Anti-Capitalist Sentiment (with some morality)

[CoccoBill]

When you say things like "there is no evidence of trickle-down", you're rewriting economics by your own parameters. Earlier I tried explaining why the misnomer "trickle-down" has been pulled out of consensus economic theory of growth.

Us going back and forth isn't going to yield any fruit. Your points are reasonable from several logical perspectives, but that doesn't mean they are reasonable from an economics perspective. For example, you say "That's assuming that building a luxury yacht is better for the society than shopping groceries for the same amount." The answer to this statement is that the incentives behind this spending is what makes one better or worse. To the non-economist, groceries obviously look more productive than yachts, but because the behavior is economic in nature, groceries aren't always more productive than yachts, and the non-economist perspective is simply wrong. This is why I have often said "economics doesn't care about our morals". Economics is a science just like physics. Physics doesn't give a fuck what we think it should do. It does what it does and that's the bottom line and we just have to conform. Economics is no different.

Physics is a more obvious experimental science than economics, so it's easier to not disagree with physics and economics has more unknown holes than it otherwise would. But they're both still sciences dependent on the same type of methods of discovery and theory development.

I think I was unclear about what I meant with that. From what I understand the argument is that in order to help the poor, we should give more money to the rich. I have let myself be told, that this only increases income inequality, that while it may be the best thing for the growth of the economy as a whole, it will only give marginal benefits for the majority, while giving enormous benefits to the rich. If you look at the Gini coefficients of countries, you'll find that the countries with the lowest value (least income inequality) are the western prosperous countries, and the highest values are found in the third world. Looking at the trends you'll see the Gini coefficients lowering linearly with economic growth. If we measure overall well-being with the size of the economy without looking at the distribution, we're getting a distorted view.

[wufwugy]

I think I was unclear about what I meant with that. From what I understand the argument is that in order to help the poor, we should give more money to the rich. I have let myself be told, that this only increases income inequality, that while it may be the best thing for the growth of the economy as a whole, it will only give marginal benefits for the majority, while giving enormous benefits to the rich. If you look at the Gini coefficients of countries, you'll find that the countries with the lowest value (least income inequality) are the western prosperous countries, and the highest values are found in the third world. Looking at the trends you'll see the Gini coefficients lowering linearly with economic growth. If we measure overall well-being with the size of the economy without looking at the distribution, we're getting a distorted view.

I think you made two different points here, so I'll split them up.

I think I was unclear about what I meant with that. From what I understand the argument is that in order to help the poor, we should give more money to the rich. I have let myself be told, that this only increases income inequality, that while it may be the best thing for the growth of the economy as a whole, it will only give marginal benefits for the majority, while giving enormous benefits to the rich.

Giving money to the rich is a bad idea. I don't know of anybody who proposes doing that. Supply-side reformers propose marginal rate reductions for all income brackets (Reagan focused on all brackets even though this is often unnoticed) for the purpose of incentivizing more work. Supply-side reformers also propose regulation reductions that will reduce the quality and quantity of products/services and/or reduce their costs. The only people who are "given" money in our economy appears to be many of the poor through welfare and some rent seeking corporations through "corporate welfare". It should be clear that reducing tax rates is not giving anybody any money. It is reducing the amount taken from them, partly in an attempt to incentivize more work.

When one group of people work more than another, you haven't "given" them anything. Their increased production benefits everybody. If we disagree with this, to be logically consistent, we should probably start doing things like blaming urban poverty on Asian Americans since they are more productive than other Americans. Clearly that would be ridiculous. Everybody benefits from increased production, and the people who benefit the most are those who do it personally. Redistribution just reduces production and makes everybody less prosperous.

If you look at the Gini coefficients of countries, you'll find that the countries with the lowest value (least income inequality) are the western prosperous countries, and the highest values are found in the third world. Looking at the trends you'll see the Gini coefficients lowering linearly with economic growth. If we measure overall well-being with the size of the economy without looking at the distribution, we're getting a distorted view.

This tells us that something is a certain way, not why that something is that way. These correlations don't tell us that redistributing funds could change things for the better. Marxism and the Soviet Union was dependent on the view that redistribution would change this sort of thing for the better. The USSR hit the ideology as hard as you could, and the entire thing collapsed into destitution because of it. To contrast this, supply-side reforms have overwhelming evidence showing they work in both industrial and pre-industrial nations. One need to look no further than China. But I will admit it's very hard to find this stuff for non-economists since the media never talks about them. I see it from time to time on economists' blogs, but I don't save them and they get buried.

[CoccoBill]

Giving money to the rich is a bad idea. I don't know of anybody who proposes doing that. [...] It should be clear that reducing tax rates is not giving anybody any money. It is reducing the amount taken from them, partly in an attempt to incentivize more work.

I don't think there's any practical difference between taking something and giving it back or not taking it in the first place.

http://www.bankrate.com/finance/taxe...or-rich-1.aspx

When one group of people work more than another, you haven't "given" them anything. Their increased production benefits everybody. If we disagree with this, to be logically consistent, we should probably start doing things like blaming urban poverty on Asian Americans since they are more productive than other Americans. Clearly that would be ridiculous. Everybody benefits from increased production, and the people who benefit the most are those who do it personally. Redistribution just reduces production and makes everybody less prosperous.

The rich "working more" and "being more productive" sounds a bit emotionally loaded, different work is just valued differently, and different exchanges have different volumes. I don't see the volume (in material, economic or resource terms) of an exchange having any direct correlation with the productivity of the transaction. The US fiscal policy has long been to redistribute to the wealthy "job creators". Whether redistribution should be done at all is a separate issue.

This tells us that something is a certain way, not why that something is that way. These correlations don't tell us that redistributing funds could change things for the better. Marxism and the Soviet Union was dependent on the view that redistribution would change this sort of thing for the better. The USSR hit the ideology as hard as you could, and the entire thing collapsed into destitution because of it. To contrast this, supply-side reforms have overwhelming evidence showing they work in both industrial and pre-industrial nations. One need to look no further than China. But I will admit it's very hard to find this stuff for non-economists since the media never talks about them. I see it from time to time on economists' blogs, but I don't save them and they get buried.

The USSR was a dictatorial command economy with rampant corruption, it had very little to do with socialism or marxism. According to Marx socialism was "from each according to his ability, to each according to his contribution", and communism was "from each according to his ability, to each according to his need". If production and productivity is high enough to support everyone, why would there be a need for growth? Crime, for example, is mostly created out of need, and that would in theory remove the need. But I digress.

Like MMM said, to me this also feels like you're dodging and muddling my question about why is the distribution as it is. I'm giving you the benefit of the doubt and assume you know what you're talking about, and that I just lack the understanding. Again, my understanding is that the US tries to stimulate the economy by giving tax cuts to the rich, assuming it will trickle down to the poor and help everyone. The IMF says no. So, should I understand your comment about "the distribution being as it is, because it is as it is" as saying that there indeed is no trickle down?

BTW the discussion about economy being science made me think of this: https://xkcd.com/435/

[wufwugy]

I don't think there's any practical difference between taking something and giving it back or not taking it in the first place.

That is true in a sense, but I made my point in the context of redistribution.

The rich "working more" and "being more productive" sounds a bit emotionally loaded, different work is just valued differently, and different exchanges have different volumes. I don't see the volume (in material, economic or resource terms) of an exchange having any direct correlation with the productivity of the transaction.

Well, it's economics. Production and productivity are prosperity.

The US fiscal policy has long been to redistribute to the wealthy "job creators". Whether redistribution should be done at all is a separate issue.

It has not. It has been and is currently the opposite. Per capita, the rich pay more than everybody else and receive less in benefits/services. This difference is not by a little either. When you compare somebody who makes 10k to somebody who makes 10MM, our tax and welfare policies are off-the-charts progressive. The left says this is okay for two reasons: (1) the rich can bear it, and (2) the poor are oppressed. Neither of these are true. (1) is mildly true, but only in a vacuum. Yes, the richer somebody is, the more easily they can pay for necessities, but this has little bearing on the health of the economy. Redistributive policies distort incentives and hinder capital in some complex ways that make for an economy that works less well than otherwise. (2) is not remotely true. The poor's incentives and ability to improve their lot are greatly hindered by redistributive and most regulatory policies.

The USSR was a dictatorial command economy with rampant corruption, it had very little to do with socialism or marxism. According to Marx socialism was "from each according to his ability, to each according to his contribution", and communism was "from each according to his ability, to each according to his need". If production and productivity is high enough to support everyone, why would there be a need for growth? Crime, for example, is mostly created out of need, and that would in theory remove the need. But I digress.

Production is not high enough to support everybody and it is unreasonable to think that society ever hits a constant where it would be. Furthermore, it is capitalism that brings these resources to people and puts them together in wonderful ways. It's capitalism that gives us every great piece of engineering we have. Would it not be foolish to at some point say "okay capitalism got us this far, but we should stop doing it so we can maintain the current status forever"? The irony is that the USSR tried that, and it went backwards.

The USSR was corrupt because it was centrally commanded. Socialism is also a central command. People are trying to tiptoe around it and say it's not, but the bottom line is that a society based in "social ownership" requires central command. This is seen in the US and in your country, where we all have "social ownership" through our vote, but that vote goes to a central command. We are lucky that our governments do not intervene in as many ways as the USSR did.

The real dichotomy to work with is state versus non-state. That's when we start seeing divergence in how the societies organize. The USSR fully embraced the concept of the state while the US (at least initially) mostly embraced the idea of a limited state. Every meaningful rendition of national socialism has embraced the state.

Like MMM said, to me this also feels like you're dodging and muddling my question about why is the distribution as it is. I'm giving you the benefit of the doubt and assume you know what you're talking about, and that I just lack the understanding. Again, my understanding is that the US tries to stimulate the economy by giving tax cuts to the rich, assuming it will trickle down to the poor and help everyone. The IMF says no. So, should I understand your comment about "the distribution being as it is, because it is as it is" as saying that there indeed is no trickle down?

The IMF study examines effects. Trickle-down does not mean that if the rich have more money then the poor will have more money. Trickle-down is not even a theory. It is a comment that was once made in an attempt to illustrate a way of understanding the effects of marginal tax rate reductions. When those marginal rate reductions have been put in place, the results have been great and quite "trickle-down-y". Most of the best stretches the US economy has had over the last 50 years were when marginal rates were reduced. The theory is sound and the data backs it up. The US has out-performed all the European countries that did not enact supply-side reforms over the last 40 years. The UK has recently been doing it, and it has been going great for them. Germany did it back in the 90s and it turned their horrible economy into the healthiest on the continent.