In order to ensure that this thread continues to meet TL standards and follows the proper guidelines, we will be enforcing the rules in the OP more strictly. Be sure to give them a re-read to refresh your memory! The vast majority of you are contributing in a healthy way, keep it up!
NOTE: When providing a source, explain why you feel it is relevant and what purpose it adds to the discussion if it's not obvious. Also take note that unsubstantiated tweets/posts meant only to rekindle old arguments can result in a mod action.
On March 21 2014 16:48 Sub40APM wrote: whoever greenlit this in the GOP needs to be fired. (a) either because he doesnt understand what he is doing or (b) he tricked some wealthy donor with this campaign into thinking the GOP is actually trying to expand its base to the 'youth'
Over half of renters, and one third of homeowners in New York live in unaffordable housing, as defined by the federal government. Unaffordable housing is housing that costs more than 30% of household income. More than a quarter of renters paid over half of their household income.
The report found that rising housing costs and stagnant or declining real income were to blame for the trend. The increase in unaffordable housing is a social crisis, and there is no reason to expect that New York state is any better or worse than the rest of the country.
Told you we weren't building enough housing
Edit: not sure if I said it to you, so you = thread.
On March 21 2014 04:22 corumjhaelen wrote: [quote] You know what possible means ? Edit : Yeah let's stop thinking, it could end badly.
Possible? If WhiteDog and IgnE are just speculating about what could be I have no problem with that. But they seem to be arguing that we're really in a crisis of over accumulation.
You know I'm not speculating entirely. It's just that it is a complex matter. As I said, there are no law in this matter : so we can only use historical evolution and "speculate" from it. Now, we are arguing that we are in a crisis, because the situation is comparable to the situation prior to the first world war (in terms of capital to income ratio for exemple) : and yes, it was a deep crisis of the economical system back there (1929 remember ? and the new deal fixed it, through a high marginal taxation, in the US, while the two world war fixed it in Europe, through the destruction of capital).
There have been more than two crisis (great depression and today). Why are you linking these two? Moreover, why are you supposing that capital accumulation is the cause? Why not look to a bank run / credit crisis as the cause?
Well the bubble in 2000 have ressemblance but not at the same scale. I am not the one that made clear that there are big ressemblance between 2007 and 1929 - there are a tremendous number of paper and work on the subject. I'm not saying that the crisis was created by the accumulation per say (we already had this discussion), I am merely showing a direct correlation between the two (through the various graph). The analysis of the impact of inequalities and capital accumulation on crisis is very complex and quite new, and I already gave my point of view on various occasion on that previously, so I will not enter in that area (the IMF, the OECD, and various economists such as Krugman are discussing this since some times now).
So you want to link accumulation with crisis? Then why add in inequality? The Marxian view doesn't stand up well in the US. We save little and import a vast amount of capital from overseas. Or just look at the graphs you posted - more inequality in the US yet Europe has more accumulation.
And what about how the latest crisis played out. Too much capital wasn't the issue, it was how the capital was structured and used that was the main issue. Look at your graphs again - there was a lot of capital accumulated in the UK / France for quite a while before the depression and the accumulation fluctuations in the US aren't very big (relatively).
How the capital was used and structured is linked to the accumulation. If inequalities and/or accumulation is too important (the two are obviously linked) then demand is lacking, and it is better to use capital income in sustaining demand - through credit (for the state or for individuals, just like during the "roaring twenties" or "la belle époque") - than to use it directly for production.
It is something I've stated countless time and you force me to restate it over and over. Everytime you refuse to acknowledge the deep macroeconomic background that participated in the 2007 crisis, and force us to talk everytime about financial innovations, risk management and whatever.
The US had a huge trade deficit nearing 6% of GDP at its worst. We weren't able to produce enough to meet our own demand by a long shot. Capital had no where to go? How about satisfying existing demand? Capital was ~450% of GDP in US but ~650% of GDP in France but we were over accumulating?
We were absorbing a huge amount of capital from other countries:
we were over accumulating yet excess capital from all over the world flooded to the US?
And what happened during the crisis? Capital flowed out of the US!
You don't seems to understand. The huge trade deficit was only possible because of credits. The US basically sustained the world economy through debt - an artificial demand. I never said the US were specifically over accumulating capital, I said there is a global tendency of accumulation that is not sustainable in the long run : this touch both the US (at 500% of income) and France. The US trade deficit is merely a result of the overall over accumulation of capital in the entire world : the US is not an island that we could just discuss after putting aside all other countries. I'm going to stop responding to your endless questions, I don't think I will be able to correct your incapacity to understand the big picture.
Like I already told IgnE, focusing on global over accumulation makes even less sense. Billions have far less capital stock to work with than the developed world and they're poorer for it. Capital flowing to the US to fund consumption is more of a mis allocation of capital rather than an over accumulation of capital. Developing countries need more factories and more power plants, which requires investment.
If you want to run with the global savings glut story you can, but it's different from the Marxist over accumulation story. That situation was driven by a lot of low income savers having their savings channeled into their economy's export sector and holding of foreign reserves via government policy. It wasn't a situation of capitalists saving too much and desperately trying to find a home for their capital. Their capital could have been used to finance domestic activity, but they chose to finance exports instead.
When you say it is a misallocation of capital, you are right, but you are also going against everything you said previously (the hypothesis of the efficiency of financial market, that I critized and that you tried to defend some month ago). Of course there is a misallocation (as in financial market are not working efficiently), but even if the capital was rightly allocated, it would not lead to an economic growth that is comparable to the rate of return on capital, for obvious reasons. When we say overaccumulation, nobody is saying there is too much capital - something that you don't seems to understand - but we imply that capital in relation to income has become too important and that there are no forces that would change this trend.
To evaluate that, you don't need to evaluate the capital in a society by itself, you need to evaluate the capital, in relation to the income, and thus the rate of return in relation to both GDP growth AND potential growth. In a world where GDP growth will never be high enough for the current rate of return on capital to be sustainable, you are in a situation of overaccumulation. I'm not talking about the global saving glut, by the way, because I'm not saying the demand is low for some theorical reasons and that we can fix the whole problem through policy that sustain demand, I'm saying the dynamics of capitalism push us towards a capital overaccumulation where demand is being restricted for profit - what needs to be fixed is capital and not demand.
You think Marx don't talk about demand ? You think Keynes and Marx are that far off ? Keynes is a just light Marx. The whole idea of the tendancy of the rate of profit to fall is that capitalist are supposed to substitute "living work" (people working) with "dead" work, in order to push profit up, but that by doing so they contract demand. The desire to accumulate capital (note marx never say capitalism in any of his work) is what leads the economic system to crisis, and not the lack of demand.
On March 21 2014 16:48 Sub40APM wrote: whoever greenlit this in the GOP needs to be fired. (a) either because he doesnt understand what he is doing or (b) he tricked some wealthy donor with this campaign into thinking the GOP is actually trying to expand its base to the 'youth' https://www.youtube.com/watch?v=PulUKsICY9o
Over half of renters, and one third of homeowners in New York live in unaffordable housing, as defined by the federal government. Unaffordable housing is housing that costs more than 30% of household income. More than a quarter of renters paid over half of their household income.
The report found that rising housing costs and stagnant or declining real income were to blame for the trend. The increase in unaffordable housing is a social crisis, and there is no reason to expect that New York state is any better or worse than the rest of the country.
Told you we weren't building enough housing
Edit: not sure if I said it to you, so you = thread.
they need to change property tax to be more leaning on land value instead of building value. that should encourage development especially in big cities
On March 21 2014 16:48 Sub40APM wrote: whoever greenlit this in the GOP needs to be fired. (a) either because he doesnt understand what he is doing or (b) he tricked some wealthy donor with this campaign into thinking the GOP is actually trying to expand its base to the 'youth' https://www.youtube.com/watch?v=PulUKsICY9o
Over half of renters, and one third of homeowners in New York live in unaffordable housing, as defined by the federal government. Unaffordable housing is housing that costs more than 30% of household income. More than a quarter of renters paid over half of their household income.
The report found that rising housing costs and stagnant or declining real income were to blame for the trend. The increase in unaffordable housing is a social crisis, and there is no reason to expect that New York state is any better or worse than the rest of the country.
Told you we weren't building enough housing
Edit: not sure if I said it to you, so you = thread.
they need to change property tax to be more leaning on land value instead of building value. that should encourage development especially in big cities
In MA we need more multi-unit close to employment areas rather than single unit far away. Zoning changes along with what you just said could help that
On March 21 2014 04:27 JonnyBNoHo wrote: [quote] Possible? If WhiteDog and IgnE are just speculating about what could be I have no problem with that. But they seem to be arguing that we're really in a crisis of over accumulation.
You know I'm not speculating entirely. It's just that it is a complex matter. As I said, there are no law in this matter : so we can only use historical evolution and "speculate" from it. Now, we are arguing that we are in a crisis, because the situation is comparable to the situation prior to the first world war (in terms of capital to income ratio for exemple) : and yes, it was a deep crisis of the economical system back there (1929 remember ? and the new deal fixed it, through a high marginal taxation, in the US, while the two world war fixed it in Europe, through the destruction of capital).
There have been more than two crisis (great depression and today). Why are you linking these two? Moreover, why are you supposing that capital accumulation is the cause? Why not look to a bank run / credit crisis as the cause?
Well the bubble in 2000 have ressemblance but not at the same scale. I am not the one that made clear that there are big ressemblance between 2007 and 1929 - there are a tremendous number of paper and work on the subject. I'm not saying that the crisis was created by the accumulation per say (we already had this discussion), I am merely showing a direct correlation between the two (through the various graph). The analysis of the impact of inequalities and capital accumulation on crisis is very complex and quite new, and I already gave my point of view on various occasion on that previously, so I will not enter in that area (the IMF, the OECD, and various economists such as Krugman are discussing this since some times now).
So you want to link accumulation with crisis? Then why add in inequality? The Marxian view doesn't stand up well in the US. We save little and import a vast amount of capital from overseas. Or just look at the graphs you posted - more inequality in the US yet Europe has more accumulation.
And what about how the latest crisis played out. Too much capital wasn't the issue, it was how the capital was structured and used that was the main issue. Look at your graphs again - there was a lot of capital accumulated in the UK / France for quite a while before the depression and the accumulation fluctuations in the US aren't very big (relatively).
How the capital was used and structured is linked to the accumulation. If inequalities and/or accumulation is too important (the two are obviously linked) then demand is lacking, and it is better to use capital income in sustaining demand - through credit (for the state or for individuals, just like during the "roaring twenties" or "la belle époque") - than to use it directly for production.
It is something I've stated countless time and you force me to restate it over and over. Everytime you refuse to acknowledge the deep macroeconomic background that participated in the 2007 crisis, and force us to talk everytime about financial innovations, risk management and whatever.
The US had a huge trade deficit nearing 6% of GDP at its worst. We weren't able to produce enough to meet our own demand by a long shot. Capital had no where to go? How about satisfying existing demand? Capital was ~450% of GDP in US but ~650% of GDP in France but we were over accumulating?
We were absorbing a huge amount of capital from other countries:
we were over accumulating yet excess capital from all over the world flooded to the US?
And what happened during the crisis? Capital flowed out of the US!
You don't seems to understand. The huge trade deficit was only possible because of credits. The US basically sustained the world economy through debt - an artificial demand. I never said the US were specifically over accumulating capital, I said there is a global tendency of accumulation that is not sustainable in the long run : this touch both the US (at 500% of income) and France. The US trade deficit is merely a result of the overall over accumulation of capital in the entire world : the US is not an island that we could just discuss after putting aside all other countries. I'm going to stop responding to your endless questions, I don't think I will be able to correct your incapacity to understand the big picture.
Like I already told IgnE, focusing on global over accumulation makes even less sense. Billions have far less capital stock to work with than the developed world and they're poorer for it. Capital flowing to the US to fund consumption is more of a mis allocation of capital rather than an over accumulation of capital. Developing countries need more factories and more power plants, which requires investment.
If you want to run with the global savings glut story you can, but it's different from the Marxist over accumulation story. That situation was driven by a lot of low income savers having their savings channeled into their economy's export sector and holding of foreign reserves via government policy. It wasn't a situation of capitalists saving too much and desperately trying to find a home for their capital. Their capital could have been used to finance domestic activity, but they chose to finance exports instead.
When you say it is a misallocation of capital, you are right, but you are also going against everything you said previously (the hypothesis of the efficiency of financial market, that I critized and that you tried to defend some month ago).
What was the context there? I've never argued that you get perfect results ex post. The best you can get is a good decision ex ante. You and I could be using different definitions of efficient.
Of course there is a misallocation (as in financial market are not working efficiently), but even if the capital was rightly allocated, it would not lead to an economic growth that is comparable to the rate of return on capital, for obvious reasons. When we say overaccumulation, nobody is saying there is too much capital - something that you don't seems to understand - but we imply that capital in relation to income has become too important and that there are no forces that would change this trend.
To evaluate that, you don't need to evaluate the capital in a society by itself, you need to evaluate the capital, in relation to the income, and thus the rate of return in relation to both GDP growth AND potential growth. In a world where GDP growth will never be high enough for the current rate of return on capital to be sustainable, you are in a situation of overaccumulation. I'm not talking about the global saving glut, by the way, because I'm not saying the demand is low for some theorical reasons and that we can fix the whole problem through policy that sustain demand, I'm saying the dynamics of capitalism push us towards a capital overaccumulation where demand is being restricted for profit - what needs to be fixed is capital and not demand.
You think Marx don't talk about demand ? You think Keynes and Marx are that far off ? Keynes is a just light Marx.
No I understand the argument. There's too much capital relative to demand. But I don't think that's correct and supported by the data.
"But capital to income has been increasing" ... yet trends change all the time. Just look at the US - falling savings rate and the return on capital may be falling for the long term as well. There's a lot of intelligent and honest discussions in the world of public pensions over whether or not their assumptions on portfolio rates of return need to be adjusted downward for the long run. A downward savings rate and rate of return would put a huge break on any 'over accumulation' here.
Similarly a lot of countries, like China, realized that export lead growth can't be a permanent thing and have been trying to readjust to domestic growth.
It's like I said before, you can't just assume a trend will continue and then complain that your extrapolation won't work. If it won't work, why would it continue?
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
why would I share my robot army with you if I have one?
CHARLOTTE, N.C. (AP) — North Carolina regulators say Duke Energy illegally pumped 61 million gallons of contaminated water from a coal ash pit into the Cape Fear River, marking the eighth time in less than a month the nation's largest electricity company has been cited for environmental violations.
The pumping violated the terms of Duke's wastewater permit at its Cape Fear Plant, State Department of Environment and Natural Resources spokesman Jamie Kritzer said Thursday. Kritzer said the agency has issued Duke a formal notice of violation, which could result in hefty fines.
Regulators from the agency said the illegal pumping had been going on for months. It wasn't immediately clear if Duke's efforts to empty the pond were related to a crack in the earthen dam holding back the coal ash. Duke first disclosed the existence of the crack to regulators on Thursday.
Inspectors are trying to determine the cause of the crack, but the dike does not appear to be in imminent danger of collapse, said State Dam Safety Engineer Steve McEvoy.
Duke did not respond Thursday to requests for comment from The Associated Press.
A Feb. 2 pipe collapse at a similar Duke coal ash dump in Eden coated 70 miles of the Dan River with toxic sludge. Duke has nearly three dozen other ash pits spread out at 14 coal-fired power plants across the state.
The state is now testing water samples from the Cape Fear River for signs of hazardous chemicals. Coal ash contains arsenic, lead, mercury and other heavy metals highly toxic to humans and wildlife.
Several sizable cities and towns are downstream of the Duke plant, including Sanford, Dunn, Fayetteville and Wilmington. Kritzer said municipal officials in those communities have reported no problems with drinking water.
Duke's dumping was first spotted March 10 by the environmental group Waterkeeper Alliance, which took aerial photos of two large mobile pumps at the facility. The pumps appeared to be sucking water directly from a large coal ash dump into nearby woods and into a canal leading to the river.
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
why would I share my robot army with you if I have one?
why would I need you to share your robot army with me if I have one?
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
why would I share my robot army with you if I have one?
why would I need you to share your robot army with me if I have one?
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
why would I share my robot army with you if I have one?
why would I need you to share your robot army with me if I have one?
isnt that what you meant by 'broader ownership'? Some kind of stock ownership that allows the common man the benefits of a robot overlord?
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
why would I share my robot army with you if I have one?
why would I need you to share your robot army with me if I have one?
how does one acquire a robot army?
it's build by a horde of robot engineers obviously
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
why would I share my robot army with you if I have one?
why would I need you to share your robot army with me if I have one?
isnt that what you meant by 'broader ownership'? Some kind of stock ownership that allows the common man the benefits of a robot overlord?
It could be that. Depends on the robots...
Anyways, if we're talking stock you don't get the army unless you issue shares. That's part of the funding to get the robots. So it's similar to today - if you want to raise capital you need to reach out to a lot of places, many of which have strong ties to the common rabble (banks, insurance co.'s, pension funds, public trusts, endowments, etc.).
On March 21 2014 18:52 Sbrubbles wrote: Jonny, I agree on most of your points, but it's true that "positive returns on new investments = economic growth, therefore you can't have positive ROI without economic growth", it's more or less a simple matter of national accounting. For new physical capital to have positive ROI (beyond the physical capital destined to replace depreciations), either gross national profit needs to grow (which happens only with economic growth or with a growing capital share of GDP) or the profit level for some (or all) industries must fall to accomodate the new investment. + Show Spoiler +
Suppose a very simple economy with 200 units of capital, 200 units of labor that produces 400 units of GDP (distributed evenly into profits and wages). If capital deprereciation is 5% and the private saving rate is 10%, there are (400*10% - 200*5% = 30) new units of capital in the following period, raising the capital stock to 230 units. Maintaining GDP fixed, it should be clear that either 1. the return on new investments is zero so that older investments maintain their return levels of (200/200 = 1 unit of GDP per unit of capital), 2. the return of all capital (aka profit level) falls (200/230 = 0,87 unit of GDP per unit of capital) or the capital share of GDP changes (for example, to maintain constant the profit level of 1 unit of GDP per unit of capital, the division between wages and profit changes to 170/230).
So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
why would I share my robot army with you if I have one?
why would I need you to share your robot army with me if I have one?
isnt that what you meant by 'broader ownership'? Some kind of stock ownership that allows the common man the benefits of a robot overlord?
It could be that. Depends on the robots...
Anyways, if we're talking stock you don't get the army unless you issue shares. That's part of the funding to get the robots. So it's similar to today - if you want to raise capital you need to reach out to a lot of places, many of which have strong ties to the common rabble (banks, insurance co.'s, pension funds, public trusts, endowments, etc.).
Not really. There are plenty of large wholly private companies.
On March 22 2014 01:08 JonnyBNoHo wrote: [quote] So don't have new physical capital (beyond replacement). If we're talking zero growth, that should be the case.
Alternatively, shrink wages, which isn't a bad thing if we're talking about a future economy where robots do the work for us
And this future economy you speak of where robots do all the work is a capitalist one? Do the robot's owners just give away the living essentials to the impoverished post-working-class?
If robots are doing all the work there is no working class. You'd have to get rid of your capitalist / worker classification, which is artificial to begin with.
But the capitalist / worker labor market system is how gains from capital filter down to to workers. If the labor market dies due to robots, how will those who don't own robots eat? The labor market feeds them now, but that might go away. Society will need some alternative to the labor market is these robots do all the work.
PS: The obvious alternative is a tax and spend welfare state.
Or broader ownership.
I'd think most likely a mix of the two, with a relatively small labor market still existing.
why would I share my robot army with you if I have one?
why would I need you to share your robot army with me if I have one?
isnt that what you meant by 'broader ownership'? Some kind of stock ownership that allows the common man the benefits of a robot overlord?
It could be that. Depends on the robots...
Anyways, if we're talking stock you don't get the army unless you issue shares. That's part of the funding to get the robots. So it's similar to today - if you want to raise capital you need to reach out to a lot of places, many of which have strong ties to the common rabble (banks, insurance co.'s, pension funds, public trusts, endowments, etc.).
Not really. There are plenty of large wholly private companies.
Wholly private doesn't mean singular owner. Examples?
Edit: regardless, does it even matter? some guy owns a lot of robots... so what? unless you're supposing that one guy owns all the robots...
On March 21 2014 18:07 DeepElemBlues wrote: Of course it doesn't, capital accumulation invested into production eventually and inevitably does. From the only examples we have in history it seems to take about two generations.
But if no one has the money to buy the produced stuff companies are not going to invest into production and instead will chose to make more money from the financial markets instead.(which often again put the money into other financial products and so on and so forth)
There's really not that much to theorize. If too much capital is in the hand of only a few people they'll do stupid stuff with it because demand of real goods is too low. If companies don't have enough money they can't invest and make new cool stuff. It's basically just an empirical question to find the distribution that guarantees that both is happening. But the financial crisis and the fact that the financial markets today are tens of times bigger than the real economy strongly indicate that we're well past this point.
That really isn't what is happening though. There's plenty of investment in production right now. However, almost all of that investment is about increasing efficiency instead of increasing output. This is why we're seeing soaring profit margins of businesses and not soaring employment.
Now, that's not to say the financial sector doesn't seem extremely large in some places, but I fail to see how that is, in and of itself, a problem for everybody. If risk isn't properly mitigated, it poses a problem for economies that rely too heavily on it, but that's true of any sector.
Well the interconnections and the shear size of the financial sector are two aspects that make it a bigger deal than other sectors.
Few if any other sectors have the ability to devastate every other economic industry to such a degree.
Part of it is that people were screaming from the rafters that the deregulation of the financial markets and the ensuing intentionally piss poor risk management and fraud would lead to financial disaster.
Meanwhile schmucks like Greenspan and his "conservative" ilk were claiming that the free market being unleashed would be so great. And that the financial institutions would not do precisely what they did.
Randians claim the free market clears up deceitful and corrupt industries, but as soon as the financial market did what people had been saying would happen, did conservatives rally behind stopping the big bad government from bailing out the financial industry?? Of course not. They all said some variation "it violates my principles but it has to be done" That's what the fuck people were talking about.
And even if people had stayed true to their "principles" the entire global economy would of been hosed. The financial industry has such a stranglehold on the global economy they can be caught red handed committing egregious legal violations but all they have to do is pay a fine and deny they did anything wrong. They just signed off on giving away billions of dollars because they wanted to be good people...
CHARLOTTE, N.C. (AP) — North Carolina regulators say Duke Energy illegally pumped 61 million gallons of contaminated water from a coal ash pit into the Cape Fear River, marking the eighth time in less than a month the nation's largest electricity company has been cited for environmental violations.
The pumping violated the terms of Duke's wastewater permit at its Cape Fear Plant, State Department of Environment and Natural Resources spokesman Jamie Kritzer said Thursday. Kritzer said the agency has issued Duke a formal notice of violation, which could result in hefty fines.
Regulators from the agency said the illegal pumping had been going on for months. It wasn't immediately clear if Duke's efforts to empty the pond were related to a crack in the earthen dam holding back the coal ash. Duke first disclosed the existence of the crack to regulators on Thursday.
Inspectors are trying to determine the cause of the crack, but the dike does not appear to be in imminent danger of collapse, said State Dam Safety Engineer Steve McEvoy.
Duke did not respond Thursday to requests for comment from The Associated Press.
A Feb. 2 pipe collapse at a similar Duke coal ash dump in Eden coated 70 miles of the Dan River with toxic sludge. Duke has nearly three dozen other ash pits spread out at 14 coal-fired power plants across the state.
The state is now testing water samples from the Cape Fear River for signs of hazardous chemicals. Coal ash contains arsenic, lead, mercury and other heavy metals highly toxic to humans and wildlife.
Several sizable cities and towns are downstream of the Duke plant, including Sanford, Dunn, Fayetteville and Wilmington. Kritzer said municipal officials in those communities have reported no problems with drinking water.
Duke's dumping was first spotted March 10 by the environmental group Waterkeeper Alliance, which took aerial photos of two large mobile pumps at the facility. The pumps appeared to be sucking water directly from a large coal ash dump into nearby woods and into a canal leading to the river.
Yet another example of how after breaking the law on hundreds of occasions how long will they spend in prison... 0 days. Just pay up a fraction of what you made/saved by being a career criminal when you get caught and your free to go on to your next empirical fuck up.
EPT
![[image loading]](http://4.bp.blogspot.com/-XpJg_dCzB8Y/UOi5d9rtl8I/AAAAAAAACkI/Sp_C7wqRaBM/s640/import+capital+2005.jpg)
