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On January 28 2010 05:42 L wrote:Show nested quote +On January 28 2010 05:36 Caller wrote:On January 28 2010 05:28 L wrote:On January 28 2010 05:19 REDBLUEGREEN wrote:On January 28 2010 05:08 L wrote:However global prosperity and living standarts have improved a lot over the last 30 years thanks to globalization. How do you know they're because of globalization instead of far more powerful forces, like the green revolution or a vast number of technological advances? because it is globalization that brings technological advances and know-how to 3rd world countries. No it isn't. the green revolution started just after WW2 and was spreading of its own accord. The implementation of most strains of food which resulted in the revolution occured prior to 1970. The modern era of globalization started in earnest after the tokyo GATT round in 1973 where the amount of tariff reductions secured was around 8 times higher than the prior round. This series of concessions then went on to create the WTO. So your entire argument is that the system is unsustainable because corporations are greedy and take out more than is put into the "system." First of all, the only thing you've demonstrated is that the US government, which is not a capitalist enterprise, last time I checked, takes out money that isn't put back in. So your entire argument that it's the corporations fault is based off of the US government taking money out through taxes.
You can use the taxes as a substitute for any form of externality, or any form of non transactional cost. Even the material upkeep of the store would break the cycle. The point is there's no wealth being created in the cycle, but there's a transactional cost regardless. While this is true, L, his entire argument mentions nothing of externality, nor does it mention something about transactional costs either. It simply talks about taxes. If you're insisting that transactional costs are a flaw, though, then by that argument no market system can ever be good because your outputs will never be 100% from your inputs. It's like the idea of a Carnot engine in chemistry-you will never have 100% efficiency with your heat engines because of the second law of thermodynamics and how entropy works. The transactional cost represents the difference of inputs to outputs. I also like it when the OP proceeds to ignore my post and go to the next one. That's not really true, because even if you don't have 100% efficiency, you can always have something other than a closed system; if you create wealth, then it can be destroyed by inefficiencies, but the onus would be on creating more wealth. If we take manufacturing to be the prototypical example of a clear value added process, we can see that MAKING STUFF GIVES YOU MONEY. If, however, the only thing you do is cyclically trade around retail goods, you simply run out over time. The idea behind his statement is that the near complete collapse of manufacturing has stopped the input of wealth into the system, which is now spinning around in service industries being shaved down slowly.
This would certainly be the case if we looked at just the United States. But you have to look at the world as a whole, not just one country. If wealth were to be shaved down because the only industries in a country would be service industries, then several small countries would likely have collapsed economically by now.
We should probably ask the question "what is wealth?" before we can get into this sort of argument. My argument is that wealth is how much someone values something, and tends to be subjective for an individual but objective for the aggregate. Therefore, one could argue that the services that are provided to people through service industries are providing "intangible, illiquid" wealth to people purchasing their services. So while they may not be getting any monetary benefit from acquiring it, they are still spending the money to gain utility-but I digress regarding utility.
We could see a chain of money like this, however:
raw resources --> manufacturing--> distribution
each of these need money for their work, which they can acquire through loans or equity. This comes from financial institutions. To support these financial institutions are other institutions, and profit from all these companies goes to financial institutions so they can loan out more money, etc.
This is a very flimsy representation and is probably full of holes but I'm operating on two hours of sleep so my argumentation style is pretty crappy today.
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On January 28 2010 05:25 Caller wrote:Show nested quote +
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.
I read this and already realized that you have no idea what you're talking about when it comes to economics. For an example, consider your little Gamestop analogy: Show nested quote +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. So your entire argument is that the system is unsustainable because corporations are greedy and take out more than is put into the "system." First of all, the only thing you've demonstrated is that the US government, which is not a capitalist enterprise, last time I checked, takes out money that isn't put back in. So your entire argument that it's the corporations fault is based off of the US government taking money out through taxes. You then to proceed to reveal your ignorance of complaining about "input" and "output" in the system by saying: Show nested quote +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. All I read here is: I don't understand why the bailout was key to preventing an across-the-board slash in all market sectors by at least 50%, but I will use popular imagery and combine it with a few numbers and classic "human" arguments and use it to justify my view on economics. You then complain about all the so called "free-market fundamentalists" and how they are destroying the world by breaking the balance between markets and government and how deregulation is causing all these problems. But then you mention how the reason that "monopolists are such a powerful force in 'free markets'" because they can use law against the other companies to drive them out of business, when in reality that is the primary flaw of having a mixed market. That is why people want deregulation-so larger companies can't use laws to fuck over smaller competitors. Now we do see companies today gradually consolidating over and over again. This is an example of the idea of economies of scale. But then you make the argument that they are growing so big that they are now in diseconomies of scale. So isn't it patently obvious that these sorts of companies are probably going to be driven out of business by another company that doesn't have such a diseconomy? Instead of concentrating on popular views and very general ideas, I would focus on the more obvious problems with the free market. For instance, the idea of asymmetric information, which causes market failure, as well as what we call externalities. These are all very key ideas in the teaching of economics which you just gloss over as being free-market fundamentalists. Those are very valid arguments as to why we need to "change" capitalism. They certainly are better than the pop-crap, contradictions, and blatant generalizations that your entire argument revolves around.
No. You've made probably the most wrong-footed analysis possible. You're welcome to go back and look at my post history. I've stated several times the factors leading to the bailout and why it was necessary.
Nothing I've said is pop-crap. You just like to brand it as such because you find any philosophy that wants to help Main street to be "populist propaganda." You see how easy it is to label people and throw out generic insults?
Now to your actual points.
1. I never said they use government to drive out competition. Wtf are you talking about?
2. There is no such thing as a balance between markets and government. Again, wtf are you talking about? I never said anything remotely like your twisted interpretation.
3. What I said was that with the recent laws, corporations are able to influence the very watchdog that is supposed to regulate them.
4. All I've read from you is that you lack reading comprehension. A corporation gets large enough to suffer diseconomies of scale, but the way the "free market" is structured, they can overcome this with buying power to allow destructive practices like price wars to take down the competition before the more efficient little guy can expand enough to actually compete.
Please put the e-peen away. I assure you my understanding of economics is more than sufficient. Just because I boil something down to a simpler process for the sake of discourse doesn't mean I am not aware of the nuances.
Further, your concept of asymmetric information is so old and tired and irrelevant that it's just boring to debate at this point. You can give two people the same information and they won't even interpret it the same way. ie your reading comprehension skills. There will never be a way to guarantee perfect information for a consumer market. Especially not when there's a marketing industry around, whose sole purpose has become warping the perception of value consumers have about a product. This is an outgrowth of free market principles. Do whatever is effective in gaining sales.
Externalities are impossible to quantify. GL waiting on a way to compute butterfly effect with any kind of accuracy and in a quantifiable way that can be taxed or assessed in a business transaction. I think you're the one showing a lack of understanding in economics because the two points you brought up are pipe dreams rather than anything worth debating.
We might as well start debating the merits of Communism, if only we could find a way to change human nature. Assessing externalities and creating an environment of perfect information are those kinds of ideals.
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On January 28 2010 05:42 L wrote:Show nested quote +On January 28 2010 05:36 Caller wrote:On January 28 2010 05:28 L wrote:On January 28 2010 05:19 REDBLUEGREEN wrote:On January 28 2010 05:08 L wrote:However global prosperity and living standarts have improved a lot over the last 30 years thanks to globalization. How do you know they're because of globalization instead of far more powerful forces, like the green revolution or a vast number of technological advances? because it is globalization that brings technological advances and know-how to 3rd world countries. No it isn't. the green revolution started just after WW2 and was spreading of its own accord. The implementation of most strains of food which resulted in the revolution occured prior to 1970. The modern era of globalization started in earnest after the tokyo GATT round in 1973 where the amount of tariff reductions secured was around 8 times higher than the prior round. This series of concessions then went on to create the WTO. So your entire argument is that the system is unsustainable because corporations are greedy and take out more than is put into the "system." First of all, the only thing you've demonstrated is that the US government, which is not a capitalist enterprise, last time I checked, takes out money that isn't put back in. So your entire argument that it's the corporations fault is based off of the US government taking money out through taxes.
You can use the taxes as a substitute for any form of externality, or any form of non transactional cost. Even the material upkeep of the store would break the cycle. The point is there's no wealth being created in the cycle, but there's a transactional cost regardless. While this is true, L, his entire argument mentions nothing of externality, nor does it mention something about transactional costs either. It simply talks about taxes. If you're insisting that transactional costs are a flaw, though, then by that argument no market system can ever be good because your outputs will never be 100% from your inputs. It's like the idea of a Carnot engine in chemistry-you will never have 100% efficiency with your heat engines because of the second law of thermodynamics and how entropy works. The transactional cost represents the difference of inputs to outputs. I also like it when the OP proceeds to ignore my post and go to the next one. That's not really true, because even if you don't have 100% efficiency, you can always have something other than a closed system; if you create wealth, then it can be destroyed by inefficiencies, but the onus would be on creating more wealth. If we take manufacturing to be the prototypical example of a clear value added process, we can see that MAKING STUFF GIVES YOU MONEY. If, however, the only thing you do is cyclically trade around retail goods, you simply run out over time. The idea behind his statement is that the near complete collapse of manufacturing has stopped the input of wealth into the system, which is now spinning around in service industries being shaved down slowly. Show nested quote +On January 28 2010 05:40 REDBLUEGREEN wrote:On January 28 2010 05:28 L wrote:
No it isn't. the green revolution started just after WW2 and was spreading of its own accord. The implementation of most strains of food which resulted in the revolution occured prior to 1970.
The modern era of globalization started in earnest after the tokyo GATT round in 1973 where the amount of tariff reductions secured was around 8 times higher than the prior round. This series of concessions then went on to create the WTO.
If you read my post again you will notice that I spoke about technological advances and know-how not the green revolution. Some people might spend money to educate people in 3rd world countries just because they are awesome persons, but corporations that operate factories also have to educate and bring know-how to their personnel in order to function properly. The green revolution is the largest example of a sharing of technological advances and know-how. It occured pre globalization and has probably saved billions from starvation. You need to do more than say that globalization has existed while the standard of living has increased. You need to isolate globalization.
Yup ,100% L. Thank you for communicating that more eloquently than I did. The point of my Gamestop analogy was not to show off the precise mechanics of economics, it was merely to illustrate in a very simple way for people NOT acquainted with economics, that the value-added process has been destroyed in America.
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On January 28 2010 05:27 StorkHwaiting wrote:+ Show Spoiler +On January 28 2010 05:17 I_Love_Bacon wrote:Show nested quote +On January 28 2010 05:12 StorkHwaiting wrote:
What? I did propose a solution, albeit an aspirational one rather than a detailed economic proposal. It's the same one as Sarkozy. The philosophies of capitalism need to be reformed with a moral purpose in mind, rather than relying on puritanical Capitalist ideology.
And just to be clear: if Americans didn't think less taxes/regulation = increased economic prosperity, the Republican party would lose every single election.
This is the rhetoric that has been espoused in America for the last 30 years. This is the economic philosophy the WORLD has been operating on for the last 30 years. Don't tell me some crap like "this isn't edgy or provocative." If it wasn't provocative, then why was the entire world marching to this beat for decades? And why did it take a massive slap to the face like this last recession to make people wake up and smell the coffee?
Just because I'm posting it now doesn't mean I didn't hold the same view ten years ago. I don't give a shit about being edgy. That was just Heyoka's queer little insult he felt needed to be expressed. It's the fact that this recession was such an epic vindication of my positions (and of many other minority economic thinkers). It is a great thing to see that the world leaders are FINALLY starting to see the light. This view has been the MINORITY for a long time. And I'm amazed you think it hasn't been the minority view. The crux of the argument still lies in people making the "right" decision. Suddenly thinking, oh, well we'll make the right decision this time, doesn't quite cut it because seldom is there a clear cut correct answer that somehow lands due north so everybody's moral compass points to it. Republicans would lose every single election if people actually voted on what was best for them or what they believed. Voting has little to do with actual needs, but instead with what basically becomes tradition passed on down families to the younger generation. And switching parties? Please, that's admitting you've had the wrong view point for the past X number of years. People would rather ignore what is best for them just to not be on the losing side of things. I'd have to disagree. Because the guiding philosophy for the past 30 years is that things will naturally take care of themselves. This ideal of laissez faire. Now, they're being forced to take a step back, reevaluate, and realize that no, laissez faire and letting things take the "natural" course is not the right way. Rather, things will need to be guided and more strictly regulated to create the outcomes that are needed. To use an Eastern example, it's the difference between Confucianism and Taoism. It is a fundamental difference between the two and it most certainly does not have the same foundation of "people making the right decision." Taoism espouses that there is a natural "Way," and that if everything is in tune with that Way it leads to harmony for all. This is very VERY similar to the concept of laissez faire, market forces, and natural equilibrium. Sometimes I wonder if the original theorists of these concepts drew their inspiration from Lao Zi. Confucianism, on the other hand, says that systems must be created that create the good effects we want to see, and it is in the perfection of these systems and roles of people that harmony can be found. There is a HUGE difference between the two, to the point that the philosophies are virtually antagonistic. And this is the entire crux of the debate going on right now. Is the "free" and "natural" order of things most beneficial, or should we be focusing on creating systems that are best at guiding and creating the growth/equality that we think is morally righteous for the people. This is what is meant by "reinventing capitalism so that these original principles are the means and not the ends." We need to reinvent these theories and implement systems so that they serve what we want as a society, rather than just letting nature take its course.
We are not having a free market, not the US, not in Europe, not in Asia, not anywhere! The market is heavily regulated everywhere, trying to say anything else just reeks of ignorance. That was my point. And no matter how much money a company is giving to the parties if it turns out that the party will help empowering this company to disproportional degrees the people wont tolerate it and will shoot them down the next election. And it isn't even plausible for it to happen, since the parties know that if they go too far out of line in terms of this they will for sure lose the next election, so they don't since it wouldn't be helping their self interest to do so.
And no, money is not winning the elections. What wins elections is support from the people, the more support the party have the more money they will get. Or, in this case correlation do most likely not mean causation since we have a very strong rational argument why popular support and financial support should correlate.
And about the current "crisis", is anyone starving in any of the western countries? Do anyone lack the money to buy clothes? No, not really, what gets put on hold is something like a new plasma TV, mostly just forcing people to consume a bit less luxury wares than they usually do.
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United States22883 Posts
OP, have you ever lived outside of the US? How about outside of the "West"?
What interests me is that I have never seen you make a specific post in your entire time at TL. You make blanket declarative statements, without every providing evidence. You're a nice essayist, but why don't you show us something besides your opinion?
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I honestly think that all this discussion is complete bullshit.
"Capitalism is good" is not the sole reason why we have money, we have it because its the best way to give value to work we ever invented.
And even if your system is not a free market (and really few places are true free markets, like somalia) you can still have capital, a stock market, and make use of all economic know how that exists to better improve the lifes of everyone.
As was said before, the problem isnt money or globalization or corporations, its people behind them, and since we cant just trust that the top guys making the decisions that are capable of fucking up billions of people we need to have some for of regulation/accountability so that abuses dont happen.
Then again, people realized to late that corporations can actually be selfish motherfuckers and now they have bought all the politicians they need to keep fucking us in the ass.
In conclusion, money is good, creating business, investing in stocks, its all not only good, its essential for a country to thrive nowdays, but theres a correct way to do it and so far, there arent many doing it the right way.
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On January 28 2010 05:50 Caller wrote:Show nested quote +On January 28 2010 05:42 L wrote:On January 28 2010 05:36 Caller wrote:On January 28 2010 05:28 L wrote:On January 28 2010 05:19 REDBLUEGREEN wrote:On January 28 2010 05:08 L wrote:However global prosperity and living standarts have improved a lot over the last 30 years thanks to globalization. How do you know they're because of globalization instead of far more powerful forces, like the green revolution or a vast number of technological advances? because it is globalization that brings technological advances and know-how to 3rd world countries. No it isn't. the green revolution started just after WW2 and was spreading of its own accord. The implementation of most strains of food which resulted in the revolution occured prior to 1970. The modern era of globalization started in earnest after the tokyo GATT round in 1973 where the amount of tariff reductions secured was around 8 times higher than the prior round. This series of concessions then went on to create the WTO. So your entire argument is that the system is unsustainable because corporations are greedy and take out more than is put into the "system." First of all, the only thing you've demonstrated is that the US government, which is not a capitalist enterprise, last time I checked, takes out money that isn't put back in. So your entire argument that it's the corporations fault is based off of the US government taking money out through taxes.
You can use the taxes as a substitute for any form of externality, or any form of non transactional cost. Even the material upkeep of the store would break the cycle. The point is there's no wealth being created in the cycle, but there's a transactional cost regardless. While this is true, L, his entire argument mentions nothing of externality, nor does it mention something about transactional costs either. It simply talks about taxes. If you're insisting that transactional costs are a flaw, though, then by that argument no market system can ever be good because your outputs will never be 100% from your inputs. It's like the idea of a Carnot engine in chemistry-you will never have 100% efficiency with your heat engines because of the second law of thermodynamics and how entropy works. The transactional cost represents the difference of inputs to outputs. I also like it when the OP proceeds to ignore my post and go to the next one. That's not really true, because even if you don't have 100% efficiency, you can always have something other than a closed system; if you create wealth, then it can be destroyed by inefficiencies, but the onus would be on creating more wealth. If we take manufacturing to be the prototypical example of a clear value added process, we can see that MAKING STUFF GIVES YOU MONEY. If, however, the only thing you do is cyclically trade around retail goods, you simply run out over time. The idea behind his statement is that the near complete collapse of manufacturing has stopped the input of wealth into the system, which is now spinning around in service industries being shaved down slowly. This would certainly be the case if we looked at just the United States. But you have to look at the world as a whole, not just one country. If wealth were to be shaved down because the only industries in a country would be service industries, then several small countries would likely have collapsed economically by now. We should probably ask the question "what is wealth?" before we can get into this sort of argument. My argument is that wealth is how much someone values something, and tends to be subjective for an individual but objective for the aggregate. Therefore, one could argue that the services that are provided to people through service industries are providing "intangible, illiquid" wealth to people purchasing their services. So while they may not be getting any monetary benefit from acquiring it, they are still spending the money to gain utility-but I digress regarding utility. We could see a chain of money like this, however: raw resources --> manufacturing--> distribution each of these need money for their work, which they can acquire through loans or equity. This comes from financial institutions. To support these financial institutions are other institutions, and profit from all these companies goes to financial institutions so they can loan out more money, etc. This is a very flimsy representation and is probably full of holes but I'm operating on two hours of sleep so my argumentation style is pretty crappy today.
See, that's where I have a problem with how "wealth" is assessed in America today.
While there is a certain utility value in consumption, it's a very very small amount for what's paid.
That's why there is this stark delineation between consumption and investment. Investment is spending resources to improve one's ability to produce. Consumption is spending resources for the sake of pleasure.
While it can be argued that consumption in a way is just a cost of production because people need to be happy/content/healthy etc to produce, there is a limit to how much consumption is actually necessary. In today's material culture, consumerism has gotten way out of hand. People do not need 5 generations of Ipods in as many years.
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United States22883 Posts
On January 28 2010 05:57 D10 wrote:
there arent many doing it the right way.
There is no right way. There are better and worse ways.
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On January 28 2010 05:56 Jibba wrote:
OP, have you ever lived outside of the US? How about outside of the "West"?
What interests me is that I have never seen you make a specific post in your entire time at TL. You make blanket declarative statements, without every providing evidence. You're a nice essayist, but why don't you show us something besides your opinion?
Explain how this has any relevance and I'll give you an answer.
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United States22883 Posts
I'll assume it's a no. I have to go to class.
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On January 28 2010 05:51 StorkHwaiting wrote:
3. What I said was that with the recent laws, corporations are able to influence the very watchdog that is supposed to regulate them.
How would the new law allow them to influence the politicians more than before? It is not about bribes, or are the parties allowed to give the money they get to individuals?
I mean, this is nothing like buying politicians, this whole deal is just about companies being allowed to contribute with ads.
On January 28 2010 05:59 StorkHwaiting wrote:
While it can be argued that consumption in a way is just a cost of production because people need to be happy/content/healthy etc to produce, there is a limit to how much consumption is actually necessary. In today's material culture, consumerism has gotten way out of hand. People do not need 5 generations of Ipods in as many years.
So basically, you want us to produce more without anyone consuming it? What a hypocrite you are... With your logic we could just as well go 100 years back in time.
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On January 28 2010 05:57 D10 wrote:
I honestly think that all this discussion is complete bullshit.
"Capitalism is good" is not the sole reason why we have money, we have it because its the best way to give value to work we ever invented.
And even if your system is not a free market (and really few places are true free markets, like somalia) you can still have capital, a stock market, and make use of all economic know how that exists to better improve the lifes of everyone.
As was said before, the problem isnt money or globalization or corporations, its people behind them, and since we cant just trust that the top guys making the decisions that are capable of fucking up billions of people we need to have some for of regulation/accountability so that abuses dont happen.
Then again, people realized to late that corporations can actually be selfish motherfuckers and now they have bought all the politicians they need to keep fucking us in the ass.
In conclusion, money is good, creating business, investing in stocks, its all not only good, its essential for a country to thrive nowdays, but theres a correct way to do it and so far, there arent many doing it the right way.
D10 that's the crux of the debate here. Contemporary capitalist theory says that people doing whatever is in their own interest is GOOD for the economy. (Except doing what's in their own interest can often be labeled asshole behavior. Hence why selfish is considered an insult).
I am not advocating the destruction of currency, the stock market, or corporations. What I'm saying is that this concept of deregulation, laissez faire, and small government is a horrible idea. Exactly for the reasons you brought up. People and corporations need to regulated so they don't keep fucking us in the ass.
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On January 28 2010 06:03 Klockan3 wrote:Show nested quote +On January 28 2010 05:51 StorkHwaiting wrote:
3. What I said was that with the recent laws, corporations are able to influence the very watchdog that is supposed to regulate them.
How would the new law allow them to influence the politicians more than before? It is not about bribes, or are the parties allowed to give the money they get to individuals? I mean, this is nothing like buying politicians, this whole deal is just about companies being allowed to contribute with ads.
Because if a corporation paid for the politician's campaign, the politician would then be indebted to them and would work hard to get laws passed that are favorable to the corporation? Are you really not understanding how corruption works? :-/
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On January 28 2010 05:51 StorkHwaiting wrote:Show nested quote +On January 28 2010 05:25 Caller wrote:
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.
I read this and already realized that you have no idea what you're talking about when it comes to economics. For an example, consider your little Gamestop analogy: 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. So your entire argument is that the system is unsustainable because corporations are greedy and take out more than is put into the "system." First of all, the only thing you've demonstrated is that the US government, which is not a capitalist enterprise, last time I checked, takes out money that isn't put back in. So your entire argument that it's the corporations fault is based off of the US government taking money out through taxes. You then to proceed to reveal your ignorance of complaining about "input" and "output" in the system by saying: 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. All I read here is: I don't understand why the bailout was key to preventing an across-the-board slash in all market sectors by at least 50%, but I will use popular imagery and combine it with a few numbers and classic "human" arguments and use it to justify my view on economics. You then complain about all the so called "free-market fundamentalists" and how they are destroying the world by breaking the balance between markets and government and how deregulation is causing all these problems. But then you mention how the reason that "monopolists are such a powerful force in 'free markets'" because they can use law against the other companies to drive them out of business, when in reality that is the primary flaw of having a mixed market. That is why people want deregulation-so larger companies can't use laws to fuck over smaller competitors. Now we do see companies today gradually consolidating over and over again. This is an example of the idea of economies of scale. But then you make the argument that they are growing so big that they are now in diseconomies of scale. So isn't it patently obvious that these sorts of companies are probably going to be driven out of business by another company that doesn't have such a diseconomy? Instead of concentrating on popular views and very general ideas, I would focus on the more obvious problems with the free market. For instance, the idea of asymmetric information, which causes market failure, as well as what we call externalities. These are all very key ideas in the teaching of economics which you just gloss over as being free-market fundamentalists. Those are very valid arguments as to why we need to "change" capitalism. They certainly are better than the pop-crap, contradictions, and blatant generalizations that your entire argument revolves around. No. You've made probably the most wrong-footed analysis possible. You're welcome to go back and look at my post history. I've stated several times the factors leading to the bailout and why it was necessary. Nothing I've said is pop-crap. You just like to brand it as such because you find any philosophy that wants to help Main street to be "populist propaganda." You see how easy it is to label people and throw out generic insults? Now to your actual points. 1. I never said they use government to drive out competition. Wtf are you talking about? 2. There is no such thing as a balance between markets and government. Again, wtf are you talking about? I never said anything remotely like your twisted interpretation. 3. What I said was that with the recent laws, corporations are able to influence the very watchdog that is supposed to regulate them. 4. All I've read from you is that you lack reading comprehension. A corporation gets large enough to suffer diseconomies of scale, but the way the "free market" is structured, they can overcome this with buying power to allow destructive practices like price wars to take down the competition before the more efficient little guy can expand enough to actually compete. Please put the e-peen away. I assure you my understanding of economics is more than sufficient. Just because I boil something down to a simpler process for the sake of discourse doesn't mean I am not aware of the nuances. Further, your concept of asymmetric information is so old and tired and irrelevant that it's just boring to debate at this point. You can give two people the same information and they won't even interpret it the same way. ie your reading comprehension skills. There will never be a way to guarantee perfect information for a consumer market. Especially not when there's a marketing industry around, whose sole purpose has become warping the perception of value consumers have about a product. This is an outgrowth of free market principles. Do whatever is effective in gaining sales. Externalities are impossible to quantify. GL waiting on a way to compute butterfly effect with any kind of accuracy and in a quantifiable way that can be taxed or assessed in a business transaction. I think you're the one showing a lack of understanding in economics because the two points you brought up are pipe dreams rather than anything worth debating. We might as well start debating the merits of Communism, if only we could find a way to change human nature. Assessing externalities and creating an environment of perfect information are those kinds of ideals.
Oh dear lord.
First off, #1
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.
Then, #2:
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.
#3 I agree with your statement here, but I don't see why there would still be a watchdog if there's deregulation going on. If anything, deregulation would get rid of the watchdog, otherwise it's not deregulation, its corporate favoritism. I also didn't talk about this at all.
#4: Funny, because the only thing you mentioned was how big companies want to compete in each other in a bidding war. While they do tend to buy up smaller companies, it's not because they are trying to "outgrow" the other-it has more to do with trying to destroy competition. But think about it logically-assuming the industry doesn't have ludicriously high start-up costs, the big companies will be paying through the nose for things that aren't worth nearly as much as they are just so they can avoid competition. It's a cycle that will end-badly for these large companies-because they are paying more than what they are getting back. This cycle is certainly more solid than your Gamestop example of cyclical service markets not putting in more than they are taking out. A good example of this was GM, which basically bought more than it could chew, and compounded other problems together to create a financial struggle.
As for your views regarding asymmetric information and externalities, I wasn't making the argument that a free-market would get rid of these things. Far from it. My entire argument was based on the fact that markets do fail. And these two are main causes of it. And we should address the problems that are caused by this-for instance, in the case of asymmetric information in the insurance market, we create social programs to deal with this. In the case of externalities, we try to internalize the externality, i.e. make people pay for what they pollute/what they are getting for free. Instead of "boiling down every argument" to favor your statement, I suggest you offer a more balanced approach to everything.
I also still don't understand why you consider "asymmetric information" and "externality" so boring and irrelevant when the argument over labor and wages has gone on for far longer than either of these two concepts, and your generalizations of how all profits go to the fat cats at the top of the companies are certainly far older and boring than these two sources of market failure.
I would also like to apologize for the ad hominem attack I made where I accused you of not knowing what you are talking about. But that doesn't mean you should escalate it by accusing me of having bad reading comprehension and the like.
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On January 28 2010 06:05 StorkHwaiting wrote:Show nested quote +On January 28 2010 06:03 Klockan3 wrote:On January 28 2010 05:51 StorkHwaiting wrote:
3. What I said was that with the recent laws, corporations are able to influence the very watchdog that is supposed to regulate them.
How would the new law allow them to influence the politicians more than before? It is not about bribes, or are the parties allowed to give the money they get to individuals? I mean, this is nothing like buying politicians, this whole deal is just about companies being allowed to contribute with ads. Because if a corporation paid for the politician's campaign, the politician would then be indebted to them and would work hard to get laws passed that are favorable to the corporation? Are you really not understanding how corruption works? :-/
This is not how corruption works. Corruption would be if they took bribes. Bribes are not legal in most countries. It might tip the scales sometimes but it is not like they will make totally new laws just because corporation A helped their campaign. The voters still sits on the power and until you can buy votes or is free to bribe officials you can't really complain.
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On January 28 2010 05:59 StorkHwaiting wrote:Show nested quote +On January 28 2010 05:50 Caller wrote:On January 28 2010 05:42 L wrote:On January 28 2010 05:36 Caller wrote:On January 28 2010 05:28 L wrote:On January 28 2010 05:19 REDBLUEGREEN wrote:On January 28 2010 05:08 L wrote:However global prosperity and living standarts have improved a lot over the last 30 years thanks to globalization. How do you know they're because of globalization instead of far more powerful forces, like the green revolution or a vast number of technological advances? because it is globalization that brings technological advances and know-how to 3rd world countries. No it isn't. the green revolution started just after WW2 and was spreading of its own accord. The implementation of most strains of food which resulted in the revolution occured prior to 1970. The modern era of globalization started in earnest after the tokyo GATT round in 1973 where the amount of tariff reductions secured was around 8 times higher than the prior round. This series of concessions then went on to create the WTO. So your entire argument is that the system is unsustainable because corporations are greedy and take out more than is put into the "system." First of all, the only thing you've demonstrated is that the US government, which is not a capitalist enterprise, last time I checked, takes out money that isn't put back in. So your entire argument that it's the corporations fault is based off of the US government taking money out through taxes.
You can use the taxes as a substitute for any form of externality, or any form of non transactional cost. Even the material upkeep of the store would break the cycle. The point is there's no wealth being created in the cycle, but there's a transactional cost regardless. While this is true, L, his entire argument mentions nothing of externality, nor does it mention something about transactional costs either. It simply talks about taxes. If you're insisting that transactional costs are a flaw, though, then by that argument no market system can ever be good because your outputs will never be 100% from your inputs. It's like the idea of a Carnot engine in chemistry-you will never have 100% efficiency with your heat engines because of the second law of thermodynamics and how entropy works. The transactional cost represents the difference of inputs to outputs. I also like it when the OP proceeds to ignore my post and go to the next one. That's not really true, because even if you don't have 100% efficiency, you can always have something other than a closed system; if you create wealth, then it can be destroyed by inefficiencies, but the onus would be on creating more wealth. If we take manufacturing to be the prototypical example of a clear value added process, we can see that MAKING STUFF GIVES YOU MONEY. If, however, the only thing you do is cyclically trade around retail goods, you simply run out over time. The idea behind his statement is that the near complete collapse of manufacturing has stopped the input of wealth into the system, which is now spinning around in service industries being shaved down slowly. This would certainly be the case if we looked at just the United States. But you have to look at the world as a whole, not just one country. If wealth were to be shaved down because the only industries in a country would be service industries, then several small countries would likely have collapsed economically by now. We should probably ask the question "what is wealth?" before we can get into this sort of argument. My argument is that wealth is how much someone values something, and tends to be subjective for an individual but objective for the aggregate. Therefore, one could argue that the services that are provided to people through service industries are providing "intangible, illiquid" wealth to people purchasing their services. So while they may not be getting any monetary benefit from acquiring it, they are still spending the money to gain utility-but I digress regarding utility. We could see a chain of money like this, however: raw resources --> manufacturing--> distribution each of these need money for their work, which they can acquire through loans or equity. This comes from financial institutions. To support these financial institutions are other institutions, and profit from all these companies goes to financial institutions so they can loan out more money, etc. This is a very flimsy representation and is probably full of holes but I'm operating on two hours of sleep so my argumentation style is pretty crappy today. See, that's where I have a problem with how "wealth" is assessed in America today. While there is a certain utility value in consumption, it's a very very small amount for what's paid. That's why there is this stark delineation between consumption and investment. Investment is spending resources to improve one's ability to produce. Consumption is spending resources for the sake of pleasure. While it can be argued that consumption in a way is just a cost of production because people need to be happy/content/healthy etc to produce, there is a limit to how much consumption is actually necessary. In today's material culture, consumerism has gotten way out of hand. People do not need 5 generations of Ipods in as many years.
Please tell me you're not trying to quantify utility value with respect to money. That's like the number one DO NOT DO THIS thing in microeconomics 101.
And your argument has changed from "capitalism is evil" to "consumerism is wasteful." While the latter may very possibly be true, the two are distinct issues.
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On January 28 2010 05:42 L wrote:
You need to do more than say that globalization has existed while the standard of living has increased. You need to isolate globalization.
You and I both know that it is impossible to isolate it 
But I think it is undeniable that globalization brings infrastructure, work, technological advances and education to 3rd world countries.
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United States6862 Posts
On January 28 2010 05:54 StorkHwaiting wrote:Show nested quote +On January 28 2010 05:42 L wrote:On January 28 2010 05:36 Caller wrote:On January 28 2010 05:28 L wrote:On January 28 2010 05:19 REDBLUEGREEN wrote:On January 28 2010 05:08 L wrote:However global prosperity and living standarts have improved a lot over the last 30 years thanks to globalization. How do you know they're because of globalization instead of far more powerful forces, like the green revolution or a vast number of technological advances? because it is globalization that brings technological advances and know-how to 3rd world countries. No it isn't. the green revolution started just after WW2 and was spreading of its own accord. The implementation of most strains of food which resulted in the revolution occured prior to 1970. The modern era of globalization started in earnest after the tokyo GATT round in 1973 where the amount of tariff reductions secured was around 8 times higher than the prior round. This series of concessions then went on to create the WTO. So your entire argument is that the system is unsustainable because corporations are greedy and take out more than is put into the "system." First of all, the only thing you've demonstrated is that the US government, which is not a capitalist enterprise, last time I checked, takes out money that isn't put back in. So your entire argument that it's the corporations fault is based off of the US government taking money out through taxes.
You can use the taxes as a substitute for any form of externality, or any form of non transactional cost. Even the material upkeep of the store would break the cycle. The point is there's no wealth being created in the cycle, but there's a transactional cost regardless. While this is true, L, his entire argument mentions nothing of externality, nor does it mention something about transactional costs either. It simply talks about taxes. If you're insisting that transactional costs are a flaw, though, then by that argument no market system can ever be good because your outputs will never be 100% from your inputs. It's like the idea of a Carnot engine in chemistry-you will never have 100% efficiency with your heat engines because of the second law of thermodynamics and how entropy works. The transactional cost represents the difference of inputs to outputs. I also like it when the OP proceeds to ignore my post and go to the next one. That's not really true, because even if you don't have 100% efficiency, you can always have something other than a closed system; if you create wealth, then it can be destroyed by inefficiencies, but the onus would be on creating more wealth. If we take manufacturing to be the prototypical example of a clear value added process, we can see that MAKING STUFF GIVES YOU MONEY. If, however, the only thing you do is cyclically trade around retail goods, you simply run out over time. The idea behind his statement is that the near complete collapse of manufacturing has stopped the input of wealth into the system, which is now spinning around in service industries being shaved down slowly. On January 28 2010 05:40 REDBLUEGREEN wrote:On January 28 2010 05:28 L wrote:
No it isn't. the green revolution started just after WW2 and was spreading of its own accord. The implementation of most strains of food which resulted in the revolution occured prior to 1970.
The modern era of globalization started in earnest after the tokyo GATT round in 1973 where the amount of tariff reductions secured was around 8 times higher than the prior round. This series of concessions then went on to create the WTO.
If you read my post again you will notice that I spoke about technological advances and know-how not the green revolution. Some people might spend money to educate people in 3rd world countries just because they are awesome persons, but corporations that operate factories also have to educate and bring know-how to their personnel in order to function properly. The green revolution is the largest example of a sharing of technological advances and know-how. It occured pre globalization and has probably saved billions from starvation. You need to do more than say that globalization has existed while the standard of living has increased. You need to isolate globalization. Yup ,100% L. Thank you for communicating that more eloquently than I did. The point of my Gamestop analogy was not to show off the precise mechanics of economics, it was merely to illustrate in a very simple way for people NOT acquainted with economics, that the value-added process has been destroyed in America.
what value-added process? do you know what that means? you're talking about taxes and how taxes somehow make everyone poor and unsustainable. are you serious? your manipulation of numbers is astounding i don't know how you went from paying taxes to
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.
but either you're a super mega genius or you have no idea what you are talking about.
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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.
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EPT
