5 Economic 'Truths' It May Be Time To Rethink
The economy is pretty much unavoidable and decides the lives of basically everyone in the country. As we’ve seen during the *gestures at latest crisis*, economic upsets can dump pretty long-lasting damaging effects on working-class people, so it’s pretty important to get things about the economy right.
But there are a lot of things about the economy that people accept as fact, which might not be true at all …
What If Small Businesses AREN'T Good?
Here's a fairly popular idea that spans the entire political spectrum: Supporting local small businesses is basically a one-stop solution for many economic woes. Its use is so common in political debates and legislative talks that pretty much every president is judged by it at some point. But despite the raging boner Americans have (or don’t have) for helping struggling businesses, there is an underlying reality to this that smashes this narrative apart entirely: small businesses aren't much better than big businesses. In fact, they can often be worse.
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This might seem paradoxical at first. Surely helping small businesses helps keep competition healthy and workers happy, right? Well, not exactly, and there’s data behind it, too. For example, small businesses often have worse pay, almost non-existent worker protections, more abuse, and far fewer benefits than their bigger counterparts.
One study done by the Bureau of Labor Statistics discovered that, on average, smaller employers pay significantly lower wages than larger employers, with the average weekly wage for small businesses in 2017 being $849 vs. $1,793 for big businesses. That’s no pocket change. Many small businesses also don't offer health insurance, not wanting to shoulder the cost.
What’s worse is that workers at small businesses report abuse more often than people at large companies. A study conducted by the University of Nebraska Omaha discovered that small-business employees report abuse at almost double the rate of big firms. And unless your name is literally Satan or Jeff Bezos, this is a pretty big deal, considering that, uh, workers are people too and shouldn’t be exploited.
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Maybe Unemployment Benefits Don't Cause Worker Shortages?
Back in early 2020, when unemployment benefits were extended by $600 due to the high rates of unemployment caused by the pandemic, many right-wing pundits and some liberals didn’t waste any time in denouncing this as the death of the economy and businesses. Many states cut off these extra unemployment benefits early on, citing “worker shortage.” Was there any truth behind this claim?
Well, it seems the $600 unemployment boost did not actually lead to people dropping their jobs or job search altogether but served as an important supplement. A study by Yale researchers found that the increase in unemployment benefits did not disincentivize people from work at all and that rates of employment stayed relatively the same during the period.
This runs entirely counter to the idea that when people are given a wage, that they’ll just stay home and do nothing. Of course, given that a pandemic was going on, staying home and doing nothing just might be the difference between life and death.
The whole argument is based on a false premise as well. An unwillingness to work is not actually responsible for worker shortages, but a job shortage itself, rather, is the rightful culprit. There aren’t enough jobs that pay people above minimum wage to justify them working long hours there with no benefit or career path in sight. The burden is on businesses to, y’know, actually pay someone a wage that allows them to pay rent and put food on the table.
What If The Government Can Just Spend Money, Limitlessly?
The discussion of budget and whether the country can afford things like universal healthcare is an eternal debate. Welfare programs put a huge financial burden on the state; pretty much everyone agrees. The United States surely can’t just spend an infinite amount of money and achieve some weird socialist utopia, like those pesky leftists think we can.
Only … what if it could? The United States has practically no restrictions on how it spends its money, so maybe it could shoulder the cost for not just universal healthcare, but other stuff too, like actual public transit and maybe even universal basic income. Some fringe economists actually think so.
How does this all work? With a little thing called Modern Monetary Theory. Modern Monetary Theory (MMT) states that countries, like the United States, who make their own currencies can pretty much print as much as they want and not have to worry about inflation. A few Democrats have championed this as a response to all “but how will we pay for it” accusations.
While MMT might seem unconventional, the idea behind it isn’t much different than what the government already does, like spending a ludicrous and very disproportionate amount of money on national defense or minting trillion-dollar coins for COVID aid. This is merely adding more resources to things the average person could actually get use out of ... like canceling student loan debt and making college free.
Maybe Government Debt Isn't Bad?
You’ve all heard this one before, that eternal political bogeyman that haunts the jaundiced studios of Fox News and every presidential debate stage: "Our national debt is too high." Currently sitting at around $29 trillion, the national debt can seem pretty scary to those not too familiar with how debt actually works.
Debt underpins basically every discussion about whatever the government decides to do with its money and has often successfully shut down any attempts at improving American infrastructure. The logic seems sound on the surface because the average person’s idea of debt comes from personal debt, like credit cards, mortgages, and student loans, so why shouldn’t the government act like people and watch its spending?
-Prof Fiscal Moneypenny, still sounding like they're high
Only the government isn’t a person like you and me, which means the debt it has is almost entirely alienated from how people normally see debt. All countries naturally incur debt, which is just the side effect of a globalized international economy. America’s economy and credit are so strong that there’s no need to ever repay it all, as it produces more money than it loses and helps other economies, like China’s.
Even economists pretty much argue that debt is a bogeyman that doesn’t actually hurt the US economy in any concerning way. Other countries rely heavily on the US economy for their own trade, so it’s less than any one country is in debt to the other, but more so like a group of friends who borrow/lend money constantly and know that the other is good for it. So don’t worry about it; the US empire is probably not going to fall thanks to a little bit of debt any time soon. Now, if only the actual lawmakers in charge of your life could realize this.
What If Stimulus Doesn't Cause Inflation?
Whenever a new stimulus bill comes to give people some economic relief during hard times, news media and right-wing politicians immediately start waving around their “hyperinflation!” flags, saying that stimulus bills will further drain the economy.
Stimulus bills stimulate the economy into greater activity and wealth redistribution. Take the COVID stimulus checks, for example, which gave most Americans a couple of thousand dollars for nothing in return. People tend not to hold onto money but spend it as fast as possible, and even economists know this. Because people tend to be behind on some things like bills or rent when jobs are scarce, and money is tight.
Inflation has been high in the year that followed that stimulus, but still, some economists say that's nothing to worry about. Politicians will argue over abstract numbers while poor people are dying. But that’s politics, baby.
Top Image: Bureau of Engraving and Printing
