The Instigator
darkkermit
Pro (for)
Winning
16 Points
The Contender
CAPLlock
Con (against)
Losing
0 Points

In order to reduce unemployment and increase GDP, counterfieters should not be prosecuted

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Voting Style: Open Point System: 7 Point
Started: 7/6/2011 Category: Economics
Updated: 5 years ago Status: Voting Period
Viewed: 1,654 times Debate No: 17426
Debate Rounds (5)
Comments (4)
Votes (4)

 

darkkermit

Pro

The resolution is as follows "In order to reduce uemployment and increase GDP, counterfeiters should not be prosecuted". If I can prove that counterfeiting money will reduce unemployment and increase GDP in the short run, then I will win the debate. It is CON's burden to disprove this otherwise. First round is for clarifications. Second round we start debating.
CAPLlock

Con

And by unemployment:
occurs when people are without jobs and they have actively looked for work within the past four weeks. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labour force.

http://en.wikipedia.org...

Printing money is not work.
Debate Round No. 1
darkkermit

Pro

Thanks to my opponent for accepting this debate.

1. Wages and Prices are sticky

I will first explain that wages and prices are "sticky". Sticky in this context refers to the snowiness of prices and wages to change due to a disruption in equilibrium. A disruption in equilibrium can include changes in savings rate, and an increase of economic growth.

Wages are sticky due to a variety of factors. A main contributor is our inability to think of currency in nominal terms instead of real terms. For example, many people see a 2% cut in nominal income as fair yet see a 2% raise in nominal income whereas a 4% income is seen as fair[1].

Another reason for this occurrence is contract obligations. Contracts can require a person to receive a fixed salary or receive a good or service at a fixed price. Often these contracts do not take into account changes in deflation or inflation.

Third reason for this occurrence is oligopoly competition (a few producers, let's say they produce similar but slightly different material). Firms will not raise there prices above Po, since a small increase in prices will cause consumers to flow to the other businesses. However, firms will not lower prices below Po, since other producers will respond the same way. This creates stickiness, since a company will only increase prices if expenses are really high or if expenses are really low.

Final reason is due to "menu costs". Basically businesses will be reluctant to change prices since it will actually cost them to change the price level. They will have to change their advertisement fliers, the cost of a menu, and accountant costs. The result is that since it costs money for a business to change its prices, it will be more affordable for the business to keep prices the same.

2. MV = PY

In brief this equation states that the money supply times the velocity of money is equal to the price index times the gross domestic production.

As stated earlier, prices are sticky. Therefore an increase in the money supply will not cause a proportional increase in the price index (Ex: doubling the money supply will not double prices). This means that through increasing the money supply, one can actually increase the Gross Domestic Production. I have now fullfilled my first burden, to show that an increase in the money supply will cause an increase in gross domestic production.

It is easy to see how a counterfeiter will increase the money supply in the economy. That's what a counterfeiter does.

3. The Philips Curve

The Philips Curve is a historical trend and empirical evidence that demonstrates that as inflation increases, unemployment decreases[2].

There are many possible reasons for this occurrence. One is the historical relationship between GDP and employment. This is known as Okun's law. [3] It is quite possible that as GDP increases due to price stickiness, it causes firms to hire more people and more people are put to work.

Another reason for this phenomena is, as stated earlier, the prices of wages are also sticky. Since employers are able to obtain a 'cheaper deal' through wage stickiness, the firm has the ability to hire more people. Contrast to if deflation occurs, then employers have to pay employees too much, and as a result lay off occurs.

Conclusion:

I have successful shown how counterfeiting increases GDP and reduces unemployment. In fact, since the two are correlated through Okun's law, If I can demonstrate that one occurs, then it is likely the other has occurred as well. I look forward to my opponent's response.

http://ideas.repec.org...[1]
http://www.econlib.org...[2]
http://en.wikipedia.org...[3]
CAPLlock

Con

Thank you for that long post.
counterfeiters(which I see to be misspelled in the debate title) Printed more then 5 dollars per print. They print MUCH more, as much as they want. Now if you could make your money at home smoking a cigar and printing money, would you work? Unemployment would go up, and with all that money



Another reason for this occurrence is contract obligations. Contracts can require a person to receive a fixed salary or receive a good or service at a fixed price. Often these contracts do not take into account changes in deflation or inflation.

If it is about money, dont take those jobs

Third reason for this occurrence is oligopoly competition (a few producers, let's say they produce similar but slightly different material). Firms will not raise there prices above Po, since a small increase in prices will cause consumers to flow to the other businesses. However, firms will not lower prices below Po, since other producers will respond the same way. This creates stickiness, since a company will only increase prices if expenses are really high or if expenses are really low.

I dont think this has anything to do with some printing off money.


Final reason is due to "menu costs". Basically businesses will be reluctant to change prices since it will actually cost them to change the price level. They will have to change their advertisement fliers, the cost of a menu, and accountant costs. The result is that since it costs money for a business to change its prices, it will be more affordable for the business to keep prices the same.


I'm not getting why this is important


As stated earlier, prices are sticky. Therefore an increase in the money supply will not cause a proportional increase in the price index (Ex: doubling the money supply will not double prices).

No. If Everyone gets more money why would you keep prices low? This is a Capitalistic society.

This means that through increasing the money supply, one can actually increase the Gross Domestic Production. I have now fullfilled my first burden, to show that an increase in the money supply will cause an increase in gross domestic production.



GDP only counts for the "official" sum of all money made in the country for one year.

- it does not take into account the 'black economy', which makes up 5-10% of the real GDP in countries like the UK or USA, up to 30% in Italy, and as much as 50% in Russia. This means that at equal "official" GDP per capita, Italy and the UK do not in fact have the same average income - it is maybe 15-20% higher in Italy, as fewer people declare the totality of their income.

it does not take into account the accumulated wealth and assets, such as savings, investments (bonds, shares...), real estate properties and other material possessions. The GDP per capita would be a good way to compare citizens' wealth is all people were forced to spend all their income on perishable or consumable goods like food or clothes, and be left with no cash, no house and no other investment or long-term material goods (e.g. furniture, TV...) at the end of each year.

Therefore A persons wealth does not count ALL of a person's riches.


http://www.eupedia.com...



Debate Round No. 2
darkkermit

Pro

Thanks to my opponent for the swift reply.

First off, CON states that "If you could make your money at home smoking a cigar and printing money would you work? Unemployment would go up" First off, unemployment is defined as those searching for a job. If I'm not actively searching for a job, I'm not unemployed, regardless If I have a job or not.

Second off, you assume that all persons would have the knowledge and capital necessary to print money. This is not necessarily true. Those unable to master the art of counterfeiting would work for a living.

My opponent does not refute my arguments about sticky wages. His arguments are "If it is about money, don't take those jobs", "I dont think this has anything to do with some printing off money.", and "I'm not getting why this is important ". These statements don't argue anything. Extend arguments on sticky wages and prices. Wages and prices can remain the same even with a growth in the money supply.

Ironically, my opponent then states "No. If Everyone gets more money why would you keep prices low? This is a Capitalistic society." This was the entire reason I wrote Point #1. I specifically stated why businesses will keep prices low even with an increase with the money supply. I stated that prices were sticky, or difficult to change. My opponent ironically asked "I'm not getting why this is important". My point was that prices remain the same due to sticky wages.

Due to the equation MV = PY, if prices don't change in proportion to the money supply, then GDP increases. It's basic mathematics.

My opponent then tries to explain the limits of GDP. That's nice. However, my arguments is to prove that counterfeiting will increased GDP. The limits of GDP do not matter in this context. Any arguments stating the limits of GDP is a distraction and a red herring.

My opponent has not responded to the following arguments:
-The Philips Curve provides empirical evidence that demonstrates that as inflation increases unemployment decreases.

I look forward to the next round. Thank you.
CAPLlock

Con

I thank Pro for not touching this:

This means that through increasing the money supply, one can actually increase the Gross Domestic Production. I have now fullfilled my first burden, to show that an increase in the money supply will cause an increase in gross domestic production.



GDP only counts for the "official" sum of all money made in the country for one year.

- it does not take into account the 'black economy', which makes up 5-10% of the real GDP in countries like the UK or USA, up to 30% in Italy, and as much as 50% in Russia. This means that at equal "official" GDP per capita, Italy and the UK do not in fact have the same average income - it is maybe 15-20% higher in Italy, as fewer people declare the totality of their income.

it does not take into account the accumulated wealth and assets, such as savings, investments (bonds, shares...), real estate properties and other material possessions. The GDP per capita would be a good way to compare citizens' wealth is all people were forced to spend all their income on perishable or consumable goods like food or clothes, and be left with no cash, no house and no other investment or long-term material goods (e.g. furniture, TV...) at the end of each year.

Therefore A persons wealth does not count ALL of a person's riches.



First off, CON states that "If you could make your money at home smoking a cigar and printing money would you work? Unemployment would go up" First off, unemployment is defined as those searching for a job. If I'm not actively searching for a job, I'm not unemployed, regardless If I have a job or not.

No. people will not not if they can make money at their house. Thats not good.



Second off, you assume that all persons would have the knowledge and capital necessary to print money. This is not necessarily true. Those unable to master the art of counterfeiting would work for a living.

I had assumed that some print, but not others. I was thinking gangs and above the "25%".


My opponent does not refute my arguments about sticky wages. His arguments are "If it is about money, don't take those jobs", "I dont think this has anything to do with some printing off money.", and "I'm not getting why this is important ". These statements don't argue anything. Extend arguments on sticky wages and prices. Wages and prices can remain the same even with a growth in the money supply.

I know sticky prices. Onward.


Ironically, my opponent then states "No. If Everyone gets more money why would you keep prices low? This is a Capitalistic society." This was the entire reason I wrote Point #1. I specifically stated why businesses will keep prices low even with an increase with the money supply. I stated that prices were sticky, or difficult to change. My opponent ironically asked "I'm not getting why this is important". My point was that prices remain the same due to sticky wages.

Source? Prices do not matter. Have had bunch of candy? Yes? Would you be most likely to say ah "I got so much candy I think I make art.". The money value drops becoming a little worthless. So what? What about those who didn't print.
Do you know what happens when theres a blast of money in a nation.

Due to the equation MV = PY, if prices don't change in proportion to the money supply, then GDP increases. It's basic mathematics.

Thanking for the source. I cant refute.


My opponent then tries to explain the limits of GDP. That's nice. However, my arguments is to prove that counterfeiting will increased GDP. The limits of GDP do not matter in this context. Any arguments stating the limits of GDP is a distraction and a red herring.

I tried to point out that not all of ones wealth count. You did not refute any part of that argument.


My opponent has not responded to the following arguments:
-The Philips Curve provides empirical evidence that demonstrates that as inflation increases unemployment decreases.
I read that the P.C is outdated.
http://en.wikipedia.org...

I look forward to the next round. Thank you.
Debate Round No. 3
darkkermit

Pro

My opponent goes on to explain the problems with GDP. I agree with everything CON states. However, it is not my opponent's burden of proof to show that there are problems with measuring GDP. My burden is to show that counterfeiting will increase GDP in the short run. I stated in the first round that It is CON's burden to disprove otherwise. I showed how counterfeiting increases GDP. CON does not disagree that counterfeiting will increase GDP in the short run, only that using GDP to measure wealth is flawed. That's not the point. Any attempts to discredit the GDP i futile. My opponent can only discredit that GDP will not increase as a result of counterfeiting.

My opponent response to the argument that businesses will keep prices low even with an increase in the money supply. The response is:

"Source? Prices do not matter. Have had bunch of candy? Yes? Would you be most likely to say ah "I got so much candy I think I make art.". The money value drops becoming a little worthless. So what? What about those who didn't print.
Do you know what happens when theres a blast of money in a nation."

To be quite honest, I don't know what my opponent is stating. I already stated previously that prices will not double if the money supply doubles. My opponent agrees that prices are sticky. I agree that the value of the dollar will decrease with an increase in the money supply. This is obvious, but it is not an argument that counterfeiting decreases unemployment or GDP.

My opponent states that the Philips Curve is outdated. The equations used in the Philips Curve is outdated in the sense that one cannot simply inflate the money supply by (X) and expect unemployment to decrease by (Y). There's a new equation used for the Philips Curve that does not use empirical evidence. It's more complex and it's not necessary to go over the equations.

The main criticism of the Philips Curve was from Milton Friedman. He stated that firms and people would have a rational expectations of how much inflation would occur. As a result people would adjust there behavior accordingly and therefore the ability to reduce unemployment via inflation would have a dampening effect. This was partially proven true via stagflation. However, it should also be noted that using inflation to reduce unemployment is still a commonly used. It should also be noted that rational expectations is not completely true. Behavior economics has shown in experiments that humans have systematic biases in economic behavior. As I explained earlier, experiments have shown that workers would see a 2% pay increase with 4% increase in inflation as fair, while a 2% pay decrease with no inflation as unfair. This is irrational since the two scenarios leave the worker with the same salary. This is one reason why inflation works to reduce unemployment.

I've already explained that an increase in GDP due to inflation reduces unemployment since employers need to hire more people to satisfy consumption. If I print money and hire a servant, I have just reduced the unemployment count by one. The servant also then has money to pay for other products, which increases employment for them, and so forth. This effect is know as the Keynesian multiplier[1].

My burden is to show that counterfeiters increases the GDP and reduces uenmployment. I have proven both of these statements. CON's main arguments are red herring that do not disprove the resolution.

http://en.wikipedia.org...[1]
CAPLlock

Con

CAPLlock forfeited this round.
Debate Round No. 4
darkkermit

Pro

Extend all arguments.

Just remember folks, If you decide to counterfeit, don't think of it as devaluing everyone's dollar and getting something for nothing, think of it as "stimulating" the economy".

VOTE PRO
CAPLlock

Con

CAPLlock forfeited this round.
Debate Round No. 5
4 comments have been posted on this debate. Showing 1 through 4 records.
Posted by darkkermit 5 years ago
darkkermit
Yea, thaddeus that's coming from someone who wrote this:
http://www.debate.org...

However, I feel this debate is a good educational experience for those uninformed about keynesian economics.
Posted by Thaddeus 5 years ago
Thaddeus
"If I can prove that counterfeiting money will reduce unemployment and increase GDP in the short run"

Fairly abusive =P
Posted by phantom 5 years ago
phantom
Agree with cobo.
Posted by Cobo 5 years ago
Cobo
This will be good.
4 votes have been placed for this debate. Showing 1 through 4 records.
Vote Placed by Krazzy_Player 3 years ago
Krazzy_Player
darkkermitCAPLlockTied
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Reasons for voting decision: FF
Vote Placed by 16kadams 5 years ago
16kadams
darkkermitCAPLlockTied
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Reasons for voting decision: FF. caps your debating skills are improving, now use more sources and don't FF.
Vote Placed by ApostateAbe 5 years ago
ApostateAbe
darkkermitCAPLlockTied
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Total points awarded:70 
Reasons for voting decision: forfeit
Vote Placed by Kinesis 5 years ago
Kinesis
darkkermitCAPLlockTied
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Total points awarded:70 
Reasons for voting decision: Double forfeit.