Unemployment statistics, per capita income, etc

[Lawrence of Arabia]

Che - a very small part of america is underemployed. My guess is that the majority of them are teenagers etc. who work a few hours a week. For all intents and purposes, underemployment is a 3rd world country problem.

[Urban Ranger]

Originally posted by Lawrence of Arabia
Per Capita income is a good measure of how well off a person is in a 1st world country.

Maybe for Sweden, Finland, and Norway, but definitely not for the US.

A few excessively rich people will completely distort the picture.

[Urban Ranger]

Originally posted by Lawrence of Arabia
Heres a demand and supply diagram. Q is quantity (or consumption) and P is price. D is a the demand curve of a unit elastic good.

That justs looks like a stock graph.

Demand becomes inelastic as you go to the right and elastic as you go to the left.

[Lawrence of Arabia]

UR - of course, but a model does not have to be totally accurate in order to predict something.

[DuncanK]

Originally posted by Lawrence of Arabia
Che - a very small part of america is underemployed. My guess is that the majority of them are teenagers etc. who work a few hours a week. For all intents and purposes, underemployment is a 3rd world country problem.

That's because you never leave your ivory tower just kidding

LoA,

How come when I start a thread you never retype a text book?

[Urban Ranger]

Originally posted by Lawrence of Arabia
UR - of course, but a model does not have to be totally accurate in order to predict something.

I have always been thinking, can supply and demand explain all the situations? Apparently not. It seems that the classic economics has missed some important factors.

Take Japan for example. The Japanese are highly nationalistic - they will buy products manufactured by Japanese companies even if they are more expensive.

Another one is the organic movement. A lot of people now buy organically grown produce only, even if they cost more. They are more concerned with health instead of money.

[chequita guevara]

Originally posted by Lawrence of Arabia
Che - a very small part of america is underemployed. My guess is that the majority of them are teenagers etc. who work a few hours a week.

People who don't want more work aren't underemployed, just like people who aren't seeking worker aren't unemployed. Underemployment only consideres people who want more work and can't get it, and it's a significant problem in America.

[DuncanK]

Yeah, It's the service jobs where you only get less than full time work and therefore no benefits.

[Ramo]

Okay, suppose the income distribution follows a normal distribution ("bell curve"), there are several things you need to know.
Arithematic mean (average)
Median - median is the value where 50% of the curve is to its left and 50% is to its right
Mode - mode is the value of the highest point on the curve
Range - range is simply max - min
The average is easily skewed when there are just a few excessively rich people. The median usually gives you a better picture, but it too can be skewed. The mode gives you the clearest picture of how your average Joe on the street is doing in terms of income.

If the distribution is Gaussian, there wouldn't be any skew and the mean would be the same thing as the median and mode.

[Berzerker]

Sava - several points

1) Unemployment rates have increased in recent months, perhaps because of economic slowdown, but unemployment benefits were extended too. When that happens, many people who are unemployed don't run out and get jobs as fast as they would if their benefits were running out. And as many people stay on unemployment, others join the rolls. The result is a higher rate of unemployment, but one that is misleading when compared to periods when benefits are at their normal timeframe.

2) Rates also ignore the unemployed who've given up looking for work or who no longer receive benefits, so the rate is always under estimated. But government needs a standard by which to make calculations, so benefits are how they make the calculation.

Capitalists always tell me that supply and demand dictates prices and wages. But I think that this may be a fallacy. There is essentially infinite high demand for food and health care. I mean, people need to eat. And in this current economy, most people need automobiles, cars, and telecommunications. Could the huge profits that corporations take actually be making our economies and production capacities inefficient?

You're mixing issues without linking them. What does the demand for certain products and services have to do with corporate profits?

I mean, if we took the money that is wasted on CEO bonuses, corporate fringe benefits and such, I bet it would come to an enormous figure.

Yup, maybe enough to run the federal government for an hour or so.

All things being equal, if that amount of money were put back into the system instead of going into the pockets of the rich, would it make our economy more efficient?

Do you think those pockets are black holes? Where do you think the money goes? Right back into the economy in one way or another.

My gut tells me that capitalism might be more inefficient than it's fans think.

Common sense dictates capitalism is the most efficient for one simple reason - a complex economy is too complicated for a handful of educated elites to run. Supply and demand functions because of information sent back and forth between producers and consumers, millions of decisions made every day by millions of people.

But please, don't think in black and white. This isn't a discussion of capitalism vs. communism... both are extremes and IMO, both don't work.

Capitalism doesn't work? Try thinking in black and white...

In the broadest sense, the total value of wealth in this world is essentially the total amount of labor hours that the population provides. And if the economy is the total amount of wealth, then it would be a relative constant to the number of able-bodied workers. So the notion that all things being equal, the economy goes up and down at will, is false.

"At will"? What does that mean?

Would a more equal distribution of wages be more efficient?

I don't see why. Wealthy people create businesses and make large capital investments. We don't see too many Mom and Pop businesses in the stock market. And the reason people take such risks is the prospect of getting rich, take away that incentive and they won't take the risks.

[Kropotkin]

Originally posted by Berzerker
I don't see why. Wealthy people create businesses and make large capital investments.

Are you not confusing wages with incomes? The same wage-levels for jobs doesn't mean that all would have the same incomes.

[Lawrence of Arabia]

LoA,

How come when I start a thread you never retype a text book?

Ask an unbiased question, or one free of opinion and I will. (also, I have this week off, so I have some time on me hands)

I have always been thinking, can supply and demand explain all the situations? Apparently not. It seems that the classic economics has missed some important factors.

Supply and demand will only explain situations where there is not a market failure.

Take Japan for example. The Japanese are highly nationalistic - they will buy products manufactured by Japanese companies even if they are more expensive.

Japan protects its industries using tariffs and subsidies. Consumers will buy what is cheapest and through these trade barriers, the local stuff is cheaper, but a lot more expensive then if the economy was open.

People who don't want more work aren't underemployed, just like people who aren't seeking worker aren't unemployed. Underemployment only consideres people who want more work and can't get it, and it's a significant problem in America.

Significant relative to what? If you compare it to the problems in third world countries, it is not significant at all.

Unemployment rates have increased in recent months, perhaps because of economic slowdown, but unemployment benefits were extended too. When that happens, many people who are unemployed don't run out and get jobs as fast as they would if their benefits were running out. And as many people stay on unemployment, others join the rolls. The result is a higher rate of unemployment, but one that is misleading when compared to periods when benefits are at their normal timeframe.

I disagree. Thanks to Bush's dumb economic policy, these people cannot find jobs. And 'theres always a job at the local mcdonalds' is not always true. McDonalds just posted their biggest loss ever. They won't be hiring until sales pick up.

What this extension will do is that some people will stop looking for jobs. The discouraged worker syndrome. This means that unemployment figures will be lower then they really are. (see my first post )

Do you think those pockets are black holes? Where do you think the money goes? Right back into the economy in one way or another.

Not necessairly. In this bad economy where consumer spending is beginning to slow down, investing into the economy is a bad thing. Which is why they play the stock market and make more for themselves. (they arnt about to put it in the bank with only 1.25% interest rate)

[Lawrence of Arabia]

and btw Duncan. I didnt recopy from a textbook.

[Sava]

Thanks Lawrence and others, you've helped. I just want to make a few more points.

IMO for a system to "work" I think that everyone should have health care, education, and employment opprotunities. In the sense of capitalism not working, my reasoning is that 40 million Americans don't have health care, one in four adults cannot read at a high school graduate level, and in addition to unemployment, a lot of jobs are not enough for people to survive on.

Sure, if you're a CEO or educated middle class worker, capitalism is working for you. But tens of millions are being left behind. Many people see numbers like 5%, 6% unemployment and think this is small. Wrong... 5% or 6% represent large numbers of people. Take the US... with 300 million people, 1% is 3 million. (duh) But if 1% of America were to die tomorrow, this would be extremely significant. 9-11 was significant and only 0.001% of Americans lost their lives. See my point?

Instead of radically changing the system, I think we should study all courses of action for a particular problem, and choose the best one. Take for instance, health care and this business with malpractice insurance costs. The main problem is that insurance companies are charging high rates because they have taken losses in their market investments. The Republicans, who receive large campaign money from insurance companies, have spread this fallacy about how frivilous lawsuits are driving up the costs of insurance. Well this simply isn't the case. And the proposed cap on punitive damages is stupid. The president makes 400k a year in just government salary, yet if I get paralyzed because of doctor error, the most I can get for punitive damages is $250,000? Dare I suggest it, but perhaps we should put a cap on corporate insurance profits? I think it's much more fair than capping the amount of money you can receive if you suffer death or a disabling injury. And then giving tax credits to companies that have the most efficient budgets. This would certainly spark more efficiency than what we have now.

If the goal of economic stimulus is to improve the quality of life for the people, then we should be putting the money to areas that directly affect this. Education is the single most important factor in determining one's potential earning power. Instead of giving pork-barrel tax cuts to corporations and rich people, how about we give out scholarships to universities and other incentives for people to get higher education. This would directly increase the overall economy because we would have more educated and skilled workers. Trickle down economics does not work, and even if it did, it's a very inefficient method.

[Imran Siddiqui]

The Republicans, who receive large campaign money from insurance companies, have spread this fallacy about how frivilous lawsuits are driving up the costs of insurance.

Um... this isn't a fallacy. Lawsuits costs a HELL of a lot of money, and there are plenty, plenty, plenty of dumb lawsuits filed every day.

Hell, why do you think doctors in many states went on strike because of the cost of malpractice suits? Because when you lose one of them, you lose BIG!

Though their probably should not be a cap on punitative damages. They all get massively reduced on appeal, anyway.

The president makes 400k a year in just government salary, yet if I get paralyzed because of doctor error, the most I can get for punitive damages is $250,000?

So? You'll probably get thousands and thousands (approaching a million) for compensatory damages.

[Sava]

Um... this isn't a fallacy. Lawsuits costs a HELL of a lot of money, and there are plenty, plenty, plenty of dumb lawsuits filed every day.

Hell, why do you think doctors in many states went on strike because of the cost of malpractice suits? Because when you lose one of them, you lose BIG!

Though their probably should not be a cap on punitative damages. They all get massively reduced on appeal, anyway.

Trust me Imran, those costs pale in comparison to the money insurance companies have lost in investments. Newsweek had a wonderful article on the subject. The total cost of lawsuits have barely increased over the past 2 years, yet the cost of insurance has sky-rocketed. And you know what's funny? It parallels almost exactly the losses of insurance companies' investments. I know it's tough to admit the people you support are wrong, but Bill Frist and company are wh0res for the insurance companies. Don't worry though, Democrats are wh0res to others. Sure trial lawyers will be affected, but again, it won't even come close to the amount of money that insurance companies will make.

I'm at least glad that we agree on the cap issue.

[Lawrence of Arabia]

Sure, if you're a CEO or educated middle class worker, capitalism is working for you. But tens of millions are being left behind. Many people see numbers like 5%, 6% unemployment and think this is small. Wrong... 5% or 6% represent large numbers of people.Sure, if you're a CEO or educated middle class worker, capitalism is working for you. But tens of millions are being left behind. Many people see numbers like 5%, 6% unemployment and think this is small. Wrong... 5% or 6% represent large numbers of people.

Sure, 5% is a lot, but how much percent of that is between the age of 16 and 18 and not working.

If the goal of economic stimulus is to improve the quality of life for the people, then we should be putting the money to areas that directly affect this. Education is the single most important factor in determining one's potential earning power.

Lets assume that everyone in the US gets a college level education. None of them would want to work at mcdonalds, or work as construction workers, or be farmers. So, to do these jobs, they demand high wages. Corporations cannot hack a profit anymore, so they move oversees 'depriving hard working americans of their jobs' to 'exploit cheap labor.' These companies wouldnt move over there if it wasnt for increasing costs.
These companies leave, and you have structural unemployment, one of the worst forms of it, because these people need to be reeducated.

You can't have it both ways.

Another side effect of everyone asking for high salaries will be highehr inflation. People will demand highher wages to keep up their real earnings, and when everyone does that, it increases inflation, thus starting the cyle again.

Investment in human capital (education) is not short term and takes a long time for any effects to be shown.

(i can do graph too if you wants it)

[Provost Harrison]

To be fair, there is always a certain amount of frictional unemployment, eg, 1% at least, of people moving between jobs and only unemployed short term and quite often have that period of unemployment sorted out anyway...

[Sava]

But Lawrence, with a more educated work force, it would increase demand for more efficient processes. Take automation for example... increased techonology decreases the demand for factory workers. Sure, there will always be demand for lower paying jobs in the service industry, but perhaps the US could intergrate this with immigration programs and/or youth work programs. Or at least create a more efficient healthcare and education system so that someone could work at McDonald's and support themselves. Or perhaps we should link minimum wage to the rate of inflation. The spending power of minimum wage has gone down significantly since the late 60's. I'm not concerned with unemployment figures as much as I am poverty in general.

[Lawrence of Arabia]

THis page takes a while to load

Sava - what employers will do first when face with increasing costs is to replace workers with machines to increase efficiency. Most of the time, if there is a Union there, that won't happen. So the company leaves . . . and goes to a country where there is no capital (machines) and replaces its US machines with 3rd world labor.

This is where I stand on the issue.
There should be no minimuim wage. Instead, the government should provide healthcare, education for free. Also full retirement benefits so you dont have to live in a gutter. The lowest 10% of america should not be taxed at all. Speeding tickets should be based on a percentage of your income.

[GePap]

I do echo Sava's question about standard of living being measured by PCI. europe and the uS are a very simple exmaple. The PCI in the US is 25% higher on average, but is the standard of living of the average European 25% lower than that of an American?

Many europeans take 8 weeks of more vacation: how does one measure how this relates to standard of living as compared to the 2 weeks most American workers get? My guess is that Car ownership in europe is significantly lower then the US (specially when it comes to multiple cars, or the 16 year old of the family having their own car), and yet, do to geography and public transit that works, its not like not having a car limits the ability of people to get to where they need or want to go.

[Sava]

I agree LoA

[Lawrence of Arabia]

GePap - by PCI, do you mean Per Capita Income? Does this mean GDP per capita? Sorry, but I'm confused.

[Wraith]

--"In the sense of capitalism not working, my reasoning is that 40 million Americans don't have health care"

Just to chime in here, let mention the HMO Act of 1973. Check US health insurance coverage over time...

--"one in four adults cannot read at a high school graduate level,"

Who's running the schools?

--"and in addition to unemployment, a lot of jobs are not enough for people to survive on."

Well, it does help when you don't need two people working just so one can cover the taxes for the other.

Wraith
"Paris gets fed!"
-- Frédéric Bastiat

[Urban Ranger]

Originally posted by Ramo
If the distribution is Gaussian, there wouldn't be any skew and the mean would be the same thing as the median and mode.

Not exactly.

[Urban Ranger]

Originally posted by Lawrence of Arabia
Supply and demand will only explain situations where there is not a market failure.

So you are denying that the classic ecnomics is incomplete?

[Jaguar]

Originally posted by Sava
I'm retarded and need guidance from more experienced and knowledgable 'Poly members.

Very tempting sig material, but I respect you enough that I will refrain.

[Sava]

Go ahead if you want, I'm honored to be sig material. That's certainly not the worst thing I've said about myself

[Lawrence of Arabia]

So you are denying that the classic ecnomics is incomplete?

No. I am saying that classic economics (based on the rationality law) is not incomplete.
Demand and supply would be incomplete if there was no rule for market failure (which is when the price and quantity of a good is no longer being determined by market forces)