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Cash for clunkers question for the Keynesians
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2013 Nov 25, 7:50am 7,483 views 50 comments
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marcus
2013 Nov 26, 1:28am
Cash for clunkers was all about making the base price for any car start at $17K, $30K for a car that wont compact like a beer can stomped on by a 300lb drunk.
This is right wing stupidity at it's finest.
Anyone with an IQ over 75 could chart the steady progression of car prices upward, as well as the increasing quality demanded by the marketplace. I paid a little over 16K for a honda Civic in 2003 (it was the EX ).
Today, a better Civic, 11 years later will go for about 19K. That's about a 1.5% increase per year for 11 years compounded. I believe it is higher quality for a number of reasons. It's a bit bigger and heavier, and they've had Hundai and Kia, not to mention other Japanese and also American Car makers to compete with.
I too am blown away by the fact that really nice cars now go for over 25K new. But it has been a very steady progression of prices that lead to this. If you graphed it, CFC would not represent the slightest blip.
The fact that you manage to connect current new car prices to cash for clunkers, is one of the more ridiculous things I've ever heard from you.
Actually it's kind of in line with the level of ridiculousness in most of what you say, but still I find this one surprising, because it took an extra push of creativity and outright dishonesty. Not to mention the denseness it takes to actually believe your own made up lies.(a soecial right wing trait).
You're turning in to a far right wing wacko version of that cranky old guy who says, "why I remeber when a candy bar cost just a nickel. OF course that was before they put Jimmy Carter in the Presidency and America went to Hell in a handbasket."
A new adult has demand -- needs a new car, new clothes, new place to live,
etc.
A new adult has wants. His/her wants translate into qualified demand when he/she earns enough to pay for those wants. When the government gives him/her money to translate those wants to demands, the taxation necessary turns someone else' qualified demand into unqualified wants. If interests have to be added, then more demand gets disqualified than wants get qualifed into demand due to the need to pay interest.
The fact that you manage to connect current car prices to cash for clunkers,
is one of the more ridiculous things I've ever heard from you.
What's so hard to understand about:
1. removing supply of used cars jack up used car prices
2. higher used car prices drive buyers to new cars
3. the blanket $3k subsidy (guaranteed "trade in" for clunkers) drove up new car prices . . . just like the $8k incentive in 2010 drove up home sales.
In fact, there are idiots who advocate tearing down homes across the country in order to drive up home prices; i.e. forcing people to overpay for houses left standing after the massive tear-downs.
marcus
2013 Nov 26, 1:40am
BY the way, one other factor in car pricing, is low interest rates.
How do super low interest rates impact car pricing? Obvious answer: financing and thus monthly payments will buy more.
Less obvious answer: Car lease prices, which are based entirely on interest rates.
I don't know how much the lower financing cost translates over to more quality for your money, but if you look at how much car prices have gone up since the year 2000, it's less than it would seem, if you look at monthly payments, either for financing or for leases.
(although it's true that both are only available to those with good creddit rating).
You might argue that car makers offered low interest rate deals back in 2000 and before. This is true, but it cost them more back then to offer that, so it had to be priced in up front.
The spending can be for end products/services or for capital investment that would bring on more goods and services available for consumption in the future. Only that capital investment ensures future availability of continually improving goods and services.
Agreed.
A new adult has wants. His/her wants translate into qualified demand when he/she earns enough to pay for those wants. When the government gives him/her money to translate those wants to demands, the taxation necessary turns someone else' qualified demand into unqualified wants. In interests have to be added, then more demand gets disqualified than wants get qualifed into demand due to the need to pay interest.
Yep. The problem is that prices are too high due to encouraged consumption and discouraged capital formation by todays disastrous money policies.
You are way off on your analysis:
1. Walmart doesn't not pay 25% of total wage outlay as payroll tax and
benefits. 25% of total outlay would mean 33% of wages! Payroll tax is 7.5% from
employers, and Walmart doesn't provide benefits for most sales associate
positions.
My health insurance premium at my current employer is $21k per year for a family. Granted, Walmart does not offer health insurance to most employees, but they most assuredly do for employees making $40k and above to remain competitive. Medicare taxes are uncapped and are 1.45/2.35%.
I am way off on my analysis on the low side. I would be shocked if wages were 75% of operating costs. That was a high estimate - Those stores are huge and hardly crawling with sales associates. How long does it take you to check out?
No, $10/hr is not average, you dimwit. The 2000hr/yr assumption is wrong for
most Walmart jobs.
4000 US Walmart stores, open 24/7. Lets say an average of 50 people are working at any one time at the Walmart. So demand is 168 hours * 50 per week * 4000 stores / 1.3 million employees ~ 26 hours per employee.
I would say at least 10%-15% of Walmart employees do not work in the store. Distribution Center, home office, truckers, ITers, etc....
In store workers probably do not average 40 hours per week. But I bet they average 30-32.
Amend it to 1600 hours per year for in store workers. Also lets say non-instore workers - have health insurance, and cost $80k per year on average fully loaded. 15% of 1.3 million is 195,000 workers not in the stores, costing an average of $80k per year = $15.6 billion. Subtract that from the $35.7B in total wage expense = $20.1B. Use 15% loaded rate for payroll taxes, workers comp, etc and we have $17.5B. Divided by (now) 1.1 million workers in the stores and we have ~16,000 per worker.
Divided by 1600 hours per year and viola - still about $10 bucks per hour, including store management.
This link says the average sales associate makes $8.81 per hour.
http://makingchangeatwalmart.org/factsheet/walmart-watch-fact-sheets/fact-sheet-wages/
They start at minimum wage, and after 10 years are making 11 bucks an hour. This would leave an average around $8.81.
Publicly available data based upon a sex discrimation case against Walmart shows that Walmart paid its employees on the average 26% less than its competitors in 2001. (The "Drogin data")
http://laborcenter.berkeley.edu/retail/walmart_jobquality.pdf
Doubtful this policy has changed.
MisdemeanorRebel
2013 Nov 26, 2:26am
people migrate to other jobs.. Wallmart has no control over which jobs people take.
Such as... ?
If they are the only employer left in town? Yes in that situation they have quite a bit of control.
Yep. In many cases, they are. Walmart bribes the local politicians, who are mostly realwhores and developers, and the city/county outfits their chosen location with millions of taxpayer dollars in road infrastructure and a big property tax break - usually by buying the land for the government, then leasing it back to Walmart at far below market prices for the next decade. By the end of the decade, Walmart threatens to leave if the deal isn't renewed - to the next small town down the road.
By this time they've killed the local IGA, the local pharmacy, the local optics store, the local fish & bait store, the local sporting goods store, etc. and the area is wholly dependent on Wally.
Not only did these small independent business people pay the taxes which was used to subsidize Walmart (and destroy the town center), but lost their businesses too. Now the little league team is utterly dependent on handouts, instead of being supported by civic local businesses, and all kinds of other wonderful social developments.
From their most recent 10-k, Walmart employs 1.3 million people in the US, almost 1% of the total US workforce.
In the 60s, the #1 employers in the USA were General Motors, GE, and US Steel. Unionized jobs with middle class wages - and the janitors were unionized and making middle class wages too.
Today, it's Walmart, Target, and Kelly Services (temps). And now even the janitors are outsourced at minimal wages, no benefits.
marcus
2013 Nov 26, 2:30am
And now even the janitors are outsourced at minimal wages, no benefits.
Except in the public secotr, you still have some janitors getting half way decent pay and benefits. Maybe a few corporations as well.
We have to put an end to that ASAP !
On an unrelated note, at least we can thank God we don't have slavery in this country anymore.
MisdemeanorRebel
2013 Nov 26, 2:32am
Except in the public secotr, you still have some janitors getting half way decent pay and benefits.
It's outrageous that public janitors are making $15/hr + benefits. If they want to make such high incomes, let them go back to college and major in finance! Freeloading bastards!
My health insurance premium at my current employer is $21k per year for a
family. Granted, Walmart does not offer health insurance to most employees, but
they most assuredly do for employees making $40k and above to remain
competitive. Medicare taxes are uncapped and are 1.45/2.35%.
Two problems with this paragraph:
1. You are trying to prove that the typical Walmart employees are making less than $10/hr, which at 20hrs a week would result in $10k a year, a far cry from $40k a year. If you assume $40k per employee, then you blow your own thesis out of water.
2. As for to remain competitive, would you prefer working for a company that would pay you that $21k in cash instead? Assuming if I'm making $100k or less, I'd absolutely take the cash offer. That answers your concern regarding "remain competitive."
I am way off on my analysis on the low side. I would be shocked if wages were
75% of operating costs. That was a high estimate - Those stores are huge and
hardly crawling with sales associates. How long does it take you to check
out?
Depends on which WMT and what time of the day/week. All you are saying here is that you are just pulling numbers out of thin air therefore don't count. I agree.
4000 US Walmart stores, open 24/7. Lets say an average of 50 people are
working at any one time at the Walmart. So demand is 168 hours * 50 per week *
4000 stores / 1.3 million employees ~ 26 hours per employee.
You are once again pulling numbers out of thin air. Most Walmart stores do not open 24/7. The ones in my state close at 10pm and don't open until 8am. I doubt there are 50 employees in the store at all time, more like 20-50 on, depending on size of the store and time of the day.
I would say at least 10%-15% of Walmart employees do not work in the store.
Distribution Center, home office, truckers, ITers, etc....
You would say that because you are habitual pulling numbers out of thin air guy. You are kidding yourself if you think Walmart overhead organization has 200,000-300,000 employees! It's a company with 2.2 million employees! You have no basis to come up with any of the numbers that you are pulling out of thin air.
Give it up already. You are wasting everyone's time.
They start at minimum wage, and after 10 years are making 11 bucks an hour.
This would leave an average around $8.81.
No they do not in most jurisdictions. The typical starting wage is $8/hr, set against a $7.25/hr federal minimum wage.
Publicly available data based upon a sex discrimation case against Walmart
shows that Walmart paid its employees on the average 26% less than its
competitors in 2001. (The "Drogin data")
http://laborcenter.berkeley.edu/retail/walmart_jobquality.pdf
Doubtful this policy has changed.
The report is utter nonsense, as it compares walmart jobs to high end department store jobs for all employees. Walmart has much more efficient and proportionally smaller headquarters.
Two problems with this paragraph:
1. You are trying to prove that the typical Walmart employees are making less
than $10/hr, which at 20hrs a week would result in $10k a year, a far cry from
$40k a year. If you assume $40k per employee, then you blow your own thesis out
of water.
2. As for to remain competitive, would you prefer working for a company that
would pay you that $21k in cash instead? Assuming if I'm making $100k or less,
I'd absolutely take the cash offer. That answers your concern regarding "remain
competitive."
1. Wasn't speaking about typical employees - was speaking about those employees who are skilled enough to demand $40k in salary. Most jobs that pay $40k per year also offer health benefits.
Even if this is 15% of the walmart workforce, and they have a 33% benefits rate - the affects the benefits rate for the population as a whole.
2. It would depend on the healthiness of my family. If I would expect to spend less than $21k (or at least 65% of $21k - taxes) in a year on health care, I would. (I do.) Unfortunately this has never been offered to me.
Depends on which WMT and what time of the day/week. All you are saying here
is that you are just pulling numbers out of thin air therefore don't count. I
agree.
I am using math to show how unreasonable your thesis of "Walmart pays more than competitors" is.
1. Wasn't speaking about typical employees - was speaking about those
employees who are skilled enough to demand $40k in salary. Most jobs that pay
$40k per year also offer health benefits.
Even if this is 15% of the walmart workforce, and they have a 33% benefits
rate - the affects the benefits rate for the population as a whole.
The 15% number is counter-factual assumption, so is the 33%, so is the $40k number. You are talking about a hypothetical Walmart that exists on Mars, or at least known to not exist on earth, with every number you ascribe to the entity. You are working your yayas out against a hypothetical Martian store.
2. It would depend on the healthiness of my family. If I would expect to
spend less than $21k (or at least 65% of $21k - taxes) in a year on health care,
I would. (I do.) Unfortunately this has never been offered to me.
In other words, paying people cash instead of benefits at that rate would be more competitive not just "remain competitive." What does that say about your earlier statement that they'd have to pay the benefit in order to "remain competitive"? Wouldn't surprise me at all if WMT does precisely that: pay cash instead of benefits, when the "benefit" ratio is that high.
I am using math to show how unreasonable your thesis of "Walmart pays more
than competitors" is.
No you are not using math. You are making up numbers. 7th grade math should have told you that your conclusion can never be more accurate than your input numbers. Since your input numbers have zero accuracy, your conclusion is null and void.
You are kidding yourself if you think Walmart overhead organization has
200,000-300,000 employees!
I said 195k non-store employees. This includes home office AND distribution center, truckers, IT, etc.
The report is utter nonsense, as it compares walmart jobs to high end department
store jobs for all employees. Walmart has much more efficient and proportionally
smaller headquarters
This is your biggest fault. You glance something, have a preconceived idea on its validity, and just dismiss and attack. You never learn anything I am sure.
Read down to table 1 where is shows all general merchandise is $11.36 if Walmart is excluded vs $9.68 (walmart reported, $8.81 independent).
Walmart is 55% of all general merchandise workers. The rest of the 45% is going to be Target, Sears, etc. They compare.
No you are not using math. You are making up numbers. 7th grade math should
have told you that your conclusion can never be more accurate than your input
numbers. Since your input numbers have zero accuracy, your conclusion is null
and void.
Walmart itself reports $9.68 per hour in 2005. I said $10 bucks in 2012.
Independent source says $8.81.
Amazing how my pulling numbers out of thin air is so close to these. I must have gotten lucky.
You are kidding yourself if you think Walmart overhead organization
has
200,000-300,000 employees!
I said 195k non-store employees. This includes home office AND distribution
center, truckers, IT, etc.
What is 10-15% of 2.2 Million?
The report is utter nonsense, as it compares walmart jobs to high end
department
store jobs for all employees. Walmart has much more efficient and
proportionally
smaller headquarters
This is your biggest fault. You glance something, have a preconceived idea on
its validity, and just dismiss and attack. You never learn anything I am
sure.
Read down to table 1 where is shows all general merchandise is $11.36 if
Walmart is excluded vs $9.68 (walmart reported, $8.81 independent).
Walmart is 55% of all general merchandise workers. The rest of the 45% is
going to be Target, Sears, etc. They compare.
I'm a speed reader. Speed being necessity, especially for those trash paper reports. Walmart has a much leaner top structure than Target and Sears. Sears is a department store combined with repairmen operation. How door-to-door repair technicians at Sears can be compared to floor associates at Walmart . . . only happens in those trash paper reports generated for specific polical purpose.
Walmart itself reports $9.68 per hour in 2005. I said $10 bucks in 2012.
Independent source says $8.81.
Amazing how my pulling numbers out of thin air is so close to these. I must
have gotten lucky.
Starting pay at $8/hr at Walmart can quite easily lead to the assumption that the average pay there beign around $10. That's why I have been saying the numbers you are pulling were a waste of time for all of us. You probably had to back fill in order to cook your numbers; i.e. the $10/hr conclusion came first, the other numbers were just cooked to lead t o the $10/hr.
I'm a speed reader.
Speed Reader and self appointed expert on everything. Got it.
Except latin.
10-15% of 1.3 million US employees.
Tenpoundbass
2013 Nov 26, 3:53am
I paid a little over 16K for a honda Civic in 2003 (it was the EX ).
You should have waited 5 years you could have saved a grand or so.
Honda Civic $15,010 26/34 Stable, comfortable, and quiet ride; chipper interior; good handling Minimal storage space
Sure but there were still plenty of 1976 buicks to be had, or 1996 compact cars to be had all for under $1200 a pop.
Been to a car lot or did a craigslist search lately, a car with a faded paint job and is prone to over heating starts at $3500.
Tenpoundbass
2013 Nov 26, 4:00am
But by the way, Cash for clunkers wasn't about just raising the price, it was about getting rid of the cheap used car market, to bolster the Car industry and car loans. Spite Warrens best efforts, if you have great credit, I got 0% interest, but if you got spotty credit, they are sticking people with 14%+ loans. on top of outrageous late fees.
Blah, blah, blah.
This kind of rhetoric gives me agita.
Walmart is a shitty job that doesn't provide a living wage.
Join the Army or work for Walmart, I hope middle America's youth spits it back in their face.
marcus
2013 Nov 26, 4:55am
I paid a little over 16K for a honda Civic in 2003 (it was the EX ).
You should have waited 5 years you could have saved a grand or so.
No, as I said, it was the EX. Bigger engine than the LX, with sun roof too. That's why I used 19K for current price (which is a little high).
Bellingham Bill
2013 Nov 26, 4:59am
I hope middle America's youth spits it back in their face.
gotta stop voting for the plutocrat party, LOL.
But "Team Republican" still has a good brand, fighting the l-l-l-liberal gun-grabbing, god-hating, nigger-loving, flag-burning traitorous left.
The GOP still has enough buttons to push in the lizard brain to stay relevant this decade and next. They didn't fail with Romney by all that much and that alone scares the crap out of me.
What we got here now is a neo-Confederacy, basically. Impervious to facts, reason. Functioning on ignorance, fear, and bullshit beliefs.
Buried deep, deep in the national cognizance is the reality that taxes have to go up a lot, on everyone. We can't throw $4T away on military crap and cut taxes to pay for it.
http://research.stlouisfed.org/fred2/series/FDEFX
($4T is all spending over $400B/yr, 2001-now)
$4T over 30 years is $1000/yr per worker.
On top of that is the boomer retirement and health care burdens that are steadily looming into view, several thousand per year on top of that.
What we have now is unsustainable; yet we lack the maturity to actually move things to a more responsible basis.
The plutocrats defend their wealth thanks to the millions of useful idiots on the right. The left has been largely dismantled in this country, outside of Democracy Now, a couple of websites and shows on MSNBC etc they don't have much presence in the debate any more, if they ever did.
This nation is so fucked, and it's going to have to get a lot worse for millions before it gets any better, policy-wise.
We're so far gone we can't even see the problems any more.
marcus
2013 Nov 26, 5:15am
uried deep, deep in the national cognizance is the reality that taxes have to go up a lot, on everyone. We can't throw $4T away on military crap and cut taxes to pay for it.
Good graph. Hard to blame Obama for that doubling in defense spending since 2000, but I'm sure there are those who will try.
Buried deep, deep in the national cognizance is the reality that taxes have to go up a lot, on everyone. We can't throw $4T away on military crap and cut taxes to pay for it.
If you want to complain .. perhaps you should find a Islamic terrorists to vent over..
not our fault for being attacked by a bunch of inbred retards...
Good graph. Hard to blame Obama for that doubling in defense spending since 2000, but I'm sure there are those who will try.
Dont you want to thank Reagan-Bush for busting up the USSR and
earning a peace dividend watching military spending declining since 1990.
all you need to worry about now is some hand full of terrorists and not 20
Soviet Divisions crossing Europe in the first wave... or the Baltic fleet running
Missile drills 15 minutes off the Atlantic Coast...
Hey, thomaswrong, the 5 Trillion dollars that Bush/Cheney wrongheadedly took over to the M.E. and blew the hell up, to no conceivable benefit of anyone but the parasitic defense industry, isn't on your graph.
When Barack Obama became president, there were 32,000 U.S. troops in Afghanistan. He escalated to over 100,000 troops, plus contractors. Now 5 years later, there are 47,000 troops in that shithole, in 9 huge bases, and they project out to “2024 and beyondâ€.
But, 2013 was a record year for the Opium crop, so that's going good.
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When the economy collapsed, we obviously propped up the auto sector as best we could. It has become the received wisdom that C4C was a failure, largely due to pulling sales from future months.
In the Keynesian sense, wouldn't it be a success though? The cash that was "saved" could be spent on other goods or services (almost BECAUSE the recipients might not have needed it but had the ability to spend). Mainly though, it would have served as a kickstart to consumption. Wouldn't an extra 3 billion used directly to spur citizens to spending be a good thing, regardless of whether or not autos were helped by that program?
The 3 billion didn't just disappear. That might not seem "fair" but in terms of economics I can't see how it would not be right on target.