Speak Out: Recessions: The Don't Do List

Posted by Givemeliberty on Mon, Feb 18, 2013, at 11:37 AM:

Very worthwhile read, full of great ideas.

With respect to the monetary situation, we really are being "experted to death."

In case you aren't following this at the state level, State Rep. Paul Curtman has introduced HJR 9, the "Missouri Says Audit the Fed" current version, as well as HB 421, a sound money bill.

You can read them at www.house.mo.gov, look up "Curtman", click on his name, go to "legislation introduced" for this session (on the right on his home page), click on the bills' numbers to read them.

Replies (22)

  • "Artificial maintenance of wage rates in a depression insures permanent mass unemployment. Furthermore, in a deflation, when prices are falling, keeping the same rate of money wages means that real wage rates have been pushed higher. In the face of falling business demand, this greatly aggravates the unemployment problem."

    I've been arguing that for ages, but 'the left' refuses to accept the idea that the minimum wage contributes to joblessness.

    -- Posted by Shapley Hunter on Mon, Feb 18, 2013, at 11:44 AM
  • The one thing people don't understand is when people have worked at a place and earned three more bucks an hour and then the minimum jumps those folks will want a raise also or become disgruntled. Where does it stop if all of your people are only separated by a few dollars.

    When your 25 employees start making $2 more an hour it will cost you $2495 more per week. That amount comes out of the back pocket of the employer and I would say most of them can't take the hit right now. They will have to cut wages, hours, and benefits or just close up shop.

    Its all about learning some skills and then start earning more.

    -- Posted by We Regret To Inform U on Mon, Feb 18, 2013, at 10:19 PM
  • What can you expect from a leader who never so much as ran an ice cream stand and was responsible to try and turn a profit so that he could pay his suppliers, taxes, grocery bills etc.

    Being a community organizer doesn't require a degree in high finance.

    -- Posted by Have_Wheels_Will_Travel on Mon, Feb 18, 2013, at 10:36 PM
  • Someone once argued something about flexibility or elasticity something or another saying the market has the ability to absorb cost as a way to defend higer cost of regulation.

    I wonder how that argument holds up with a minimum wage increase when Obamacare has the democratic state legislatures calling for an expansion of Medicade.

    See Mo house Democrats file Medicade expansion act in Semissourian.

    I'm confused how this will create new jobs and save hospitals from going broke, but of course confusion is not incurable if someone would be so kind as to explain it to me.

    -- Posted by Old John on Mon, Feb 18, 2013, at 11:02 PM
  • The minimum wage is a temporary starting wage for young people entering the work force for the first time. By raising the minimum wage to $9.00 per hour will do nothing but hurt these young workers because employers will not be hiring them. Now, what our great leaders in Washington fail to realize is that the cost of increasing the minimum wage is passed on to the consumer who end up paying more for fuel, food, day care, clothing everything goes up plus the employer not only adds the increase but also the matching FICA, Unemployment tax, Worker Compensation, FUTA Tax and General Liability cost over and above the base wage of $9.00 per hour which comes out to an additional $1.38 which now that $9.00 per hour has turned in to $10.38 per hour and the $1.38 is going to be passed on to the consumer. Oh it is great for any politician to stand before the cameras and say "I'm going to raise the minimum wage" but what they don't tell you is the additional cost over and above the base rate and the reason they don't tell us about the additional cost because majority of them have never ran a business in their lives or made a payroll.

    -- Posted by swampeastmissouri on Tue, Feb 19, 2013, at 8:17 AM
  • Let us say that I make my living with a lathe, and I squeak by with the work I do. But, let us say hard times befall, and I cannot find enough work to keep my lathe employed. I continue to buy product and make parts, which I stock on the shelves, hoping demand will return and I'll be back in full employment. But, the hard times roll on, and I can no longer justify keeping my lathe employed. I have a shelf full of parts, bills coming due for the materials I used to make those parts, and no cash coming in from the sale of those parts. I have to let my lathe go to pay the bills. I sell my $2,500 lathe to pay my debts.

    Now, in theory, once the economy recovers, and I can sell my inventory of parts to raise the $2,500, I can buy a new lathe and be back in business. But, let us say the government imposes a tariff on the purchase of new lathes, which jacks the price of a new lathe up to $3,500, a 40% increase in cost. Now, I must delay the purchase of a new lathe until I have sold $3,500 worth of inventory. That means the lathe must remain unemployed for about 40% longer than it would otherwise have to wait to be returned to employment. I might be able to sell $2,500 worth of parts in 20 weeks, but I'll now have to wait 24 weeks to raise the capital. That means an additional 4 weeks of unemployment for my poor lathe.

    Now keep in mind, that 40% tariff does not improve the output of the lathe one bit. It does not mean the lathe will be more efficient. It does not mean it will work harder. It does not mean it will break down less. It does not mean it will require fewer replacement parts. It does not mean it will do anything but cost more to purchase.

    So it is with artificially raising wages in a down economy. If the lathe were a worker, laid off due to lack of work, who cannot be rehired at the same wage as it was paid at layoff, it will have to wait until there is sufficient cash flow to justify the new, higher wage demanded.

    -- Posted by Shapley Hunter on Tue, Feb 19, 2013, at 8:39 AM
  • SH: First of all why would you buy more product if you know you don't have a market for it? Jobs will only be created when there is a demand for any product.

    -- Posted by left turn on Tue, Feb 19, 2013, at 9:40 AM
  • "SH: First of all why would you buy more product if you know you don't have a market for it? Jobs will only be created when there is a demand for any product."

    It's called 'building inventory'. Many companies do it when demand drops. They have the machinery, they have the labour force, so they keep them employed by filling shelves. Only after the shelves are full do most begin idling plants and laying off workers.

    That is why profits tend to rise sharply when recovery starts: the inventories are high so the sales occur without the corresponding costs (those having been recorded with the losses in the preceding quarters). Sales occur with little expenditures, resulting in high profits, until shelves are depleted sufficient to justify hiring workers and restoring idle plants to operation.

    -- Posted by Shapley Hunter on Tue, Feb 19, 2013, at 9:50 AM
  • "Should all Tax "Loopholes" be closed as some posters demand , those on Entitlements who receive Tax Refunds will no longer get their money every year."

    How so? Tax refunds are sent about because the person overpaid their taxes during the year, and are entitled to a return of the amount overpaid.

    The government prefers refunds, because it means people are letting the government borrow some of their income, interest free, throughout the year. The government repays that loan, sans interest, when you ask for it after they've started a new loan for the next year.

    Yet, many people who receive those refunds think they've 'beaten the government' becuase they get their own mony back...

    -- Posted by Shapley Hunter on Tue, Feb 19, 2013, at 11:02 AM
  • "Jobs will only be created when there is a demand for any product."

    Are you suggesting no one builds a product until someone asks for it? All the world is not Steak & Shake.

    If you walk into Best Buy and want a television, I hardly doubt you're going to wait until they build you one. You're going to expect one to be on the shelf. When the economy is good, factories have a hard time fillng shelves becuase they hopefully sell them as fast they can build them. They try to maintain sufficient stock to accomdate surges in demand, that stock being built up during lulls in demand.

    When the market falls into a continued lull, they build enough to fill the shelves, in anticipation of the surge that will follow the lull, and in order to be able to continue to fill orders even as their factory is idle.

    If they can't sell you a television when you want one, they'll go to someone who can, and they will sooon find themselves out of business.

    -- Posted by Shapley Hunter on Tue, Feb 19, 2013, at 11:27 AM
  • Dissident,

    Those are all well and good in a stable economic environment. As many learned during the last recession, those models fail when the market is erratic, as it has been.

    They are based upon one basic principle - when called upon to do so, manufacturers can meet surges in demand by producing the components in a rapid turnover. That works well when you have the equipment and manpower on hand to do so, and they are not overburdened by current demand. Even in those instance, they generally require an inventory of the component parts or raw materials needed which cannot be readily obtained during surges in demand.

    For example, a manufacturer of electric drill presses may opt not to have a stock of drill presses on hand. They may even decide not to stock the motors for the presses, since they may have a motor supplier near by that maintains that stock for them, and will drop ship or hand-deliver motors if needed.

    However, the cast parts of the drill press cannot be so readily obtained. Thus, the manufacturer likely maintains a stock of them, because one cannot simply fire up a foundry and cast drill-press bases, work tables, and housings right away. Since the same components may be used for several models, however, they do not assemble them until they know which model is or is likely to be needed. They also have to have machinery on hand to manufacture such things as pedestals.

    Then, the same problem occurs: if economic conditions warrant the laying off of the machine operator responsible for machining many of the component parts, they have to resort to the old method of stocking inventory before they do so, since the possibility that they will be unable to make the parts 'just in time' increases markedly with the loss of the person responsible for making them, no?

    In my hypothetical situation, I made it clear that I was getting rid of my lathe, making it impossible to make parts 'just in time', and relying on the sale of stock parts in order to resupply myself with a lathe when the economy returns. Even then, I find myself at the mercy of the lathe manufacturer, hoping that his just-in-time delivery can live up to its name.

    Methinks a lot of people that are idle today are idled becuase their Manufacturing was too line and their Just-In-Time wasn't...

    -- Posted by Shapley Hunter on Tue, Feb 19, 2013, at 12:16 PM
  • "Lean Mfg. , the use of as many common parts as possible for quicker equipment change-over time plus employee imput to help solve mfg. block-age process problems"

    Nothing new about that. Henry Ford thought of it a long time ago. But, he maintained inventory, too.

    "The Customer (Store) has access to the Supplier's (Company) On-Line Real Time Inventory to see how much they can order."

    Appparenlty, you missed the point. As the owner of lathe, I would be the manufacturer, not the store.

    -- Posted by Shapley Hunter on Tue, Feb 19, 2013, at 2:20 PM
  • "The tools are limitless..."

    Ultimately, those tools boil down to one fact: Somebody has to maintain stock if its going to be sold for immediate delivery. The chain is only as strong as its weakest link. If you (the customer) are relying on an unreliable supplier, it's your neck that is on the line.

    -- Posted by Shapley Hunter on Tue, Feb 19, 2013, at 2:22 PM
  • "This would be PIC ..Production Inventory Control"

    That's fine, if you're in the acronym business. For most of us, it's simply 'filling the shelves'.

    -- Posted by Shapley Hunter on Tue, Feb 19, 2013, at 2:40 PM
  • Quite a few buzz words being tossed around in an attempt to impress. It is obvious he has no clue what they mean.

    -- Posted by good.for.the.gander.good.for.the.goose on Tue, Feb 19, 2013, at 4:42 PM
  • BCStoned, Sorry for the confusion. I was not referring to you or your link.

    -- Posted by good.for.the.gander.good.for.the.goose on Tue, Feb 19, 2013, at 5:07 PM
  • We are defined around the world as the "Regulation Nation" this is why a lot of companies have a hard time coming back here because with these stacks of regulations and high taxes. We can't even start construction on the Keystone Pipe Line. We sat here and ran off our manufacture base and our government can't agree on nothing they fight daily with one another now we have a divided nation to top it all off.

    -- Posted by swampeastmissouri on Tue, Feb 19, 2013, at 6:31 PM
  • "Yes Shap, demand is the crucial linchpin. I know you supply-siders can't stand this idea."

    Demand can be created. The personnal computer was invented first, and demand for it was created to sell it. Tha't why companies spend fortunes on marketing: to create demand for products they have.

    Ever notice that no one markets a product they don't make, hoping to create a demand so they can invent something to fill it? Supply does, in fact, often precede demand. The proactive know this, the reactive can't fathom it.

    -- Posted by Shapley Hunter on Wed, Feb 20, 2013, at 6:34 AM
  • Spaniard

    Are you saying the lower the regulatory, trade barriers and taxes are not incentives to produce more?

    So by using you approach we can increase taxes and apply more regulation and we will prosper.

    -- Posted by We Regret To Inform U on Wed, Feb 20, 2013, at 10:31 AM
  • So by using you approach we can increase taxes and apply more regulation and we will prosper. -- Posted by We Regret To Inform U on Wed, Feb 20, 2013, at 10:31 AM

    Careful - you just made a definitive statement attributed to Spaniard. Let the crying begin!

    He can't handle tough questions or statements on these threads. And don't let him challenge you openly - he'll run and hide.

    -- Posted by not_sorry on Wed, Feb 20, 2013, at 10:33 AM
  • "Supply creates its own demand" - John Maynard

    Keynes -

    -- Posted by Shapley Hunter on Wed, Feb 20, 2013, at 11:18 AM
  • "Spaniard lied again" - Dug.

    -- Posted by not_sorry on Wed, Feb 20, 2013, at 11:29 AM

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