Economy: How can we spend more when we make less?

[Todd]

All the big news says we need to spend more to put money back into the economy. and they say spending is down by such and such a percentage from the year before.

The little local stations have drawn some interesting corelations showing that the same amount spending is down so are family incomes.

What are your thoughts? How can you put more money into the economy if you don't have it in the first place?

 

[MissTaken]

Todd, dear.

Is there a right answer to your question?

 

[Todd]

Todd, dear.

Is there a right answer to your question?

I don't rightly know, I was hoping the smart people on here could help me, but they are to busy for us plebians.

 

[MissTaken]

Well, I haven't kept up with the details, but supposedly the economic stimulus package is supposed to help by providing more money to be spent. I gave up trying to follow it as it seemed to be more political maneuveuring than any intense interest in the middle class or working poor.


The point remains, you can't get blood from a stone, nor can you spend money you don't have.

 

[patient1]

How can you put more money in the economy when you don't have it in the first place?

Spend& borrow- the power of plastic!

Seriously, people do it. The government does it.
Another way is to increase productivity, which attracts capital, which increases productivity which further increases leisure time/ standard of living, which results in consumer spending.

 

[pdx39]

One solution

How about making the minimum wage a living wage? This would improve the economy more than the latest round of corporate tax breaks will.

 

[MissTaken]

Hmmmm

so I didn't do the economy any favors by paying off all of my plastic and loans this month?

I was wondering about that as it was a rather large sum of money, but wasn't spent in the "mainstream."


Thank you for your explanation. I can't manage a check book well, so the nation's economy is far beyond what I can understand.

 

[p_p_man]

I'm sure the European Union...

will look favourably on any application from the United States for a loan...

 

[Todd]

Re: One solution

How about making the minimum wage a living wage? This would improve the economy more than the latest round of corporate tax breaks will.

yeah like the democrats or republicans would go for that or allow the other to

it is a good thought though

 

[Todd]

Re: How can you put more money in the economy when you don't have it in the first place?

Spend& borrow- the power of plastic!

Seriously, people do it. The government does it.
Another way is to increase productivity, which attracts capital, which increases productivity which further increases leisure time/ standard of living, which results in consumer spending.

how is increased productivity achieved when the government , both of them D & R , are anti-private enterprise?

 

[patient1]

That is the impossible question, not "how can you put more money in the economy when you don't have it in the first place"

 

[ExLimey]

Re: How can you put more money in the economy when you don't have it in the first place?

Spend& borrow- the power of plastic!

Seriously, people do it. The government does it.

<CRINGE> (can I make that any bigger?)

I see people everyday who are in over there heads with credit card debt. Maybe the government does it, but somehow they've figured out a way to run a deficit.

MissTaken - You may not have helped the economy but you've done yourself a HUGE favor.

People don't realize that saving money can have an affect on the economy (although granted it takes longer and is not as great as spending). Supposedly, if you save money in a financial institution, what you are doing is providing more capital for the bank to lend out to others.

You can't always believe everything the media tells you. Alot of them right now are saying how it's a great idea to refinance your credit card debt into a second mortgage or refinance it and your mortgage into a new loan. If your credit card balances are growing each month you are outliving your income. So you refinance, most people who don't then make adjustments to their lifestyle will be back with massive debt within a year or two. Plus they won't have the equity to refinance again and will be screwed.

 

[morninggirl5]

I paid off all my credit cards over the summer. I pulled one out for the holidays but the damage will be paid off in January.

I did my part to help the economy.

 

[SINthysist]

The problem with raising the minimum wage, to a living wage is, what does the employer do? Well, he/she has to cut back on employee hours or raise the price of her/his widgets. SO you then get unemployment and raisinf prices. Now you need a new minimum living wage as well as more government help for the displaced. This again raises prices and decreases employment.

But to tell the truth, where I live very few places are paying minimum wage. There are too few willing to work, so the hourly rates are currently much better than minimum wage.

The correct solution is not spending, but saving and investing. Too much debt eventually drags the economy, people have to stop spending, people go bankrupt, etc.

Look at the auto industry. They proper themselves up with zero percent financing and lower prices. So everyone in the market to buy went out to buy. Now with slumping sales, real people are going to be laid off. The feelgood patriotic thing proved to be the wrong one. But I also pointed that out in the days after 9-11.

The answer to the question is that short of assuming debt, we cannot. The government knows that. Now I like the idea of them reducing taxes, but not as a quick fix, everyone go out and spend it, but for everyone to have it to save and invest. That is what I did with my rebate and what I will do my tax savings. I don't think we can spend our way out of the doldrums either from government or private sector.

Sorry about rambling, I am having to divide my attention between this and a tired three-year who will not lay down for her nap.

 

[pdx39]

The problem with raising the minimum wage, to a living wage is, what does the employer do? Well, he/she has to cut back on employee hours or raise the price of her/his widgets. SO you then get unemployment and raisinf prices. Now you need a new minimum living wage as well as more government help for the displaced. This again raises prices and decreases employment.

This same arguement has been used thousands of times against the idea of establishing and raising the minimum wage for over 60 years. It has never happened yet. The economy has always improved with every increase through the decades.

 

[SINthysist]

But for whom does a national minimum wage work for? Where I live, 18K can be a decent living for a small family, while in NYC, that won't cover basic rent. Set it too high, and you prohibit certain businesses in many areas of the country. Set it too low and who are you helping.

Are you in favor of a wage ceiling?

It is a window dressing issue that politians like to use to say, "Hey, I'm for the working stiff. Vote for me so he can get his fair shake!" Only problem is, most WORKING stiffs, the people who are trying are already above minimum wage. THe others long for a Dole system, i.e., like farm subsidies, they would rather be paid not to work...

 

[pdx39]

Two ways to do it

I favor setting the minimum wage to be one sixth the houry salary of a US Senator. This would make it $10.06 right now.

Cities and States can also set thier own living wage ordinances. Several Metropolitian areas across the US have already done so

 

[SINthysist]

Hey, I think they just voted a raise.

When was the last time the minimum was higher than Mickey D's pays?

 

[LadyDarkFire]

I think their suggesting that people dip into their savings, nest eggs, college accounts, etc. This money that people were saving up for retirement, etc. could provide a boost to the economy. Frankly, I think I'll keep my savings where they are, my finances are comfortable, and I need that money for the rest of my education.

 

[SINthysist]

Ditto!

Ahm wid chew!

 

[tigerjen]

Tough question....this is a topic for continual debate.....
I know I've spent a lot of money this year on things for
myself and others, and I only make $11.46/hour at
my job (which I feel that for all the shit I do and more,
I should be getting at least $15/hour, but that doesn't
happen in a non-profit agency). Its crazy!

 

[SINthysist]

Then do something for yourself. My spouse and I did. We own everthing in our lives. We have no debt. We did not sit around waiting for "The Government" to make things right for us, we did.

How?

By doing currently un-American things.

Sacrifice, Savings, and Investment. Doing without and being satisfied with what we had. Paying for our educations as we went along. Having the same television for 15 years. Hell the monitor and keyboard that I am using are that old. Maintenance and taking care of what we have.

This is the greatest nation in the world and too many people are making excuses for themselves. Too many look to government first.


Name one millionaire that minumim wage laws created!

 

[horny_giraffe]

Re: Two ways to do it

I favor setting the minimum wage to be one sixth the houry salary of a US Senator. This would make it $10.06 right now.

Cities and States can also set thier own living wage ordinances. Several Metropolitian areas across the US have already done so

Ha! An interesting thought.

Personally, I think mimimum wage puts too much strain on corporations, though. As it was said before, they'll just pass it on to the consumer. It hurts small businesses the worst--and as I understand it, small businesses employ more people than large corporations.

What we really need to do is to stick it to the ultra-rich.

Yeah, sure, I hear the rich people say "It isn't fair." But the reality is that the poor and middle class spend a greater percentage of their income. They need things--like food, clothing, etc. The extremely wealthy need the same things, but they cost them the same as the poor folks. They save a greater percentage of their money.

Honestly, suppose I'm only bringing home 5% of my 10-million-dollar-a-year income? I'm still bringing in 500K per year! Even if I need 100K per year, I'm still saving 400k per year! Compare that to the regular wage earner keeping 75% of 30K. The wage earner is still only bringing home 22.5K, and spending every dime!

Frankly, I don't think the wealthy stay wealthy by paying taxes. They have tax attorneys and accountants on their payroll, figuring out how they can dodge taxes (legally, of course .) Unfortunately, I suspect that income taxes only touch the working wealthy, and in some professions they really need that money. Doctors need to pay their school bills, malpractice insurance, etc. On top of that, even educated people sometimes insist on large families. You wouldn't want to punish their kids because their parents are imprudent. What we need is some kind of cap on individual assets, and a serious increase in estate taxes. Personally, I'm not interested in seeing something like "landed gentry" or some pseudo-aristocracy arising in the heirs of the Bill Gates of the world.

 

[pdx39]

Name one millionaire that minumim wage laws created!

Name one minimum wage worker who wasn't better off when he got a raise.

"What we really need to do is to stick it to the ultra-rich."

I agree with that and would like to see progressive tax systems that make large corporations and the super rich pay a higher rate than the working poor and middle do. I currently pay a 36% higher rate in state income taxes than Nike, Intel, and Wells Fargo do.

The ratio is even worse for property taxes.

 

[SINthysist]

ME

Giving someone a raise of minimum wage is tantamount to rewarding them for doing the barest minimum in society. Back when I was a big lefty, I did the minimum required to buy that weekly bag of dope. Once that was secured, I didn't give a flying fawk. I spent too long comforatably numb.

I do remember one raise in particular. I got promoted to Lance Corporal and that pushed me into a higher tax bracket, so I took home less.

[Which is another pet peeve of mine.

Service people should not pay income tax. The pay is way too low as it is. In fact, maybe less than or equal to minimum wage.]

Minimum wage is merely a feel-good band aid for the left as well as one of thier class warfare weapons. It is a political creature, not an economic creature. It did not help me to become a millionaire. Stuggle, education, frugality were the keys to my success.