The multiplier effect from the live performing arts is eleven dollars of stimulus for every one dollar the government gave in grants. The stimulus is to the whole community that the Arts reaches into. It's not unlike the outsourcing that an auto company does for extra parts. Art is an activity that requires many types of services in order to exist. If you make a performance possible, all of the things that went into that performance are provided for by the society as business. That one dollar for the performance stimulates eleven dollars in business. I mentioned a Canadian economist earlier who had quantified all of those threads out into society and what they brought in business. I seem to have a block on his name. Looked it up and posted it and now can't find it. He did a study for the NEA here that showed those connections. During the Reagan years when Reagan wanted to eliminate the Nation Endowment for the Arts as well as the National Endowment for the Humanities,Reagan commissioned this economist and a committee to examine the cost benefits to having the NEA and the NEH. This economist and committee proved to Reagan that the stimulating effect to the economy was too good to lose even though his fundamentalist Christian base was against the Arts.
Also Edward Deming was the first author that I read to speak about the movies and how they saved the export deficit for the U.S. You make a movie for $______. Expenses are high but you book the movie into ____ number of theaters that makes your initial investment back and gives you some capital to make DVDs for one dollar that you can then sell here for $17 to $25 and abroad for $35. That gives you a profit of__________. Sixteen or twenty four or 34 dollars on an investment of one dollar. That is so good that the export on American Movies rescued the entire American export deficit during Deming's lifetime. I know that it is still good but I don't know how it compares today to the rest of the exports the country has. Perhaps some of you would know that. REH -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Lawrence de Bivort Sent: Monday, August 02, 2010 5:25 PM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION Subject: Re: [Futurework] As spending by wealthy weakens, so does economy Hi, Mike, You mention a concept that, the more I think about it, leaves me puzzled. It is the idea of a 'multiplier effect' usually expressed in the following way: "Every dollar spent on the Defense department budget is worth seven dollars to the economy." I think Ray expressed something similar with regard to the arts recently. Question, then, to everyone who might read this: do you know of any methodology that explains this notion of a multiplier effect? It is hard for me to conceive of what the factual basis for such a notion is, or, if the general notion is valid, how one sector of the economy would have a higher multiplier than another. I hope someone here can throw some light on this. Cheers, Lawry On Aug 2, 2010, at 4:58 PM, Michael Gurstein wrote: > Frankly I think this piece is complete and utter codswallop! It is part of > some sort of organized effort by the owners of the media all of whom are > rich to ensure that Obama doesn't cancel the tax cut that Bush provided to > his rich GOP friends. It is really really hard to believe that the trickle > down from the .05% who own the yachts, private jets and country club > memberships would quite match in multiplier what would come from increased > purchasing power in the hands of the bottom (or mid-range) folks who are > increasingly strapped to pay for their trips to WalMart. The problem isn't > that the wealthy aren't making the expenditures but rather that the US > economy has been gutted of jobs and so the advantage of any expenditure just > trickles through to China. > > M > > -----Original Message----- > From: [email protected] > [mailto:[email protected]] On Behalf Of Lawrence de > Bivort > Sent: Monday, August 02, 2010 10:49 PM > To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION > Subject: Re: [Futurework] As spending by wealthy weakens, so does economy > > > My guess is that wealthy people 'feel their wealth' in terms of the stock > market; if the stock market rises, so will their spending. Except... > > It may be that some portion of the wealthy and the upper middle class are > cutting back as a matter of life-style and cultural maturation. This may > involve the very notions of (excessive) wealth and (excessive) spending > becoming contemptible. Personally, i like this cultural shift -- if it is > taking place -- but recognize that it is bad for the traditionally defined > US economy. Keith has been returning to this notion of high-priced, > innovative, attractive consumer items. He is concerned that there seem to be > none on the horizon and asks whence the new high-end spending will come > from. To his concern I would add the idea that even if such products were > discernible, wealthy people might -- some of them -- simply have become > bored with consumption and materialism. > > When I think of the wealthy people I know, these speculations do not seem so > far fetched. The values of the US counter-cuture of the 60s may be > reemerging among those who were part of that on the 60s, who then went and > got jobs and had kids and have seen them through university, and who now > approaching retirement are remembering the values and dreams of the > counter-culture. (And, no, I don't mean drugs or those who think of, or > experienced the 60s in those terms....!) > > Cheers, > > Lawry > > > > > On Aug 2, 2010, at 6:55 AM, Michael Gurstein wrote: > >> >> Who knew? >> >> M >> >> >> Jeannine Aversa, AP Economics Writer, On Sunday August 1, 2010, 2:09 >> pm EDT >> >> WASHINGTON (AP) -- Wealthy Americans aren't spending so freely >> anymore. And the rest of us are feeling the squeeze. >> >> The question is whether the rich will cut back so much as to tip the >> economy back into recession -- or if they will spend at least enough >> to sustain the recovery. >> >> The answer may not be clear for months. But their cutbacks help >> explain why the rebound could be stalling. The economy grew at just a >> 2.4 percent rate in the April-June quarter, the government said >> Friday, much slower than the 3.7 percent rate for the first quarter. >> >> Economists say overall consumer spending has slowed mainly because the >> richest 5 percent of Americans -- those earning at least $207,000 -- >> are buying less. They account for about 14 percent of total spending. >> These shoppers have retrenched as their investment values have sunk >> and home values have languished. >> >> In addition, the most sweeping tax cuts in a generation are due to >> expire in January, and lawmakers are divided over whether the >> government can afford to make any of them permanent as the federal >> budget deficit continues to balloon. President Barack Obama wants to >> allow the top rates to increase next year for individuals making more >> than $200,000 and couples making more than $250,000. The wealthy may >> be keeping some money on the sidelines due to uncertainty over whether >> or not they will soon face higher taxes. >> >> The Standard & Poor's 500 stock index has tumbled 9.5 percent since >> its high-water mark in late April. Home values fell 3.2 percent in the >> first quarter, according to the Standard & Poor's/Case-Shiller 20-city >> home price index. >> >> Think of the wealthy as the main engine of the economy: When they buy >> more, the economy hums. When they cut back, it sputters. The rest of >> us mainly go along for the ride. >> >> Earlier this year, gains in stock portfolios had boosted household >> wealth. And the rich responded by spending freely. That raised hopes >> the recovery would strengthen. >> >> No longer. The dizzying plunge on Wall Street in May and June and >> lingering stock market turbulence have shrunk Americans' wealth. The >> Dow fell 10 percent for the April-June quarter. The broader Standard & >> Poor's 500 index dropped 11.9 percent. And the rich are once again >> more cautious about spending, economists say. >> >> The affluent went back to tightening their belts in June after months >> of vigorous showing. Data from MasterCard Advisors' SpendingPulse >> showed luxury spending fell in June for the first time since November. >> The decline followed a solid rise in sales revenue earlier in the >> spring. >> >> "It isn't a good omen for the consumer recovery, which cannot exist >> without the luxury spender," said Mike Niemira, chief economist at the >> International Council of Shopping Centers. >> >> At the same time, government reports show shoppers as a whole cut back >> on their spending in both May and June. >> >> Companies have responded by refusing to step up hiring. The housing >> market is stalling. And Americans are seeing little or no pay raises. >> It adds up to a recipe for a grinding recovery to slow further. >> >> And it helps explain why economists expect the rebound to lose >> momentum in the second half of the year. Especially if the rich don't >> resume bigger spending. >> >> "They are the bellwether for the economy," says Mark Zandi, chief >> economist at Moody's Analytics. "The fact that they turned more >> cautious is why the recovery is losing momentum. If they panic again, >> that would be the fodder for a double-dip recession." >> >> That's because whether they're saving or spending, the wealthy deliver >> an outsize impact on the economy. What's not clear is whether they >> will remain too nervous to spend freely again for many months. That's >> what happened when the recession hit in December 2007 and then when >> the financial crisis ignited in September 2008. >> >> As their stock holdings and home values sank, the affluent lost >> wealth. Their jobs weren't safe, either. Bankers, lawyers, accountants >> and mortgage brokers were among those getting pink-slipped. Those who >> did have jobs feared losing them. Neither group spent much. >> >> Instead, Americans' savings rate spiked. And most of the increase came >> from the richest 5 percent, according to research by Moody's >> Analytics. >> >> In the first quarter of this year, stocks rebounded, layoffs slowed >> and the rich were spending again. >> >> But now the rich are building up their savings and splurging less on >> discretionary items. That's starting to show up in softer sales at >> upscale retailers, such as Neiman Marcus and Saks Inc. It's because >> people like Angeli Gianchandani, 40, have cut back. >> >> She used to hit the mall every two weeks -- flicking through the racks >> at Saks or Bloomingdale's and returning home with a new frock. Not >> anymore. She's limiting her splurges now. The downturn in the stock >> market has played a role. >> >> "Rather than spending more money, I'm keeping more," says >> Gianchandani, who lives in New Jersey. >> >> Even with recent losses, household net worth has risen 13 percent from >> its bottom during the recession. Net worth -- the value of assets like >> homes, checking accounts and investments minus debts like mortgages >> and credit cards -- grew 2.1 percent in the first quarter. >> >> However, net worth would have to grow 21 percent more to regain its >> pre-recession peak. In the meantime, don't expect the wealthy to >> suddenly start spending lavishly. >> >> "The affluent -- as their wealth goes down -- they'll become more and >> more conservative," predicts David Levy, chairman of the Jerome Levy >> Forecasting Center. >> >> Associated Press Writer Anne D'Innocenzio in New York contributed to >> this report. >> >> >> _______________________________________________ >> Futurework mailing list >> [email protected] >> https://lists.uwaterloo.ca/mailman/listinfo/futurework > > > _______________________________________________ > Futurework mailing list > [email protected] > https://lists.uwaterloo.ca/mailman/listinfo/futurework > > > _______________________________________________ > Futurework mailing list > [email protected] > https://lists.uwaterloo.ca/mailman/listinfo/futurework _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
