[lbo-talk] Sawicky's Math (was Re: Obama on poverty:straightDLC=

sawicky at verizon.net sawicky at verizon.net
Thu Apr 3 10:37:23 PDT 2008



> >Of course it's logically possible for tax subsidies to have
> > no important impact on inflation, including localized inflation,
> > since the subsidy could be small compared to the associated
> > economy.
>
> This means the impact is proportional, not zero.
>
> >>> Not zero, right; proportional, broadly speaking yes, though possibly
> too small to worry about.
>
>
> > There has not been much in the way of progressive tax legislation
> > for some time. The EITC is for those who are not likely to
> > save much, with or without the EITC.
>
> If they are not saving, where is the money going? Rent?
>
> >>> Consumption.  There's some empirical lit on this, actually.
>
>
> Since they are are not saving, are workers, in the end, consuming
> a larger _percentage share_ of the national product, or not?
>
>
> >>>  Not necessarily.
>
>
> >>From what I understand they are not, thus what good is a larger
> nominal net wage if the level of relative consumption and savings
> remains unchanged, or even decreases?
>
>
> >>>  No good, but I haven't conceded that there is no real increase in
> purchasing power.
>
>
> > Even so, it is possible for
> > wage subsidies (like the EITC) or minimum wage legislation or
> > collective bargaining to raise wages without doing much for
> > capital formation, insofar as workers choose not to save more.
>
> The point is the _workers_ are not forming capital, in other words,
> no basis for class mobility.
>
>
> >>>  EITC is certainly not a vehicle for class mobility.  It's an
> anti-poverty device.
>
>
>
> Is not saving more simply a choice?
>
>
> >>>  Yes.  Many could choose to live frugally and accumulate a little
> something, though I would be the last one to condemn anyone for not doing
> so.
>
>
> cheers.
>
> Typing text files since 1966.
>
>
>



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