Obama Stimulus Check

Continued from Economic Myths Part1 , Economic Myths Part 2, Economic Myths Part 3 and Economic Myths Part 4

This completely demolishes my critic’s view that “that productivity is used to supplant labour, not to enhance.” It should now be clear that he has committed the lump-labour fallacy which basically argues that there is only a fixed amount of work1. Not that he will be persuaded. He is convinced that technical advance in medicine prove that productivity destroys jobs. Hence: “But to say that the replacement of their labour (doctors and nurses) with new products of productivity will increase their wages and make the cost of medicine decrease is pure idiocy.” Who said machinery would replace them? Moreover, their wages have not been falling. But it needs to be said that in a dynamic economy some people do suffer transitional income loss. Let’s not forget what the oil lamp did to the candlestick maker and the car to wheelwrights, smiths, saddle makers, etc.

As for the falling price of medicines, he obviously cannot see that medicine today is not what it was yesterday. Medical technique’s are becoming more complex as they advance. Even so, ordinary people have access to drugs and medical procedures that were only dreams 20 years ago. And capital accumulation has made this possible.

My critic (I’m whom I’m tempted to call a cretin) stated: “So capital is what creates jobs huh? If that were the case, then all of us would be rich. Get this straight…there is no lack of capital…none. The problem is lack of anyone having the capability to buy what capital is creating.” If there was “no of capital” all plant and machinery would literally be free because as I said in Part I capital is the +material means of production. This cretin (I’ve decided to call a cretin a cretin) seems to believe that credit equals capital. If only it were so. Any economic policy based on this idiocy eventually results in hyperinflation.

Continued at Economic Myths Part 6

Thanks to the Obama stimulus checks, home sales may soon increase

Most of the local finance officials believe that the recent stimulus bill is the “real deal.” Aside from that, they also believe that the Obama stimulus checks will give a big kick to the industry of real estate all over River Valley as well as Arkansas.

According to Todd White, the manager of Avest Loan, the tax season will be one of the main reasons why first-time property buyers will get to purchase their own homes this year. If their stimulus check tax credit is big enough, they can actually use it as their down payment. Afterwards, when they file for their tax returns, they will be getting a lump sum in cash. It’s like a property rebate.

Todd White also said that the Obama stimulus is the greatest opportunity that all first-time home buyers should grab. White mentioned that he recently talked to one of their lenders located in Fort Smith. The lender said that they for the past two days, there had been a lot of real estate purchase activities, thanks to the latest details regarding the Obama Stimulus Checks. Finance officials said that the stimulus check tax credit can mean as much as $8,000 to all those who will buy their homes for the first time.

However, according to Joel Doelger, the Credit Counseling of Arkansas, the rising foreclosures as well as the declining economy of the country makes other people think twice whether to buy or not to buy a house this time. They need thorough thinking so that they can determine if they are really prepared to buy a property. One of the main factors affecting this decision is the source of income or their employment situation. If they are not still sure how their income would be, it is possible that they would not consider getting a house today even if it the Obama Stimulus Check and tax rebate would save them $8,000 later on.

Continued from Economic Myths Part1 , Economic Myths Part 2 and Economic Myths Part 3

According to economic theory there is a tendency in the market place for every factor, including labour, to receive the full value of its marginal product. This means that labour, for example, will tend to get the full value of its additional output. From this we can deduce that rising productivity in a free market should be accompanied by a rise real in wage rates. In other words, real wage rates will move in the same direction as productivity. If doesn’t happen then the theory is wrong.

Fortunately there is abundant evidence to support it. First, only countries with rising productivity have enjoyed rising living standards. Second, about 6 years ago Bank Credit Analyst, a Canadian group, did a study showing that real wages in America had in fact increased in line, as the theory predicts, with the rise in value productivity. (Economists think of productivity in value terms rather than physical terms).

Bank Credit Analyst’s findings have been supported by other studies and authorities. Professor Robert Gordon of Northwestern University points out that wages and productivity are the obverse of each other when he says: “[W]e start with a definition about which there can be no controversy at all: growth in the real wage is equal to growth in output per hour plus the change in labor’s share.” It’s true that productivity is a slippery concept. But whichever way one looks at it real wages have moved in line with it.

Part of the confusion has been caused by divorcing the gross wage rate from the net rate. And it’s the gross rate that matters to the employer and not the net rate, which is what’s directly received by employees. The gross rate includes all additional labour costs which not only includes ‘non-wage’ benefits but also payroll taxes. In 1950 employee benefits have risen from 20 per cent to about 40 per cent of the gross wage. Once these oncosts have been factored in and the necessary adjustments for inflation made we find that gross wage rates have behaved as predicted by the theory.

Continued at Economic Myths Part 5