This is an interesting thought I’ve wanted to speak out on. In nature, when food and resource supplies are low, animals breed less to adjust. Eventually, depletion of resources is resolved by there being less drain on the system due to a lower animal population. But more resources leads to more animal population again in an ever repeating cycle.
So despite mankind’s ability to remove itself from some of natures checks and balances, perhaps the lower birth rates of developed nations that we are seeing is an attempt to mimic the cycle of nature? Perhaps many are realizing that the opportunities for the future may not be as strong as they were in the past. So we naturally try to adjust by cutting back on population construction.
However, the problem is that our economic system isn’t designed to work like this. We constantly need more people working to continue to consume and pay taxes so as to help support the consumer economy and benefits needed for those who have come before. BUT due to outsourcing and productivity increases, LESS people are now needed to produce the output we can consume. So we have a basic economic/nature conflict.
Bringing more people into the country, when there aren’t enough quality jobs for those already here doesn’t solve the problem. As we are beginning to see, at some point, the Ponzi scheme that our economy and society is built on falls apart!
SS: *You have to show me why government is capable of providing what the market can’t. *
There, I agree with you. Even if we do accept the OP’s premise that the market is in fact failing in a crucial way in the current situation, it’s necessary to provide evidence that a proposed government solution won’t be counteracted or nullified by pressure from market forces. And I think you’re right that most of the proposals suggested here have been weak in providing this kind of backup.
“Let’s have the government fix it” is not an adequate argument. But “The government can’t fix it because governments are inherently less efficient than markets” is not an adequate argument either.
OK, I figure that it will be necessary to have an ongoing review process to shut down corps that clearly are not going to make a profit/achieve their goal. When that happens, everybody involved goes on unemployment just as if they were working for a corp. which folded, except of course the paperwork will be streamlined. As for shutting the entire program down, you could take a good, unfiddleable unemployment number (preferably generated by a nonprofit nongovernmental org) and say when unemployment sinks below X percent, you stop creating new orgs and continue phasing out existing orgs. In the case of a prolonged recovery, this would have the effect of pretty much shutting down the org. In a mild recovery, it would slow it down but keep things going so that if the economy downshifts, it can pick right back up.
Now, you’re an unemployed call center worker and you want to work for a Title 27 Org. So you go to the 27 Org website and register yourself, and also scan the listings for unfilled positions – just like any other job search. But suppose you don’t see anything? Well, then you go to the Website’s Corp Formation boards where people are proposing corps, discussing their pros and cons, and going through the development phase of getting them established. You join in discussions about the corps that interest you – nanotech for hooligans, laser-diffracted corn flake manufacture, whatever – and start posting and discussing, and getting in with people building orgs you think will work and that you can work for. So when one of those orgs succeeds, you’re on the fast track – you send them an app, saying, “Hey, I’m CornDog2000 who was discussing how we can rev up your profit through call center work, how about hiring me?” Inside track, baby.
I’ve read about ideas along these lines for years, and it seems to belong to a class of obvious improvements in government that somehow never get implemented – like streamlining the tax code. I suspect that many powerful government and financial interests are arrayed against it.
Sure, I’m sure that there are marketplace solutiosn to problems like crime, emergency services like fire and ambulances – for RICH people. The problem with capitalism is that while it works very well for the wealthy, it works poorly or not at all for the poor and the middle class. Just look at the differences in how the wealthy and the poor are treated by the legal system already – imagine that magnified a thousandfold for most governmental services – now you see capiutalism in all its “glory.”
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Strawman argument. The goal was never to creat money-losing entities, that’s just a predictable side-effect of the program. The goal is to provide investment capital to bring the next wave of technical/social innovation along faster than it would with all the investment capital dried up in a recession.
It’s really ironic, the objections you are raising here – you have in the past expressed your certitude that left alone capitalism will right itself, but apparently if the government creates a fiscal environment which will nurture the eoconomy’s ablity to right itself – the very ability you cite as the reason we need not interfere with recessions you suddenly doubt that such innovations will occur in such an environment.
Interesting. Very interesting indeed. And self-contradictory. Very self-contradictory indeed.
The notion that the market primarily moves to benefit rich people is another widespread fallacy. If rich people were the only ones who benefitted from the market, Wal-Mart would not be the largest corporation in America.
The market overwhelmingly aids the bulk of America, for the simple reason that they have massive buying power. If you sell a product to ‘the rich’, you have a market that is only 1/50 the size of the population at large.
In fact, the poor and middle class benefit the most from a free market, because the rich can always find the things they want. The average person in Russia lived in a hovel and waited in line for years for a Yugo, if he could get one at all. Clothes were rough cut and uncomfortable, and often not available in your size. Shotages were so common place that lining up for staple goods was the norm.
But the ‘rich’ had large Dachas on beautiful lakes, chauffered limosines, and all the other trapping of the rich everywhere.
Now this is interesting! Maybe the “economic recovery” isn’t really happening at all. Seems Businessweek thinks that the GDP numbers are inaccurate and that we really do have a serious economic problem. The poor job growth creation numbers we are seeing may actually be a truer reflection the current state of the economy, not the GDP numbers.
GDP Growth: Are The Numbers Too Rosy?
Forget faulty jobs data. An overstated GDP may help explain the economic reality gap
The economic statistics collected by the U.S. government are probably as honest and accurate as any in the world. Perfect, though, they’re not. Collecting data about the American economy is a boundless challenge on a limited budget. And it’s even harder in periods of dramatic change – like today.
Take the puzzling case of stagnant hiring. Economists have been scrubbing the Labor Dept.'s employment surveys to account for the gap between strong reported growth in gross domestic product and the anemic 61,000-a-month pace of payroll job creation since August. But they’ve been looking in the wrong place: There’s fresh evidence that GDP, the most closely watched economic statistic, may be overstated – and that lackluster job prospects may present a truer picture of what’s happening now than the strong growth number.
That evidence is popping up in several measures, including income and manufactured imports. But the most intriguing is summed up in one figure. From 2002 to 2003, U.S. imports of services from abroad, adjusted for inflation, didn’t grow at all – a nice, round 0% change. That comes after only 1.4% reported growth in 2002. That seems implausible. Take one key component of service imports: U.S. companies’ transfers abroad of a range of service work, including computer programming, customer support, tax-return preparation, and research and development.
The problem is that the rich benefit DISPORPORTIONALLY. Not only do they get the same “low” prices as everyone else, they also get the benefits of being able to invest in ownership of the companies that make up the marketplace. And although they get most of the benefits, it still isn’t enough. So they use every tax loophole they can find, not just the usual accepted loopholes, but some very creative (and often illegal) ones. As a group, they tend to hide money overseas to avoid paying taxes on income. Basically they don’t pay their fair share to keep this society going and that has got to stop.
You’re either misreading my posts, or I haven’t been clear. I never claimed that the goal was to create money losing entities. I raised objections to those who implied that making money was not necessary for the venture.
The objections I’ve raised are these, and feel free to cite evidence to the contrary if it exists:
The government (ours or any other) does not have a good track record of success in directing innovation.
The government generally does not react fast enough to deal with the short duration of most downturns.
The government has a miserable track record of getting rid of experiments that fail.
I don’t object to the concept of a safety net. I just think that people are better off making their own decisions with what they receive from the safety net rather than having the government direct them as to what they should do with it. That minimized overhead and maximizes personal responsibility.
Getting back to the OP subject, FastCompany magazine has written a series of articles on this subject in last months issue which is now online.
Into Thin Air
Maybe offshoring is good for the economy in the long run. Maybe it will boost productivity and save companies. But it’s causing real pain to real people. And they never thought it would happen to them:
The Responsibility to Retrain
In a Web Exclusive interview with Fast Company, RIT professor Ronil Hira considers the arguments for and against offshoring, as well as who is responsible for the American workers left behind:
A Brief (Recent) History of Offshoring
In this Web Exclusive, the CEO of Covansys, one of the first American organizations to explore offshoring, considers how Indian government regulation, the Y2K problem, and the widespread acceptance of the Net contributed to the current job loss and economic insecurity:
Crunching Monster’s Numbers
For Jeff Taylor, founder and chairman of Monster.com and a longtime observer of the employment tea leaves, the hot-button issue of jobs moving abroad ignores what he thinks is a cold, hard fact: The biggest job-related challenge in this country is likely to be too many jobs, not too few. This Web Exclusive offers Taylor’s argument on why the aging of the baby boomers means dynamism, not depression, for job seekers. http://www.fastcompany.com/magazine/81/offshore_extra2.html
In this article, Businessweek is offering some SOLUTIONS for considerations, much of it mirroring what has been discussed in this thread. Now the question is, as always, will anything really happen? Will anything substanial really be done? Or will the hot air keep flowing? Given past history, I have to choose the latter.
I have never said government intervention is bad. In order to keep the market free govt intervention is nesessary. Private orgs as well as govts will move to restrict peoples choices in order to provide themselves with wealth if not contained. The free market needs to be protected which is the same as saying it needs to be enforced.
Mostly I have been taking issue with what some people claim society wants, and I take great issue with the claim that society can want something and value something but the market cant or wont provide it. That makes no sense whatsoever.
As to your specific sentence, it has been pointed out in this thread that a percentage of a price still allows the price to fluctuate and reflect the markets desires. Other forms of taxation, such as subsidies, flat fees etc, distort the market and screw up the rise/fall of prices and so distort what people (the market) value/dont value, want/dont want.
The number of people in this country without health insurance is usually said to be around 15-20%. Fr the sake of argument, lets say its 25-30%.
In the 70-75% portion of society with health coverage, where are all the people donating money to buy insurance for those who dont have it? You say my logic evaluates to, if they wanted it, theyd pay for it; no, my logic evaluates to if society wanted universal health coverage, then the 70-75% of people who have it now would be volunatarily donating money to pay for those who dont.
If society wants everyone to have health coverage, then why isnt society voluntarily paying for it?
For the most the only people in our society who want universal health coverage are those who dont have it. And they are a minority. So I take great issue with declarations as to what society wants, especially when there is no empirical (and thus market) eveidence for it.
What is it youre claiming that society wants? Obviously society is willing to put people out of work due to outsourcing, as society keeps buying the goods and servies of companies who outsource.
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We are dealing with an assumed case where markets are in fact failing to meet our declared needs.
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Then we are dealing with an assumed impossible situation. Our declared needs/desires are expressed through the market.
In general I take issue with people broadly proclaiming what society wants, and I ask again, what do you base this on? Where do you get your eveidence that this or that is what society wants?
iamme replied to Sam: *“So ‘as a group’, the rich are just a bunch of crooks. Is that it?”
As a group, YES!*
I usually leave it up to the Loyal Opposition to critique the arguments put forth more or less from my side, but… cite? Personally, I really don’t think that the problem is likely to stem simply from higher levels of immorality or lawlessness among rich people. That sounds to me like mere prejudice, I have to say: just the mirror image of upper-class people complaining that poor people are all druggies and muggers or that lower-middle-class people are all mindless drones with no initiative.
If we’re going to bring personal integrity into this at all, I would speculate that the causality goes the other way: crooked and/or greedy people may be more likely to become rich, and then the effects of their crookedness or greed are much more serious for everybody else.
“For Jeff Taylor […]: The biggest job-related challenge in this country is likely to be too many jobs, not too few.”
This was hopeful-looking: if we were suddenly about to see a mass exodus of retirement-age workers and a correspondingly shrunken labor pool, we could all stop worrying about the jobless economy, right? But on reading the linked article, I didn’t see a lot of substance behind that claim:
Why does Taylor think the labor shortage crisis will hit as early as 2008? He doesn’t say.
When are these 30-35 million new workers supposed to be needed? Between now and 2008, or between now and 2020? He doesn’t say.
If the OP’s new paradigm of a high-productivity “jobless economy” is valid, why would we assume that we’d need that many entry-level workers?
If the “jobless economy” model is valid and continues putting downward pressure on wages, how would we support so many retirees on the payroll taxes of a fairly small number of fairly low-paid workers?
So in short, iamme, this potential solution to the “jobless economy”—wait till the baby boomers create a huge labor shortage by retiring—seems to be operating with a lot of premises that assume that there isn’t in fact a jobless economy. Those premises may be right or they may be wrong, but they’re not much help in considering our current hypothetical situation.
Vdc:[…]I take great issue with the claim that society can want something and value something but the market cant or wont provide it. That makes no sense whatsoever.
Well, here’s a simple example. Solid majorities of poll respondents and voters have long expressed their support for tax-supported income supplements and health insurance for the elderly: Social Security and Medicare. Before those laws were passed, did most people really want elderly people to be much more financially insecure, as they were? Or did the majority all along want some kind of social insurance for elderly that markets simply failed to provide?
Vdc:I have never said government intervention is bad. In order to keep the market free govt intervention is nesessary. Private orgs as well as govts will move to restrict peoples choices in order to provide themselves with wealth if not contained. The free market needs to be protected which is the same as saying it needs to be enforced.
Then we seem to be totally on the same page here: because of inevitable tendencies toward market failures, there needs to be some government intervention in markets to correct for those failures.
But in that case, your attempted distinction between the cases of pollution and health care doesn’t make economic sense. Why do companies pollute the environment? Because of market failures—specifically, their ability to externalize costs. Why don’t companies provide health care that poor people can afford? Because of market failures—specifically, imperfect information, nonuniform pricing, externalized costs, high entry barriers, etc. There’s no a priori reason why it’s okay to have government intervention in one case but not in the other.
*If society wants everyone to have health coverage, then why isnt society voluntarily paying for it? *
By that rationale, we’d have to argue that people must not really want companies to stop polluting, unless they are willing to organize vast consumer boycotts to express their preferences strictly within consumer markets. Seems to me that’s a pretty absurd standard for evaluating what people really want. Sometimes it’s simply far more effective and quicker for a society to enact a law to get what it wants than to laboriously set it up at the level of individual consumers.
In the case of SS, its hard to say. The market in the 30s wasnt nearly as free and open as it is now. Many market vehicles and practices that exist today didnt exist then. Also, the market was constrained by an artificial attachment to gold, and the creation of wealth involved the aquiring of a finite natural resource. I think a good case could be made that SS came about because of the restricted, non-free market that existed then.
As for today, more empirical evidence than surveys and polls as to what society values in terms of the elderly would be the enormous market in lowcost insurance for seniors, senior-care homes, etc etc. This is also due in no small part to seniors being the age group with more wealth than any other (regardless of SS), which was not the case in the restricted market of the 20s and 30s; or even 60s when Medicare came about.
Societies concern for the elderly is well reflected in the market, as is the elderly’s increased buying power.
Vdc:The market in the 30s wasnt nearly as free and open as it is now. Many market vehicles and practices that exist today didnt exist then.
Hmmm, got a cite for this? I can readily believe that US markets in the 30s were smaller and less diverse than at present, but I’d like to see some evidence that they were more heavily restricted or less free. Are you thinking of tariffs?
(This is a big hijack on our parts anyway, so if you don’t come up with anything I’ll understand.)