necessary for years; if necessary, alone

        by SouthernLiberalinMD on Sat Jan 05, 2013 at 12:53:10 AM PST

        [ Parent ]

    •  not hourly - either monthly or annual rate (3+ / 0-)

      to adjust for part time workers.

      And a fully loaded rate with benefits & bonuses - paid at the top, not so much at the bottom

      But these are just details - I agree with your concept.

      Although I have this nagging belief that wage and price controls never really work - I'd wnat to research that and figure out why, to see how to make this one work  better.

      •  They've worked in wartime (1+ / 0-)
        Recommended by:
        DarkLadyNyara

        A command economy enabled Britain to survive WWI, and the United States to win WWII.

        Good point about how to figure wages.  Really, it's going to have be up to people with much greater economics smarts than I to come up with how to implement a directed economy - I'm just here to push the Overton Window to the left.  :)

      •  We have had these type of freezes in my memory. (1+ / 0-)
        Recommended by:
        JesseCW

        When the runaway inflation and the oil embargo happened, the pres did a freeze at that time.  What happened when it lifted, EVERYTHING went up in price at one time, and no one's wages were increased during the freeze.

        "Death is the winner in any war." - Nightwish/Imaginareum/Song of myself.

        by doingbusinessas on Fri Jan 04, 2013 at 01:22:41 PM PST

        [ Parent ]

    •  You're awesome. (1+ / 0-)
      Recommended by:
      Unitary Moonbat

      How the fuck are they going to manage when climate change hits the Gulch, anyway?

      if necessary for years; if necessary, alone

      by SouthernLiberalinMD on Sat Jan 05, 2013 at 12:52:00 AM PST

      [ Parent ]

      •  There's a lot of things about the Gulch (1+ / 0-)
        Recommended by:
        SouthernLiberalinMD

        that those cats don't seem to grok.  Who mows the lawns, or changes diapers, or waits tables in what must be some awesome Objectivist restaurants?  Climate change will be the least of their concerns, when they figure out that their pedicurist isn't allowed past the guard at the gate.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site