While agreeing with your prior statements, this is just silly. Government regulation helps smooth out many market inefficiencies such as but not limited to differential access to information. Your statement is fine for libertarianist fantasies, but I don’t see much bearing to reality. (Not that government intervention is good, but neither is it bad per se, it all depends on the situation: I can’t see any basis for claiming that much of what Capitalism gets blamed for is because of government intervention. Frankly Capitalism gets blamed being rough on the people, da folks back home, and in the short term that’s true. Creative destruction when coupled with real world stickiness and immobilities in factors of productin produces pain people don’t like. Government intervention smoothes this out.
That is one of the most absurd claims I have ever seen. Scams are human. With or without government interventions there will be fraud. With government securing the bottom line, as FDIC system, confidence is maintained in the system and smaller players are protected from large hits. While there are inefficencies introduced by this, there are also market inefficiencies, notable in information distribution, which regulation smoothes out. Small sacrifice for stability, which in the long run promotes markets.
I don’t know Sam – this just sounds like uphill bothways to me. The hard work and resulting lack of surplus you have described led me to conclude a ratio of 14 farmers to every non-farmer. See my previous reply. I just don’t believe there was ever such a society where you needed 14 people working 100 hour weeks just to feed one excess person.
Even Feudalism couldn’t have been that bad. Farmers usually had a 25% tax to the feudal lord, and a ten percent tithe to the church.
So, you were apparently working on the worst farm ever. Apparently you had no tractors and no oxen and were thus working with technology circa 3000 BC. If y’all were working such bad land you should have found another line of work.
I’d really like to see a third party cite that shows famrers at whatever stage of technology ever worked as hard as y’all claim to have worked year round for the equivalent of $500 a year.
And your solution is to live in a flood plain, and just repeatedly waste the effort of rebuilding over and over again? Riiight. That home of yours across the sea isn’t built next to an active volcano by any chance, is it? But, hey, you probably have volcano insurance. And it’ll pay for cloning the remains of your pinky into a whole new kabbes with bionic powers!
Yeah, capitalist systems do require insurance. Thanks for pointing this out over and over and over even though no one has shown up to disagree with you. I’m not even sure why this is adressed to me.
Capitalist systems don’t require insurance. Insurance is the natural product of a Capitalist system. Inthis and previous thread you seem to think that Capitalism is the source of many things. But the reality is that the world is full of scarcity (time, labor, resources, intellect) and risk (weather, disaster, etc.) as well as needs and desires (food, shelter, pokemon cards). These are not the product of a system but of nature.
So how do you allocate scarce resources, proetect yourself from risk and meet your everyday needs and desires? Well Capitalism is one of those. And the many devices that have developed…insurance, lending, division of labor, technological advance, money, prices, wages, etc. All these things are by-products of trying to solve nature’s problem of scarcity wants and risk. And the fact is they do them efficiently (although there are some exceptions) and effectively.
What? Did you just fall off the turnip truck? You claimed that insurance provided nothing of value. Several people responded showing that it did indeed convey something of value. You back pedalled on your definition of value, you back pedalled that insurance does convey value, but only in a capitalist system. Now you make the amazing statement above. We were disagreeing with you…that insurance does have value when people face risk. Unless these mysterious (more like fantasy) systems you have been alluding to actually do away with risk, I am pretty sure any scheme that minimizes the risk that individual’s face will have value.
kabbes,
Yes there are benefits to having regulation. The problems of externalities and public goods provide some support for regulation and some level of government activity in the economy.
For a detailed discussion see Jean-Jaques Laffont’s book Public Economics.
The problem though is that policy is rarely if ever based on sound analysis. Policy makers use whatever proposal sounds good. For example, the use of pollution standards in many cases could result in a decrease in the overall welfare. In some cases a per unit tax would be more effective and result in a higher level of overall welfare.
Also, I despise laws and regulations that talk about eliminating pollution. If you want to do that, shut down the goddamned factory/plant. Don’t pile on regulations that are going to raise costs and ultimately fail in the stated goals. Achieving zero pollution is, IMO, a stupid, stupid, stupid goal. The problem is that the cost pollution abatement is in general an increasing funtion of the level of abatement. So to set abatement at 100% would result in expenditures far in excess of the benefits. Instead of wasting everybodies time and energy just shut the damned factory down.
While agreeing with your prior statements, this is just silly. Government regulation helps smooth out many market inefficiencies such as but not limited to differential access to information.
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I never said that ALL government regulation is bad. I’m not an anarchist. There is a definite place for government in dealing with areas where the market breaks down. My point was that government often gets involved in areas where it ISN’T needed, and when it does it tends to get the credit when something works, and Capitalism takes the blame when it doesn’t.
You missed my point again, or you aren’t familiar with the nature of S&L fraud. The vast bulk of S&L fraud REQUIRED the FDIC insurance.
It went something like this:
[ul]
[li]S&L owner loans money to a friend.[/li][li]Friend intentionally defaults on loan.[/li][li]S&L owner gets compensated for loss through FDIC.[/li][li]Friend and S&L owner split the proceeds.[/li][/ul]
Typically what would happen is that a partner would buy a worthless piece of land, sell it to another silent partner at an inflated price, who would then sell it back or to a third person at an even higher price, etc. Once this worthless piece of land had acquired a high value on paper, it would be used to secure an S&L loan. Then the land owner would default the loan, and give the government a worthless piece of land in exchange.
BTW, one of the reasons the Clinton’s kept being investigated for Whitewater is because it had all the earmarks of a classic S&L scam, and one of their good friends was an S&L owner (and Hillary was the lawyer who drafted many of the legal documents for that S&L).
Before Carter, FDIC insurance only covered something like $25,000. He raised the FDIC cap to $75,000. Now, this had a couple of effects - first, it increased the government’s exposure to bad debt, and second it reduced the incentive for the S&L owner to take only good risks. After all, if he’s insured for the whole amount, what does he care?
The danger of this was somewhat offset by heavy regulations on who the S&L’s could loan money to, and how. Reagan deregulated the S&L’s, but left the FDIC limits in place. THAT is what opened the door to massive fraud, abuse, and just plain bad decision-making. It wasn’t the FDIC by itself, it wasn’t the lack of regulation by itself, it was a combination of both.
Stabilization of markets is not a fundamental characteristic of government regulation. In some cases it may have that effect, but in others it may be destabilizing. In fact, I’d say that the latter is the normal condition, because market by themselves stabilize through negative feedback, while government regulation is a top-down control. That’s why government price and wage controls often leads to heavy cycles of shortages and oversupply.
Apparently you didn’t read my message. You concluded that you’d need 14 third-world farmers to feed YOU for one year.
That may be true, but you are nowhere near representative of the average person. I have a suspicion that you have no idea how wealthy you are. Did you know that a welfare recipient in the U.S. earns about 5 times more than the median world income? The average human on earth earns about $2500 per year.
But we’re not even talking about that. Poor farmers in 3rd world countries don’t eat $5 a day in food. They don’t even eat $1/day in food. Typically, there’s a 1:1 ratio between the poorest farmers and how many people they can feed. i.e the poorest farmers can feed their families, and that’s about it. There’s nothing left for housing, clothes, etc. That’s why many of the poorest people in the world live in discarded packing crates, or shacks built from scrap wood they collect, etc.
It’s also why many of the poorest people in the world can’t survive at all without subsidy.
Sigh. You really need to work on your reading skills. -I- worked on a farm that earned about $40,000 per year. That’s 80 times more efficient than the poorest farmers I was talking about.
You really don’t have a clue how poor some people are, do you? Angola today has an annual GDP per person of $220. Burundi’s per capita GDP is an astonishing $120.
The average per capita income for all the S.E. Asian countries is $440. Sub-Sahara African nations average $500.
All in all, there are something like 80 countries in the world where the average per-capita income is less than $1000 per year.
The average per-capita income in the U.S. is $30,600.
I don’t know Sam – this just sounds like uphill bothways to me. The hard work and resulting lack of surplus you have described led me to conclude a ratio of 14 farmers to every non-farmer.
Your “conclusion” was wrong because you confused the claim of a yearly $500 income with $500 worth of food produced. You can produce $100,000 worth of food and have 0 income if you spent $100,000 on equipment, seed, and supplies.
IF you don’t know how hard being a farmer is, you have led an amazingly sheltered existence.
I agree that there are some major structural problems ahead. The problems with Social Security are well known. Thirty years from now our largest demographic group will be retired, and they will be supported by a very small middle class. That will lead to all kinds of problems.
But we’ll solve them. If you told me ten years ago that our governments would have the huge surpluses they have today, I probably would have laughed at you. And those surpluses aren’t due to anything the politicians did - we have those surpluses because we outgrew our own spending. And that trend is not abating. A few more years of continued economic growth and we’ll be able to use those surpluses to bail out the Social Security system.
Here in Alberta, we had a huge debt ten years ago. It was expected to take 60 years to pay off. Today, our surpluses are so huge that we’ve had several spending increases, several tax cuts, more tax cuts coming, and we’re on track to have the debt paid off in five years. After the debt is cleared there is talk of abolishing provincial income tax, because we won’t need it. Amazing.
Sorry, I thought you were talking from personal experience. I didn’t realize you were calmly explaining elemental farming to me.
Yeah, OK – but isn’t almost everything made domestically cheaper in those countries? I can go to Montreal and get the same steak dinner there for US$6 that would cost me US$14 here. Does it really take someone in Angola 700 years to save up enough to buy a house? Or is everyone in Angola homeless? How would anyone even buy a farm, or are they all perpetual slaves to a vassal/bank?
RickJay – if you count the people who make tractors or who sell their goods primarily to farmers as farmers-by-proxy, that only makes the 14:1 ratio more lopsided, perhaps 15:1 or 16:1.
Yes, if you don’t have enough land you are a subsistance farmer. But that’s less work again, although it misses out on economy of scale. Again, if you have a reference that any farmers in the middle ages ever worked 16 hour days, I’d like to see it.
I doubt it. According to the numbers at the Seminar it would take something like bringing in 100 million imigrants to the U.S. Social Security is essentially a government sanctioned Ponzi scheme. Moreover, the government is purposefully lying about the situation. They over estimate population growth, overestimate economic growth, etc.
As for the economy, there were two views presented. The “New Economy”, where economic growth is more a function of technology not the traditional view that it depends on labor, and a “Bubble Economy” where the current inflow of money to the U.S. is actually indicative of money’s flight from risk. So if the Bubble bursts…
Regarding the budget surpluses…don’t count those chicks before they hatch. The CBO has three scenarios for economic growth. The optimisic, baseline, and pessimistic. The optimistic forecast has surpluses from 2000 through 2010, with a total surplus of about 6,800 billion dollars. The base line also has surpluses with a total surplus of 3,200 billion. The pessimistic forecast has a some surpluses and deficits. The total in the pessimistic case is -1,060 billion.
Now the question is, which is worse: Leaving money unspent or assuming the best and not having enough money to meet commitments? I think the politicians should be working off of at best the baseline case and most likely the pessimistic case.
It doesn’t matter how much money is stored up in some lockbox somewhere. The reality is, and I hope people follow along this time, that, as the old saying goes, you can’t eat tommorow’s bread today, or vice versa in this case.
No matter how much money there is to enable future economic redistribution, the people in the economy are still going to have to work very hard to feed, clothe, and shelter all these people who don’t add anything back into the economy.
So all this lockbox really does is take money out of the economy today. The equivalent could easily be done by just not printing as much new money, right? And then just print more money to facilitate redistribution later.
So the whole thing seems like a political hoodwink to me. Instead of not printing as much new money and hurting the banks a tad, they take away the money we’ve earned already, hurting us taxpaying consumers.
Well with credit markets you can…at least in an economy with some form of currency. I suppose since you don’t seem to like money your mythical systems you keep bloviating about one would not be able to borrow against future income.
Well we are back to this I see. Perhaps your userid should be changed to pancake since you flip-flop so much. Which is it? Insurance and financial services do something of value or not? You waffle so much your gonna make me puke. Also, you might be a tad bit more critical if you picked a position and actually stuck to it.
It isn’t a lockbox. Your metaphor here fails miserably. Insurance companies invest the premiums they recieve. That money is then taken and used by others to buy and make things. Hey anybody got a jpeg of the economy you find in an elementary macro text book? You know the one with the firm on one side, consumers on the other with savings, the government and all the arrows.
Maybe that is because you are confused. Look, you yourself don’t seem sure which view to hold…does insurance provide something of value (in a capitalist economy) or not? You have gone from,
If you’re paying $6 US for a steak in Montreal - go to another restaurant. A good steak in a Canadian restaurant should cost you a lot more than $6. I can’t get a decent hamburger and fries for less than that here.
No, not 700. I would guess 7000, at least. To buy a house you or I would consider acceptable for human habitation would be completely impossible for an Angolan. A cheap house in Ontario would probably take him at least ten thousand years to save up for, given that the most he could possibly save would be five bucks a year, if he was lucky. Many people in this world make less than ten bucks a month.
Of course, Angolans DO have houses, but an Angolan’s house would probably cost you nothing to build, given that it’s likely made of trash and sod. So they’re not technically homeless, but they live in homes you would not be willing to allow your dog to live in. You could construct the same house here for nothing, too.
In feudal times is was quite common for people to live in homes made of cow shit. It’s cheap, but it obviously doesn’t deliver the quality of life a nice bricks-and-wood house does.
As has been stated before, though I do not mean this in offense, but you seem to lack some perspective on how poor some people are. As was pointed out, welfare in the U.S. would be considered a life of incredible luxury to many people in the Third World.
I do not think you understand the original post. Your numbers here bear no relation to what was said. The OP said he EARNED $500 a year. You can earn $500 a year producing $50,000 worth of food if your costs are $49,500.
I don’t see why you are making that assumption. If things are so bad, why don’t they move?
I know it is a slight simplification, but if he sold 50,000 dollars worth of food, and 49,500 dollars of that basically went to feeding the people who built the tractors, etc., that leaves $500 of money that people, who are not in farming or a farm related industry – a city folk if you like – paid into the system.
In other words, he sold $50,000. But he had to pay $49,500. Let’s assume, that no matter how far down the line you go, most of that money eventually went to buy food. The guy who mined the metal for the tractor might have bought food and a radio, but the guy who made the radio bought food and a deck of cards, going on down the line.
So if he only made $500, that is $500 from someone who is out of the loop.
If you’re living in Angola where are you going to move? Some of them can make it to other places but most of them cannot. And in case you haven’t noticed there are all sorts of people who attempt to get into the United States. Hatians, Mexicans, Cubans, not to mention Africans and Asians. The same thing happens in western europe.
Hey bud, I’ve got a great idea. Why not collect all your thoughts about how an economy should work and start a new thread. And no I’m not finding a snotty way of telling you not to post in this thread. But after this thread and your “slave to money” thread I still have no idea where you’re coming from. Conversations with you seem to go in an endless circle until it feels as though we’re banging our heads against the wall.
You are just completely ignorant of what farm work is all about. Just admit it. Just say, “I know nothing about farming.” We know it. You know it. The american people know it. You know nothing about farming.
Have you ever been out of a city? Have you ever talked to a farmer? Have you ever visited a third world country? If you want to see poverty, Mexico is just a short drive away. Do you think all those Mexican campesinos are secretly wealthy and are just pretending to be poor?
Why do you think that some countries have a per capita GNP of $500 a year? Those aren’t factory workers. They are subsistence farmers who basically see cash maybe once a year when they sell whatever surplus is left over. And yes, in those countries 90% of the population are farmers. Our country used to be 90% farmers.
Sure, life would be easier if there were no taxes or government. One of the reasons that poor farmers have to work so hard around the world is that the local goverment/bandits take most of their surplus.
All well and fine. It would appear that many do not agree with your definitions of what works and does not work.
Stabilization of markets is not a fundamental characteristic of government regulation. In some cases it may have that effect, but in others it may be destabilizing. In fact, I’d say that the latter is the normal condition, because market by themselves stabilize through negative feedback, while government regulation is a top-down control. That’s why government price and wage controls often leads to heavy cycles of shortages and oversupply.
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Perhaps I may be so bold as to point out that your straw man of government price and wage controls by no means indicts government regulation. Your assertion regarding stabilization of markets seems questionable given recent economic history (I do mean mid to late 20th c.) as compared with the prior century. Of course markets stabilize in the long run, in the short run, a little government regulation may help spare people some carnage and preserve profitable and system preserving stability.
A good steak in a Canadian restaurant should cost you a lot more than $6. I can’t get a decent hamburger and fries for less than that here.