US Politics Mega-thread - Page 944

On March 20 2014 03:55 oneofthem wrote:

pursue of efficiency yea. replicable jobs are for interns or temps while experience is still highly valued. with corporate expansion i guess one has to specify what kind of expansion it is to say whether you need more people in the offices.

race is the Rosetta Stone that makes sense of many otherwise incomprehensible aspects of U.S. politics.

We are told, for example, that conservatives are against big government and high spending. Yet even as Republican governors and state legislatures block the expansion of Medicaid, the G.O.P. angrily denounces modest cost-saving measures for Medicare. How can this contradiction be explained? Well, what do many Medicaid recipients look like — and I’m talking about the color of their skin, not the content of their character — and how does that compare with the typical Medicare beneficiary? Mystery solved.

Or we’re told that conservatives, the Tea Party in particular, oppose handouts because they believe in personal responsibility, in a society in which people must bear the consequences of their actions. Yet it’s hard to find angry Tea Party denunciations of huge Wall Street bailouts, of huge bonuses paid to executives who were saved from disaster by government backing and guarantees. Instead, all the movement’s passion, starting with Rick Santelli’s famous rant on CNBC, has been directed against any hint of financial relief for low-income borrowers. And what is it about these borrowers that makes them such targets of ire? You know the answer.

On March 19 2014 22:35 aksfjh wrote:

And I'm trying to tell you that demand is low in regards to it's potential, as in it's nowhere near any concept of a "ceiling."

Also, you seem to have some tremendous misunderstanding of what an economy is. As long as work is done in exchange for other work (via wages or whatever), there is an economy. As long as the supply and demand of that work is reflected in a price mechanism, capitalism is working. It doesn't matter if that work "creates" a good or if that work provides a service.

On March 20 2014 02:25 aksfjh wrote:

Personally, I think the way to go about that is to reduce the incentives on capital investment locally. Re-distributive and inflationary fiscal policies mixed with inflationary monetary policy. Give more money to those that will spend it and punish excess saving (mainly through income tax and/or capital gains tax). In the US, this equates to giving money to those with lower incomes. Psychologically, it doesn't really matter how the money is given since many people would rather lower their tax rate by increasing wages to workers they deem worthy than having the government take their money and give it to those who are unworthy. "Useless" government job programs (although "useful" would be better), more generous food stamps, EITC, guaranteed living allowances for everybody, etc., it doesn't really matter.

In places like Europe and Japan, I'm starting to think a more punitive approach to savings is necessary to spark demand/inflation. Either that, or heavily taxing investments that leave the country. So the solution isn't as cut and dry there.

The key here is that we know how to deal with inflation through central banks in advanced economies (jack up interest rates).

On March 20 2014 05:01 IgnE wrote:


I don't think you understood what I am trying to get at. I'm not saying that services aren't commodities that can be exchanged in an economy. I'm saying that if everyone is working as a service worker, that is, living on wages obtained from working in the service industry, the economy cannot function as a capitalist economy, because capital cannot reclaim a reasonable return on investment.

When a capital owner invests a certain amount in a business opportunity, he expects a reasonable return on investment, factoring in risk and potential profits, otherwise there is no point, as he might as well save his capital to look for another opportunity or spend it on his own personal consumption. Investment creates a return by creating a commodity and selling it at markup after paying the costs of inputs and labor. But where profit is produced is not always the same point where it is realized. When American corporations make a huge profit on goods produced in China, they are realizing the profit far away from where it was produced.

The purchasing power of the working class, however, is limited by the wages being paid them. So the total pool of potential demand in an entirely services-dominated industry is the sum of the working class wages and the demand of capital itself for consumptive spending. But if profits come from surplus value, the total wage pool can never provide enough demand for the service industry as a whole to return a profit. So the demand has to be supplied by capital itself. Other capital owners have to either spend consumptively or buy commodities as inputs for their own business ventures from which they hope to turn a profit. This is of course a problem with all commodities, but the service industry is unique in that service commodities tend not to be that useful as inputs for other commodities. In other words, the service industry is primarily a consumptive one. This makes it increasingly difficult for capital to find a return on investment in the service industry, a restaurant for example, in an economy where the vast majority of workers/consumers are also employed in the service industry, because the total demand arising in that economy is limited by the wages of those workers. Credit of course bridges the gap, allowing someone employed in another service to buy more than his wage allows, but his repayment of that debt requires an ever increasing spiral of credit from other workers in the industry so that the economy we are describing here can grow as a whole.

You can see the results of this within the last couple decades, as American capital is increasingly invested in financial instruments and other countries. The domestic services market here is saturated with investment, making further investment too risky or simply unprofitable.

On March 20 2014 04:14 JonnyBNoHo wrote:

I think you need to explain what you're talking about more. Lean corporate structures have been evolving for decades. Blaming current job market weakness on that seems... weird. The reality that people with more training and experience have an easier time keeping jobs isn't new either. Technology that allows some to leverage their work over a larger area isn't new either.

On March 20 2014 05:04 JonnyBNoHo wrote:

I'm not sure about the punishing excess savings part (would have been useful last cycle ), but the rest is pretty reasonable.

On March 20 2014 06:23 aksfjh wrote:

I knew you'd have a problem with that, but I don't see any way around it tbqh. Without discouraging savings by taxing it, we run into the problem of government financing, which is another tool to boost savings rate (in a sense). We have to shift the counter balance between investment and consumption closer to consumption.

If we weren't in "crisis mode" and merely participating in some form of "routine" savings vs consumption balance, I could see how you could do it with only positive reinforcement.

Asian Americans—the fastest growing ethnic group in the country—more likely to identify themselves as Democrats than Republicans, and by stunning margins. In the 2012 presidential election, Barack Obama won 73 percent of the Asian American vote, exceeding his support among Hispanics (71 percent) and women (55 percent). This striking statistic has caused a great deal of consternation among Republicans, who seem generally mystified as to what they might be doing wrong.
It’s a puzzle with huge electoral ramifications. More than 16 million Asian Americans live in the United States today, making up 5 percent of the population and accounting for nearly 4 percent of all voters. They’re a sizeable voting bloc, but one far less understood than other groups, given that their political clout has only begun to emerge.


Read more: http://www.politico.com/magazine/story/2014/03/asian-americans-democrats-104763.html#ixzz2wS8wqwZd

On March 20 2014 05:12 JonnyBNoHo wrote:

No he's right. Services aren't different than goods and you can absolutely have B2B services.

Profits or surplus value aren't extracted from the economy. They show up as demand for either capital or consumption goods and services. Just like wages.

On March 20 2014 00:09 JonnyBNoHo wrote:

Don't forget that profits are also high because interest rates are low, and that bonds are part of the capital structure too

... and ~100% of the population has seen income growth,

... and that US manufacturing's decline is over-hyped - manufacturing hasn't declined, just the number of jobs.

One last thing - mounting debt is over-hyped as well. It was a problem in the last cycle, but a lot of the long term buildup in debt is related to interest rates falling. Debt service / financial obligation costs for households haven't seen the same increase as debt levels. Right now, debt costs are down to multi-decade lows... hardly a recipe for collapse!

It seems like you're taking reasons why we had a recession and assuming that the same situation still exists and extrapolating from there.

On March 20 2014 10:07 IgnE wrote:


That's the problem. As I've said already, I know that services are commodities. But my point is that the structure of a service-industry economy is particularly susceptible to one of the primary contradictions of capital: that demand from workers is limited by total wages, yet capitalism only works when surplus capital, extracted from labor, is collected. This requires that realized profits are greater than the total wage pool, because total wages are a fraction of the total invested capital. A fraction is not greater than a whole, so this is impossible if the demand comes only from wage-paid consumers. The surplus capital, then, has to be generated by the capitalist class, which supplies the required demand, by buying up commodities (including services, as investment) with the expectation of further surplus capital in the future. So there's a temporal disconnect between the demand required today and the capital realized in the future to pay for it today. Hence the connection between debt and capital accumulation.

Now it's one thing when you are increasing material prosperity by building cars and refrigerators and microwaves and computers, wherein the commodities are helping to spur on further growth by enhancing the productivity of individual workers, spurring further consumption by the working class, etc. It's another thing when the commodities are primarily dead-end service-industry products that are not used as inputs for further capital investment. The service industries, as a whole, provide less growth for working-class demand, through wage growth, than other industries (perhaps because many services are an exchange of simple human labor for simple human labor, quid pro quo). This means that capitalist-class demand has to pick up the slack through reinvestment. But that requires credit today to cover the difference between the total surplus and the investment capital, with the expectation of continued profits in the future. Without that expected future return, the capitalist class won't be able to provide the demand surplus required for investment today. The cycle slows down or stops. This problem, in general, is inherent to the reproduction of capital, no matter the commodity. And there are other ways to provide that demand in the real world, like housing and real estate development, consumer credit, foreign investment, financial products in credit markets, etc. But a pure service-industry economy, as I've been talking about, runs into demand problems. It is an extremely fragile "capitalist economy" subject to shocks of all kinds, as it is more akin to a slave economy, where labor is traded for labor amongst consumers, but bought by the social power of capital in the ruling class. This goes back to the necessity of capital to continually reproduce itself, for a capitalist economy to grow exponentially in perpetuity.

What's the national debt like now compared to 2007? Household debt hasn't seen increases but maybe that's because the public sector is absorbing the debt for now? It still is essentially a promise of future economic growth to spur current economic growth.

On March 20 2014 10:53 JonnyBNoHo wrote:

Your proposition seems to be that service industries are less capital intensive, leaving a lot of capital unneeded. If true, capital will get used as consumption (one way or another). There's no requirement for capital to reproduce itself, either in a macro or micro sense.

Service industries tend to be much more stable than goods industries btw. They don't suffer the same investment and inventory booms and busts.

You may also be a bit confused as to where demand comes from - capital income adds to demand, it's not just about worker's wages. "Capitalists" aren't Martians that suck money from Earth to Mars.



source

On March 20 2014 10:17 oneofthem wrote:
business to business services do improve capital investment tho.

On March 20 2014 11:16 IgnE wrote:


You've said before that you capital doesn't have to reproduce itself. I have no idea what you mean, unless you mean something as trivial as it's not a law of nature that capital has to reproduce itself or the universe implodes. The fact is that if capital doesn't reproduce itself, capitalism as we know it breaks down. Without a return on investment, there is no incentive to invest anywhere and you end up with something more like feudalism or some post-capitalist zero growth environment than the capitalism we have today. You haven't explained yourself so I won't put words in your mouth, but your statement as written is wrong on its face. Capital seeks to reproduce itself. If it isn't reproduced, the economy as we know it ceases to function.

I said in my post that demand comes from wages and from capital reinvestment. I did not say nor did I imply that demand only comes from wages. My point, in fact, was that it's impossible for capital to reproduce itself if demand only comes from capital.

This goes back to the necessity of capital to continually reproduce itself, for a capitalist economy to grow exponentially in perpetuity.

As for the graph of debt you linked. It looks to me like total debt is still well above 2007 levels. You say this is good news?

My point, in fact, was that it's impossible for capital to reproduce itself if demand only comes from capital.

On March 20 2014 11:29 JonnyBNoHo wrote:
To your question, you're saying things like
No, capitalism doesn't demand exponential growth until the end of time.

If you're talking return on investment, that's different from growth. You can have a return on investment without growth.

Could you define what you mean by capital reproducing? Is that like a return on investment that gets reinvested?

It's come down from the peak. I don't think it really matters though. Debt is a lot cheaper now than it was then.

Edit: I'm not sure what you mean by this:You're arguing that in a world that doesn't exist there would be a problem? Even if true (I'd have to think about it) who cares? Extrapolating an abstraction to the breaking point isn't very meaningful!!

On March 20 2014 13:33 IgnE wrote:


I meant "wages" not "capital."

If anyone doubts that we are in a serious capital accumulation crisis, wherein capital has no readily available sources of reinvestment, look no further than the $1.5 trillion in cash reserves that American corporations have sitting on their books.

How can you have a return on investment without growth? Rapidly depreciating assets?