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On February 28 2014 20:35 oneofthem wrote:Show nested quote +On February 28 2014 14:28 aksfjh wrote:
I'm getting to the point where I don't believe the education thing on inequality and mobility. Not that education is bad or anything, I think more people should be highly educated because it benefits society as a whole. However, if/when higher levels of education are available to more people, that will do nothing to close the gap.
Those fueling the inequality aren't doing so because they're better skilled, they are positioned in such a way that it is impossible to unseat them and their lineage from their thrones, which means there isn't any room for anybody else up there. a lot of research on childhood education being very critical. college and beyond is a game of elite getting more elite though due to the demand for professional jobs.
Yes but he is right in sayign that it only lessen inequalities to a certain extent. When you put poor people and rich kids in competition, even if you do everything you can to help the poor, you will never end up with an equality - the "competition" for education is not fair.
In France we have a public system that takes kids early and inequalities are still important. As I say I don't even believe in lessening inequalities in education at school, I think it's impossible in the broad sense. The school culture is the culture of the dominant, a rich kid will always come in life with parents interested in books, museum and shit that will help him at school and facilitate his success, while success for a poor kid is both hard work and a cultural experience (there are various study on the subject, kids who succeed in poorest neighborhood usually stop getting in contact with their friends in the same neighborhood for exemple). They more or less need to cut their ties with their direct environment and culture.
We will never create a society where everybody has both a master degree and a highly paid work anyway. Even if we do give master degree to everyone, what will happen is that the value of degree will lessen (it already happenned), not only because it is less rare but also because the "social value" of the people who newly acquired the degree is less, and people will just find other ways to differenciate with others (through social network for exemple, or with new diploma that you need to pay for in private school). This already happened but I guess it's not over as public educational systems all around the world are being torn appart to both facilitate poor kids to gain access to "public" degree while never actually adressing the fundamental inequalities - which is revenu.
What we need is to lessen inequalities through taxations and laws, and valorise every possible profession at school, giving even the less paid profession a way to positively represent theirselves.
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What we need is to lessen inequalities through taxations and laws, and valorise every possible profession at school, giving even the less paid profession a way to positively represent theirselves.
That is a terrible idea with vast unintended consequences. Our education system wasted a generation glorifying liberal arts, high finance and social studies, where the real value of human capital is best unlocked through trades and STEM professional focus.
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Cayman Islands24199 Posts
lol there's no glory in the liberal arts. pls.
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On February 28 2014 21:38 Wolfstan wrote:Show nested quote +What we need is to lessen inequalities through taxations and laws, and valorise every possible profession at school, giving even the less paid profession a way to positively represent theirselves. That is a terrible idea with vast unintended consequences. Our education system wasted a generation glorifying liberal arts, high finance and social studies, where the real value of human capital is best unlocked through trades and STEM professional focus.
No it's not.
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Taxation as a punitive, negative reinforcement is less desirable than positive reinforcement through subsidies in the state affecting the behavior of an economy.
I'm not a hurr-durr taxes are bad, no government ideology. Taxes are just another market transaction of payment for a service, it is fine to negotiate for more of either side. Punitive taxes are not in exchange for service and funnels resources away from undesirable activities instead of funneling them into the progress goal of the people.
Punitive taxes - cause resentment among citizens as they are forking over value in exchange for nothing.
- has a chance to not change behavior, while increasing costs
- resources taken away from undesirable behaviors may go into other undesirable behavior, flight, or hiding.
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On February 28 2014 15:21 Danglars wrote:Show nested quote +On February 28 2014 14:00 mcc wrote:On February 28 2014 12:45 Introvert wrote:Interesting study I found when googling around. "The odds of moving up — or down — the income ladder in the United States have not changed appreciably in the last 20 years, according to a large new academic study that contradicts politicians in both parties who have claimed that income mobility is falling.
...
The new study, based on tens of millions of anonymous tax records, finds that the mobility rate has held largely steady in recent decades, although it remains lower than in Canada and in much of Western Europe, where the odds of escaping poverty are higher." http://www.nytimes.com/2014/01/23/business/upward-mobility-has-not-declined-study-says.html?_r=0I don't know if anyone denies that social mobility could be better, but how are we to get there? That's the question. Do we advocate individuals or government? is it worth it for there to be "income inequality?" Obviously people here know what I think, but we really need to stop with the whole "conservatives are denying that things aren't so hot right now." Two basic blocks that allow better social mobility are free (or nearly free) higher education and public healthcare system. First being more important for this particular issue. Without those you can just dream about better social mobility. You got anything backing this up you'd like to share? After showing whatever evidence has led you to believe this, also pray tell if you're funding these "free" things with a progressive income tax or something else.
If you mean definite evidence, of course not, otherwise we would not be discussing it. There are the mechanisms, which are pretty obvious. Cost of education discourages parents from investing in it for their children, that is basic economic behaviour. There is critical time period for the education and if you move outside of it, beneficial effects decrease. So even if the child later decides to pay for his education it will be greatly delayed and there will be multiple disincentives to pursue it.
Another thing pointing towards that proposition is empirical evidence of countries with higher social mobility and what policies they have implemented. Correlation only and not even conclusive one, but it forms reasonable picture together with the mechanisms. Compared to the opposite view, which has no (non-imaginary) mechanisms and ignores empirical data I find it somewhat convincing.
As for how to pay for it, countries with flat-tax schemes are able to finance it, so I see no issue, even though I am light and not very-convinced supporter of progressive taxation, it is not necessary to fund those programs. At least the education part. Healthcare might need progressive funding of some sort.
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On February 28 2014 22:11 Wolfstan wrote:
Taxation as a punitive, negative reinforcement is less desirable than positive reinforcement through subsidies in the state affecting the behavior of an economy.
I'm not a hurr-durr taxes are bad, no government ideology. Taxes are just another market transaction of payment for a service, it is fine to negotiate for more of either side. Punitive taxes are not in exchange for service and funnels resources away from undesirable activities instead of funneling them into the progress goal of the people.
Punitive taxes - cause resentment among citizens as they are forking over value in exchange for nothing.
- has a chance to not change behavior, while increasing costs
- resources taken away from undesirable behaviors may go into other undesirable behavior, flight, or hiding.
I read you, and I see nothing. You have no argument, because you forget the goal. I'm not talking about a market transaction, there are no goods or services in here. It's only an ethical matter : what do you want ? Equality ? Then the best way to achieve that goal is by increasing marginal taxation, period.
You can discuss this to death in your corner, but that's the best and most efficient way to achieve more equality. Not to mention, it will have no or almost no impact on the economy, despite what moronic economists might say, if you only increase marginal taxation rate on the highest income / patrimony. In fact you could even substitute old taxations (on firms for exemple) with this new taxation and have a positive impact on the economy.
Also I'll not discuss your wrong incentive theory, let's just say that everything you say is based on a flawed argumentation, and you might want to read some empirical economy like behavioral economy to see that above a certain income, incentive are rather inexistant.
May I add that in economic theory, we always say that all actions coming from the government are second best, meaning that there are no perfect state intervention : distorsion exists, in our every day life, coming from everything, but the distorsions coming from a high marginal taxation rate are not higher than say the distorsion that you create by financing the police. They are just needed because the market, by itself, does not redistribute efficiently (all redistribution process are pareto optimal, meaning you can give all the money to 1 guy and 0 to the others, the market does not fucking care).
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On February 28 2014 22:56 WhiteDog wrote:Show nested quote +On February 28 2014 22:11 Wolfstan wrote:
Taxation as a punitive, negative reinforcement is less desirable than positive reinforcement through subsidies in the state affecting the behavior of an economy.
I'm not a hurr-durr taxes are bad, no government ideology. Taxes are just another market transaction of payment for a service, it is fine to negotiate for more of either side. Punitive taxes are not in exchange for service and funnels resources away from undesirable activities instead of funneling them into the progress goal of the people.
Punitive taxes - cause resentment among citizens as they are forking over value in exchange for nothing.
- has a chance to not change behavior, while increasing costs
- resources taken away from undesirable behaviors may go into other undesirable behavior, flight, or hiding. I read you, and I see nothing. You have no argument, because you forget the goal. I'm not talking about a market transaction, there are no goods or services in here. It's only an ethical matter : what do you want ? Equality ? Then the best way to achieve that goal is by increasing marginal taxation, period. You can discuss this to death in your corner, but that's the best and most efficient way to achieve more equality. Not to mention, it will have no or almost no impact on the economy, despite what moronic economists might say, if you only increase marginal taxation rate on the highest income / patrimony. In fact you could even substitute old taxations (on firms for exemple) with this new taxation and have a positive impact on the economy.
How much do you tax them and what do the resources get put into?
Then that is the crux of our disagreement you want equality(at which rung of the social ladder?), I want prosperity for those who earn it. The government should steer the economy towards the goals they desire.
Want R+D in space exploration? Build a space ship, don't punish a ocean explorer.
Want a dominion linked by steel? Build a railroad, don't punish a stableman.
Want clean energy? Subsidize wind, solar and nuclear, don't demonize oil and gas.
Want to lift people out of poverty? Educate them, train them, employ them, don't take a sledgehammer to the people, businesses and industries that have already achieved your goal of being out of poverty.
After running out of other people's value, the poor will still be poor and the rich will have fled, found another means of prosperity, or used loopholes in your own system to insulate and shield themselves from overreaching liberals.
May I add that in economic theory, we always say that all actions coming from the government are second best, meaning that there are no perfect state intervention : distorsion exists, in our every day life, coming from everything, but the distorsions coming from a high marginal taxation rate are not higher than say the distorsion that you create by financing the police. They are just needed because the market, by itself, does not redistribute efficiently (all redistribution process are pareto optimal, meaning you can give all the money to 1 guy and 0 to the others, the market does not fucking care).
I'll give you that, I don't advocate no government distortions at all, I would rather have government apply focus to the programs they want than actions they don't. As I said taxation and service are great as long as there is agreement like any other transaction, forcing a transaction upon someone without them participating and influencing the process with proper checks and balances is far from ideal.
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On February 28 2014 23:16 Wolfstan wrote:Show nested quote +On February 28 2014 22:56 WhiteDog wrote:On February 28 2014 22:11 Wolfstan wrote:
Taxation as a punitive, negative reinforcement is less desirable than positive reinforcement through subsidies in the state affecting the behavior of an economy.
I'm not a hurr-durr taxes are bad, no government ideology. Taxes are just another market transaction of payment for a service, it is fine to negotiate for more of either side. Punitive taxes are not in exchange for service and funnels resources away from undesirable activities instead of funneling them into the progress goal of the people.
Punitive taxes - cause resentment among citizens as they are forking over value in exchange for nothing.
- has a chance to not change behavior, while increasing costs
- resources taken away from undesirable behaviors may go into other undesirable behavior, flight, or hiding. I read you, and I see nothing. You have no argument, because you forget the goal. I'm not talking about a market transaction, there are no goods or services in here. It's only an ethical matter : what do you want ? Equality ? Then the best way to achieve that goal is by increasing marginal taxation, period. You can discuss this to death in your corner, but that's the best and most efficient way to achieve more equality. Not to mention, it will have no or almost no impact on the economy, despite what moronic economists might say, if you only increase marginal taxation rate on the highest income / patrimony. In fact you could even substitute old taxations (on firms for exemple) with this new taxation and have a positive impact on the economy. How much do you tax them and what do the resources get put into? Then that is the crux of our disagreement you want equality(at which rung of the social ladder?), I want prosperity for those who earn it. The government should steer the economy towards the goals they desire. Want R+D in space exploration? Build a space ship, don't punish a ocean explorer. Want a dominion linked by steel? Build a railroad, don't punish a stableman. Want clean energy? Subsidize wind, solar and nuclear, don't demonize oil and gas. Want to lift people out of poverty? Educate them, train them, employ them, don't take a sledgehammer to the people, businesses and industries that have already achieved your goal of being out of poverty. After running out of other people's value, the poor will still be poor and the rich will have fled, found another means of prosperity, or used loopholes in your own system to insulate and shield themselves from overreaching liberals.
The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies
In the world, the return rate of patrimony is around 5%, while the growth is less than 2% : it's clearly easy to understand what's going on. If you don't want to punish people who work, then just increase taxation on patrimony and heritage for all I care.
There are reproduction mecanisms that exist in society, wheither you like it or not it's a fact, and it is rather impossible to truly succeed if you are brilliant but poor : the best bet you have is luck.
On February 28 2014 23:16 Wolfstan wrote:Show nested quote +May I add that in economic theory, we always say that all actions coming from the government are second best, meaning that there are no perfect state intervention : distorsion exists, in our every day life, coming from everything, but the distorsions coming from a high marginal taxation rate are not higher than say the distorsion that you create by financing the police. They are just needed because the market, by itself, does not redistribute efficiently (all redistribution process are pareto optimal, meaning you can give all the money to 1 guy and 0 to the others, the market does not fucking care). I'll give you that, I don't advocate no government distortions at all, I would rather have government apply focus to the programs they want than actions they don't. As I said taxation and service are great as long as there is agreement like any other transaction, forcing a transaction upon someone without them participating and influencing the process with proper checks and balances is far from ideal.
So you want to ask the rich if they agree to give their money to the state ? lol
I'm sorry for my sloppy english btw. Sometimes I'm ashamed when I read myself.
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On February 28 2014 23:16 Wolfstan wrote:Show nested quote +On February 28 2014 22:56 WhiteDog wrote:On February 28 2014 22:11 Wolfstan wrote:
Taxation as a punitive, negative reinforcement is less desirable than positive reinforcement through subsidies in the state affecting the behavior of an economy.
I'm not a hurr-durr taxes are bad, no government ideology. Taxes are just another market transaction of payment for a service, it is fine to negotiate for more of either side. Punitive taxes are not in exchange for service and funnels resources away from undesirable activities instead of funneling them into the progress goal of the people.
Punitive taxes - cause resentment among citizens as they are forking over value in exchange for nothing.
- has a chance to not change behavior, while increasing costs
- resources taken away from undesirable behaviors may go into other undesirable behavior, flight, or hiding. I read you, and I see nothing. You have no argument, because you forget the goal. I'm not talking about a market transaction, there are no goods or services in here. It's only an ethical matter : what do you want ? Equality ? Then the best way to achieve that goal is by increasing marginal taxation, period. You can discuss this to death in your corner, but that's the best and most efficient way to achieve more equality. Not to mention, it will have no or almost no impact on the economy, despite what moronic economists might say, if you only increase marginal taxation rate on the highest income / patrimony. In fact you could even substitute old taxations (on firms for exemple) with this new taxation and have a positive impact on the economy. How much do you tax them and what do the resources get put into? Then that is the crux of our disagreement you want equality(at which rung of the social ladder?), I want prosperity for those who earn it. The government should steer the economy towards the goals they desire. Want R+D in space exploration? Build a space ship, don't punish a ocean explorer. Want a dominion linked by steel? Build a railroad, don't punish a stableman. Want clean energy? Subsidize wind, solar and nuclear, don't demonize oil and gas. Want to lift people out of poverty? Educate them, train them, employ them, don't take a sledgehammer to the people, businesses and industries that have already achieved your goal of being out of poverty. After running out of other people's value, the poor will still be poor and the rich will have fled, found another means of prosperity, or used loopholes in your own system to insulate and shield themselves from overreaching liberals.
Those two options are fundamentally the same in all of your cases. The government can not create wealth, thus if you subsidize something, you are transferring wealth from other sources to that goal. You can hide it, but that is how things work. If you spend tax money on subsidizing railroads, at least part of that is coming from the stableman. There is no fundamental difference between the two, because the wealth you invest into something has to come from somewhere. If you only tax the railroaders to build that railroad, that is not going to work, you are just creating bureaucracy that effectively swallows money.
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On February 28 2014 11:11 KwarK wrote:Show nested quote +On February 28 2014 11:00 Wolfstan wrote:
I am very patriotic and grateful that we live in a society where people can move up and down form social classes. Social mobility is awful in the US, why on earth would you be patriotic about people moving between classes in the US of all places. This is just plain delusion. The facts simply do not agree with your beliefs, the US is hugely outperformed by the interventionist states in Northern Europe when it comes to social mobility. http://en.wikipedia.org/wiki/Social_mobility#Country_comparisonThe US is only ahead of the UK as a shitty place to be born poor in the developed world, and only just. Your feelings of patriotism are not rooted in the success of the US, for it has no success, it's failing horribly, but rather your own delusional beliefs in the American mythos and ignorance about how badly the US compares to the rest of the developed world.
You're quoting a Canadian... he has good right to be proud of the social mobility in his country.
He also has rights to free social health care and generally a great social system. Wolfstan may be arguing for the libertarians most of the time, but the actual social policy in his country that he is apparently very proud of, is one of the furthest you can find from a libertarian viewpoint in any country in the world.
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The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies
You touch on another very valid point that is also very dangerous. You are correct that all large portion of wealth is not affecting the "real" economy, it is VERY dangerous to advocate policies that take wealth from wall street and contaminate main street. The wealth of the 1% looks very attractive when you think about how many houses, cars and food the poor could have if the money was forced out of investments seeking growth into the consumption of the poor. Nothing good can come of it as the last crisis has shown. I would elaborate more but have a few meetings to run into.
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On February 28 2014 21:03 WhiteDog wrote:Show nested quote +On February 28 2014 20:35 oneofthem wrote:On February 28 2014 14:28 aksfjh wrote:
I'm getting to the point where I don't believe the education thing on inequality and mobility. Not that education is bad or anything, I think more people should be highly educated because it benefits society as a whole. However, if/when higher levels of education are available to more people, that will do nothing to close the gap.
Those fueling the inequality aren't doing so because they're better skilled, they are positioned in such a way that it is impossible to unseat them and their lineage from their thrones, which means there isn't any room for anybody else up there. a lot of research on childhood education being very critical. college and beyond is a game of elite getting more elite though due to the demand for professional jobs. Yes but he is right in sayign that it only lessen inequalities to a certain extent. When you put poor people and rich kids in competition, even if you do everything you can to help the poor, you will always end up with an equality - the "competition" for education is not fair. In France we have a public system that takes kids early and inequalities are still important. As I say I don't even believe in lessening inequalities in education at school, I think it's impossible in the broad sense. The school culture is the culture of the dominant, a rich kid will always come in life with parents interested in books, museum and shit that will help him at school and facilitate his success, while success for a poor kid is both hard work and a cultural experience (there are various study on the subject, kids who succeed in poorest neighborhood usually stop getting in contact with their friends in the same neighborhood for exemple). They more or less need to cut their ties with their direct environment and culture. We will never create a society where everybody has both a master degree and a highly paid work anyway. Even if we do give master degree to everyone, what will happen is that the value of degree will lessen (it already happenned), not only because it is less rare but also because the "social value" of the people who newly acquired the degree is less, and people will just find other ways to differenciate with others (through social network for exemple, or with new diploma that you need to pay for in private school). This already happened but I guess it's not over as public educational systems all around the world are being torn appart to both facilitate poor kids to gain access to "public" degree while never actually adressing the fundamental inequalities - which is revenu. What we need is to lessen inequalities through taxations and laws, and valorise every possible profession at school, giving even the less paid profession a way to positively represent theirselves.
More or less, this is correct. I don't agree that wealthy kids are more predisposed to learning or have a home environment that makes them "smarter". I think money keeps many of them from making permanent mistakes with the law, and the social connections they make give them many highly valued opportunities. Education has turned into a copout, just like "structural unemployment." Those things can ALWAYS be improved, but are rarely anything related the primary issue(s).
The only ways I can see how to fix this now is with better social integration and/or taxation policy that discourages massive wealth accumulation (we're talking millions a year or more).
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On March 01 2014 00:22 Wolfstan wrote:Show nested quote +The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies You touch on another very valid point that is also very dangerous. You are correct that all large portion of wealth is not affecting the "real" economy, it is VERY dangerous to advocate policies that take wealth from wall street and contaminate main street. The wealth of the 1% looks very attractive when you think about how many houses, cars and food the poor could have if the money was forced out of investments seeking growth into the consumption of the poor. Nothing good can come of it as the last crisis has shown. I would elaborate more but have a few meetings to run into.
Actually the last crisis is exactly a result of the fact that we are not taxing enough capital. Capital was so high, and unchecked, and capitalists wanted to gain so much from their savings, that it came to point where rich were indirectly lending their money to poor people in risky loan just to maximize their capital gain.
At the macroeconomic level, the 2007 crisis was really a marxist crisis resulting from the contradiction of a system that remunerate capital accumulation too much in a situation of low or almost no economic growth.
On March 01 2014 00:38 aksfjh wrote:Show nested quote +On February 28 2014 21:03 WhiteDog wrote:On February 28 2014 20:35 oneofthem wrote:On February 28 2014 14:28 aksfjh wrote:
I'm getting to the point where I don't believe the education thing on inequality and mobility. Not that education is bad or anything, I think more people should be highly educated because it benefits society as a whole. However, if/when higher levels of education are available to more people, that will do nothing to close the gap.
Those fueling the inequality aren't doing so because they're better skilled, they are positioned in such a way that it is impossible to unseat them and their lineage from their thrones, which means there isn't any room for anybody else up there. a lot of research on childhood education being very critical. college and beyond is a game of elite getting more elite though due to the demand for professional jobs. Yes but he is right in sayign that it only lessen inequalities to a certain extent. When you put poor people and rich kids in competition, even if you do everything you can to help the poor, you will always end up with an equality - the "competition" for education is not fair. In France we have a public system that takes kids early and inequalities are still important. As I say I don't even believe in lessening inequalities in education at school, I think it's impossible in the broad sense. The school culture is the culture of the dominant, a rich kid will always come in life with parents interested in books, museum and shit that will help him at school and facilitate his success, while success for a poor kid is both hard work and a cultural experience (there are various study on the subject, kids who succeed in poorest neighborhood usually stop getting in contact with their friends in the same neighborhood for exemple). They more or less need to cut their ties with their direct environment and culture. We will never create a society where everybody has both a master degree and a highly paid work anyway. Even if we do give master degree to everyone, what will happen is that the value of degree will lessen (it already happenned), not only because it is less rare but also because the "social value" of the people who newly acquired the degree is less, and people will just find other ways to differenciate with others (through social network for exemple, or with new diploma that you need to pay for in private school). This already happened but I guess it's not over as public educational systems all around the world are being torn appart to both facilitate poor kids to gain access to "public" degree while never actually adressing the fundamental inequalities - which is revenu. What we need is to lessen inequalities through taxations and laws, and valorise every possible profession at school, giving even the less paid profession a way to positively represent theirselves. More or less, this is correct. I don't agree that wealthy kids are more predisposed to learning or have a home environment that makes them "smarter". I think money keeps many of them from making permanent mistakes with the law, and the social connections they make give them many highly valued opportunities. Education has turned into a copout, just like "structural unemployment." Those things can ALWAYS be improved, but are rarely anything related the primary issue(s). The only ways I can see how to fix this now is with better social integration and/or taxation policy that discourages massive wealth accumulation (we're talking millions a year or more).
I never said it made them smarter, they are just accustomed to the culture of the school. Being smart is something else entirely.
There are a lot of work on the subject, in the matter of language for exemple William Labov showed that the language of the poorest people was different and less adapted to school (for exemple, they tended to use as many words, but different words, and with less contextual evidence : for exemple if you ask a young poor kids where is the ball, he would show you, saying it's there, while a young rich kid would contextualize the answer, saying that it is near this, between this and this, all sorts of skill that teachers really search for in school).
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On March 01 2014 00:38 WhiteDog wrote:Show nested quote +On March 01 2014 00:22 Wolfstan wrote:The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies You touch on another very valid point that is also very dangerous. You are correct that all large portion of wealth is not affecting the "real" economy, it is VERY dangerous to advocate policies that take wealth from wall street and contaminate main street. The wealth of the 1% looks very attractive when you think about how many houses, cars and food the poor could have if the money was forced out of investments seeking growth into the consumption of the poor. Nothing good can come of it as the last crisis has shown. I would elaborate more but have a few meetings to run into. Actually the last crisis is exactly a result of the fact that we are not taxing enough capital. Capital was so high, and unchecked, and capitalists wanted to gain so much from their savings, that it came to point where rich were indirectly lending their money to poor people in risky loan just to maximize their capital gain. At the macroeconomic level, the 2007 crisis was really a marxist crisis resulting from the contradiction of a system that remunerate capital accumulation too much in a situation of low or almost no economic growth.
Sorry, but I think that's misguided.
Credit cycles happen all the time without creating a major crisis. The problem had more to do with how the credit was being used - in money markets with highly leveraged institutions.
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On March 01 2014 01:49 JonnyBNoHo wrote:Show nested quote +On March 01 2014 00:38 WhiteDog wrote:On March 01 2014 00:22 Wolfstan wrote:The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies You touch on another very valid point that is also very dangerous. You are correct that all large portion of wealth is not affecting the "real" economy, it is VERY dangerous to advocate policies that take wealth from wall street and contaminate main street. The wealth of the 1% looks very attractive when you think about how many houses, cars and food the poor could have if the money was forced out of investments seeking growth into the consumption of the poor. Nothing good can come of it as the last crisis has shown. I would elaborate more but have a few meetings to run into. Actually the last crisis is exactly a result of the fact that we are not taxing enough capital. Capital was so high, and unchecked, and capitalists wanted to gain so much from their savings, that it came to point where rich were indirectly lending their money to poor people in risky loan just to maximize their capital gain. At the macroeconomic level, the 2007 crisis was really a marxist crisis resulting from the contradiction of a system that remunerate capital accumulation too much in a situation of low or almost no economic growth. Sorry, but I think that's misguided. Credit cycles happen all the time without creating a major crisis. The problem had more to do with how the credit was being used - in money markets with highly leveraged institutions.
Nothing you said goes against any of the things I said.
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On March 01 2014 02:02 WhiteDog wrote:Show nested quote +On March 01 2014 01:49 JonnyBNoHo wrote:On March 01 2014 00:38 WhiteDog wrote:On March 01 2014 00:22 Wolfstan wrote:The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies You touch on another very valid point that is also very dangerous. You are correct that all large portion of wealth is not affecting the "real" economy, it is VERY dangerous to advocate policies that take wealth from wall street and contaminate main street. The wealth of the 1% looks very attractive when you think about how many houses, cars and food the poor could have if the money was forced out of investments seeking growth into the consumption of the poor. Nothing good can come of it as the last crisis has shown. I would elaborate more but have a few meetings to run into. Actually the last crisis is exactly a result of the fact that we are not taxing enough capital. Capital was so high, and unchecked, and capitalists wanted to gain so much from their savings, that it came to point where rich were indirectly lending their money to poor people in risky loan just to maximize their capital gain. At the macroeconomic level, the 2007 crisis was really a marxist crisis resulting from the contradiction of a system that remunerate capital accumulation too much in a situation of low or almost no economic growth. Sorry, but I think that's misguided. Credit cycles happen all the time without creating a major crisis. The problem had more to do with how the credit was being used - in money markets with highly leveraged institutions. Nothing you said goes against any of the things I said.
I think the difference is in how the contradiction gets resolved. The dot-com bust didn't leave the US in a horrid recession, nor did the S&L crisis - but the sub-prime bust did. The latter didn't have a good way to resolve the issue, and I see that as the real issue. Credit, capital, whatever - it's always going to over and undershoot the ideal. What matters more is the ability to keep mistakes in the past and move forward.
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On March 01 2014 02:12 JonnyBNoHo wrote:Show nested quote +On March 01 2014 02:02 WhiteDog wrote:On March 01 2014 01:49 JonnyBNoHo wrote:On March 01 2014 00:38 WhiteDog wrote:On March 01 2014 00:22 Wolfstan wrote:The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies You touch on another very valid point that is also very dangerous. You are correct that all large portion of wealth is not affecting the "real" economy, it is VERY dangerous to advocate policies that take wealth from wall street and contaminate main street. The wealth of the 1% looks very attractive when you think about how many houses, cars and food the poor could have if the money was forced out of investments seeking growth into the consumption of the poor. Nothing good can come of it as the last crisis has shown. I would elaborate more but have a few meetings to run into. Actually the last crisis is exactly a result of the fact that we are not taxing enough capital. Capital was so high, and unchecked, and capitalists wanted to gain so much from their savings, that it came to point where rich were indirectly lending their money to poor people in risky loan just to maximize their capital gain. At the macroeconomic level, the 2007 crisis was really a marxist crisis resulting from the contradiction of a system that remunerate capital accumulation too much in a situation of low or almost no economic growth. Sorry, but I think that's misguided. Credit cycles happen all the time without creating a major crisis. The problem had more to do with how the credit was being used - in money markets with highly leveraged institutions. Nothing you said goes against any of the things I said. I think the difference is in how the contradiction gets resolved. The dot-com bust didn't leave the US in a horrid recession, nor did the S&L crisis - but the sub-prime bust did. The latter didn't have a good way to resolve the issue, and I see that as the real issue. Credit, capital, whatever - it's always going to over and undershoot the ideal. What matters more is the ability to keep mistakes in the past and move forward.
You didn't understand my point, and it does not go against your views. What I was implying is that we are in a society where capital is overflowing, by opposition to labor and production. In this situation, capital is cheap (and the low interest rates are a good exemple of that).
With an overflowing capital and less regulations on capital accumulation / investment, it is normal that a huge part of dormant capital will be invested in risky loan. To say it in another way, when the production is not growing enough to assure a high return on investment, then capital will naturally find other ways to gain a high return, and the subprime is the kid of this situation of overflowing capital and a slow economical activity (what Ben Bernanke called a saving glut). There is a reason why all major economic bubble (1930 and the 2007 subprime crisis) happened in economic situations where the inequalities were at their highest and where the cpaital expressed in % of the national income were also at their highest.
That the effect of the bubble were bigger with the sub prime than with other kind of bubble is another subject.
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On March 01 2014 02:12 JonnyBNoHo wrote:Show nested quote +On March 01 2014 02:02 WhiteDog wrote:On March 01 2014 01:49 JonnyBNoHo wrote:On March 01 2014 00:38 WhiteDog wrote:On March 01 2014 00:22 Wolfstan wrote:The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies You touch on another very valid point that is also very dangerous. You are correct that all large portion of wealth is not affecting the "real" economy, it is VERY dangerous to advocate policies that take wealth from wall street and contaminate main street. The wealth of the 1% looks very attractive when you think about how many houses, cars and food the poor could have if the money was forced out of investments seeking growth into the consumption of the poor. Nothing good can come of it as the last crisis has shown. I would elaborate more but have a few meetings to run into. Actually the last crisis is exactly a result of the fact that we are not taxing enough capital. Capital was so high, and unchecked, and capitalists wanted to gain so much from their savings, that it came to point where rich were indirectly lending their money to poor people in risky loan just to maximize their capital gain. At the macroeconomic level, the 2007 crisis was really a marxist crisis resulting from the contradiction of a system that remunerate capital accumulation too much in a situation of low or almost no economic growth. Sorry, but I think that's misguided. Credit cycles happen all the time without creating a major crisis. The problem had more to do with how the credit was being used - in money markets with highly leveraged institutions. Nothing you said goes against any of the things I said. I think the difference is in how the contradiction gets resolved. The dot-com bust didn't leave the US in a horrid recession, nor did the S&L crisis - but the sub-prime bust did. The latter didn't have a good way to resolve the issue, and I see that as the real issue. Credit, capital, whatever - it's always going to over and undershoot the ideal. What matters more is the ability to keep mistakes in the past and move forward.
Part of the issue with the Great Recession is the debt overhang and erosion of net wealth of those that have most of their wealth locked inside a house. Post recession, not much has changed on that front. Consumer debt has gone down, but in many ways, that's what's holding us back from a robust recovery. If more capital was given to labor, it would be used for consumption instead of searching for more investment in a wasteland. That's what we're seeing in China, Brazil, and other developing nations. That capital is being pulled out in fears that growth is slowing to 2-3% instead of the booming 6-10%. The capital is chasing gains that don't exist as long as the workers aren't able to purchase to their hearts' content.
There needs to be a (soft) cap on wealth accumulation so that the investor class can't starve the mouths that feed them.
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On March 01 2014 02:21 WhiteDog wrote:Show nested quote +On March 01 2014 02:12 JonnyBNoHo wrote:On March 01 2014 02:02 WhiteDog wrote:On March 01 2014 01:49 JonnyBNoHo wrote:On March 01 2014 00:38 WhiteDog wrote:On March 01 2014 00:22 Wolfstan wrote:The problem is, as I stated before, those people "who earn it" almost does not exist in reality. There are exemples, but at the macroeconomic level they do not exist - it's a statistical residue. True there is a huge difference between the US and Europe because in the US the capital only represent 400% of the total revenu of the country for one year, while it is closer to 600 % in Europe, but OVERALL, most of the richest people on our planet :
- gain more money from their patrimony rather than from their labor
- herite their condition from their famillies You touch on another very valid point that is also very dangerous. You are correct that all large portion of wealth is not affecting the "real" economy, it is VERY dangerous to advocate policies that take wealth from wall street and contaminate main street. The wealth of the 1% looks very attractive when you think about how many houses, cars and food the poor could have if the money was forced out of investments seeking growth into the consumption of the poor. Nothing good can come of it as the last crisis has shown. I would elaborate more but have a few meetings to run into. Actually the last crisis is exactly a result of the fact that we are not taxing enough capital. Capital was so high, and unchecked, and capitalists wanted to gain so much from their savings, that it came to point where rich were indirectly lending their money to poor people in risky loan just to maximize their capital gain. At the macroeconomic level, the 2007 crisis was really a marxist crisis resulting from the contradiction of a system that remunerate capital accumulation too much in a situation of low or almost no economic growth. Sorry, but I think that's misguided. Credit cycles happen all the time without creating a major crisis. The problem had more to do with how the credit was being used - in money markets with highly leveraged institutions. Nothing you said goes against any of the things I said. I think the difference is in how the contradiction gets resolved. The dot-com bust didn't leave the US in a horrid recession, nor did the S&L crisis - but the sub-prime bust did. The latter didn't have a good way to resolve the issue, and I see that as the real issue. Credit, capital, whatever - it's always going to over and undershoot the ideal. What matters more is the ability to keep mistakes in the past and move forward. You didn't understand my point, and it does not go against your views. What I was implying is that we are in a society where capital is overflowing, by opposition to labor and production. In this situation, capital is cheap (and the low interest rates are a good exemple of that). With an overflowing capital and less regulations on capital accumulation / investment, it is normal that a huge part of dormant capital will be invested in risky loan. To say it in another way, when the production is not growing enough to assure a high return on investment, then capital will naturally find other ways to gain a high return, and the subprime is the kid of this situation of overflowing capital and a slow economical activity (what Ben Bernanke called a saving glut). There is a reason why all major economic bubble (1930 and the 2007 subprime crisis) happened in economic situations where the inequalities were at their highest and where the cpaital expressed in % of the revenu were also at their highest. That the effect of the bubble were bigger with the sub prime than with other kind of bubble is another subject.
I do understand your point.
BUT - if you want to talk savings glut, a lot of that came from overseas... and then the debt came back when credit insurance was triggered (good bye AIG). Afaik, it wasn't an internal accumulation by class situation, though I'll welcome data that says otherwise.
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EPT
