Found this article on Yahoo's finance page. It dovetails nicely with this article.
http://finance.yahoo.com/news/frankenstein-capitalism-sucking-life-america-151542600.html;_ylt=AwrC1jHT7jNWjB8A9gmTmYlQ;_ylu=X3oDMTByMDgyYjJiBGNvbG8DYmYxBHBvcwMyBHZ0aWQDBHNlYwNzYw–
Happy Halloween!
As usual, this article decries that "Capitalism" is the issue, not the "Crony Capitalism" enabled by government. It would be nice if articles like this would just dig a bit deeper and ask why is "Capitalism" able to become "Frankenstein Capitalism". Why not look at who is Victor in this story? As long as we fail to look at government as the creator of this mess and continue to beg it to slay the monster, we will continue to get bigger and more fierce "Frankensteins". It's time to take away Victor's tool chest!
This was truly a great article. I remember two instances that clearly indicated Yahoo! must be going south. The first sign was after Ms. Meyer declared an end to the work-from-home policy. This must have been in 2010, because at that time my main employer was moving in the opposite direction, making 50% of its workforce virtual, which resulted in three good things: 1) increased productivity, 2) decreased attrition, 3) and reduced fixed costs. The second sign was about a year later in 2011 when I heard radio ads for Yahoo!'s search engine. This incidentally coincided with my wife's decision to stop using Yahoo! as her search engine because it simply didn't fine half the things Google did.
"Unrealistic expectations" seems to be with everyone, almost. I’m trying to decrease in my children, no luck so far…
Aloha! Mahalo Adam! Hmmm … Actually Alcoholics Annonymous has a vast repertoire on the dangers of "expectations", which leads me to believe that perhaps rather than Rogoff or Reich a reformed alcoholic might be the best advisor for an economic recovery. Here's one …
Expectation is premeditated resentment.
Another …
My serenity is inversely proportional to my expectations.
My favorite is …
All your best thinking got you here!
In other words all our best voting and our best democracy and our best capitalism and our best religion and our best career politicians got America and the world where it is today. The entire world is drunk on debt! I first saw this in the 1980s and decided to make a radical change and bail out on the Republican party. The two party system was a sham! My last Republican vote was Reagan. After that I supported Perot.
A new movie out called "Our Brand is Crisis"! The same script could have been used by Greeks in the 3rd century BC at the Theatre of Dionysis. Crisis is the age old tactic of the elite to retain power over the masses. Hitler certainly did not come to power in a time of great economic prosperity. Look when WW2 took place. Not exactly global prosperity!
Lets face it without EBT, SSI and Section 8 and SS and Med those in power now would be hanging from street lights lining Pennsylvania Ave. The elite are in a desperate bid to hold onto power at all costs even if it means WW4 and sending your kids to fight on a multi-front in the Middle East and Asia and Europe. I suspect before I die we will see the "draft" come back. But wait … ah … in many ways the "draft" is back as high youth unemployment tends to drive recruitment in the military. Yet the elite tactics are devised from a long list of historical tactics started in ancient time and practiced by ancient rulers. The commonality being "human nature". You simply cannot fix "human nature".
However you slice it clearly the sociopaths are winning! They have a long line of progeny from ancient Rome. Those who would commit criminal acts and order mass killings are always in charge. Always on top! Why is that?
I have posted this before from 1911. What's changed? Do not get hung up on that oft repeated buzz word "capitalism". If you use the simple and broad definition of capitalism which is that capitalism is simply the "accumulation of capital", leave out the methodology, then you understand that even Stalin and Putin and even Bernie Sanders and Hillary are great capitalists! Certainly Hillary stood by and applauded her husband's removal of Glass-Steagall back in 1999. That was a fatal year for the global Middle Class as the Euro came into power that year too!
“Glass-Steagall was no longer appropriate to the economy in which we live. It worked pretty well for the industrial economy…but the world is very different”. - Bill Clinton, 1999
So by his statement his perception is that America in 1999 was no longer an "industrial economy". What then? Okay, it must be a "consumer economy" then! Certainly debt fuels that type of economy. Is debt capital?
Perhaps the US Fed has not raised the Fed Funds Rate because they subscribe wholey to …
DEBT LIVES MATTER!
-When unearned income for the top .1% > earned income of 95+% of working people (i.e. the uber-rich earn millions off their money while most earn less than $100K for actual labor)
-When unearned income comes in large part from the efforts of working people (that work generates company profits which are distributed as dividends), plus rent and interest payments on borrowed money
-When unearned income is high enough to enable an extravagant lifestyle AND a growing bank account (again, without even working)
why would anyone be against wealth re-distribution? Because short of a massive market meltdown, the rich will only get richer. Unless we enact progressive taxes to reign in massive net worths and the 7, 8, and 9 figure unearned incomes they generate. Higher capital gains taxes and more profit sharing would help.
No question we are living beyond our means–both as a country and individuals–but wealth re-distribution could fund programs (such as those Mark_BC mentioned in post #23) that'd make us a stronger, less vulnerable country.
Nature is going to address the imbalances. She always does.
There may be an assumption among "the elite" (policymakers and the commentariat) that doing ONE thing can achieve BOTH goals. And it is probably a chimera. The vision of justice for all men and one's own personal success CAN be mutually supportive but usually to truly help another requires sacrifice. Justice requires virtue and does not guarantee a reward. Oftentimes I find "no good deed goes unpunished". It is lazy analysis to say that what is right and true always benefits me. The truth may actually not include us. That is not an argument for pursuing it assiduously I realize BUT experience tells us that what's right is hard and what's easy is probably selfish.
Our leaders have refused to admit that of all the things America could be, it could not be all things to all people everywhere. It could not singlehandedly "save the World" just because it was exceptional. That hubris, made it flawed and we are currently reaping the whirlwind. So I blame the hubris of flawed elites that as they succeeded they continued to believe in their own indispensable contributions rather than giving back to the society itself. Since every Congressman/Senator becomes a millionaire by virtue of his election and thereby receiving a gold plated pension (not to speak of ANY morning coffee checks) why are they ALL not working hard for the common man or for future generations? Some tragic flaw must blind them to doing the most necessary actions. I have appreciated this site's focus on What is to be Done? A question with a lengthy pedigree but no simple answer. I like Resilience. I like the concept of LESS. Our military is not making us safer–we need to do less. Government spending is not "helping" the debt or our economy and should be less. Immigration should be less. Energy use could be more efficient doing more with less, with some leadership. So more bottom up encouragement and less top down control. Less is more when pursing a failing policy. As they say, when in a hole, quite digging.
The wings of Time are black and white, Pied with morning and with night. Mountain tall and ocean deep Trembling balance duly keep. In changing moon, in tidal wave, Glows the feud of Want and Have.And this closing paragraph from JMG's latest posting at The Archdruid Report, "The Patience of the Sea"(excerpt from "Compensation" - Ralph Waldo Emerson)
The sea is patient. It has outlived countless species and will outlive countless more, ours among them. Among the things it might be able to teach us, on the off chance that we’re willing to learn, is that the life of a species, like that of an individual, is completed by death, not erased by it, and that its value is measured by the beauty and wisdom it experiences and creates, not by the crasser measurements of brute force and brute endurance.
Because unearned income IS wealth redistribution; and it interferes with the process of wealth creation, making petitioning and violence more effective at gaining control of assets than labor, which in turn disempowers and discourages labor while empowering and encouraging petitioning and violence.
Read Freiderich Hayak’s “Road to Serfdom”.
[quote=chipshot]
why would anyone be against wealth re-distribution? Because short of a massive market meltdown, the rich will only get richer. Unless we enact progressive taxes to reign in massive net worths and the 7, 8, and 9 figure unearned incomes they generate. Higher capital gains taxes and more profit sharing would help.
No question we are living beyond our means--both as a country and individuals--but wealth re-distribution could fund programs (such as those Mark_BC mentioned in post #23) that'd make us a stronger, less vulnerable country.
What about all the debt? Are you going to evenly spread it out as well. If so then every household now owes and must work harder since they are now in debt. If you have been prudent and saved, does that mean your willing to be in debt just to make things fair?
[quote=rhare]
Let's see total wealth in the US is estimated to be around $85T, yet unfunded liabilities is estimated to be between $50T and $250T net present value depending on where you look. Exactly how is that $85T going to cover all those promises. [/quote]
If trying to follow the preceding sentence causes mental gymnastics, then consider a real example: is medical care unattainable in Mexico? Nope. I haven't studied it in depth but I would guess that most people in Mexico have an easier time getting decent medical care than they do in America, or at least it is significantly cheaper to the state if the state is funding it. So then, the average Mexican wage is better at buying a doctor's visit than in America, but worse in terms of buying a gallon of gasoline. How is this so? Because doctors and everyone else in Mexico's medical system get paid less in relation to a barrel of oil than American doctors do.
The term you might be looking for is "FSA".
They may well be…displeased.
From what I hear, we'll all be "coding", whatever that is…I'm ready to peruse my old book on blacksmithing, and then hand it on to my niece…Aloha, Steve.
Why is medical care cheaper in Mexico, because the government doesn't fund it, or at least not a lot of it. Much of it is provided by a real market that adjusts to provide services that people can afford. It's not artificially inflated by things like FDA, AMA, etc, which are all simply cartels protected by government. They limit competition and cause inflated prices. In the US where before Obamacare, the government was responsible for close to 70% of healthcare (Medicare, Medicaid, VA) and enforces cartels in the name of protecting you. It is not a free market when the bills are being paid by an entity that can use a gun to collect the payment. There is no incentive to keep prices low when payee is not incentivized to do so, as happens when you spend other peoples money.
No the point is those liabilities are not going to be covered at all. They will no longer be liabilities as no one will pay them. All those promises are going to be broken. You had a pension and now you don't - ie. you will work for the rest of your life.
Price of labor will reset. It will be priced at what the market will support. Labor is just like any other product, a large supply means cheaper prices. No amount of manipulation with the things like minimum wage, protected cartels (ie. labor unions, professional licensing, etc) negates that fact. At most it delays the reset. As far as automation, at some point labor becomes cheap enough it's better not to pay for the automation and better to pay for people. As prices of resources rises, then labor will become more economical than automation. Most people would rather deal with another person than an automated system. How do you feel when you get trapped in a phone tree trying to call any service provider? A human would be better as long as the price is right, but labor through artificial support, has been priced to high - hence the automation and high unemployment.
Life is hard, most people worked hard labor until they died until the recent gorging on cheap energy. As we loose those "energy slaves" as CM puts it, we will return to manual labor. We will also unfortunately have to work through the glut of extra humans, many which do not have skills that allow them to support themselves. No amount of government or meddling with markets can correct that issue, just like the fiat money system, it can only hide and delay a return to reality.
[quote=Mark_BC]
And China has stolen America's manufacturing sector via 40 years of currency manipulation.
[/quote]
China didn't do that, we did it to ourselves. We artificially raised the price of labor in the US and didn't allow it to compete when we had global markets. Labor was too high in the US so production moved to China and other cheap labor areas. In addition we used the special privilege of world reserve currency to make everyone feel rich and encouraged citizens to live beyond their means. We've had a hell of a party and now we are going to get the hang over.
You are still trying to live in the land of Unicorns and Rainbows. Capitalism or a better term would be "free market", doesn't guarantee happiness, or employment or any of those things. It allocates resources based on where they are most needed/desired since everyone votes with their wallets. If there is a glut of a resource then the price falls, if it is in shortage the price rises to balance the supply and demand. Those who need it most/desire it most will pay. If possible higher prices bring on added capacity. This applies to labor, too few farmers, then more will be produced - it's just has a longer lead time than many manufactured goods.
Most people will not have medical care as it exists today. It is one of those areas where we have lived well beyond our means. People will pay for what they can afford. Either prices will come down on the service or most people won't be able to afford it. In a free market, if it can be produced at an affordable price then it will, otherwise it's not available. That's what it means to live within your means. Most people won't get a higher education if it doesn't lead to a more productive existence because it's not sustainable and most people will not be able to retire. The fantasy of being able to work for 20-30 years and produce enough to support yourself has been a fantasy perpetrated by borrowing from the future - that's what that $100T future liabilities represents - it's the lie that you can have medical care, education, retirement.
Note that the "free market" could also just be called nature. Life in all forms behaves the same way, it seeks resources to survive and strives to find the cheapest solution (easier, safer, etc). In humans we represent those trades offs with money, but it's just an abstraction of a process that occurs in all life. All manipulation to try and fight nature and live beyonds ones means will eventually fail.
That's what it sounds like (#31).
Replies to your questions:
#1 "So I'm curious, why did you cutoff the line at 7 figures? Why not 6 or 5? After all the median household income worldwide is 4 figures. Is it perhaps you just don't want to consider yourself in the greedy, evil rich category?"
6 figures (of net worth) is hardly enough to earn unearned income > most people's earned income. And I was thinking in terms of the US, not the world. With most solutions, there are details to be worked out and lines to be drawn. Just because they can be difficult, and unfair to some, doesn't mean solutions shouldn't be pursued.
#2 Do you have a pension, 401K, savings, and expect to retire based on their expected growth - ie. un-earned income. Have you given them up so that your not being evil and greedy, or at least cashed them out so that you make sure your not participating in that evil unearned income?
This discussion is supposed to be about us–the country as a whole–and the big picture. Not about me. However, I have gotten out of the unearned income game. And more and more people don't have the opportunity (in the from of pensions, retirement plans, etc) to participate. The retirement thing was something only a generation or two got to experience.
#3 Let's see total wealth in the US is estimated to be around $85T, yet unfunded liabilities is estimated to be between $50T and $250T net present value depending on where you look. Exactly how is that $85T going to cover all those promises.
Nobody said it would. But we should attempt to cover as much as possible. Wealth re-distribution (perhaps better labeled as "reducing the concentration of wealth") is likely the best way to go, as the uber rich won't exactly suffer as a result.
#4 "Then you have to consider, if you had those assets, who would be left to buy them? That $85T is a complete illusion since they are only worth something if you can sell them. If even a small fraction of those assets hit the market the value would plummet." IMO, the only good point you raise. It's a problem the .1% will mostly have to deal with, since they have most of the assets. In the meantime they'll certainly have less cash, as that's what the government would be collecting from them.
Rhare, Mark and all,
Great discussion on both sides.
Today in a couple of econ. classes we started learning about how government intervention is described by mainstream economic theory (the Neoclassical Synthesis) and we discussed this very point, by considering whether or not more rules by the government was more in accordance with nature or whether more free markets was.
On this fairly basic level, most of the students and I agreed that free markets were more natural for the self-evident reason that individuals doing what they see as in their own best interest is more natural human behavior than individuals following lots of rules and laws.
Then we moved on to the difference between anarchy and libertarianism. I think you would have approved, Rhare, at how much support I gave to the libertarian case. Even though I don't describe myself as a libertarian, I am one in many ways and teaching mainstream economic theory (which I am sort of required to do in practice) tends to support libertarianism in many ways, maybe not as much as Von Mises and Hayek would have liked, but the heavy emphasis on the wonders of market equilibrium make a good theoretical case for laissez-faire.
However, after that discussion and reading what you wrote above, I don't think it's accurate to say that the free market could just be called nature. After all, we didn't really operate according to market principles for most of human existence, but rather according to some hybrid of individualism and tribalism during our very long hunter-gatherer period. that I don't think we (or at least I) even understand very well at this point.
It's basically impossible to separate most of economic theory from the context in which it developed - the Industrial Revolution. Indeed, Ishmael argues that we divorced from nature when we started cutting the Earth with plows, and the five or ten millennia separating our agricultural and industrial expansions may eventually be seen - if there is any seer at that point - as all part of a wafer-thin sedimentary irregularity, as brief and unrepresentative as a manta ray's jump into the air.
One could make a better case that both anarchy and indigenous hunter-gatherer bands are much more more natural, but even then I'm not so sure about the former, which is just another flavor of industrial political philosophy.
Just as John Locke's state of nature served its purpose as an origin myth for the concept of natural rights, but is also a historical fiction, it also seems that free markets - and our entire transactional civilization - are not objectively natural, although they may be somewhat natural in the context of an expansion powered by fossil fuels.
Whether or not we go extinct, get ourselves back to the garden by going paleolithic, or make it through gauntlet of fossil fuel contraction by establishing a toe-hold in space as Arthur encourages is an open question. But I'm pretty sure that the current free market ideology will not survive in anything near its current form, as it seems to be mostly a cultural construct.
Having said that, I love the fact that libertarianism advocates so well for freedom and individual rights - both economic and civil. It seems that today was the first time that some of the students considered anything other than that the government exists to "keep things in control" and to "keep us from hurting ourselves," (direct quotes).
And of course the tax ramifications of libertarian ideology make it an easy sell to the scions on the room, so there is that…
You missed the point. I can find very similar statements from various tyrants in history. So in other words what you are saying is:
My neighbor has more stuff and is living better than I am, let's steal from them. In order to make it right, I'm going to steal from them and distribute it equally among all the other thieves who join me and to make it sound better we'll call it "taxes".If your going to advocate wealth redistribution then at least have the courage to identify it for what it is. You want your gang of thugs (you call them government) to take from others on your behalf. Note, this is exactly what has been going on already with the Crony Capitalism. The only difference is that you want to make sure your on the receiving end of the loot.
Just keep in mind that if you live in the US, you most likely live better than much of the rest of the world. I assume it's fine when others decide that you are just living a bit to high on the hog and should give up what you have.
Why not take a different approach and decide that it's not right to use violence to force your will on others and maybe it's not right to steal from others. How about we try living within our means and have voluntary cooperation (ie. community) to make the world a better place.
[quote=chipshot]
rhare: Attacking comments you don't like to hear?
why would anyone be against wealth re-distribution?Ok, I'll bite. Let's pretend we live in a society that is run by sociopaths, whose entire apparent goal is to redirect a good chunk of the tax loot they collect to their friends that run various cartels - let's call them the military industrial complex, TBTF banking, big pharma, big tobacco, industrial sugar & fatty food production, captive media, big energy ... have I missed anything? Yeah anyhow, lets pretend the mechanism of governance is completely captured by this group: sociopaths & cartels.
Only, we don't really need to pretend, do we? Because that's pretty much where we live.
So if you are advocating raising taxes on - pretty much anyone - and handing the money to the sociopaths, I'm going to say that's a bad idea.
Here's the thing. Under your plan, wealth will DEFINITELY be redistributed. I just don't think it will end up in the place you hope it will end up.
If we can arrange to have a system that isn't run by sociopaths - somehow - then I'd be for some amount of redistribution. That, of course, is the trick. Those pesky sociopaths always seem to float into positions of power. Communism had that issue, if I recall correctly…