If you give a dollar to a middle class family, they will spend it in the local economy and spur growth, or they will use it to make a high return investment, such as paying for their children’s college. If you give that same dollar to a very wealthy individual, instead of circulating it in the local economy, they will place it in lower-return investments, often offshore. . . . → Read More: Congressman Bill Foster Explains Why Middle Class Tax Cuts Lead To Economic Growth
The California Constitution says the water belongs to the people. Yet the state gives water almost free to agriculture–resulting in enormous waste and dire “shortages” during droughts. If the state were to charge for water, that would end the water crisis–and solve California’s fiscal crisis too. . . . → Read More: Whose Water? Ours! How to End California’s Water Crisis
Back when I studied economics, we “proved” in class that a minimum wage causes unemployment. But that proof depends on assuming a perfectly competitive market. Big low-wage employers like Wal-Mart have substantial market power; they can deliberately under-staff operations to force down wages. In that case, a minimum wage increase can actually create jobs–if it can be enforced. . . . → Read More: Increasing the Minimum Wage Can Actually Create Jobs–If It’s Enforced
The new Congressional Budget Office report projects that the Affordable Care Act will lead to a decline in full-time equivalent workers of 2.5 million. This is people voluntarily deciding to work less–like mothers with small children, or workers in poor health or close to retirement. That should mean higher wages for the remaining workers. . . . → Read More: The Affordable Care Act Will Raise Wages
Quantitative Easing (QE) was supposed to stimulate the economy by encouraging investment with low interest money. That hasn’t happened, but why? Does no one want to borrow, or do banks not want to lend? My favorite financial columnist, Yves Smith, has laid out both theories. . . . → Read More: What’s Crippling the Recovery: Lack of Investment Demand or Too-Big-to-Lend Banks?
A carbon tax would operate much like a diamond tax, for reasons both of demand and supply. . . . → Read More: Taxing Carbon is Like Taxing Diamonds
In 1995, we encountered a group of economic advisors to Governor John Engler of Michigan, intent on cutting property taxes. We reminded them of California’s 1979 Proposition 13. After Prop. 13 rolled back and froze property taxes, sales taxes reached crushing levels, budget crises became routine, local services collapsed, and public schools fell from the best in the nation to among the worst. But Engler was determined. . . . → Read More: How a Progressive Tax System Made Detroit a Powerhouse (and Could Again)
It was the perfect “natural experiment:” in April 1992, New Jersey’s minimum-wage was scheduled to rise from $4.25 an hour to $5.05, while neighboring Pennsylvania’s minimum wage remained unchanged. Princeton economists David Card and Alan Krueger surveyed over 400 fast food outlets in both states, before and after the increase, in order to test the conventional economic wisdom that minimum wages cause unemployment. What did they find? No apparent effect on employment. None. Zip. Economic hell broke loose… . . . → Read More: The Economics Anti-Textbook: A Critical Thinker’s Guide to Microeconomics, by Rod Hill and Tony Myatt
Conventional economics wittingly or unwittingly provides cover for the One Percent, by professing that “the market” operates benevolently on its own. Alex Marshall gives us an entertaining, thoughtful, and well-written antidote to this dangerous abstraction. . . . → Read More: It Takes Government to Create Markets: Alex Marshall’s The Surprising Design of Market Economies
As most of us know, sales taxes are “regressive.” That is, when sales taxes are “passed on,” they fall harder on poorer customers than on richer ones. That’s why many states exempt food and medicine, as does New York, (except for restaurant food). But sales taxes are also “passed back” onto retailers and service providers. It’s the “passed back” portion of sales taxes that do the most damage, because—unlike profit taxes—they take a bite from gross revenues before expenses. Sales taxes fall hardest on small, labor-intensive retailers, with high volume and low profit margins.
. . . → Read More: Grover Norquist is Right to Oppose Internet Sales Taxes