Monday, December 23, 2013

Via DailyKos: Peter Schiff pulls a John Stossel to denigrate the working poor


Looks like our old inflation-hawk, gold salesman friend had nothing better to do last week than stand in front of a local Wal-Mart and harass passers by: 

http://www.dailykos.com/story/2013/12/21/1264469/-Millionaire-Oligarch-Poses-as-Walmart-Protestor-Harrasses-Shoppers-to-Discredit-Mock-Employees


"His spiel was that he was a Walmart employee/protester and told everyone they should donate 15% of whatever they paid at Walmart directly to him.  He kept screaming "higher prices for higher wages" as the protester's "motto".  When people said they were broke, he mocked them and said they just bought "all this stuff" and they didn't care about the workers.  He kept yelling "We are counting on you to pay higher prices!"  When someone told him that they were poor workers who couldn't afford to pay, he actually said "But the Walmart workers are more important!"  Even when people tried to give what they could, he would get irate and demand 15% of their purchases!"

Seriously, what is with these wealthy white guys thinking its funny to denigrate the less fortunate? I'd like to see Stossel or Schiff do one day's work as a Wal-Mart employee or short order cook. I guess because Wal-Mart's low paid "associates" cant afford to buy any  !!GOLD!!, they are not worth much to Schiff. Do we have any other videos of these tools being smacked down?

21 comments:

Bob said...

"Less profit for higher wages" could be an alternative slogan. As that would not raise prices, I'm sure the shoppers would be in favour of it.

Tom Hickey said...

"Less profit for higher wages"

The obvious solution. Instead profit share and executive compensation have been rising against wage share.

Michael Norman said...

The guy needs a good ass kicking.

Matt Franko said...

Bob/Tom,

Per the GDP report just released, total corporate profits after taxes for 3rd qtr at seasonally adjusted annual rates were 1.868T...

Table 11 here:

http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp3q13_3rd.pdf

Then they paid out $858B in dividends to our retirees pension funds...

That leaves $1.010T in corporate profits after taxes and dividends... which they probably spent over $400B of that on CAPEX but lets say they didnt and we would just confiscate all of the 1.010T and redistribute it to "wage share" or whatever...

Divide this by all 310M US citizens and you would only get $3250 per citizen, and your economy would soon be in the toilet because firms made no capital investments...

"redistribution" cant work it is mathematically impossible, the leading flow has to be increased period... which means higher federal consumption and xfers... no other choice...

rsp,

Charles DuBois said...

Depreciation offsets the capex and creates cash flow so there would be roughly another $400B to distribute. Doesn't change the conclusion. Thanks

Also we know from the Kalecki equations that lower wages don't increase profits, which is being implied here. Lower wagers also mean lower revenues for business so its a wash. Similarly, higher wages won't hurt profits because they get translated into higher profits. Again, the conclusion is correct. Wages should be increased.
No harm to profits so everyone wins.

Charles DuBois said...

Depreciation, which creates cash flow, offsets the capex - so there would be roughly another $400B to distribute. But doesn't change the conclusion. thanks.

These comments are implying lower wages mean higher profits. We know from the Kalecki equations that this is not true because lower wagers also mean lower corporate revenues so its a wash. Similarly, higher wages do not decrease profits. So the conclusion is the same as here. Higher wages would not only help workers but also not hurt profits. So everyone wins.

Bob said...

It is possible in a competitive market that wage increases cannot be passed on as price increases. Thus, profits take the hit.

John Taylor said...

I'd pay 15% to see that.

Charles DuBois said...

Hello Bob From my standpoint you miss the point. Higher wages result in higher revenues, even assuming prices remain the same. The higher revenues don't come from higher prices but because volume in increased - workers have more money to spend so more output is sold. So business (at the overall macro level) does not have to offset higher wages with higher prices in order to maintain profits. There is nothing about "prices" in the Kalecki equations for profits for this reason.

Unknown said...
This comment has been removed by the author.
Carlos Augusto Osuna said...

Charles DoBois lower or higher wages does not have a direct relation. If the business owner finds a way to increase productivity by increasing wages, it is good to do so. Henry Ford did it in his assembly line.

But forcing businesses to pay more to their employees without a vision on how to channel that extra cost is just ruining their business, reducing their profit and maybe forcing them to fire people.

Carlos Augusto Osuna said...

Instead, you should look at the Federal Reserve that is pumping money into the big banks, causing inflation. Inflation is what causes the wages to loose value, and to cause the need to increase them.

You all attack the businesses for low wages, but it is the Federal Reserve who prints money out of nothing, and hands it to the big banks that control the economy.

Tom Hickey said...

Wage share

Productivity and average real earnings

Corporate profits and compensation

Tom Hickey said...

the Federal Reserve that is pumping money into the big banks, causing inflation

Huh? What inflation exactly.

Unless you are considering asset appreciation in equities "inflation" that was arguably related to the Fed taking safe assets off the table and keeping margin cost low. But that argument is a stretch.

Charles DuBois said...

Carlos that "extra cost" for one business is an "extra revenue" for another (when it gets spent) - hence profits overall are not impacted. Check the Kalecki equations. As Henry Ford, whom you cite, said "if I (and others) pay higher wages, I will sell more cars".
The Fed is printing money but they are "unprinting" bonds which previously existed. Hence there is no increase in financial assets in the system. Hence, overall, there is no trasmission mechanism to higher inflation.
Thanks for taking the interest and Cheers for the holidays.

Jan said...

Building Progressive Alliances - Social Europe Journal http://www.social-europe.eu/2011/07/builiding-progressive-alliances/

Bob said...

My response was directed to the assumption that a wage increase will always be passed on as a price increase. Hence the slogan used by Schiff and other nincompoops.

You don't have to convince me of the carry-on effects of increased wages on the economy.

Charles DuBois said...

Bob you are right Cheers

Matt Franko said...

Charles,
Here is from the wiki on Kalecki:

Kalecki derived this relationship in an extremely concise, elegant and intuitive way. He starts by making simplifications which he later progressively eliminates. These assumptions are:
Divide the whole economy into two groups: workers, who earn only wages and capitalists, who earns only profits.
Workers do not save.
The economy is closed (there is no international trade) and there is no public sector.


Seems like Kalecki is modeling an economy that doesn't exist, and the identity s=i depends on this .... cannot you comment on this...

RSP,

Matt Franko said...

http://finance.yahoo.com/blogs/talking-numbers/peter-schiff-why-wal-mart-t-pay-15-110803125.html


Leave it to Marrissa Mayer's morons over at Y! Finance to exalt this garbage......

Charles DuBois said...

Matt thanks for the interest re:Kalecki - a great economist, I think you would agree. I went to Wiki and if you continue down you can see that Kalecki expanded the simplified framework to include the government and external sector as well as to allow consumers to save or borrow.
In the end (in "English") - the Kalecki equation is:

After-Tax Profits = (Investment minus Depreciation) + Government Deficits +
(Consumer spending minus wages) + Net exports.

Basically, profits at the macro level occur when business incurs a revenue without a cost. For example, as we know, deficits put money into the private sector's hands. If this money is spent, it becomes a corporate revenue with no increase in corporate costs (at the macro level), hence a profit (business savings). If the money is saved instead, it becomes private savings directly. As we know, deficit = net private savings which therefore has two components - direct private savings and corporate profits (which are business savings).

FYI The Levy Institute has free papers available on "The Profit Perspective" which go into more detail. If you Google "Montier what goes up must go down", you will get a nice 60 year graph of the components of profits.

My only point was that wages impact profits in two ways: Wages, as a cost, are a subtraction to profits. However, if they are all spent, they are an addition to profits (because of the revenues generated). Consequently, if wages are lowered and worker spending is lowered commensurately as a result , profits do not increase.

The surprising finding from all this is that corporations don't have much control over profits in the aggregate. They fight for their piece of the pie but the pie is often largely exogenous. For example, the strong profits of 2010-2011, despite the slow economy, were primarily a consequence of high government deficits.

Hope helpful. Comments, criticism welcome.

Hope helpful.