Moshe, Welcome to the Lake.

Max, Thank you for Hosting today’s Book Salon.

Great to be here and thank you

Max, thank you for having me on the program.

First questions:

Why do you think the efficiency standard of Pareto is dominant in today’s US?

Why is executive pay only focused on during economic downturns?

How do you explain the popularity of efficient wage theory and micro foundations of macro economics?

Paret was very clear that he invented his definition of efficiency in order to replace the definition of efficiency that was based on utilitarianism.

Are our policies today haunted by Bentham’s ghost?

Utilitarianism was developed by Bentham. It says that if the goverment has 1 dollar to give, it will do more good by giving it to the poor than to the rich. It will produce more utility this way

Good afternoon Moshe and Max and welcome to FDL this afternoon.

Moshe, I have not had an opportunity to read your book so forgive me if you answer this in the book.

I was a Sociology major my first time through and we were often mocked as being not serious as a science.

Given the track record of wrong predictions by many economists, how does the error rate effect the “science” aspect of economics, dismal or not?

Greetings,
This looks like a great book!

Any schools interested in it?

Of course, the govt does not have a dollar to give. So Utilitrianism says the govt should take a dollar from the rich and give it to the poor. This is because the loss in utility to the rich will be smaller than the gain in utility to the poor.

As a technical note, there is a “Reply” button in the lower right of each comment. By clicking the reply, it should pre-fill the name and comment you are replying to (Note: if you have refreshed the page, you will need to wait for the entire page to load or reply may not work correctly).

The man who taught me econometrics/foecasting wisely told all of us to remember that if it were not for the weather man we would be seen as the worst predictors on earth

This is an age-old question I suppose, but as I was reading your book I kept wondering why everyone falls for mainstream economic theory that so obviously doesn’t take the real world into consideration. Any thoughts about that? How do we change this?

Response to 8 first.

There are parts of economics that are clearly subjective–the definition of efficiency, and parts that could be entirely objective–the theory of wages. The theory of wages could be scientific, but economists do not reject the theory they have, even though empirically it is wrong.

Response

I am not sure yet.

What do you make of the cardinal versus ordinal debate among utility theory fans? Does this debate influence your utility theory suggestions?

The problem is not lack of accuracy, the problem is that the theory of wages that economists employ is simply wrong

How would a labor theory of value present a different set of conclusions?

The cardinal vs. Ordinal debate is basically Pareto’s objection to redistribution. It says: “How do you know that if you take a dollar from a billionaire and use it to save the life of a baby, the loss in utility to the rich is less than the gain in utility to the baby (and its family?)

Whoa there!

Could you define for me what ordinal and cardinal is in terms of this theory, versus the “one” vs “first” cardinal/ordinal I normally think of?

Just a mere mortal here… *grin*

So how come so many economists keep getting attention even when they are demonstrably wrong?

I would tend to agree. My thought was to sketch the way measurment foci distract from core debates that might shift the objects of the field’s analysis

As I show in the book this question, of cardinal vs. ordinal was already answered by Abba Learner in the 1930s. he said, it is a principle of statistics, that things that the best you can do is act as if things that look the same are the same. of course the rich could be totally different, but the govt will make fewer mistakes by assuming that the rich are human like the rest of us.

Certainty of wrong and right on central social issues is usually not to be had or highly theory relative. I would tend to see the problems here as similar to those of common wisdom and the cult of famous experts in all the fields?

The economist’s theory of wages says that each person, worker or executive, gets paid exactly the value of what they produce. Executives are the ones who hire economists and fund business schools, and this is a theory that they obviously like.

I hope my previous answer, about Abba Lerner’s argument, helps. While we cannot measure utility, we nevertheless can say that total utility will increase, if we pass a dollar from a billionaire to a dying baby.

crossing fingers for you

It is worthy to note that economists are not all of one mind. We have strong traditions of heterodox economics too. These folks make up much of the field, if not the commanding heights and offer alternative theories of wages, profits, growth……

So is it safe to say that means:

“Money is more useful being used rather than simply accrued.”

Yes, but also milk to a baby is more useful than a Maseratti.

This is of course true, only that our inflence on govt policy is minimal.

The bubbles create an illusion of wealth that at the apex destroys the economy losing value, personal wealth and jobs. How does economics account for this phenomenon? We commoners know we are at the mercy of financial manipulation of the too big to fail institutions. Any thoughts?

Money is buying power, measure of value and store of wealth. Utility is from use. Thus, it is valuable to raise questions about utility value of stores of buying power?

Sadly that is true with Obama, yet again

Got it.

I’ve been thinking that since the repeal of Glass-Steagall. It seemed to me that REIT market went berserk, where they, like utilities, were fine for years on say 6-8% margins.

Then they miraculously, like all stocks had to produce 20% or more on returns to attract any money.

I thought to myself then “How can you really diversify, if EVERYTHING has to produce 20%+ returns?

The zero sum game. Actually, the government does have “a dollar to give,” seeing as how the constitutional authority to create money rests in the government. In practical terms, though, the vast majority of the money supply is created by private banks and they tend to allocate it in ways that overwhelmingly favor the rich.

The theory of wages that I use in the book is taken from Ricardo. It is the theory of TEAM PRODUCTION. A bus and a driver produce trips together, but it is impossible to know what one has produced and what the other has produced. Therefore, it cannot be that the salary of the driver consists of the value of what she has produced. What she has produced is not measurable. Driver and bus produced income together, and this income has to be divided between them.

Today’s Us economy is based on bet and speculation. Cheap money is fuel on the fires

Monetary wealth is relative. I have a million dollars. Am I rich or am I poor? This depends on how much money you have. If you have 2 million, I am poor. The book shows how an unequal distribution of income makes the economic pie smaller.

Past philosophy aside, what becomes of economics under globalism as we see it unfolding? It’s quite impossible for me to hire me to make goods I can at the same time afford to buy, while simultaneously affording me profit. Yet this closed system is where we increasingly find ourselves via globalism.

As we merge into one global, neo-capitalist economy, doesn’t this forebode repeated gigantic, worldwide economic collapses (CDS and our present crisis notwithstanding), and, if so, why the mad rush to implement it? What is the upside of deliberately creating global economic catastrophes (in the current case, through equal parts deliberate misapplication of mathematics and greed)?

Am I being too pessimistic, or are economic tsunamis the wave of the future?

That should read debt and speculation

Money is, of course, a store of value. But if we measure value in utility, then a dollar has more value in the hands of the poor than of the rich.

You may have had it right the first time (grin)

Whether global or not and whether market or not, an economy may be subject to occasional problems that affect different people differntly. The question is how do we react when the problem occurs. Long duration and generous unemployment benefits, easy-to get welfare, national health insurance, free college education with stipends to students, all these will mean that we will be able to adjust to the problems without creating the human misery that many of us suffer right now.

Yeah – I was totally fine with that answer!

I agree with you that we have a problem when we accept the mantra that taxes are “bad for the economy.”

We tend to taxes as less or more and monolithic. THis is of course, false

Based on what you’ve seen of the economic recovery so far, do you have a prediction on how long it will take to stabilize the US economy?

You say that the govt does have a dollar to give because it can print money. In principle this is not a bad thing to do when there is high unemployment, but in practice what we see is that once we get into the mode of “taxes are bad,” we cannot extricate ourselves from it at any time at all.

We tend to see taxes as more or less and monolithic. A proper debate is who pays and who gets what?

When Obama/Bush took $2 trillion out of the government and shifted it to the banksters what utility was created? (Save the swindlers that ripped off the markets). The baby didn’t get the milk and the bad debts were born by the baby who is going without. I am a Samuelson fan. The boys implemented the policies Shock Doctrine Naomi lien wrote about. Essentially what was done in the Horn of South America…privatize public assests was done her in the “bailout” and other support programs. The banksters declared bi profits after.

This is true, and nevertheless: I am showing here a simple argument, an argument that I develop further in the book.

Suppose there are three people, P, M, R. Their incomes are 10, 100, 1,000 respectively. Each has 1 kid who eats lunch at school. Cost of lunch is $2. P gets lunch free, paid for taxes that M and R pay. If you calculate a flat tax rate, you will get that it is 20 cents on M and $1.80 on R. So the total that M pays for lunch is $2 for her own kid, plus 20 cents, or $2.2. Give the lunch free to everybody, M’s tax triples to 60 cents, but the total cost of lunch decreases from $2.2 to 60 cents.

Progressive taxes are great, but any tax is good, provided it pays for services.

I wrote an article that appeared in counterpunch called
“bailing out wall street won’t save main street.” you should check it out.

http://www.counterpunch.org/adler09262008.html

There is of course significant utility to a functioning system of banks/financial services. We have seen massive redistribution over the last year. Sadly it is up, not down.

So how is the upward distribution stopped?

Taxation should be designed to extract the “economic rent” that private monopoly confers on the those privileged to receive it. The progressive income tax may have originally been designed to collect some of these “takings” but the right has been successful in characterizing it as “punishing success.” Obama, in recent statements regarding the “astute businessmen” most of us refer to as banksters, apparently subscribes to this view.

I am in total agreement with Keynes, that there is no scientific way to know how long a downturn will last. All we can do is policies that help us bridge the gap.

Of course, given the high rate of unemployment, this is the time to do all things that we need badly: Build more schools and reduce class size, build more colleges and reduce tuition, build many many new medical schools so that doctors will not be so powerful.

To me, the following question is the most important one: What actually creates jobs?

Had the govt let the stock market collapse, we would have had a massive redistribution from rich to poor not by the govt but by the market. As I explained above, monetary wealth is relative. When the rich have less, the poor have more. More than fifty percent of working americans own no stock. and among those that do, those at the bottom would have also benefitted if the rich lost value.

In an economy where 70% of GDP is consumption you cant let the consumers go down. However, 20 years of running on debt hit the wall in 2007. We need government jobs and direct subsidy run programs to build/rebuild infrastructure and new industries starting in the worst hit areas and training folks who have been out of work for over 27 weeks- now 41% of our unemployed

What creates jobs are both the demands in the private economy and the demands by the govt. I think we can all agree that we need more teachers, more schools, more colleges, we need to fix the roads, clean our rivers, clean our beaches, have more parks. There is plenty of work that needs to be done.

Unless the baby grows up to be a serial killer or a terrorist, that is.

I totally agree that Obama has joined the anti-tax mood. Our chief role is to show that taxes, EVEN TAXES ON THE LOWER MIDDLE CLASS, are good. Please see my comment number 52 above.

But but but … I thought all the people collecting unemployment were just milking the system and using unemployment compensation to pay for a vacation.

That’s what Larry Kudlow says on CNBC all the time anyway.

I get the concept, but am looking for a direct answer. Let me pose it this way:

The Greek people are on track by rejecting the austerity programs the EU desires to impose upon the Greek government.

Economies are systems of interdependence. They are not enhines. You cant just pull our and swap parts. The stock markets have a role and many have a dog in that fight. However, they can outgrow their productive role and then carefel rebalance becomes important. Likewise, credit plays a role. Massive consumer credit driven activity can quickly over run the prudent.

We often forget how hard it is socially and individually to be unemployed. It is a social investment to get folks back on their feet. It is the height of penny wise pound foulish to spend money punishing unemployed people and the society/economy with sadistic lack of aid.

Do you think it’s just because we all hate being required to pay, or is it possible that most Americans don’t receive much in return for all the taxes they do pay?

Could not agree more.

And we should also remove workers from the work force by paying them not to work. High school students fill aobut 3 million full time jobs, college students fill about 5 and old people about 5 also. We need child subsidies, stipends and generous social security, so that these people will be able to leave the workforce.

The greeks do not need an austerity program. Greek suffers from tax evasion. Instead of punishing the poor and workers, the government should enforce its tax code. This would be easy to start doing under current conditions.

Read that and I agree. You used a different syntax in that article versus economic theory. The Middle east wars are also a shift of assests from Main street to MIC. While neither created value in the true sense that labor and capital (Bus and Driver)create real value in terms of goods and services while using up capital.
And a second point the transfer of wealth via balance of payments could be offset by clean energy that will create jobs and real value while eliminating costly pollution,meanwhile the water wastewater and energy grids not been kept in efficient order and so more milk is spilt. Any thoughts?

I think that most americans do get a good return on their taxes, but are somehow blinded to the fact that when taxes are low services cannot be good. Between 1913 (first year that the income tax was constitutional) and 1981, the highest marginal was on average 68%. This is when we had new state colleges, new roads, new schools, good schools, etc.

Here in NYC we posied to slash public transit- fire workers and close parks. 100 degrees from the lessons of economic history in a downturn. Ironically cuts in services do feed people’s sense that governments dont work for them.

How do you account for the idea that the process of distribution of economic benefits has been skewed over time by the ever-increasing power of big transnational corporations to craft government policy that directly affects markets, and that these same corporations rationally now view America as a fully exploited, mature market such that their best interest lies in extracting whatever capital they can from here and investing it all in the fast-growth markets of the future, i.e., the Asian markets?

I agree with Max’s response, and wish to add to it.

unemployment insurance puts a floor under wages. it is bad for employers, but it is good for working workers, even if they have to finance part of it through their taxes. They finance part of it, because employers pay as well, and it is workers who reap all the benefits in the form of higher wages. The less desparate workers are for jobs, the higher is everybody’s wage.

It seems to me, as a non-economist, that Americans today are suffering from economic snow blindness generated by a self serving blizzard of corporate and politician disinformation:

1) the myth that we have a free market capitalist system; not privatized profits with socialized losses; and paradoxically, that the U.S. government effectively regulates the economic system in a way that J.S Mill & Jeremy Bentham would recognize.

2) the critical difference between short, intermediate & long term results

3) the importance of intangibles such as defining worthy public goods, and what were formerly free resources now constrained by population growth and environmental limits

4) the failure across the board to invest in human capital and physical infrastructure to make our people more productive and commmensurately higher paid

I’m sure Einstein had some of these in mind when formulating his other theory of relativity:

Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.

There is no doubt that corporation move to where wages are low. In the book I explain the workings of “the law of one price,” which is at work here. The question is, can we respond to the misery that this creates. Yes we can: Unemployment insurance that is very generous and very long is one way.

Well, sure. It’s like collecting dues for something the community agrees that it wants. Most everyone likes Social Security but the payroll tax is an unnecessarily regressive way to fund it. Taxes are often used to reward or to punish in our system. When Greenspan, et al engineered the raise of the payroll tax in ’82 I believe the intention was to place more hardship on working people. As to the government “printing money” that can also be good or bad depending upon the uses it is put to. More money in the system obviously creates more demand but it can also increase supply if it is allocated to infrastructure or other productive uses.

There is a great saying, when you are carrying a piano up the stairs you dont notice the writing on the wall. Middle class America has been dying for 25 years. We are carrying a piano up the stairs and have missed eth writing on the walls- now being foreclosed around us.

We have a problem that the economic theory that is taught in the classroom was developed in order to serve the interests of the rich. This is why we need to educate oursleves.

funding social security through the payroll would be GREAT. We don’t have it. We cap the payroll. Remove the cap and the system would be ideal, in fact.

Between 1913 (first year that the income tax was constitutional) and 1981, the highest marginal was on average 68%. This is when we had new state colleges, new roads, new schools, good schools, etc.

Given the number of jobs lost and/or replaced by automation and off-shoring, would such a tax rate allow us to now include health care along with infrastructure, green energy transition, and education?

Its important that early economists- Smith, Ricrado…-wrote for the libeartion of industry from the crushing control of mercantilist states. Using their rhetoric against today’s thoroughly capitalist states is a slight of the historical record and unproductive/inaccurate

With respect, that was not my question. Sure, low wages provided the initial impetus for outsourcing jobs overseas, but now that the process is established, it is creating a working class and middle class in those overseas nations that can support strong growth in those markets. It is axiomatic that mature markets, like ours, grow at a slower rate than developing ones. And corporations need ever growing profit results to satisfy shareholders. So, are we not now at a kind of endgame for this market, such that the rules for an ongoing market process will be superceded by the actions of large scale programmatic capital withdrawal that will be invested overseas and will never have a reason to return to this market?

What is ironic in this piece between you and PPDCUS is that the original “writing on the wall” , which comes from the bible is “mene mene tekel upharsin” which means “counted counted weighed and measured.”

A disenfranchised, bankrupted middle class is the perfect medium for those who want Amerika to be a dystopian banana republican paradise for financial parasites. The last straw is Glenn Beck accepted as the new Thomas Paine.

This process is neither over, nor fixed in stone. There remains much opportunity to draft an alternative ending?

Piano and the writing. Superb metaphor!

This seems too obvious if one has read Howard Zinn’s A People’s History of the United States.

From manifest destiny to mindless chanting of USA USA USA, we never acknowledge what the true total costs are for America, as 5% of the world’s population, to consume 25% of the world’s resources.

I quote in my book at great length from Adam Smith. You will see that he thought that the govt sides with employers against workers by crushing unions, and that he was opposed to it strongly. He has been totally misrepresented. he knew that in order to but beef from the butcher they had to make a living first.

About Ricardo. Ricardo was interested in freeing industrialists from the high price of food created by the corn law. What economists did is adopt his theory of land rent to explain wages. This is impossible to do as Ricardo himself has shown, and as I explain again in my book.

Ricardo’s theory of industrial production states that it is done by TEAMS. how can this possibly be wrong? how can you measure how many vehicles an hour are produced by the janitor on the shop floor at gm, or by worker who is responsible for supervising a robot?

Per capita GDP in the US right now is $47,000. That means that every family of four can have at its disposal goods and services worth $188,000. Are only problem is the distribution of the wealth that we produce together. If we distribute it more evenly, there is more than enough to go around for EVERYBODY.

What’s the reference context, kelly?

Ricardo’s theory of industrial production states that it is done by TEAMS.

This is also true of performance arts to a degree. Specifically orchestras. We’ll often laud a conductor and ignore the tympanist, but it’s taken the whole lot of them to produce the performance.

Your Einstein quote about counting, and Wolff’s reply regarding writing on the wall.

I’m just saying I find it delicious.

I am going to have to sign off in about 5 mins. We are being told we have to leave the building where I am- office.
It has been great to be on with all of you.
I truly enjoyed Moshe Adler’s book. I storngly urge those of you who have not had a chance, to read it.

As always, thank you so much to Bev! Its always a disticnt pleasure working with you and at FireDog. Sorry to run a few mins early

Does that per capita figure include Wall Street front running, market manipulation, opaque leveraged derivative bets, M/A fees, obscene bonus compensation?

There’s a reason why the regular economy where people live is systematically being starved out.

No real business can compete for capital or financing with the returns available in the financial and government capture economies.

I meant the tanach quote context…

There is no doubt that employers want to go to where wages are low. But in today’s paper there is a story that Apple discovered that its overseas suppliers use child labor. We can insist on labor protection around the globe.

There is a lot investment that must be done by the government right now, and this can create in itself many jobs. I think we shoud concentrate on the public investments that we need right now. This will help us also become exporters. The world needs doctors, let’s train doctors. The world needs teachers of teachers, lets train teachers of teachers. etc. Let’s be exporters of good.

Thanks again for an interesting salon, MF and Moshe. Stop back at the Lake anytime.

I could not agree more. This is why Richardo said that the distribution of income is determined by bargaining power, not by productivity.

Have enjoyed your contributions greatly. Thank you~

Thank you for the book and for sharing your time and thoughts.

Many thanks to all of you.

Best,

Max

I think this is the time to say Thank YOU All.

Moshe

Oh that part.

Daniel is basically saying at Balshazzar’s feast that his (Balshazzar’s as king’s) deeds had been counted, 2x, found wanting, and his kingdom would be measured/divided.

As we come to the end of this Book Salon,

Moshe, Thank you for stopping by the Lake and spending the afternoon with is discussing your new book and economics.

Max, Thank you very much for Hosting this great Book Salon.

Everyone, if you haven’t bought Moshe’s book yet, here is a link.

Thanks all.

Thanks Moshe, Max, and Bev!

Late to the party, but thank you for writing your book and for stopping by to discuss it and other economics-related topics.

Am forwarding excerpts from the discussion to my congresscritters. They’re homeschooling these days.

Thank you so much for your insights and teachings~

Daniel’s full of some very weird interpretations – perfect for a Purim afternoon salon.

I also came in late. Followed the discussion, though. Thanks.

thank you all for an interesting book salon

Thanks again Moshe, Max & Bev – excellent discussion

Well to be fair, I am full of weird and unconventional interpretations.

The context of that passage in Daniel is pretty ironic. After destroying the temple and taking the people captive to Babylon, Nebuchadnezzer finds himself bowing to the God of Daniel through his dream interpretations.

But I think this may not be what Einstein had in mind when he posited –
what is important cannot always be quantified, and what can be quantified is not always important.

We have a problem that the economic theory that is taught in the classroom was developed in order to serve the interests of the rich. This is why we need to educate oursleves

.

Speaking as a professional economist and teacher, I think it’s a bit more complicated than that, though the bottom line comes to the same thing. Over the past 40 years, the social and empirical content of basic economics was stripped out of the introductory classes in the interest of more efficient pedagogy. The theory is complex,and we thought that the more simplified you can present the basic principles of reasoning, the easier they can be understood. This turned out to be a mistake. There is no easy way to learn economics, and stripping out the content played right into the hands of the Chicago School, who as we used to say, has the extraordinary capacity to turn third-rate minds and first-rate minds into second-rate minds.

So what’s the solution – Redesigning undergraduate economics curricula?

Mr. Moshe Adler,

“Progressive taxes are great, but any tax is good, provided it pays for services.”

Seems to me that ethics of taking money from other people that they have earned, is outside of your theory of economics? Correct me if that is not the case.

Also, what are the demand consequences of getting lunches for free on the consumption behavior of P, M and R?… As Austrians would correctly predict – waste of food will increase, food fights will become far more common, quality of food will go down, as neither P, M or R can actually withhold their tax payments to protest bad food, shortages will occur – increasing prices from $2 to $20.
Especially dig your comment about tax evasion and how the Greek govt should enforce the tax code. Ever wonder if the Greeks are P, M and R and don’t want to pay for the $20 dogs-wouldn’t-eat school lunches? Naah.. such things never happen, do they?

but the govt will make fewer mistakes by assuming that the rich are human like the rest of us.

We saw Greenspan basically adhering to that and ignoring obvious stats that the working class were sinking into debt and running off the tracks and leading us to disaster of a sort as bad as the financial sector crisis we actually got into.

Assuming that the rich will use money with as much utility as everyone else makes sense right up to the moment when it fails.

Especially when it is the Rich, managers who decide what portion of the value is attributable to labor or capital, worker or management. That’s raw power!

Investors shouldn’t speculate. They should buy bonds or stocks which regularly pay dividends. That takes the steam out of bubbles.

This has occurred in part, as I learned recently, because companies have been allowed to hold in reserve profits made (rather than paying them as dividends), so they can reinvest and grow larger.

Allowing reinvestment without dividends means the company is more valuable and it’s stock price should reflect that. How far that goes is hard to estimate and produces bubbles.

Not allowing a corp. or build up reserves keeps stock prices more stable, but doesn’t allow a corp. to build up for larger investments.

Which is preferable? What combination of these two features should co-exist? It probably varies according to the environment of the world.

Money is, of course, a store of value.

We’ve seen plenty of proof (see dollar vs. ruble) the paper is only reflecting the greater society’s robustness and productivity. Democracy over Socialism, individualism over communalism, transparency over secrecy, etc.

When Obama/Bush took $2 trillion out of the government and shifted it to the banksters what utility was created? (Save the swindlers that ripped off the markets). The baby didn’t get the milk and the bad debts were born by the baby who is going without.

First, the system kept going, so people wouldn’t starve or get out the pitchforks.

Second, the debt & interest should be born by those getting the bailout, but it should be repaid over time to enable a smooth transition back to a normal working system.

The appearance that the baby would bear the debt was what shocked and angered people and the Obama admin. failed to make it clear to anyone that it was the banks who would have to repay.

If we had a situation where the middle-class had NOT been run off the road and into huge debt, then that might be demonstrable.

I think the utility of various things depends upon the situation. War is always bad except when it’s necessary. Taxes are always terrible except where they’re good. Low interest rates are good except when high inflation indicates we should have high interest rates. We can say that about a lot of things.

If you can find a pattern to these kind of political-economic trade-offs…

unemployment insurance puts a floor under wages. it is bad for employers

Perhaps ‘bad’ in the short-run, but by pushing the real economy along it keeps employers going and gives the economy time and a chance to get into gear to move faster.

Keep the money moving faster and faster.

the failure across the board to invest in human capital and physical infrastructure to make our people more productive and commmensurately higher paid

The American worker is tremendously more productive than they were even 15 years ago. It hasn’t helped their pay because it’s not them or their output which determines their pay. At least, not unless they can join a union and work together to get paid more.

We need some kind of understanding of what various kinds of labor are worth which will translate into a working economy which lets people save and grow wealthier.

There is no doubt that corporation move to where wages are low. In the book I explain the workings of “the law of one price,” which is at work here. The question is, can we respond to the misery that this creates. Yes we can: Unemployment insurance that is very generous and very long is one way.

Not just “low”, but LOWER. Wages have sunk in America and jobs are still being outsourced. We can push UI and the short-term economy, but for the longer run we absolutely must begin to increase capital investment, even if we send more and more overseas we need more here in America too. One way to do that is to reduce barriers to corporations which might return profits made abroad to America to invest here. That’s why Senators Wyden & Grassley are looking at lowering the corp. tax to be equivalent to other nation’s where American corps. invest.

Well, bargaining power by labor has certainly been weakened from Reagan’s 1st day ’til now.