The Lie of Capitalism and Globalization - Page 13

On January 28 2010 04:32 StorkHwaiting wrote:
It's a provocative title I know. But it's exactly what I want to debate. FIERCELY.

To start things off I'd like to open with the latest address by President Sarkozy of France:
Globalization Got Out of Control

Now, the way I see it, what's currently taught in economics and finance classes in America is this concept of globalization, free market, capitalism, and less taxes/regulation = increased economic prosperity.

I want to go ahead and say that's crap.

First, one of the central tenets of modern capitalism is this concept that the "free" market leads to benefit for everyone. They think that things naturally move to an equilibrium in demand/supply/price if left alone. The rationale for this is that people, with enough info, are perfectly rational beings that make the best choices.

The problem with this theory is it doesn't account for the destructiveness of monopolies. In business, anytime a group has either grown or merged into a large enough economic body, they can start to implement destructive strategies like dumping a ton of their products at a very cheap price onto a foreign market and wrecking the local competition. This is validated by capitalism and the free market because this is merely a strategy to increase market share, and if they have the resources to engage in such an act, then they have every right to.

Over the span of a few years, this group demolishes the local competition and creates a monopoly. Then they jack up the prices a ton and win back all the profits they gave up with this strategy. Except once they've recouped their investment, they continue to do it perpetually. This is a win-lose scenario. Yet, it's an example of what happens on the "free" market. This doesn't lead to constant competition and cheaper prices/higher quality for everyone. This leads to a stagnant market where one giant is in control and sells at exorbitant prices because they are the controllers of all supply.

In capitalism, it's theorized that the only way to combat this is for another giant group to emerge. Yet, this sort of competition doesn't help at all. While the two giants are growing, they experience economies of scale and their efficiency increases. Yet, once they reach a certain size, they start to experience the DISeconomies of scale from being too bloated. But they have to continue this arms race, because if they try to scale back, the other one will have the advantage in buying power for that short window of time and can steal more market share, thus perpetuating an advantage until the guy who stepped back first is destroyed.

This creates an effect where giants are constantly forced to grow bigger to compete, even though in the long run it leads to a net loss in efficiency. This is what the free market creates.

The problems with this are obvious. This is why countries have effected protectionist policies to defend against these sorts of aggressive economic strategies. Then you no longer have a free market. It becomes mixed. Our world is full of mixed economies.

The last 30 years of economics in the USA and the world, is a constant attempt to try to bring down these protectionist strategies on the belief that free market was more efficient and beneficial for all. Peep the giant economic collapse we just had. It's pretty obvious to everyone now that this free market liberalization was a horrible idea. It destroyed local industries, it gutted nations, it destroyed whole swathes of industry in nations, and all it really did was lower the retail prices of goods.

What use are lower prices when you don't have a job?

That's the problem with the concept of free market. It's too focused on price of goods as a barometer for efficiency. It fails to address the issues of labor and wages. Now if you try to approach the labor market using capitalist and free market principles, you end up with sweatshops in China and India.

Does anyone honestly think it is a good thing to compete with sweatshop workers in terms of pay/productivity?

There is only one real way to improve labor's market value, which is training that improves their productivity. Yet, the sad truth of the matter is that even with a great education, a large proportion of the population is not that clever. They can't really be trained that far past the level of a sweatshop worker. This is what's traditionally known as "retail sector" or "blue collar."

This makes up a pretty large percentage of the world population. Yet, the blue collar workers in America don't want to work in sweat shop conditions. Capitalism and the free market tells us that the smart thing to do is just tell those blue collar workers to fuck off and move the factories to China.

This is why you see an increasing wealth disparity between the rich and poor in America. The poor have lost their jobs to the increasingly "free" labor market, whereas the rich and intelligent Americans have increased their value because they have some of the world's best education, coupled with some of the world's best tools of production.

AKA, the American factory worker must compete with the Chinese sweat shop worker.

The American Harvard graduate competes with the Chinese Beijing University graduate. Except the Harvard graduate gets to enter an organization like Goldman Sachs, with some of the world's best financial algorithms and the best financing and the best connections.

Therefore, while the free market has allowed the Harvard graduate to reach greater and greater heights by reaching the pinnacle of the financial world and reaping the benefits of competing vs the world due to massive, built-in advantages, the American factory worker has been laid off and can't find another job because he/she is now competing versus the 5 billion people of the developing world.

Do you guys see now why the free market is not helping the vast majority of America?

And if you look at the labor markets, the greatest shift has been away from manufacturing and towards retail. Yet it's a nonsensical shift. How does it make any sense when the retail industry is driven by consumption, and the consumption is paid for by wages from the retail industry?

This is like saying, I get a job at Gamestop. Then I buy a ton of games from Gamestop. Eventually, Gamestop will expand because I'm buying so many games with my wages from them, that Gamestop's sales will be enough to expand.

It makes no sense. Money is constantly being pulled OUT of the economy this way. Every time you put $50 through the system, you end up with less. First, I get the job at Gamestop. They pay me $50. Yet, I pay income tax on that $50. It then becomes $42.

This $42 is then spent to buy a game. Yet I need to supplement it with another $8 from somewhere. So, already I'm at -$8. Okay, $50 + tax = $53. Now I'm at -$11.

Then Gamestop gets their $50 and has to pay corporate tax on it. So they're down to what? $40? A net of $-21 for a single transaction between retail to employee and back to retail.

So, in every transaction of $50 of wages going out of the system, we end up with only $29 of it going back in. It's rather obvious that the US labor/wage market can not be sustained by this type of relationship.

The middle and lower classes cannot live much longer with these types of conditions. This is why there is a constant drain of money OUT of the middle and lower classes and INTO the upper classes.

The reason is because the tax dollars are being siphoned off. That $21 that was taken out is given to the government. Yet, the government we have today is increasingly controlled by corporations. According to current moral and economic philosophy, like that espoused by Jibba and others on TL, it's perfectly okay and constitutional for a corporation to get involved with government. On top of that, morals have no place in economic decisions. Therefore, it is completely okay for a corporation to try to pay to get laws passed that benefit the corporation.

What this means is that those $21 instead of going back into an industry that benefits the lower classes could be funneled into an industry that doesn't support hardly any of the middle-lower classes. Such as the banking industry! So, not only is the middle class losing jobs, competing with a vast number of foreign competitors, but they lose nearly half of every dollar to that mfing Harvard graduate. Because he/she is busy wheeling and dealing, screwed a bunch of people over with greedy "capitalist" ploys, and then needed a bailout.

This is how Main Street gets shafted.

On top of that, to the people who claim that of course the solution to all this is just get rid of taxes, I ask the question, ok, then where is the growth?

Sure, without taxes the $50 between me and Gamestop is cycled back and forth. Yet, that $50 will never grow. It remains $50. Therefore, even in the most ideal of circumstances, the money is not lost, it only remains the SAME. ZERO growth.

In fact, accounting for inflation, you'd still see a loss of $1-2 each year. The industry continues to lose in a perfectly ideal situation. This is why the concept of consumer-based society leading to growth is total bullshit. You cannot grow an economy by spending money. That doesn't work.

The only way to grow the economic pie is technological innovation which decreases the cost of production. This way, I spend $50, Gamestop gets their $50 back. Yet, they have factories/studios that can produce the game for only $5. Therefore, they pay me $50, I buy from them for $50, they get back $45. They can then afford to make 9 more games. With 9 more games, they can make enough money back to hire 8 more workers. This way the loop continues.

Except somewhere in the loop, the business decides that instead, they're just going to pay all those profits to the CEO. We don't need to increase that many jobs. We'll just give it to the top guys. Therefore, once again the middle and lower classes are powerless to stop the flight of money from the consumer-supplier loop.

In pretty much every way, using capitalist and free market principles leads to a loss for the middle and lower classes. This is why Sarkozy says capitalism needs to be refounded to be more moral. That finance, free trade, and competition are a MEANS not an end. And it needs to be redefined and reinvented.

It's because morons run around trying to claim that the free market leads to increased efficiency and prosperity for all as long as everyone just makes decisions in a totally selfish manner. It doesn't. It doesn't work. The past 30 years have shown it doesn't work. It's led to disaster. The globalization and free market proponents were wrong. They did nothing but justify selfishness as a good thing.

On January 28 2010 06:12 Caller wrote:
I'm done with this thread. It's basically a shorter version of the Shock Doctrine with no facts or evidence, cherrypicked or not. When you claim you want to debate something and then proceed to claim that your arguments are watered down for general consumption, you clearly are looking only to entice people that are like ron paul fans or w/e that tend to be more easily-picked apart views when it comes to economical issues.

On January 28 2010 07:18 EmeraldSparks wrote:
I love TL threads about economics.

They make me feel warm and fuzzy inside.

On January 28 2010 09:25 ZeroJumps wrote:
First, Hi!
I have followed the TeamLiquid forums for a while now, but have thus far avoided posting. This thread, however, merits special attention.



Not just because the opening post is lacking in specificity and riddled with errors, but also because the majority of responses have been mere echoes of assent. Its a provocative opening, I know. But it’s exactly what I want to debate.



Good.



It’s difficult to believe that one would ever see an argument in favor of globalization and capitalism coming out from Sarkozy. Over the last few decades, France has seen significant cultural, social, and economic unrest among its population due to increasing number of immigrants, particularly those from Eastern Europe and the Middle East. I suspect if Sarkozy was seen to be advocating for greater globalization, he would soon be out of a job. This isn’t to say that his points should be discounted, but rather just that one should recognize his likely biases.



And I’m going to go ahead and say that you’re wrong.
(This isn’t meant to spark a flame-war, but rather to announce my intention to debate the rest of your post)

To begin, you will need to be a little more specific in your terminology. What do you mean when you say “free-market”, and less “taxes and regulation”? Are you talking about capital gains taxes, income taxes, or taxes in general? Do you mean less regulation on business? Or less regulation on capital and labor flows? One last point on this paragraph, and that is to say, as written, it is mostly correct. However, it should be noted that the predicted increase in economic prosperity is never immediate, nor does it imply that there will not be losers among certain segments of the population. Rather, increased economic prosperity is viewed in the aggregate, or the sum of the entire population.


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This is true if one is considering only the most basic or unrealistic economic models. I’m not entirely sure what you mean by “if left alone”, but I’ll take it to mean zero regulation, no taxes, and complete freedom in the movement of capital and labor. Also, I think you will find that every market, no matter how regulated or restricted, reaches some kind of equilibrium. I think what you meant to say is that economists believe the market will reach a perfectly competitive equilibrium, where you have many identical firms producing a given good at where price is equal to marginal cost.

While some models do predict a perfectly competitive equilibrium from these things (and often only because they simply don’t include measures of them), I don’t think you could find a serious economist who believes such an equilibrium would result. As an aside, that kind of world is essentially anarchistic, and it is difficult to imagine any sort of nation-state even existing, let alone trading.

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Which theory? Please be more specific. There are many economic models which do, in fact, account for the “destructiveness” of monopolies. Some kinds of monopolies also argue against your belief that economists always believe less regulation is a good thing. There are many situations where a regulated monopoly is the most desirable option. Any industry with high fixed costs and low marginal costs is well suited to allowing such a monopoly to exist, such as electric companies and telephone companies. (Imagine if there were many electric companies, and each had to lay their own power lines!) You are right that such monopolies could be “destructive” if they weren’t regulated, but my point here is that even “free market” economists see the value in certain kinds of regulation.



I’ll begin by saying that many countries do indeed have anti-dumping laws to protect against just that. But such laws are foolhardy. Your assessment lumps together two distinct kinds of dumping.

The situation you’re describing is one in which a company prices their goods such that price is less than marginal cost, meaning they take a loss on every item sold (a.k.a. several recent game consoles). Such maneuvers can often result in other companies being forced out (note, however, that this is not limited to international competition). However, such behavior is not economically viable in the long run. As you say, prices must eventually go up. The extent to which people are willing to pay premiums above which they originally paid however, is limited by the elasticity of demand for that good. No one is going to pay $12 for a nail when they can buy a screw instead for $.01. Furthermore, once the company raises prices to above price equals marginal cost, it opens the door for competition to once again enter the market.

The second situation is one in which the company prices their goods below the prices of other similar goods in the area, but at a price above marginal cost. This is a perfect example of specialization. If one company or country can make a profit by selling their goods at a lower price than another, then that company or country should specialize in the making of that good. Certainly, there will be some negative elements involved, such as workers of the higher-priced company being laid off, but the net gain to society more than compensates for that loss. Although this gain is most often considered in terms of lower prices, consider that lower prices result in increased profits of other companies, allowing them to expand and create new jobs.



What? This sounds like something you didn’t think through properly.
Did you have a specific example in mind here? What does it mean to have “an advantage in buying power”? What do you mean by “scale back”? I also think you are confused about the nature and importance of market share.
For the sake of argument, however, this is how I will take this paragraph:
Both companies are too large. Thus, the price of their goods has risen (due to operating inefficiencies perhaps). One company recognizes this, and reins in their production (perhaps closing several production plants or store outlets). The other does not. By not doing so, the inefficient company gains an advantage over the efficient company (perhaps because they have more production plants relative to the other company now), and uses that inefficiency to eliminate the other company.
The problem with that is that the first company is, by definition, inefficient. It cannot gain an advantage over the other company. How could it? The other company will produce the same good, but for a lower price. I think perhaps you believe market share to exhibit some kind of snowball effect, whereby once you achieve the largest market share, then you automatically eliminate the competition. Perhaps I have misunderstood you, but such behavior is not predicted in economic theory, nor is it seen in the real world. In the case you described, the inefficient company has no choice but to follow suit.




This is misattributing cause and effect. Companies don’t grow bigger so that they can compete, companies grow bigger because they are competitive. Walmart didn’t just decide to become a national chain so that they could be competitive. They became a national chain because they were competitive. At the risk of being too repetitive, companies rarely ever grow bigger unless they are efficient.


My previous statement makes this false. The most successful companies are the most efficient. This makes intuitive sense. You don’t see large, successful companies that are inefficient. (Unless you count the US government as successful, but that’s beside the point )



Since your earlier statements were not true, the problems with this are not obvious (sorry if this seems too confrontational, it is the way my mind proceeds when I attempt to make an argument). You are right that countries have created protectionist policies to defend against domestic problems resulting from international trade. But those policies are always misguided. Why do they create them? Because the advantages gained from trade are much more difficult to see than the losses. A reduction in the price of nails from $.02 to $.01 as a result of trade saves millions, if not billions, of dollars per year. But no single company sees that entire picture. But the workers in the U.S. who make nails and got laid off are highly visible. They write to their congressional delegation. They appear in the newspaper and on television. Yet the sum of their wages might not even total a million dollars per year. Even though the net gain is much higher, it is not as noticeable.



As another previous post said, this seems like nothing more than a populist outcry. Blaming the economic collapse on efforts to bring down protectionist barriers does not make sense. I fail to see how trade tariffs, immigration restrictions, and limits on international capital flows have anything to do with banking regulation. Capital flows and capital gains taxation are in the realm of banking, but are not themselves causal agents in the collapse.


They make your food stamps and unemployment insurance stretch a lot further.


I think the price of goods is an excellent barometer for efficiency. While I believe using it as a measure does neglect many important other things, such as happiness or environmental concerns, the one aspect it does excel at is to provide a measure for labor and wages. Wages mean nothing with a price to compare them to. $1 a day will buy one nothing now, but 100 years ago? Similarly, a wage is nothing more than the price of labor.
Perhaps you meant that the focus of companies on the price of goods prevents them from paying adequate attention to the needs of their workers. (I think this is, after rereading your paragraph, how you meant it). Sweatshops are an oft-cited example of “evil corporations” that exploit people. I typically associate this kind of statement with people who have never been outside of first-world countries, or experienced true poverty. Not poverty as defined by the US ($22,000 for a family of four), but poverty of the kind where people earn less than a $1 a day.
In such situations, a job at a sweatshop is almost a miracle. The alternative to such jobs in poor countries is frequently to not know if or when you will eat again. People living in developed countries often forget how terrible situations can be elsewhere. A common counter-argument to this is “Well, why don’t companies just pay them as much as they pay their American workers?” There are many answers to this. The best is probably that the labor pool is just too large. The United States makes up a but a tiny fraction of the world’s population. For every child in Egypt making shoes for $2 a day, there are a hundred more who would be willing and happy to do it for $1 a day. A second is that, if they did, there would be no incentive to hire workers abroad. All it would do is increase the costs of their goods, as they would need to be shipped further.





There is a reason manufacturing industries are declining in the United States. Does anyone honestly think this is a bad thing? American wages have been increasingly consistently over the last...250 years. Unemployment has stayed all but constant, and far lower than almost any other country on the planet. This suggests that the positive effects from structural changes in the economy, such as the shift from a manufacturing based economy to service based economy, far outweigh the negative.

There is a common story told about such shifts: Everyone used to worry that robots would take over all of the manufacturing jobs, and then there would be massive unemployment. Except, when the robots took over, the unemployment spike didn’t happen. Why? Because people were needed to build, operate, and maintain the robots.

Countries specialize in the things they are best at. The United States used to be among the best manufacturers in the world. So there were many manufacturing jobs. Now, as our standard of living, our productivity, and educational attainment have all increased, we are no longer the best at manufacturing. We still might be able to produce more per person than another country if we focused on manufacturing, due to our infrastructure and technology, but what would be the point? Instead, we move onward and upward into a service-based economy.




The first sentence is more or less correct, though it neglects the role of technology. I agree that the intelligence of the average person of the United States is “not that clever”. But, again, go outside of the first-world. The literacy rate in the US is close to 100%, and almost every student attends some high school. While poor countries have made great strides in recent years (thanks to globalization. . .), almost 100 still have literacy rates below 80%.



And this is a problem because? I understand that, given the current unemployment rate, and given how the recession has disproportionately effected men in manufacturing, that such a response seems callous. That’s because it is, in the short term.




Is it? Does $30,000 a year for a factory worker job narrow the wealth disparity between the rich and the poor? No, it does not.

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I don’t argue with this.


I just want to point out here that the standard of living and the wage level for all income groups has being increasing in America since its founding. It isn’t that the poor are getting poorer and the rich richer, it is that the rich are getting richer faster than the poor are getting richer.




I think you meant: The American Harvard graduate competes with the Chinese Harvard graduate.
And that is one the best thing about having less protectionism. With more freedom of movement for labor and capital, the best and brightest in other countries are allowed to make use of the top schools in the world.



Right. But again, this is a short term loss for a much greater long term gain. Think about the industrial revolution. It was essentially the same, except that instead of services replacing manufacturing, manufacturing replaced agriculture. Does anyone (other than dirty hippies) think America is worse off for having undergone that transformation?



To go back to the linkage between prices and wages: you don’t see how it is helping because you simply don’t notice it. When you go grocery shopping, do you stop to think, “My grocery bill this week was $100 less this week because of free trade”? Free trade results in a purchasing power increase of tens-of-thousands of dollars every year for each and every person in the United States. That is not an exaggeration. Consider how many goods you buy every year, and then realize that anything not made in the United States is cheaper than it would be otherwise. Even goods made in the United States, such as strawberries from California, are cheaper because they have to compete with Mexico. And, if that’s not enough, consider that you even have the option to buy strawberries in January. All because of free trade.



Are you asking how can goods continue to be produced in a country if no one is actually making goods?



I don’t really know what to make of this. It almost seems like you see tax money as being removed from the system.



It is not a zero-sum game.



Right. You do see taxed dollars as just vanishing. Let me redo your gamestop example (keeping it simple):

You work at gamestop. You get paid $100. Income tax takes 20%. You now have $80. You buy a game for $50, with $5 of sales tax. Now, gamestop has -$50 (the game – your income). You have $25. The government has $25. The government uses that $25 to buy concrete an pay a worker to repair the pothole in your street. Now that worker has $25. Now he buys a game from gamestop. Which fuels your next paycheck.

Economies are vast. Money changes hands very frequently. Money doesn’t just disappear from the system.




This reads like a conspiracy theory website. I can’t argue that corporations don’t heavily influence politics. But, two points to consider: first, the United States has one of the highest capital gains tax rates in the world. This is extremely detrimental to business. Second, income tax is progressive. Larger corporations pay more in taxes. One would think that, if corporations really had significant influence, these items in particular would be among the first to change.



I realize that writing quality goes down the longer one writes (witness my own comments), but there really isn’t anything of substance in here. I guess I’ll just point out recent income tax statistics: (google IRS summary of Federal Individual Income Tax Data 2007 or 2008 for source) In 2007, The top 1% of income earners paid 40% of total income tax. The top 50% of income earners paid 97% of total income tax. In other words, of that $21 dollars in taxes, $20.50 of it came from the wealthy. I find it hard to make an argument that taxation is hurting the poor.



We don’t have a consumer based economy. We are moving toward a service based economy.



Technological innovation is certainly a good thing. It reduces prices. But so does shifting labor to another country. Perhaps another example: Say they fire you because they don’t need you making the game anymore, because they hired a worker in another country. Since they can now make games cheaper, they make more profit, enabling them to expand. You get rehired as architect to design their new buildings. Now instead of being in manufacturing, you’re an architect. (Think about this on a national level, not on an individual level)



Remember what I said about Sarkozy’s likely biases and political pressures?


There isn’t really anything to respond to here. I would be happy to argue with you some more, if you would like. You said you were familiar with economic concepts in a previous post. Maybe we can break out our favorite international macro or international trade models.

Thanks for reading!

On January 28 2010 14:02 StorkHwaiting wrote:
To Zero:

Thanks for the lengthy response and your time and effort are much appreciated

1. By taxes I mean things like tax write-offs by corporations through giving to charities/NPOs that end up looping right back to the corporations, the evasion of corporate taxes by giving out huge bonuses to their executives so they can post them as operating expenses, the constant tax cuts on capital gains, and the increasingly labrynthine ways that the top tax bracket finds to evade paying their actual taxes. There are of course a great deal more, but in essence I think the problem stems from corporations and the highest income brackets consistently avoiding taxes through tax lawyers and armies of accountants, while the middle and lower class can't afford these kinds of resources to avoid paying their taxes.

On regulation, I think the most important aspect is the lack of regulation on capital AND labor flows.

2. You're right that serious economists do not posit this theory. The problem is the political rhetoric in America for the last 30 years HAS been positing this theory. If you look at the political activity, it's been repeal after repeal of regulations, while using this theory of perfect equilibrium and efficiency as their rationale.

3. I should have been more clear. I am talking about the political rhetoric in America and the movement toward globalization and deregulation that has been implemented in the political arena of America. OFC economists have accounted for everything under the sun. There are tons of economists out there postulating pretty much every possible permutation I could think of. I don't mean to say the entire field of economics and capitalism is wrong or stupid. What I mean is the political will of America has been trending towards deregulation, free markets, and the flow of capital and labor out of America (labor more than capital).

4. On dumping, what I'm talking about is the first situation, but also a third situation that wasn't mentioned. The third situation is that a government subsidized industry, like agriculture, is able to grow products at a loss, remain profitable due to subsidies, AND dump their excess product on a foreign market, thereby glutting it and ruining the livelihood of local producers. Take for instance what American dumping of goods has done to Haiti's native farmers.

Also, with the first situation, there is a window of time between monopoly and reentry in the market by a competitor. It's a rare situation in which the competitor reenters and immediately takes an aggressive percentage of market share. There is some significant lag time involved and that's why a lot of times a monopolizing entity can play this juggling game of hiking up prices and then dropping them again to squeeze out any legitimate threat, while skimming hefty profits in the back and forth adjustments. Also, over time, many competitors would see this as an industry with significant barriers to entry and high risk knowing that this monopolizing entity will just drop prices when they try to enter the market. It deters competition from ever entering.

5. On the giants issue, I was thinking more in terms of banking. Whereby the bank with more deposits has a significant advantage over a smaller bank, solely because they have more capital and thereby a great advantage in competing. Sort of like holding the most chips at a poker table. It doesn't guarantee a victory but it is definitely an advantage.

You are right in that this is probably a bad example to use for every industry as it does not apply to all of them and in many cases, the more efficient one would force the other one to scale back.

6. I blame the economic collapse more on a combination of factors including deregulation, but I should have been more specific here. And in retrospect, you are right, this was a poorly constructed OP. What I should have said was that deregulation as a political rhetoric and disposition was one of the leading factors of this economic crisis. This is why I think so:

The monetary policy engineered by Greenspan was extremely loose. The political rhetoric of the time was that deregulation of banking was a good thing. This led to a very low cost of borrowing, AKA money is cheap. This environment of cheap money combined with the repeal of laws banning ARMs and loans of that nature led to the bubble in the housing market and ridiculous overexposure in the banking industry.

So yes, in the end, I blame banking regulation, but inherent in that argument is the belief that less regulation is a good thing.

7. Again, I should have been more clear on this point. What I mean is that this a net loss in jobs for the American labor market. And yes, I'd say this is a protectionist sentiment. The corporations say that this is a good thing because the price of goods is cheaper. Yet, if Americans lose jobs and get cheaper goods, what do we end up with? A guy who makes $0 a day is not going to care if sneakers are $20 instead of $45.

My worry when it comes to manufacturing is that, yes there are people needed to maintain the robots, machines, etc but over time I think that number has decreased. Also, these jobs require more and more skilled labor. I'm wondering if these jobs will someday reach a threshold in which only the top 30% of the population are able to even perform them. What would the other 70% of America do then? But maybe this is an irrational fear. Technology is supposed to make things easier.

8. Good point. I would agree that the income gap is materializing because of the accelerated growth among the rich, rather than a drastic decrease in the growth of the poor.

9. I agree that this is exactly the same parallel. In the past agriculture was replaced by manufacture. And now manufacture has been replaced by the service sector. But I wonder if the service sector is truly an adequate replacement for manufacture. Perhaps I am too ignorant of what the service sector entails or how it perpetuates its own growth, but as of now, I have sincere worries about the sustainability of America becoming a predominantely service-sector based economy. I would love to hear your thoughts on this.

10. About money disappearing. When the US uses that money to launch a missile at Afghanistan, I see that money as disappeared. When the US gives that money to some contractor who installs a toilet for $1,000 I see that as disappeared. When the US takes that tax money and shoves it into Fannie Mae to buy up toxic loans, I see that money as disappeared. While spending on infrastructure would be fantastic, I don't see a lot of the tax money being spent that way. Instead, I see corporate interests directing government spending into channels that don't return to the consumer.

11. Your numbers are correct. But the wealthy used to pay even MORE than this. And I think they should pay more.

Anyhow, hope the numbering I did wasn't too confusing. I'm not good with quotes so I didn't want to go in and try to respond to each quoted block of text. Thanks again for responding and I will admit that you proved me wrong or showed that I needed to more greatly clarify on a number of points.

Still, I hold serious doubts about the virtues of shifting to a service based economy and whether that is truly beneficial for the people.

Also, I hold serious doubts about the fiscal policy of the US government.

I also hold serious doubts about the way taxation of corporations are handled.

But most of all I have serious doubts about capital and labor flows. While it is easy to say that everyone will move into the service sector and be happy, I've yet to see the service sector actually provide enough jobs to replace all the ones lost in agriculture and manufacture.