Nick86 and Alphasigmookie, a discussion.

Email Print posted by Nick86 06/12/2008 11:28:45 PM EST

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This is a continuation of an ongoing discussion on the nature of the economy and its functions and roles.

Continued from:
http://www.theyoungturks.co m/story/2008/6/8/1729/38210 /Diary/look-for-something-t o-happen-whit-oil-this-week -

"All I can do is assume as you have not proposed a better system."

I am not Marx, I am not a genius, I am a 22 year old! I cannot give you a systematic and full alternative to capitalism, or neoliberalism. That would require many years of hard work; which I will be embarking on soon enough.

"You have pointed to sweeden with its 50% of GDP tax rate, but given no further explanation....especially as to how an economy with only a few million people is applicable to much larger economies."

Sweden is an example of what is possible within capitalism, that you can reconcile growth with heavy state intervention into the economy. It was believed in the 1960s that both Soviet communism and American capitalism would merge into a system not unlike Sweden. It was the neoliberal reaction to this that prevented this from occuring.

It is not to say that the Swedish system is perfect, but the standard of living for the average Swede is higher than an American. The poorest Swede makes a lot more than the poorest American, and much more when you add in the government support they receive. If I had a choice of living in the US or Sweden, its a no brainer.

Taxes are not a negative thing if most of the things that you pay for are either paid for the by the state or subsidized by the state; meaning you have to have less disposable income anyways. Think about it, if healthcare costs are socialized, education socialized, etc. You actually probably pay less than an average American (Canadians pay $2000 less for healthcare per capita, and we have high quality healthcare for everyone all over the country).

American's have the APPEARANCE of ARTIFICIALLY low taxes, because the state does not do all the things the Swedish state does. Thus add your taxes, with your healthcare premiums, educational expenses/debt, your actual expenses may be close to or even exceed the figures for the Swedes, and this increases the lower you go on the income scale. Just because a private company does it, doesn't mean its not a tax.

"The biggest potential problem I see with the sweedish economy is that highly skilled, well educated workers make less than elsewhere."

That is compensated by a MUCH higher standard of living, Sweden makes Audi, Saab fighter jets, Volvo, Ikea, etc. I would say that its doing better than good, and its easily one of the fastest growing states in the EU. Money...isn't everything! OMG! Hard for an American to believe, but its true.

"Unless the entire global economy moves in this direction, it will be hard for economies like this to retain intellectual capital as workers move to locations with higher pay.  They do make great cars though (love my volvo!)"

Well you just contradicted yourself, why did I even bother?

"By the way you did not comment on my tax proposal, please point out how this would be a bad way to go economically."

Re-state it, so I have a better idea of what you are actually proposing.

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Nick86 and Alphasigmookie, a discussion. | 39 comments (39 topical, 0 hidden)
My Idea (none / 0)
My idea is to shift the tax burden from income and profit which is an economic goods and a desirable outcomes to focus on throughput.  By this I mean tax energy, materials, commodities, waste, and pollution.  By changing the focus you can completely shift the economy.  In the current system wasting large quantities of energy or spewing tons of pollution are perfectly acceptable if they lead to profit.  With the tax burden shifted, efficiency leads to lower taxes and higher profit.  With higher taxes on throughput it would provide significant incentives to build products that last longer and are more easily repaired.  Businesses could shift from selling products that they actually want you to break so that you buy a new one, to leasing products or selling service contracts on products they expect to last for many years. 

Instead of punishing profit, such a system would encourage it along with material and energy efficiency.  All imports would also be taxed at the boarder on their life cycle energy and material throughput (I recognize this is a tricky part).  In the end you would have an economy that is much more efficient and sustainable and is focused on high value added products.  The first step in this direction would be to pass a carbon tax on all fossil fuels that is revenue neutral by cutting income taxes. 

In addition a negative income tax could also be added to act as a safety net for the poor while still incentivising work.  Lets say the cuttoff is 25k.  For every dollar less than 25k, the government would give you $0.40.  If you earned no money this would be $10k a year which is right at the poverty line.  If you earned minimum wage, which works out to ~15k then the government would kick in another 4k bringing you up to 19k.  Also, no additional advantages should be given for having more than 2 children.  This would help cut down on the welfare baby factories.  Such a system would be far better and more fair than the current welfare system (and possibly even cost less).  Beyond that people would be free to earn as much as they can.  If further income tax was required it would be at a flat rate with no deductions above a higher threshold, possibly $50k-75k. 

by alphasigmookie on 06/13/2008 03:20:09 AM EST

Negative income tax (none / 0)

Are you kidding? Seriously, are you?

You know what that means, don't you? It means corporations offering abysmal wages because the state subsidises them. That way, the state actually loses money on low-income jobs. This means the state will have an incentive to prevent the creation of low income jobs. And that's a bizzaro world.

by Cogitor on 06/13/2008 12:14:25 PM EST

[ Parent ]
Its not a bad idea (none / 0)
If the minimum wage is linked to inflation, and put at a level that is considered a living wage. Otherwise, it is bunk.

Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/13/2008 12:26:47 PM EST

[ Parent ]
Response (none / 0)
"My idea is to shift the tax burden from income and profit which is an economic goods and a desirable outcomes to focus on throughput. "

The problem is that most of the wealth generated in the US, finance, does not actually have any physical qualities or quantities. Shifting the tax burden merely to the industrial process would destroy whatever is left of America's industry, unless this is made into a worldwide proposal, ala Kyoto. Secondly, the reason why this is not done is exactly for the reason you lay out:

"With the tax burden shifted, efficiency leads to lower taxes and higher profit.  With higher taxes on throughput it would provide significant incentives to build products that last longer and are more easily repaired."

Its too efficient, it would lead to too much efficiency. The market economy is based on a certain level of inefficiency. I had a 80g iPod, its broke now...one day the earphone input just started going on and off for no apparent reason and now its unusable. The logic is to force me to buy a new one, which I will not do, in order to maintain sales. Imagine if goods were at the highest quality they could be? Apple might be out of a lot of business.

Secondly, lets assume your program of incentivizing efficiency (which I support) as the only means of taxation (which I disagree) works. It contains a huge inherent contradiction. As industry becomes more efficient, tax revenue will decrease, and if this applies only to the US they will simply move to where such tax laws are not enforced. The reason why income is taxed is because, income is stable, income usually grows over time, and you can't move income, you can move wealth but not income.

"Instead of punishing profit, such a system would encourage it along with material and energy efficiency. "

There are many interests in the economy would seek to destroy your plan, because they stand to lose billions in profit...Exxon comes to mind. Capitalists are divided among themselves, some like those in hi-tech and FIRE may support your proposal, but heavy industry, resource companies,etc. will subvert it.

"In addition a negative income tax could also be added to act as a safety net for the poor while still incentivising work. "

Its an interesting idea, but I think along with that, there has to be a minimum wage linked to inflation. I totally disagree with your flat tax proposal, that is totally regressive and would undermine the whole system of progressive taxation and a just society.

Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/13/2008 12:24:18 PM EST

[ Parent ]
Re: (none / 0)
"The market economy is based on a certain level of inefficiency. I had a 80g iPod, its broke now...one day the earphone input just started going on and off for no apparent reason and now its unusable. "

Instead of planned obsolesence, companies could instead focus on continual real improvement of products.  To get people to buy your product you would actually have to make a product that is signiifcantly better than the last one that they had.  To a degree this occurs in the tech sector, but to a much lesser degree in other sectors.

"if this applies only to the US they will simply move to where such tax laws are not enforced."

This is why all imports are taxed at the boarder.  If you want to make something in china and import it...fine, but you'll have to pay tax on all energy and materials used durring production in addition to the energy expended shipping it across the pacific.  I realize there is a difficulty of enforcement there, but ISO 14000 provides a framework for assessing these things. 

"There are many interests in the economy would seek to destroy your plan"

I never said my plan was politically easy, no major change to the status quo is.  The major barrier as you said is that the losers know who they are while the winners don't or arn't nearly as organized. 

"Its an interesting idea, but I think along with that, there has to be a minimum wage linked to inflation.

The minimum wage should be indexed to inflation, and this plan would provide an incentive for the government to encourage living wages.  However, the minimum wage should not be excessive (the current rate of 7.25 + inflation adjustments should be fine), otherwise we'll be france with huge unemployment and an enormous welfare state.  If the minimum wage is significantly higher than the value a worker can provide, businesses will simply not employ anyone.  IMHO subsidizing workers at a near market wage while providing an incentive to work is much better than a high mandatory minimum wage that leads to high unemployment and a welfare system that does not encourage earning whatever income you can. 

"I totally disagree with your flat tax proposal, that is totally regressive and would undermine the whole system of progressive taxation and a just society."

This is where we disagree on principle.  I believe in providing people a safety net of basic services...food and shelter...no one should be hungary or homeless if they choose.  Anything beyond that should be earned.  Just because you go to work every day does not mean you should be handed a 3 bedroom house in the suburbs, a new car in the garage, 42" plasma with cable etc.  If you can earn it great!  If your only skill is flipping burgers, then mom's basement or a tiny loft apartment are fine places to live.  By the way, the flat tax does not even kick in until near the top end of middle class (100-150k for a married couple) so the bottom 80-85% would pay nothing!  I don't see how that is a regressive tax?  You can consider it more of a luxuary tax on excess income. 

by alphasigmookie on 06/13/2008 02:36:46 PM EST

[ Parent ]
Re: (none / 0)
"Instead of planned obsolesence, companies could instead focus on continual real improvement of products."

Alpha I couldn't agree with you more, and this exactly why I do not support the economy as it is now. It really is a mystery why you would. Do you think corporations don't know that the greater and more efficient way to improve the lives of people is to create high-quality goods? Sadly, THAT IS NOT THE POINT, the point of the market economy is to continue consumption. Think about it, how many versions of iPod's do we need? Its all about creating vendibility of the product, NOT the quality or "utility" of the product. If people buy it, it doesn't matter how shitty it is. I mean how many millions Brittany Spears CD"s have been sold? Only economies like Germany, Sweden, Austria *coughwelfarestatescough*ac tually create goods that are notorious for their quality...the US is known for its shitty consumables and relatively shitty quality cars.

"This is why all imports are taxed at the boarder.  If you want to make something in china and import it...fine, but you'll have to pay tax on all energy and materials used durring production in addition to the energy expended shipping it across the pacific.  I realize there is a difficulty of enforcement there, but ISO 14000 provides a framework for assessing these things. "

A tariff scheme that would probably actually be deemed illegal thanks to the WTO. Plus, if the US puts up its tariffs, there will be a spiral of trade wars and the global economy could sink into a spiral of tariff and devaluation wars. I do not see this flying, there has to be a world-wide agreement on a tax regime on externalizes, but poor countries especially will be against this.

"I never said my plan was politically easy, no major change to the status quo is. "

Its a bigger change than you give it credit it for, it would fundamentally alter the centre of capitalist power in the US.

"However, the minimum wage should not be excessive (the current rate of 7.25 + inflation adjustments should be fine), otherwise we'll be france with huge unemployment and an enormous welfare state. "

French unemployment has more to do with overly strong labour unions who protect the benefits of older employees than with a minimum wage. I do not see how a minimum wage leads to greater unemployment, I would argue it does the opposite. (Yes, I know the neoclassical argument about the minimum wage, and its still bull-shit). Plus a living wage is WAY over $7.25, I would go up to $10-12 an hour, and this is going to happen in Ontario soon.

"If the minimum wage is significantly higher than the value a worker can provide, businesses will simply not employ anyone.  IMHO subsidizing workers at a near market wage while providing an incentive to work is much better than a high mandatory minimum wage that leads to high unemployment and a welfare system that does not encourage earning whatever income you can. "

Neoclassical crap....this is the LOGIC which reinforces poverty and inequality. This is EXACTLY why I hate neoclassical analysis, especially knowing its based on nothing. Get a new argument, because I know, through previous experience, that you cannot defend this argument.

"Just because you go to work every day does not mean you should be handed a 3 bedroom house in the suburbs, a new car in the garage, 42" plasma with cable etc.  If you can earn it great!  If your only skill is flipping burgers, then mom's basement or a tiny loft apartment are fine places to live. "

I don't disagree, but what we have to do in  a just society is give everyone the same opportunity to not become that individual. Thus, free education all the way up to Ph.D, and education would be based on merit (grades, academic references) not income, or heredity. Thus, take out the profit from education.

"By the way, the flat tax does not even kick in until near the top end of middle class (100-150k for a married couple) so the bottom 80-85% would pay nothing!  I don't see how that is a regressive tax?  You can consider it more of a luxuary tax on excess income. "

Everyone should be paying tax, its a civic duty, but those who make more should be paying more relative to their income than those at the bottom.

Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/13/2008 04:35:29 PM EST

[ Parent ]
continued.... (none / 0)
"A tariff scheme that would probably actually be deemed illegal thanks to the WTO. Plus, if the US puts up its tariffs, there will be a spiral of trade wars and the global economy could sink into a spiral of tariff and devaluation wars."

It depends how it is classified and sold.  I'm not sure that technically it would be considered a tariff since it is more like a tax to level the playing field between imports and domestically produced goods.  A tariff is generally designed to give an advantage to domestic production, this would simply be applying a uniform tax across the board.  Where it may become a problem however is with exports flowing out of the US.  There may have to be some sort of tax rebate for these goods such that they could continue to compete on other markets.  Either way I will agree that the global trade implications of such a plan are significant and may end up being its undoing.  I never claimed it was a perfect plan simply an alternative to the current way of doing things.


"the point of the market economy is to continue consumption."


Here is where I think you missunderstand the role of markets.  Markets have no a priori goals, they are simply optimizing mechanisms.  However, what they optimize depends entirely upon the parameters of the system they operate in.  It is clear that the current market parameters highly favor increased consumption, however it does not follow that all markets must do so.  Taxes and regulations go a long way towards shaping the outcome of the market.  SOx and NOx markets have proven to be highly efficient means of reducing these two pollutants.  I have no reason to believe that markets could not similarly be harnessed to lead to higher material and energy efficiency rather than maximizing consumption as they do now.  Whatever you think of markets and capitalism you cannot discount to the power of greed and profit as a driving force, the challenge is motivating "positive" action and dicouraging "negative" action. 

"Neoclassical crap....this is the LOGIC which reinforces poverty and inequality. This is EXACTLY why I hate neoclassical analysis, especially knowing its based on nothing. Get a new argument, because I know, through previous experience, that you cannot defend this argument.

I do not need neoclassical economics to come to this conclusion.  I can derive it from first princples.  If the government tells you you must pay someone $12 to cut your lawn and the value of having your lawn cut is only $8 you will simply not pay anyone to do it.  Thus the lawn cutter who may have been willing to cut your law for $8 is now out of a job and on welfare. 

Under my system the government kicks in an extra couple of bucks to the lawn mower so that he's not as poor and he still has a job.  Unless the government is going to force me to hire someone to cut my lawn it follows that unemployment will rise.  Also, by raising the minimum wage, everyone who was making above minimum wage will now probably request a similar rasie leading to wage inflation and leaving the person at the bottom with almost no change in relative wealth.  The only way for said person climb up is to develop more valuable skills.  In the end though 50% of the people will always be below average, that's not unfair, its just life. 

"I don't disagree, but what we have to do in  a just society is give everyone the same opportunity to not become that individual. Thus, free education all the way up to Ph.D, and education would be based on merit (grades, academic references) not income, or heredity. Thus, take out the profit from education. "

We are not completely on the same page here, but maybe not as far off as you might think.  I do think the US needs better ways to fund schools, but I would argue that more money is not necessarily the answer.  I don't have exact statistics, but i don't think we spend significantly less than other countries.  I do think we need a significant change in high school education.  The problem isn't that kids arn't taking enough math or reading or whatever, I think the real problem is that they arn't learning any useful life skills.  Math classes should deal with personal finance and how to handle credit cards and pay bills instead of abstract algebra and geometry.  Englis h classes should become more high tech and allow students to read and write blogs instead of forcing them to read shitty litterature like great expectations and beowolf *puke*.  The problem is our education system has bearly made it out of the 19th century let alone entered the 21st. 

Standardized tests are also part of the problem.  Although accountability is important, it further forces teachers to teach to the tests and make kids memorize worthless facts rather than learn to think critically.  In the 21st century the memorization of facts is almost completely worthless as most can be acessed within seconds using the internet.  It is the critical thinking skills that allow people to separate truth from bullshit that is majorly lacking.   

I also agree that there should be better access to higher eduction through scholarships for high achievers.  However I'm not sure I like the European idea of having a single test around the age of 16 determining your entire future.  While education should be free or inexpensive for those who are clearly high achievers, the community college is a significanly underutilized and inexpensive source of educational opportunity.  Most charge between $50-$75 per credit hour and associates degrees can be earned for a few thousand dollars. 

by alphasigmookie on 06/13/2008 07:01:06 PM EST

[ Parent ]
Stop with the crappola! (none / 0)
"I'm not sure that technically it would be considered a tariff since it is more like a tax to level the playing field between imports and domestically produced goods. "
A tariff is a tax on imports, pure and simple regardless of the motive.

"There may have to be some sort of tax rebate for these goods such that they could continue to compete on other markets."

Aren't you the one all for markets and "efficient allocation" of resources, yet want the government to subsidize business? Cake + eating it too?

"Here is where I think you missunderstand the role of markets.  Markets have no a priori goals, they are simply optimizing mechanisms. "

Markets as you conceive them do not exist, you have conceded as such so why are you still beating this dead horse? An investor does not invest in his business because he seeks to "efficiently allocate" resources, he invests for profit. In many instances, profit is made by doing exactly the opposite of efficiently allocating resources. Again, you are living in a non-existent world of perfect competition. In your world, there would never be a recession, because things are "allocated efficiently" they clearly are not, because the premise of the argument does not exist, nor can it ever exist.

"It is clear that the current market parameters highly favor increased consumption, however it does not follow that all markets must do so. "

That makes sense...a market who's goal is not increased consumption...ok...dig the hole deeper.

"I have no reason to believe that markets could not similarly be harnessed to lead to higher material and energy efficiency rather than maximizing consumption as they do now. "

They can with government intervention to create incentives and disincentives to punish profit if it is based on pollution. If I am an investor and I know that my profits are lower in industry x, I will invest less in it. As it stands now, the polluting industries are the most lucrative because the government is not intervening in a positive way; the US government is actually still subsidizing oil firms! The economy is about profit, and power not about allocations of resources, that is achieved at best under scientific management.

"Whatever you think of markets and capitalism you cannot discount to the power of greed and profit as a driving force, the challenge is motivating "positive" action and dicouraging "negative" action. "

No one denies the power of those things, not even Marx. Problematically, thats an abstraction, and not dealing with the actual issue. How the market works and who it benefits, and in this regard it is failing.

"I do not need neoclassical economics to come to this conclusion. "

Yes you do, how can you talk about a neoclassical assumptions and arguments YET not know what lies behind those assumptions? Its like me talking about physics without any background in it, come on get real.  Are you a Jesus-freak too who doesn't need to question the existence of God, because its in your heart? You and people like you scare me quite a bit!

"I can derive it from first princples.  If the government tells you you must pay someone $12 to cut your lawn and the value of having your lawn cut is only $8 you will simply not pay anyone to do it.  Thus the lawn cutter who may have been willing to cut your law for $8 is now out of a job and on welfare."

Do not confuse microeconomics with macroeconomics, which is exactly what you are doing. Increasing wages increases demand, an increase in demand means an increase in investment as investors perceive that future profits will be higher, don't believe me. You in this quote is Pigou, and reality is Keynes:
--------------------------- --------------------------- --------------------------- ---------------
Workers, Pigou argued, were more interested in money wages than real wages. This led them to resist cuts in money wages even when prices were falling (as they were from 1920 onwards) and the real value of their wages was rising. In this way, they were pricing themselves out of work without realising it. Keynes himself had for a long time accepted this argument. But the sheer scale of the slump of the early 1930s led him to challenge it. He pointed to two central flaws in Pigou's argument.

First, it assumed that reductions in money wages right across the economy would increase the demand for goods. But although reducing the pay bill might help one firm sell more goods at the expense of its competitors, it could not have this effect throughout the economy as a whole. Indeed, it would merely decrease the demand for consumer goods, without automatically increasing investment sufficiently to compensate for this.28

By redistributing income from workers to entrepreneurs and shareholders, groups who tend to spend a smaller portion of their income on consumption than do workers, the effect could be to reduce effective demand and to increase unemployment29:

There is, therefore, no ground for the belief that a flexible wage policy is capable of maintaining a state of continuous full employment... The economic system cannot be made self-adjusting along these lines.30

There would be a vicious circle, by which cuts in wages led to cuts in employment, and cuts in employment led to further cuts in wages: 'If real wages were to fall without limit whenever there was a tendency for less than full employment...there would be no resting place...until either the rate of interest was incapable of falling further or wages were zero'.31
(Harman)
 --------------------- --------------------------- --------------------------- ---------------------

Ok so now that minimum wage crap is out of the way...

"We are not completely on the same page here, but maybe not as far off as you might think.  I do think the US needs better ways to fund schools, but I would argue that more money is not necessarily the answer."

Neither do I, I think higher academic standards are the answer.

"I don't have exact statistics, but i don't think we spend significantly less than other countries. "

You spend more I believe than most other states, especially in post-secondary.

" do think we need a significant change in high school education.  The problem isn't that kids arn't taking enough math or reading or whatever, I think the real problem is that they arn't learning any useful life skills."

Of course, we don't need our kids to be cultured...stupid us! We need them to be uncritical automatons, who's only intellectual pursuit is to become an appendage of a system that they can never question. Please...stop with this its making me sick!
 
"However I'm not sure I like the European idea of having a single test around the age of 16 determining your entire future."

I am sure you can point out where I advocated such a system?



Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/13/2008 07:58:47 PM EST

[ Parent ]
tag you're it (none / 0)
"They can with government intervention to create incentives and disincentives to punish profit if it is based on pollution"

Exactly!  This is the entire basis of my argument!  There is no such thing as a "free" market, but markets can be harnessed to acheive specific goals if incentivized in the correct way.  Markets will always seek profit, but which activities lead to profit can be changed based upon taxes and regulations. 

"Do not confuse microeconomics with macroeconomics, which is exactly what you are doing. Increasing wages increases demand, an increase in demand means an increase in investment as investors perceive that future profits will be higher"

That makes sense as well, although there are clearly limits in either direction.  Decrease wages too much and there is not enough demand to keep employment up.  Increase wages too much and jobs are outsouced to lower wage countries or they are lost altogether.  I don't claim to know what exactly an "ideal" minimum wage should be, but I doubt you know either.  A major problem with any economic analysis is that they tend to be overly simplistic and discount the effects of positive and negative feedbacks, nonlinearity and  the generaly complexity of the system.  These guys are trying to apply new techniques to diverse problems from physics to biology to economics...very interesting stuff:

http://www.santafe.edu/rese arch/topics-dynamics-human- behavior-institutions.php 

"Of course, we don't need our kids to be cultured...stupid us! We need them to be uncritical automatons"

"Culture" is a constantly shifting phenomina, the problem is schools are only able to teach what was considered "culture" a century or more ago.  The question by far asked the most by high school students is..."why should I care, i'm never going to use this in real life!"  In order to teach students importat skills like reading, writing and math you need to help them understand their applicability to real life.  You certianly aren't going to achieve that by making them read and write about Great Expectations!  I know because I though it was shit and I was one of the few people in my highschool that cared about something other than getting drunk and getting laid (not that I didn't care about that too). 

By the way I also specifically suggested that schools focus more on critical thinking and less on memorization of facts (which is a major focus currently).  It is the current system that is geared towards the production of uncritical automitons as it is entirely based on developing docile, obedient workers who can easily be plugged into the industrial machine.  It is the rebillion against this obsolete system that is contributing to the failure of todays schools. 

"I am sure you can point out where I advocated such a system?"

Maybe not exactly but close:


"Thus, free education all the way up to Ph.D, and education would be based on merit (grades, academic references) not income, or heredity"

I am interested in how you see America changing and improving their education system. 

by alphasigmookie on 06/13/2008 10:39:19 PM EST

[ Parent ]
Re: (none / 0)
"Exactly!  This is the entire basis of my argument!"

Your argument is rather confused, its using so many metrics of analysis I am not sure where you are coming from. Although, it is undeniable you are abandoning neoclassical analysis rather quickly.

"There is no such thing as a "free" market, but markets can be harnessed to acheive specific goals if incentivized in the correct way."

Then, lets not use the arguments premised on the existence of the free market anymore.

"Markets will always seek profit, but which activities lead to profit can be changed based upon taxes and regulations."

I thought markets existed for an "efficient allocation" of resources, ah yes, thats bull-shit. Coming into the light, we see that markets are indeed for commodification of goods and labour in the interests of ever-increasing profit.

"That makes sense as well, although there are clearly limits in either direction."

So, let me ask you, why the strict, unquestioned adherence to the negative view of minimum wages if you concede that they are not actually bad? I am rather interested in the logic behind the "ignorance" argument you actually presented.

"Increase wages too much and jobs are outsouced to lower wage countries or they are lost altogether. "

No, you cannot outsource most of the work done by minimum wage employees. You can try to outsource the Burger King to India, but I have a feeling it won't work, ALTHOUGH I feel that at least drive-through can be outsourced.

"I don't claim to know what exactly an "ideal" minimum wage should be, but I doubt you know either."

Sure I do, a living wage :), even Adam Smith stated as a defence of capitalism is that it would and should allow every man to live with dignity while he walks down the street...we have clearly failed in that regard.

"These guys are trying to apply new techniques to diverse problems from physics to biology to economics...very interesting stuff:"

If they base their analysis on marginalism, then its not worth it. If not, then ok it might be very interesting. I'll check it out.

""Culture" is a constantly shifting phenomina, the problem is schools are only able to teach what was considered "culture" a century or more ago. "

Indeed, and thats why we should be teaching them culture from 400 years ago. Let's see Shakespeare vs. Spears? Culture, especially with the advent of consumerism has degenerated into something so DISGUSTING and perverse that the ONLY hedge against a societal collapse into complete hedonism and selfishness is harking back to the cultures of the past.

"n order to teach students importat skills like reading, writing and math you need to help them understand their applicability to real life. "

This is a problem, mostly in the US. Europeans, Asians value education A LOT more than Americans. Americans are taught not to value education because in the US success is gauged on income and status, not achievement or bettering society. I will quote Veblen on the issue of education and why I MUST VEHEMENTLY disagree with you:
--------------------------- --------------------------- ------------------------
There is also a large resort to business methods in the
conduct of the schools; with the result that a system of
scholastic accountancy is enforced both as regards the work of
the teachers and the progress of the pupils; whence follows a
mechanical routine, with mechanical tests of competency in all
directions. This lowers the value of the instruction for purposes
of intellectual initiative and a reasoned grasp of the
subject-matter. This class of erudition is rather a hindrance
than a help to habits of thinking. It conduces to conviction
rather than to inquiry, and is therefore a conservative factor....
Courtesy as well as expediency inclines these
schools to cultivate such appearances and such opinions as may be
expected to find favor with men of wealth. These men of wealth
are business men, for the most part elderly men, who are, as is
well known, prevailingly of a conservative temper in all cultural
matters, and more especially as touches those institutions that
bear on business affairs.
--------------------------- --------------------------- ------------------------

America is capable of so much, and it pisses me off Americans are so apt to appeal to the lowest common denominator.

"  I know because I though it was shit and I was one of the few people in my highschool that cared about something other than getting drunk and getting laid (not that I didn't care about that too). "

Thats a result of culture NOT because children are naturally inclined to be hedonistic whores.

"By the way I also specifically suggested that schools focus more on critical thinking and less on memorization of facts "

And focusing on merely business principles and conditioning them to naturalize economics is going to do that as you suggest! Get real!

"I am interested in how you see America changing and improving their education system.  "

MERIT! Equal funding for all schools regardless of property taxes (like in Canada), free education for all. Entrance into universities based on academic achievement and academic reference, with a essay or some other work to showcase potential. Scrap SAT's, and schools should really help place people into work.



Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/14/2008 01:17:57 AM EST

[ Parent ]
All models are wrong, some are useful (none / 0)
The title is a quote from my ecological systems dynamics teacher.  I feel it is especially applicable to economics.

"Your argument is rather confused, its using so many metrics of analysis I am not sure where you are coming from. Although, it is undeniable you are abandoning neoclassical analysis rather quickly. "

That is because my arguments were never fully based upon neoclassical analysis.  The way I learn is to develop mental models of the way the world works and constantly test them and improve them based upon experience and new knowledge.  My understanding of economics is based upon a single honors macro class I took 6 or 7 years ago, years of discussions about economics with my dad who is a retail manager, thousands of articles on the internet, 4 or so year of investing experience (achieving ~25% compound returns so I must have learned something?), basic understanding of human nature, and a lot of reading on complex systems dynamics.  I try never to allow myself to become fully encumbered by other peoples ideas.  To me they are useful only in so far as they can help improve my own mental models.   

As an engineer I have learned to be careful of assumptions (as much as possible).  I recognize that in most cases assumptions must be made in order for any useful analysis to be performed, otherwise you can't really say anything.  Thus the reason for such assumptions as "free" markets and "perfectly rational" agents.  The people making these assumptions know they are wrong, but it is the only way to get an answer.  We engineers do so frequently when assuming "pefectly mixed" or "steady state" conditions.  The question is not if the answer is correct, the question is is the answer useful?  By useful I mean does the model help improve your understanding of the system that you are studying. 

"So, let me ask you, why the strict, unquestioned adherence to the negative view of minimum wages if you concede that they are not actually bad?"

I never said a minimum wage is a bad idea, only that an excessively high minimum wage is bad, just as an excessively low minimum wage is bad.  In a complex system it is hard to predict what an ideal minimum wage would be, but it is possible, through adaptive management of the minimum wage, to achieve a reasonably good value that minimizes unemployment while limiting the burden upon the state of providing for basic needs.   The negative income tax I proposed would potentially provide a good feedback system as the state would have an incentive to minimize payments by maximizing employment and wages.  The other important thing to not is that the minimum wage is in fact the MINIMUM.  It is meant for only the most meanial and low value added jobs.  The percentage of people who actually earn minimum wage is tiny in most economies. 

"Sure I do, a living wage :), even Adam Smith stated as a defence of capitalism is that it would and should allow every man to live with dignity while he walks down the street...we have clearly failed in that regard. "

Yeah but a living wage is highly subjective.  The minimum wage in the US is higher than the per capita GDP of Mexico, Venezuela, Brazil, South Africa, Iran and even Russia.  At the $10-12 the poorest Americans would overtake Saudi Arabia and Portugal and be nipping at the heals of South Korea and the Czech Republic. 

"Culture, especially with the advent of consumerism has degenerated into something so DISGUSTING and perverse that the ONLY hedge against a societal collapse into complete hedonism and selfishness is harking back to the cultures of the past."

That is quite the value ladden statement.  You sound like someone's grumpy grandpa.  Shakespere's Titus would rival anything Quentin Tarantino has directed in the amount of gore, plus "Hit me baby one more time" is a classic!

http://www.youtube.com/watc h?v=-NwqN-xj9Xs

"America is capable of so much, and it pisses me off Americans are so apt to appeal to the lowest common denominator. "

Unfotunatly I would argue that has to do as much with the overly liberal ideals of fairness and self esteem which coddle our students and refuse to fail them that lead to this (we can't hurt little billy's feelings yo know).  We can't play games in gym class because in games there are winners and losers.  We need to develop a society where everyone wins!  YIPPIE!  And we wonder why Americans are struggling to compete in a global market place?  A true merit based system has to provide the freedom to fail and that failure must have consequences.  Unfortunatly everything you have proposed (especially high minimum wage) only cushions the consequences of failure and limits the rewards of sucess.  In the few cases failure is allowed to exist it is blamed on "the system" and not on the individual, further minimizing personal responsibility. 



by alphasigmookie on 06/14/2008 05:27:07 PM EST

[ Parent ]
You wanna a quote: (none / 0)
"The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists."

-Joan Robinson, prominent economist, Cambridge.

Thats why I bother learning about economics, not because I believe it has answers, but because I know it lacks them.

"As an engineer I have learned to be careful of assumptions (as much as possible).  I recognize that in most cases assumptions must be made in order for any useful analysis to be performed, otherwise you can't really say anything."

There are three kinds of assumptions in scientific analysis, negligibility, domain, and heuristic. The problem with neoclassical economics is that its dominant assumptions, which are the are the assumptions that the theory must apply; therefore if its dominant assumptions are false so is the theory. The dominant assumptions behind the theory is decreasing returns, perfect competition, equilibrium brought through automatic stabilization of supply and demand, and a static view of the economy. There have been so many economists who have blasted neoclassical economics out of the water BASED on the falsity of the dominant assumptions of neoclassical economics. Sraffa, Keynes, Schumpeter are the most notable of these class of economists, and I was taught under the guidance of a theorist of his own school of economics, Nitzan, thus I cannot accept an analysis that is so logically inconsistent.

"The people making these assumptions know they are wrong, but it is the only way to get an answer."

No actually, they do not because these are their DOMINANT assumptions. Go to a neoclassical economist and tell him if he believes in utility, marginal productivity, and decreasing returns he will say yes they exist.

"The question is not if the answer is correct, the question is is the answer useful?  By useful I mean does the model help improve your understanding of the system that you are studying. "

Any system of analysis with a certain set of assumptions will answer any question. The problem is, are those set of assumptions based on reason, or belief? For example, evangelicals believe that the reason Israel has not been destroyed is because God protects Israel...their dominant assumption, God exists. Has Israel been destroyed? No, thus their theory is correct? Well, it answers the question doesn't it?

"In a complex system it is hard to predict what an ideal minimum wage would be, but it is possible, through adaptive management of the minimum wage, to achieve a reasonably good value that minimizes unemployment while limiting the burden upon the state of providing for basic needs. "

There is no magic wage that is perfect for a minimum wage, but the reality is that the lower wages go the less people end up working. Its been proven that the lower the wage, the more labour is replaced with capital. Thus, if we wish to increase employment we should raise the minimum wage, I would argue that (if this can measured) that the wage should be at a level whereby the individual can spend effectively. Effective demand, not mere subsistence, and many Americans are no longer even subsisting on the minimum wage. For instance the increasing level of wage earners going to food banks. Capitalism in the US has reached an acute state of crisis.

"The other important thing to not is that the minimum wage is in fact the MINIMUM.  It is meant for only the most meanial and low value added jobs.  The percentage of people who actually earn minimum wage is tiny in most economies."

True, but 2.1 million of your fellow citizens were making a mere 5.15 in 2003, and some even below that figure!

http://www.bls.gov/cps/minw age2003.htm

As the American economy shifts even more towards service, as you actually wanted, more and more Americans will be making minimum. With lower social mobility, less access to higher education the future does not look bright. This is one reason I think the American public is going to vote in the Democrats in the belief that government can save them from the monster of neoliberalism.

"Yeah but a living wage is highly subjective.  The minimum wage in the US is higher than the per capita GDP of Mexico, Venezuela, Brazil, South Africa, Iran and even Russia. "

No shit...somewhere there, is lies an argument.

"That is quite the value ladden statement.  You sound like someone's grumpy grandpa. "

I've been called that before, I see people my age and I am not impressed. I am not a robot, I have values as well and I will use them.

"And we wonder why Americans are struggling to compete in a global market place?"

Its because of America's hyper-individualist culture, a culture that was put on crack-mode by the Reagan revolution. Consumerism, hendonism, parents who are forced to work overtime to put food on the table, an absent government, valuation placed on income > intelligence, an OVERLY- competitive social relation (football), popularity based on the most EMPTY of measures (looks, how stupid you are, jock), exploitation of the weak to get ahead instead of utilizing one's own potential. American kids are a microcosm of America, and that is of a parasitic society, who lives off everyone else and lives it up. Don't believe me? How much do you owe the world? The system will crash, one wonders when....if it isn't already. I look at Obama and see the future, of someone who really worked his ass off to get where is he is, not like GWB who was born of an ass.

"A true merit based system has to provide the freedom to fail and that failure must have consequences.  Unfortunatly everything you have proposed (especially high minimum wage) only cushions the consequences of failure and limits the rewards of sucess.  In the few cases failure is allowed to exist it is blamed on "the system" and not on the individual, further minimizing personal responsibility. "

Yes, because allowing to feed themselves is cushioning them! You are still stuck in a unproven neoclassical value system. What do you propose for people who "fail" for them to die? Be honest.






Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/14/2008 06:56:50 PM EST

[ Parent ]
To exploit or be exploited? (none / 0)
"Thats why I bother learning about economics, not because I believe it has answers, but because I know it lacks them."

I long ago realized that simply bitching about the system as it is doesn't do much good.  Believe it or not there was a time when I too thought all corporations were evil and that the system was rigged in favor of the rich.  In many ways it definitely is, however it also allows anyone smart and disciplined enough to become rich eventually.  By limiting debt, consistenly saving and intelligently investing you can exploit inefficiencies in the market and earn above market returns.  Instead of simply bitching about the obscene profits of oil companies you too can own a piece of them! 

"The problem with neoclassical economics is that its dominant assumptions, which are the are the assumptions that the theory must apply; therefore if its dominant assumptions are false so is the theory. "

I would go a step further and argue that simply because it is based upon a model it is by definition false!  ; However your stance has the problem that is very common of democrats, it sucessfully criticizes the status quo but fails to offer a better alternative.  The truth is that neolibralism can reasonably represent reality in some cases, but fails in many other areas.  The answer is not to throw out all models and economics in general, but to continue to improve the models and assumptions so that they better represent reality. 

"Its been proven that the lower the wage, the more labour is replaced with capital."

Really?  To me this doesn't make any sense.  The cost of capital would generally be relatively fixed, so if wages are lower it would be less profitable to substitute capital for labor than at a higher wage.  I can understand how more people might chose not to work if wages are too low, but I don't get the argument you are making.  Can you clarify?

"True, but 2.1 million of your fellow citizens were making a mere 5.15 in 2003"

So only ~0.7% of the population and over 50% are teenagers who live at home who's main expenses are fast food and xbox games.  Also, 75% make less than minimum wage which generally means they work in a restaurant and depend on tips for the majority of income.  Under 200k are over 25 years old and don't get tips.  I know it sucks for them, but someone has to be at the bottom tail of the bell curve. 


http://www.bls.gov/cps/minw age2005tbls.htm

"No shit...somewhere there, is lies an argument. "

The argument was why should the most worthless, stupid and or lazy americans be entitled to a higher standard of living than average citizens of many other nations?  The truth is they shouldn't.  As globalization continues the best and brightest anywhere in the world will become relatively rich and the below average will struggle.  The question is how much do the sucessful owe to the below average. 

"I have values as well and I will use them. "

And you should use them.  As I have said it is the dynamic expression of individual values that forms the basis of the market.  Assuming or even worse trying to force common values on people is always a mistake. 

"Its because of America's hyper-individualist culture"

That may be the perception, but most Americans are risk averse sheep.  It is the brave that are willing to take risks and move away from the flock that are sucessful.  The rest crave someone to simply tell them what to do and provide a simple, low risk path to relative sucess.  There are plenty of shephards and some wolves out there perfectly willing to provide that to them.  This exploitation of the sheep, as you would call it, many times leads to profits for the shepards, but the sheep are willing participants. 

In the imortal words of sideshow bob:
"Your guilty conscience may force you to vote Democratic, but deep down inside you secretly long for a cold-hearted Republican to lower taxes, brutalize criminals, and rule you like a king."

"What do you propose for people who "fail" for them to die? Be honest."

Again my negative income tax plan would give everyone including the crack whore down the street ~10k per year, this is almost as much as your grandma gets in her SS check.  I have no problem with a basic safety nets.  I do however disagree with providing lazy people a comfortable life.  Unemployment should be hard.  The plan also provides a bit of a boost to lower paying jobs, but again I am fine with having a tail of the income distribution of "poor" people.  Not everyone can or should live in a McMansion and drive a BMW. 


by alphasigmookie on 06/16/2008 02:08:14 AM EST

Do I really to be here? (none / 0)
Seems that you are talking to someone else:

"In many ways it definitely is, however it also allows anyone smart and disciplined enough to become rich eventually."

Wrong, the facts prove otherwise. Since 1980 poverty has been on the up, inequality has been on the up, yet the US is more than 2x larger in economic terms. There certainly is wealth but its not going to the people. Thus, with less relative wealth how can the shrinking middle class become rich? Your sweet rhetoric is just that, crap.

"Instead of simply bitching about the obscene profits of oil companies you too can own a piece of them!"

...said the stock broker to the ENRON investor circa. 2000. Stop with the propaganda, the average little investor has no power and no say in how his wealth is being used, and many times it used against him. Then again, you do not know how financial work, you live in this bull-shit bubble.

"However your stance has the problem that is very common of democrats, it sucessfully criticizes the status quo but fails to offer a better alternative. "

I did offer a better alternative, not the optimal alternative, but I did offer an alternative. So don't put words in my mouth, which you are very fond of doing. I don't even need to be in this conversation by the looks of it.

"The answer is not to throw out all models and economics in general, but to continue to improve the models and assumptions so that they better represent reality. "

I never suggested to abandon economic analysis, all I am saying is to root it in correct theory, again why do I need to be here?

"Really?  To me this doesn't make any sense."

Yes because you are stuck in a neoclassical paradigm and ignorant yet spew ignorant opinions, like a typical conservative/repiglican:

"The analysis of marginalist 'capital theory' led to another, related, conclusion which destroyed the old argument that workers would always be able to get jobs if only they accepted lower wages. The marginalist argument rested on the assumption that as wages fell it would always be profitable for capitalists to switch from 'capital intensive' to 'labour intensive' techniques of production, so absorbing unemployed workers. Kaldor and Robinson showed that, in fact, a growth of profits at the expense of wages could so alter prices as to cause a process they called 'reswitching'­a change making it more profitable for the capitalist to cut the workforce by using capital intensive rather than labour intensive methods.118" (Harman)

Deal with it...

"So only ~0.7% of the population and over 50% are teenagers who live at home who's main expenses are fast food and xbox games. "

Nice try Karl, its only .7 if you include children and the elderly. In terms of the ACTUAL labour force it more like 2.9 percent. You CLEAR manipulation of the data does not deserve a further rebuttal of the point.

"The argument was why should the most worthless, stupid and or lazy americans be entitled to a higher standard of living than average citizens of many other nations?"

THings cost more in the US, Americans depend on the market more than they do in the third world, Americans have a different standard of living, American's have a right to expect more since they live in such an affluent economy. If you want to equate the US to Cameroon, you can but not even a Repiglican would accept that argument.

"As globalization continues the best and brightest anywhere in the world will become relatively rich and the below average will struggle. "

Globalization according to CIBC (large bank in Canada) is pretty much dead thanks to the rise in oil prices. So the dream looks to be coming to an end...my crocodile tears are flowing.

"Assuming or even worse trying to force common values on people is always a mistake."

Where did I do or attempt to do that? Again, who is this phantom person you are talking about?

"That may be the perception, but most Americans are risk averse sheep.  "

Thats how you see it because you live in the jungle, those in the civilized world who know what co-operation means....see it very differently. You simply do not know any better.

"I do however disagree with providing lazy people a comfortable life.  Unemployment should be hard.  The plan also provides a bit of a boost to lower paying jobs, but again I am fine with having a tail of the income distribution of "poor" people.  Not everyone can or should live in a McMansion and drive a BMW. "

I dont think anyone should own a BMW or McMansion...:)



Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/16/2008 11:22:45 AM EST

[ Parent ]
Jefferson vs. FDR (none / 0)
"Stop with the propaganda, the average little investor has no power and no say in how his wealth is being used, and many times it used against him. "

Buying good companies in a business you understand for a good price.  This simple strategy allowed Warren Buffet to become the world's richest man.  The worlds second richest man started a good company and retained ownership of a large stake in it.  Both of them have decided to give away the majority of their fortunes to philanthropic causes. 

"Yes because you are stuck in a neoclassical paradigm and ignorant yet spew ignorant opinions, like a typical conservative/repiglican&quo t;

While I'm sure you assume because I don't agree with you I must be a Republican...in reality I don't think I've ever voted for a Republican in a major election (although I did vote for Ron Paul in teh primary).  On this chart I am somwhere in the vacinity of Thomas Jefferson.  I would guess you fall somewhere between FDR and Marx. 



"I did offer a better alternative, not the optimal alternative, but I did offer an alternative. "

So far you have thrown out a few random thoughts, but no comprehensive ideas.  You have adimitted you have no alternative to neoliberal analysis.  You have argued for a minimum wage of "$10-12" or some arbetrary "living wage".  You have suggested that free higher education should be rationed based upon grades, recommendations and an essay (or other rather subjective criteria).  You have suggested the tiny european nation of sweeden as your ideal model economy (do you also support their highly privatized, market based education system?).  I would be happy to shut up and listen for a bit if you'd like to post your own ideas for improving the system. 

"Globalization according to CIBC (large bank in Canada) is pretty much dead thanks to the rise in oil prices."

This has yet to be seen.  Huge flows of exports around the world may slow, but the opeing up of world markets will still allow capital to flow to areas where investment acheives the highest returns.  This investment will continue to raise standards of living around the world putting significant pressure on the limited global resource base.  The pressure will continue to push up prices of most sources of energy and materials making it hard for Americans and Canadians to monopolize such a large percentage of these flows.  Maintaining such a high standard of living in the face of this new reality will be a significant challenge.

by alphasigmookie on 06/16/2008 04:36:17 PM EST

[ Parent ]
I am still alive (none / 0)
"Buying good companies in a business you understand for a good price."

Most people do not, they put their money into the hand of money managers (shysters) who peddle them goods in order for them to make a fast buck. Basically, would you trust the door-to-door salesman with your savings? There are always exceptions to the rule like Warren Buffet, but he is an insider in the markets and he would not have gotten where he is today without that information. The average person is usually screwed by the market, because that is how the markets work. CEOs care about the price of the stock, then sell it when they know it will decrease in value and then short it to make even more money. In order for those prices to go up millions of people invest in those stocks as the "hot stocks" of the day...Dot-com bubble, ENRON, etc. Its always the same story.  Veblen explains:
--------------------------- --------------------------- --------------------------- -----
It follows, further, that under these circumstances the men
who have the management of such an industrial enterprise,
capitalized and quotable on the market, will be able to induce a
discrepancy between the putative and the actual earning-capacity,
by expedients well known and approved for the purpose. Partial
information, as well as misinformation, sagaciously given out at
a critical juncture, will go far toward producing a favorable
temporary discrepancy of this kind, and so enabling the managers
to buy or sell the securities of the concern with advantage to
themselves. If they are shrewd business men, as they commonly
are, they will aim to manage the affairs of the concern with a
view to an advantageous purchase and sale of its capital rather
than with a view to the future prosperity of the concern, or to
the continued advantageous sale of the output of goods or
services produced by the industrial use of this capital.
 
That is to say, the interest of the managers of a modern
corporation need not coincide with the permanent interest of the
corporation as a going concern; neither does it coincide with the
interest which the community at large has in the efficient
management of the concern as an industrial enterprise. It is to
the interest of the community at large that the enterprise should
be so managed as to give the best and largest possible output of
goods or services; whereas the interest of the corporation as a
going concern is that it be managed with a view to maintaining
its efficiency and selling as large an output as may be at the
best prices obtainable in the long run; but the interest of the
managers, and of the owners for the time being, is to so manage
the enterprise as to enable them to buy it up or to sell out as
expeditiously and as advantageously as may be.
--------------------------- --------------------------- --------------------------- ------
Meaning, CEOs try to inflate the price of their stock and at a certain time will seek to destroy the price of their stock. Not for the interests of the community, or even the corporation but their own wallets. I have no illusions of the financial markets that you do, its about making money...and those with power have the money.

"While I'm sure you assume because I don't agree with you I must be a Republican"

When you use their arguments, rhetoric, and logic...you are a Republican whether you know it or not. The fact that you don't vote for them...is interesting.

"So far you have thrown out a few random thoughts, but no comprehensive ideas. "

Do you not understand that this takes YEARS of study to come up and explain a completely new system of political-economic management? Capitalism took hundreds of years to fully develop, you cannot expect me to give you a completely vviable system right now on a forum. If you can't past that, you will not get it ever. I will say that this is pretty close to what I think is acceptable alternative, that was seriously considered in Britain in the post-war period:

--------------------------- --------------------------- --------------------------- ----------
 Most importantly, they did not believe that the welfare state
was the only method of promoting greater economic equality. The
next phase of egalitarian policy-making, argued the revisionists, should
also involve altering the underlying ex ante distribution of property
and marketable skills rather than simply accepting these as given and
undertaking only ex post income redistribution through the welfare
system. This article argues that the revisionists should be credited with
promoting an egalitarian version of that fertile objective a ‘property-
owning democracy’, in which productive assets and marketable skills
are no longer the sole preserve of one social class but rather are held
in more equal amounts by individual citizens and, in the case of assets,
are also owned collectively by the state and mutual organizations.

 Leonard Hobhouse differentiated between the own-
ership of small amounts of property that conferred ‘control of things’
and hence ‘gives freedom and security’ for an ordered individual life,
and the ownership of larger amounts, which gave ‘control of persons
through things’ and ‘gives power to the owner ’.14 Hobhouse’s view
was famously replicated in J. A. Hobson’s distinction between
‘property’ and ‘improperty’,15
--------------------------- --------------------------- --------------------------- --------------------------- -------------------

If you want to learn more about something that I would be apt to advocate, you should enquire into the article, "Revisionism Reconsidered: ‘Property-owning Democracy’ and Egalitarian Strategy in Post-War Britain " By BEN JACKSON

"Huge flows of exports around the world may slow, but the opeing up of world markets will still allow capital to flow to areas where investment acheives the highest returns.  This investment will continue to raise standards of living around the world putting significant pressure on the limited global resource base. "

Most of this capital you speak of is "hot money", that is based PURELY on speculation and expectation of quick profit. It was this money that lead to the near collapse of the world economy in 1997. Even the IMF was forced to admit after the expose of Joseph Stiglitz that a overly liberal capital regime will lead to endemic crisis, that is why Keynes wanted capital flows to basically end because they will always lead to crisis. The problem now is that the actual increase in living standards and production worldwide is based on FDI to a large degree, and if it is cheaper to make things in the US than in China...issues will be created and the global nature of the economy may be undermined. I do not think that these high oil prices ($120+) will last much longer as I believe it is a bubble and it burst it will burst HARD, it may even aggravate economic problems in the US.



Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/18/2008 09:29:35 PM EST

[ Parent ]
Welcome Back! (none / 0)
"Most people do not, they put their money into the hand of money managers (shysters) who peddle them goods in order for them to make a fast buck."

I don't know about that, but it is consistent with your view that everyone in the financial world is out to screw you.  Although to a degree this is true, it is not universal.  The problem is that most people don't have the first clue how to manage their money which makes them easy targets.  However most people simply put their money in mutual funds and let someone else manage it for a fee. 


Others, the ones you talk about getting "screwed" by the market are the ones who try to make a quick buck and get rich quick.  Any time you try to take short cuts you almost always fail.  Chasing the "hot" stocks and trends will almost always lead to lower returns.  Buying oil at $140 is very risky...buying oil last summer when it was $50 was very smart.

However, if you are willing to sacrifice it is possible to become rich over time.  If you start at 25 making only $30k, only increase your income by 4% per year on average, save 20% of your income and earn the market average longterm return of 10% you can retire at 60 with $2.4 million.   Any cop, teacher, fire fighter or walmart assistant manager can do that if they wish.  True it is a major sacrifice, but it can be done.  Even if you can only save 10% and wait till 65 you can still have $2 million (yes it will only be worth 1/3 to 1/2 of today due to inflation).  However our culture is too focused on "have it now", "buy now pay later"...so instead of saving and earning a high return on their savings people are spending what they dont' have and paying 19% on throw pillows and douvet cover that their wife just had to have.  I have no sympathy for these people. 

"Meaning, CEOs try to inflate the price of their stock and at a certain time will seek to destroy the price of their stock. Not for the interests of the community, or even the corporation but their own wallets. "

One thing I think we can both agree on is the short planning horizon of most corporations.  I do think this stems from the high compensation of executives and the fact that they can be fired for a few bad quarters reenforced by the walstreet's myopic focus on the next quarter rather than long earnings projections (this inefficiency however provides major oportunities for investors with long time horizons).  I do not however think this has to be the case of all corporations in all systems, but is definitly a problem in the current US market. 

"I have no illusions of the financial markets that you do, its about making money...and those with power have the money."

Unfortunatly there tends to be some level of corruption in any system with power.  I can't imagine that if corporations were run by the government there would be any less corruption. 

"This article argues that the revisionists should be credited with promoting an egalitarian version of that fertile objective a ‘property- owning democracy’, in which productive assets and marketable skills are no longer the sole preserve of one social class but rather are held in more equal amounts by individual citizens and, in the case of assets, are also owned collectively by the state and mutual organizations. "

It is an interesting idea, but I don't see how it is any different than communism?  Also going back to the corruption idea someone will have to manage the "assets" that are collectively owned which would give rise to consolidation of power and eventually different classes again.  The dream of a classless society seems to me as just that...a dream.  I think there will always be power and that power can never be equally distributed (otherwise it would not be power). 

A more capitalist version of this idea would be something like a stock owning democracy where everyone owned equal shares of stock in all companies.  Even if everything started out even I don't see how equality could be maintained over time.  If people had the right to sell their stock, others could buy it and consolidate ownership.  Also, different people would have different numbers of children.  Depending on how the stock was disbersed it could encourage and discourage population growth. On the other hand if no exchange of stock is allowed then again I see no difference in this system than in communism or socialism. 

I am however interested in more of your visions along these lines.  I do think there is some validity to the "control of persons through things" comment, but i'm not sure how much this really solves the problem.  As a fun asside it is definitely interesting in American culture how willingly we allow ourselves to be controlled by our things...reminds me of Fight Club..."the things you own end up owning you"

by alphasigmookie on 06/18/2008 11:31:41 PM EST

[ Parent ]
Apology (none / 0)
"When you use their arguments, rhetoric, and logic...you are a Republican whether you know it or not. The fact that you don't vote for them...is interesting"

I have a confession to make.  In many of our initial exchanges I was using a tactic that I picked up from Ken.  Basically using strong language and am very confrontational trying to get you a bit riled up to see if you are worthy of my time.  As things move along I tend to soften my tone and settle in for a nice long productive conversation.  Frankly I think you're a smart kid, but I do think a bit nieve and idealistic (which is to be expected of a 22 year old), I know I was there not too long ago. 

(sorry ken for giving away your secrets)

by alphasigmookie on 06/18/2008 11:42:43 PM EST

[ Parent ]
Adolph's Meat Tenderizer (none / 0)
Every newbie must go through Hell Month and the associated initiation rights. In that way, they develop a finer appreciation of our exclusive fraternity.

I gave Nick his “Welcome To The Club” initiation a few weeks ago. I’m surprised Mookie missed the party.

by KenTX on 06/19/2008 12:34:46 AM EST

[ Parent ]
How'd I miss it! (none / 0)
I don't know how I missed that one...it was right in my wheelhouse!

For a while there I was pretty sick of politics and the primary and there didn't seem to be many interesting threads going so I wasn't checking as often...must have slipped through the cracks. 

Oh well, I think I addressed the issue in one of my recent energy posts. 

by alphasigmookie on 06/19/2008 02:17:11 AM EST

[ Parent ]
Honestly (none / 0)

I have been following along this thread and it is really just a difference of world views.

Nick has absolutely no idea about about American culture and how we view the world and our place in it.

Mookie, I can tell you are a very young intelligent person and I can also tell that have not traveled much and experienced other cultures. You should try it in a few years when the global Bush effect has worn off.

For example Mookie, in one of your arguments you stated that a trained professional will leave their country for better opportunity (like in the US). No, I am not talking about uber wealthy Europeans that are leaving their Countries (don't bother linking Ken). I'm talking about every day professionals like engineers, doctors, etc. They would rater keep their smaller homes and TV's. In trade they get to spend more time with their families with 6 hour work days and have 2 moths + of vacation time a year. That is their culture and they do not understand our rat race or our need to keep up with the Jones'.

Nick, you do not understand us at all. We are a things driven people so stop lecturing. 

Now you two need to get a room or something. 

by z1p101 on 06/19/2008 01:46:56 AM EST

[ Parent ]
Travel (none / 0)
You are right that I am young, but I have been to europe twice including Ireland, France, Monaco and Italy, i've spent many weekends in Canada, I now basically live in Mexico (Phoenix) and half of my fellow grad students are from China.   ;All this has given me appreciation for America's ability to steal the best parts of other cultures and make them even better!  I tell you what, i've never eaten worse Italian food than in Italy and many "Irish Pubs" in the US are better than the originals, plus you dont' have to drive on Ireland's shitty roads to get there!  I do wish we had some old Castles though...

by alphasigmookie on 06/19/2008 02:26:02 AM EST

[ Parent ]
Ahh (none / 0)

but there is nothing like Guinness in Dublin. Everything brewed there never leaves the Island.

You can get Jameson's anywhere.

Next time you travel, actually talk to the people.

Let me make some suggestions for you.Tallinn, the most independent and proud people of their country you ever want to meet plus the tallest, leggiest blond chicks you have ever seen. Copenhagen, free spirited party animals. Oslo, little to serous for my taste. Edinburgh, people were a lot like the ones in my home town with a Scottish twist.

I'm not talking about chaperoned high school trips of family vacations here kid. 

by z1p101 on 06/19/2008 03:02:17 AM EST

[ Parent ]
oops (none / 0)
I'm not talking about chaperoned high school trips or family vacations here kid.

by z1p101 on 06/19/2008 03:12:05 AM EST

[ Parent ]
smithwicks (none / 0)
I perfer a cold Smithwicks right down the road from the brewery in Kilkenny.

Thanks for the suggestions, i'll add them to the list of places to go once I start making some money again (The wife wants to do the Greek Iels next summer, but we'll have to see what the budget and the shitty exchange rate say about that...

As for talking to people, we do our best.  The first trip was our honeymoon and we hung out with a few British, New Zealand and South African folks and had a few chats with excentric Itialian waiters on our cruise through the Riviera.  The second trip was a road trip through Ireland with one of my best friends and his wife.  The first few days we stayed with his Uncle and his family in Wicklow.  I definitely got into some good conversations with his uncle Pat (who's favorite beer by the way is MGD for some god awful reason!).  The one thing I've noticed is that everyone from a developed country other than America thinks their own country is better!  This is funny because as an America, I know we're better!  For some reason nationalism and patriotism is seen as a major negative by liberals in America, but at the same time they celebrate the nationalism of other nations? 

by alphasigmookie on 06/19/2008 04:18:41 PM EST

[ Parent ]
Cool (none / 0)

Well, a quick suggestion would be to check out Contiki tours. They do all kinds of great trips for a reasonable price and they are for 18 to 35 year olds.  Did one about 10 years ago and had a great time. Lots of Australians use this company for some reason.

"I definitely got into some good conversations with his uncle Pat (who's favorite beer by the way is MGD for some god awful reason!)."

LOL. I remember being in Oban Scotland (where they make Oban Scotch!!!) and everyone was drinking Jack Daniels. WTF???

by z1p101 on 06/20/2008 12:10:15 AM EST

[ Parent ]
Thanks for the suggestion (none / 0)
I'll check it out...we did easycruise for the Riviera and are looking at them again for Greece.  I'm also trying to find an excuse (and funding) to go to China with some of my classmates at some point.  Nothing like traveling with a local! 

by alphasigmookie on 06/20/2008 03:59:50 AM EST

[ Parent ]
Hey (none / 0)

sounds great. Do it while you still can or you will forever regret it. Once you get a taste for travel it never goes away.

Never seen Asia myself and with a local you can't go wrong. 

by z1p101 on 06/20/2008 04:31:56 AM EST

[ Parent ]
Book Recommendation (none / 0)
Vonnegut's first book, Player Piano is a good read.  It deals with class struggle and the dilemas faced by an economy and society that is too efficient. 

http://en.wikipedia.org/wik i/Player_Piano

by alphasigmookie on 06/16/2008 04:46:02 PM EST

Re: (none / 0)
"Others, the ones you talk about getting "screwed" by the market are the ones who try to make a quick buck and get rich quick."

ENRON investors, many of whom were retired or about to retire with their now worthless 401k's? The 401k system is what I am talking about, yes there are individuals who play the market have no experience or idea of what they are doing, but now that is forced on people through the 401k system. What is even worse, is if they privatize social security! The markets will go crazy at the amount of "blind money" flowing into the markets. The profit to be made by manipulating stock prices will be too great. Either the stock market has to be reformed, or abandoned altogether because it clearly does not fulfill its supposed purpose.

"Any cop, teacher, fire fighter or walmart assistant manager can do that if they wish.  True it is a major sacrifice, but it can be done. "

Not realistic. First off Americans like their conspicuous consumption, indeed 70% of the American economy is based on it; in fact without it the US economy may collapse. Secondly, with wages not keeping up with inflation their nominal income means less and less; meaning that the individual saves less and less. Thirdly, you assume these people are single most are not and have children. This is why what you say is largely unrealistic because its simply not possible to make these "major sacrifices". Fourthly, most Americans today are in greater debt than their disposible income, so really that excess incomes will go increasingly to pay off credit card bills. Lets come back to reality, because I am not buying the basket of goods your selling.

"One thing I think we can both agree on is the short planning horizon of most corporations."

I'd argue its worse than the, the real new class of expliotation is no longer what Marx would call the bourgeoisie but a new entrenched class of super-elite CEO types who are paid millions to be fired. As long as CEOs can be compensated without a limit, and with little accountability to anyone, they will destroy everything in their path for maximum income.

"I can't imagine that if corporations were run by the government there would be any less corruption. "

AT LEAST, the government owned corporations should be accountable to the population, these people are accountable to no one. And no, their shareholders are NOT relevant apart from the huge investors.

"It is an interesting idea, but I don't see how it is any different than communism?  "

Then its obvious you do not know what communism is.

"Also going back to the corruption idea someone will have to manage the "assets" that are collectively owned which would give rise to consolidation of power and eventually different classes again. "

Thats why the leaders of corporations should be democratically elected, and ousted out of power when they are shown to be corrupt. There should be no entrenched class of managers, their salaries should have an absolute limit, they will not own any stock in the company, etc. Basically, they should have no interest in the company's performance on the stock market (assuming it still exists, which it probably won't), but rather the material efficiency of the firm, thus eliminating the profit (monetary)-motive.

Here is a video that may explain some of the changes needed:

http://youtube.com/watch?v= EeZlCgmKwvU

"A more capitalist version of this idea would be something like a stock owning democracy where everyone owned equal shares of stock in all companies. "

THE ONLY WAY that could work is if everyone owned the same amount of stock, if that were true then we can talk. Democracy = equal voice, the only thing that can change is which stocks you own not how much stock you own.

"On the other hand if no exchange of stock is allowed then again I see no difference in this system than in communism or socialism. "

Then you REALLY need to read Marx, because its laughable.

To z1p101:

"Nick has absolutely no idea about about American culture and how we view the world and our place in it."

Yes I am aware I do not live in a fantasy land of self-delusion, and American exceptionalism. Maybe instead of telling me to stop lecturing you-which ironically you lectured me to stop lecturing you...hypocrite much?-you could actually listen and learn something for once. :) Enjoy...

Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/19/2008 12:33:01 PM EST

Interesting theory (none / 0)
I don't doubt that it is an interesting theory, but even putting aside that fact that trying to move to a system like that would be politically infinately more difficult than my already politically tricky proposal for changing the basis of the tax structure, I'm not sure its even viable. 

The big questions I have are:

1) how would capital be allocated for new ventures? 
2) What is the incentive for innovation?
3) How would competition between firms play out?  If say someone has a better idea for a new product that is superior to another product, how does that work? 
4) who decides the global optimum allocation of resources? 
5) Is such a system reslient to uncertainty and shocks, and does it encourage taking responable risks while punishing stupid risks? 
6) "Thats why the leaders of corporations should be democratically elected" Is it really reasonable to hold national elections for the heads of every company?  Its hard enough to get people to pay attention enough to make an informed decision about 2 or 3 positions, how do you think having them vote for the heads of the 6000 or so publicly listed companies will lead to reasonable results? 




by alphasigmookie on 06/19/2008 05:16:17 PM EST

[ Parent ]
A world beyond our own... (none / 0)
"I'm not sure its even viable."

Its viable, given the proper context. The common thread of history has been for the given system to reach such a unsustainable level of exploitation, and disenchantment that it inevitability collapses. This lead to the French Revolution against the aristocrats into liberal capitalism, the Russian Revolution, and the abortive revolutions in Europe against aristocratic capitalism. If the hegemony of business maxims is eroded, as it may well be by the ever increasing crisis of American capitalism...unless there is a massive correction within the American capitalist system something will eventually occur. What the something is, I do not know.

"The big questions I have are:"

Yes they are very big, and I am no fully able to even approach answers. But here are only preliminary thoughts, as it these questions that will require years of study.

"2) What is the incentive for innovation?"

This is false, the notion that people invent for profit is not true. How many great inventions, medical advances have been done through profit, I'd wager not enough to justify intellectual property. The person who invented the wheel, did not do so because he wanted to get lots of sticks for the fire. Human beings have an inherent need to solve problems, indeed the Internet was created with NO profit motive at all. Most of the greatest advances have come from the public sector, which are later appropriated by the private sector. Indeed, what greed has shown us is that billions of dollars are poured into "medicines" like Viagra, while AIDS and Cancer research begs for money. Unless the research and development will lead to a vendible product, it will not be done. So we get a lot of useless inventions, while the worthwhile stuff usually comes from the government or people with a passion.

"3) How would competition between firms play out?  If say someone has a better idea for a new product that is superior to another product, how does that work? "

Ever think about competition within firms, not between firms? Instead of Microsoft and Apple competing, we would have one firm where different segments of the firm compete with each other for funding. The products would be of high quality because there is no inter-firm competition.

"4) who decides the global optimum allocation of resources?  "

At this radical level, global resources would be planned rationally. That is immensely complicated question, that I really cannot answer further than that.

"5) Is such a system reslient to uncertainty and shocks, and does it encourage taking responable risks while punishing stupid risks? "

Those are capitalist concepts, under a rationally planned economy such risks would not be taken unless it serves a social function. Most "stupid" risks are done to make a quick buck, no such incentive exists in this alternative. The notion of shocks, and uncertainty exists within a system dominated by the profit motive, because it constantly needs to reorganize itself to continue accumulation.

"6) "Thats why the leaders of corporations should be democratically elected" Is it really reasonable to hold national elections for the heads of every company?  Its hard enough to get people to pay attention enough to make an informed decision about 2 or 3 positions, how do you think having them vote for the heads of the 6000 or so publicly listed companies will lead to reasonable results? "

Firstly, I would imagine with the maximum use of technology the workday will not exceed four hours. Thus, individuals will have a lot of time to engage in intellectual pursuits, and that value will be taught from a very young age, a civic duty. With the internet it is not difficult to have a fully participatory democracy. Obviously there will not be 6000 corporations, we are looking at this economy so do not transplant the two for each other. There will be hundreds of firms at most in the whole world. Obviously, not everyone can vote in all those elections, but the workers of the firms certainly can; furthermore the most important firms (Oil, Distribution, etc.) can be voted on by the masses. But the masses have to be highly educated and competent, meaning mass high education without charge for the population.

These are VERY crude arguments.


Blog: http://perspectivos.blogspo t.com/

by Nick86 on 06/19/2008 10:06:18 PM EST

[ Parent ]
Stability (none / 0)
"The common thread of history has been for the given system to reach such a unsustainable level of exploitation, and disenchantment that it inevitability collapses. "

Although I think this is largely true of all systems...entropy builds up within the system over long time periods and eventually leads to collapse.  However American style democratic capitalism has a very good trackrecord of relative stability.  One argument would be that the periodic process of "creative distruction" allows for significant amounts of entropy to be removed from the system, improving long term stability.  Most flavors of relative socialism or communism have faired significantly worse, I think this can be attributed to the difficulty of strict central control of a complex system. 

"Most of the greatest advances have come from the public sector, which are later appropriated by the private sector. "

I would agree that public sector funding of research is a huge driver of innovation.  However for some reason the American system seems to do it better than any other system I've seen.  As for the private sector taking over, that is a huge driver of economic growth.  Government is great at doing science, but the private sector is far better at using it to develop useful and profitable products.&n bsp; Without the private sector, the internet would still probably be mostly populated by a few computer scientists sitting in labs.  It was the profit motive that allows us to have this conversation right now.  You cannot discount this fact. 

As for Viagra, I would argue that it is a very important and valuable development.  To say otherwise is to discount the happiness of millions of formerly frustrated men who now have healthy and satisfied sex lives.  

"The products would be of high quality because there is no inter-firm competition. "

How do you figure?  With no competition there would be no comparison.  Competition almost always leads to better and cheaper products.  For products like toasters and blenders this might work, but I don't think it translates will to things like cars, cell phones, and software (just look at microsoft!).  Such a system might work if your goal was to highly efficiently provide people with a homogonous ration of basic goods, but it would do very poorly at meeting the diverse wants of a large population.  Also, walmart is already more efficient than any other system you can image at providing these basic goods, but it fails miserably at providing anything that resembles "style" or "quality" and it is miles away from "cool".  What makes you think your collectivley owned mega corporations would do any better?

"At this radical level, global resources would be planned rationally. That is immensely complicated question, that I really cannot answer further than that."

Yes it is, but without an suitable answer your system fails at the starting block.  What do you mean by "rational"?  This implies the same universal utility function that you have so criticized neoliberals for.  While their theory might use it, the markets they depend on on the other hand can determine preferences and values in near real time.  Meeting these diverse values and preferences is a major challenge for any central planned economy or even overly large corporations.  With the exception of some very homogenious populations such a system will be quite challenging.  How ever it might be a rasonable system for a muslim oil producer like Iran.   

"Those are capitalist concepts, under a rationally planned economy such risks would not be taken unless it serves a social function.  Uncertainty exists within a system dominated by the profit motive"

Tell the soviet union that resiliency is not important to not capitalist economies.  You are starting to sound like the neoliberals again...lack of uncertainty implies perfect information, sound farmiliar?  Again without risks and incentives to take them such an economy will be very efficient at providing basic goods and services but very poor at innovation and advancement.  Such a contry will never be more powerful than say New Zealand.  On second thought it may be a perfect system for Canada! 

"There will be hundreds of firms at most in the whole world."

What will happen to the other millions of companies (including ones not listed on major exchanges)?  Bob's bait shop is now the offical property of Megasportsmart...

"But the masses have to be highly educated and competent, meaning mass high education without charge for the population. "

Really?  When did they invent a cure for stupid?  25% of the population has an IQ under 90, do they get PhD's too? 

One more question in addition to the above...

7) How would your system deal with freeloaders?  The answer to this question will determine could c ompletely change my mind.  If I can stay home and play golf and video games all day I'm in!  
 
"These are VERY crude arguments. "

Obviously...Seriously though if you really want to push a new system like this you'd better start thinking seriously about the braoder implications.  There is a reason most "Utopian" societies fail, and most of them have to do with the narrow focus of the "theory" that they are based on. 

by alphasigmookie on 06/20/2008 05:58:50 AM EST

[ Parent ]
Response (none / 0)

"However American style democratic capitalism has a very good trackrecord of relative stability."


It has only been around in its current corporate form since the 1880s, its not even at 130 years old yet. The cracks are beginning to show in this model of American capitalism (neoliberalism), with the unrestrained cowboy-coporate capitalism of ENRON, Tyco, GlobalCrossing, Exxon, etc. Along with the stagnant and even declining real wages of the average American workers, along with the Latin American styled inequality in income...the last time the US was in this position was in the 1920s and we know what happened then. The other issue is that after each crisis, the underlying crisis gets worse and worse. American capitalism is at a turning point in this election, either it continues its self-destruction or could be  temporarily renewed. 


"However for some reason the American system seems to do it better than any other system I've seen. "


Because the United States spends more than anyone else in R&D and espe