Pope Francis claims global economy is close to collapse and describes youth unemployment rates as an ‘atrocity’ in damning message

[Bubba_Switzler]

How does the Catholic Church contribute to youth unemployment?

By supporting (demanding, actually) minimum wages and welfare which are more direct causes of it.

 

[stinkcat_14]

By supporting (demanding, actually) minimum wages and welfare which are more direct causes of it.

How much youth unemployment is caused by the minimum wage?

 

[Bubba_Switzler]

How much youth unemployment is caused by the minimum wage?

You mean what percentage of variance in the dependent variable of youth unemployment is explained by variance in the independent variable of minimum wage? Sounds like a good research project for an economist.

 

[Pat_Albertson]

You mean what percentage of variance in the dependent variable of youth unemployment is explained by variance in the independent variable of minimum wage? Sounds like a good research project for an economist.

The description is the explanation. I like it.

 

[stinkcat_14]

You mean what percentage of variance in the dependent variable of youth unemployment is explained by variance in the independent variable of minimum wage? Sounds like a good research project for an economist.

You mean you made a claim without doing your research first? How do you know that youth unemployment is affected by the minimum wage?

 

[Bubba_Switzler]

You mean you made a claim without doing your research first? How do you know that youth unemployment is affected by the minimum wage?

Simple reasoning will suffice, although there is much literature on this relationship already.

What do you think would happen to youth unemployment if the minimum wage were raised to $1000/hour?

 

[stinkcat_14]

Simple reasoning will suffice, although there is much literature on this relationship already.

Does economic theory say that a minimum wage must increase unemployment?

What do you think would happen to youth unemployment if the minimum wage were raised to $1000/hour?

That is a rather silly question isn’t it? Nobody has proposed that and the current minimum wage is nowhere near $1000 per hour. If the minimum wage were increased to $1000 an hour, it could result in unemployment, but it would of course depend on other factors as well.

 

[Bubba_Switzler]

Does economic theory say that a minimum wage must increase unemployment?

Are you denying the existence of economic theory and research showing a relationship between minimum wage and unemployment?

That is a rather silly question isn’t it? Nobody has proposed that and the current minimum wage is nowhere near $1000 per hour. If the minimum wage were increased to $1000 an hour, it could result in unemployment, but it would of course depend on other factors as well.

No, it’s not silly. In fact, almost everyone (save sports stars) would probably become unemployed.

If we lower the minimum wage from $1000/hr what we will discover is that as it falls below the economic value of each person, that person becomes employable again.

As we keep lowering the minimum wage, who will be the last people to find employment? It will be those with the lowest economic value, disproportionately the young (but also including other low skilled categories).

This is only a thought experiment, in reality it is even worse for the young because it’s easier to keep a job than to get one and the youth are, again, disproportionately represented among those looking for a job, in fact looking for their first job. The natural way for youth to compete and find employment is to offer to work at a lower rate than older workers who have seniority and experience.

But thanks to minimum wages supported by our own Catholic Church, that’s against the law.

So they collect welfare instead, which the Catholic Church also supports. In fact, as was discussed earlier, many young people choose unemployment over a low paying job because they can collect as much or more on welfare. (And, yes, this too is in the economic literature.)

Now I doubt any of this is really news to you but I appreciate your offering me to opportunity to explain it to others who might not have thought about it before.

 

[stinkcat_14]

Are you denying the existence of economic theory and research showing a relationship between minimum wage and unemployment?

I am not denying economic theory and I am also familiar with the literature on the minimum wage. Does the literature unambiguously show a negative relationship between the minimum wage and the unemployment rate? Does economic theory predict that a minimum wage will always result in unemployment?

 

[Bubba_Switzler]

I am not denying economic theory and I am also familiar with the literature on the minimum wage. Does the literature unambiguously show a negative relationship between the minimum wage and the unemployment rate? Does economic theory predict that a minimum wage will always result in unemployment?

I’m glad that you have finally admitted that you already knew what you asked me to explain. I wonder proportion of your questions are of that nature.

 

[stinkcat_14]

I’m glad that you have finally admitted that you already knew what you asked me to explain. I wonder proportion of your questions are of that nature.

To be honest, it is not clear that you understand what economic theory has to say about the effect of the minimum wage on unemployment.

 

[ralfyman]

I am absolutely willing to give Pope Francis the benefit of the doubt. But the phrase does, in fact, dehumanize shareholders. If one were to honestly recognize the humanity of shareholders one would formulate it as follows:

[Human] Managers see [human] shareholders [who employ them] as more important than the [human] youth [who must be paid more than they are worth].

I’m not saying that everyone who uses a dishonest phrase has ill intent, but it’s hard to escape that conclusion once the dishonesty of the phrase has been exposed.

That’s what the term “profits before people” means: the financial elite who are profiting from the stock market see their profits as more important than the youth.

 

[ralfyman]

Again, focusing on the last two centuries is myopic. Human history spans millennia. Taking the fulll view of human history reveals the absurdity of the greed explanation of youth unemployment, among other things. (And the Roman Empire is within the institutional memory of the Catholic Church which is headquartered in Rome.)

It’s not myopic because the financial instruments that are causing problems today stem from those last two centuries. Money during the Roman Empire was limited to coinage. But even then,

“U.S. Income Inequality Higher Than Roman Empire’s Levels: Study”

huffingtonpost.com/2011/12/19/us-income-inequality-ancient-rome-levels_n_1158926.html

 

[ralfyman]

This is, quite simply, wrong. Of course, it will depend on what one means by “capitalism” but, as I noted previously, the longstanding description that has actually been given for almost a century is “mixed economy”.

en.wikipedia.org/wiki/Mixed_economy

Ecoomic historians generally mark the end of WWI as the turning point though different countries experienced it differently.

As we discussed earlier, risk is inherent to life and to capitalism. Some attribute this wrongly to central banking but crises are not new.

We have mixed economies, but much of credit which essentially makes up the global economy is controlled by private corporations, not governments or central banks:

“Revealed – the capitalist network that runs the world”

newscientist.com/article/mg21228354.500-revealed–the-capitalist-network-that-runs-the-world.html

The largest component of credit is unregulated derivatives, which has a notional value that’s many times the size of global GDP:

“Top Derivatives Expert Estimates Size of the Global Derivatives Market at $1,200 Trillion Dollars … 20 Times Larger than the Global Economy”

washingtonsblog.com/2012/05/top-derivatives-expert-finally-gives-a-credible-estimate-of-the-size-of-the-global-derivatives-market.html

Fallout from only a fraction of that brought the global economy to its knees in 2008. In response to that, governments scrambled and provided trillions in bailout money to financiers. Those bailouts were at the public’s expense.

During the last few years, financiers used the bailout money to continue in financial speculation, which is why there are renewed concerns that another financial crash will take place:

“The coming ‘tsunami of debt’ and financial crisis in America.”

Forces that caused the world economy to collapse, including income inequality and debt, are again in action, and could drag corporations down in their wake

theguardian.com/money/2014/jun/15/us-economy-bubble-debt-financial-crisis-corporations

 

[ralfyman]

I doubt the pope is being that speficic but, in any case, it will not work. After the 2008 financial crisis governments clamped down on banks. The result is the growth of a new industry generally termed “shadow banking”.

en.wikipedia.org/wiki/Shadow_banking_system

I also don’t think that regulations will take place, and only because I think governments work for the rich.

After 2008, governments did not regulate. Instead, they provided trillions of dollars of bailout money at zero or near-zero interest.

Finally, as shown in the link that you provided, shadow banking did not appear as a response to the 2008 crash but during the 1970s. The same link shows that it also contributed to the 2008 crash.

 

[ralfyman]

In the simplest terms: compassion. Compassion is the cause of youth unemployment.

Earlier in the thread I cited three main causes: minimum wage, welfare, and youth entitlement. The first two of these are typically justified on the basis of compassion and both are endorsed by the Catholic Church.

So not only is Pope Francis wrong about greed being the cause of youth unemployment, and compassion the solution, he has it exactly backwards. The Catholic Church is a major contributor to the ‘atrocity’ of youth unemployment.

The amount of wealth owned by the wealthy is huge compared to what the rest own, such that only a fraction of that will easily solve youth unemployment and even provide basic needs to the world’s poor.

With that, Pope Francis got it right.

 

[Bubba_Switzler]

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After 2008, governments did not regulate. Instead, they provided trillions of dollars of bailout money at zero or near-zero interest.

Finally, as shown in the link that you provided, shadow banking did not appear as a response to the 2008 crash but during the 1970s. The same link shows that it also contributed to the 2008 crash.

There was both bailouts and more regulation. Shadow banking did preexist but it has grown far faster than banking due to less regulation.

 

[ralfyman]

By supporting (demanding, actually) minimum wages and welfare which are more direct causes of it.

The cause of youth unemployment today is not the presence of minimum wage or even welfare but fallout from the 2008 financial crisis, which led to trillions of dollars lost, and governments scrambling to cover the rich’s losses through bailouts.

Also, ironically, the presence of a minimum wage and even welfare is actually advantageous to the rich because the same youth together with other workers are also consumers of goods and services produced by businesses that are owned by the rich.

 

[Bubba_Switzler]

The amount of wealth owned by the wealthy is huge compared to what the rest own, such that only a fraction of that will easily solve youth unemployment and even provide basic needs to the world’s poor.

Sadly, I suspect you are right that this is probably the entire depth of his thinking on the subject. The Church supports policies that cause youth unemployment and then expects the rich to solve them. So sad.

 

[Bubba_Switzler]

The cause of youth unemployment today is not the presence of minimum wage or even welfare but fallout from the 2008 financial crisis, which led to trillions of dollars lost, and governments scrambling to cover the rich’s losses through bailouts.

The 2008 crises no doubt exacerbated the problem but it preexisted 2008.