Anti-Capitalist Sentiment (with some morality)

@Renton/Wuf: Should society (through business or government) provide free resources to anyone? Of these, I include the physically disabled, the mentally impaired, the permanently hospitalized, the homeless, the unemployed, the uneducated, and the poor.

I ask, because I strongly believe in a "No man is an island" kind of mentality, where we are all part of a larger whole and have an obligation to help our fellow man. However, I know full well that this is unsound economically. It makes little sense to invest resources into something that wont provide a return, and its tempting to say 'not my problem' and leave it to them to get help (through family, friends, or begging).

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On another note, is physical labor long for this world? If it isnt (seems like it), what is to become of people who's only value is in hard labor?

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Originally Posted by JKDS

@Renton/Wuf: Should society (through business or government) provide free resources to anyone? Of these, I include the physically disabled, the mentally impaired, the permanently hospitalized, the homeless, the unemployed, the uneducated, and the poor.


I ask, because I strongly believe in a "No man is an island" kind of mentality, where we are all part of a larger whole and have an obligation to help our fellow man. However, I know full well that this is unsound economically. It makes little sense to invest resources into something that wont provide a return, and its tempting to say 'not my problem' and leave it to them to get help (through family, friends, or begging).

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The short answer is that people shouldn't be expropriated against their will to give resources to those people. The most basic reason for this is that it is wrong to steal. There are economic reasons why this is bad practice that go beyond morality, though. The dispensation mechanism is always flawed, wasting a large percentage of the displaced money in transit from the rich person to the poor person. It also creates messed up incentives, like making it very profitable for poor people to have children, who of course will be predisposed to poverty and crime. These issues don't particularly apply to the disabled, who are easily the most sympathetic beneficiaries of the welfare state (other than children perhaps), but that doesn't make stealing any less wrong, nor does it make the state any less ineffective at distributing resources. And by the way, disability welfare gets gamed all the time by people who are perfectly able to get jobs.


Now, there are many situations in which it is correct to give resources to someone where it will provide a return. Retail examples include free trial products, or computer software that is free and fully-functional with the option of paying for a feature-packed premium version. Turbo-tax does my taxes for free every year in order to advertise its more personalized services. There is also old-school apprenticeship, where one learns a trade from a master craftsman for a very low wage, but builds human capital. In a similar vein, a company could offer a contract where you agree to work for X amount of time after being trained. I'm pretty sure "worker's rights" have banned all such similar practices in most countries.


And after all of that there are plenty of people with your outlook who are perfectly willing to donate to causes that they're passionate about. I suspect if the state stopped taking 50% of what people make, you would see a lot more such charity.

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Originally Posted by JKDS

On another note, is physical labor long for this world? If it isnt (seems like it), what is to become of people who's only value is in hard labor?

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People who are unprepared for whatever's on the economic horizon will struggle. This has always been a constant. The bright side of things is that a world with no physical labor is also a world with incredibly abundant life supporting goods. The poor almost certainly would not starve. It is otherwise hard to imagine what the not so distant future will bring. It might be that the human race will be so extravagantly prosperous that the basics of sustenance/shelter/security will be practically free to all.

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Originally Posted by OngBonga

If there was a cap on the profit that a road management company could rake in, and if it was a fair process when it comes to handing out contracts, I could support the idea of privatising the roads.

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This would be the worst of both worlds. Profit caps destroy industries because they eliminate the reward for new entrants or any innovation and R&D. Profit caps on rents are one of the main regulations that keeps the supply of city housing much below the demand, and thus prices way too high and ultimately less population and productivity in the cities.

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But the contracts will go to the companies with the most powerful shareholders, and it will slowly become more and more expensive because there is no competition, and it is an essential service, meaning the shareholders will not need to worry about losing their customers.

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There are lots of roads and tons of competitive space. There would be a tremendous amount of competition for the most valuable roads, and if prices didn't reflect the environment, they would lose customers. There would be more restructuring, but it would also be easier to restructure and what would come out on top would be far better than the current system.

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Why do the roads need to be privatised in order to charge people for using them? We already charge people for using the roads during the day in London. It would probably suffice to merely have a rush hour charge in other towns and cities, with the money being used to offset the reduction in public transport income and improvements to local infrastructure.

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It's just much harder for governments to do. It is widely accepted for businesses to charge what they believe is best for their profits, but when a government charges anything, because people intuitively understand government is not a business, we get up in arms. The incentive for government to optimize roads is non-existent, but the incentives for businesses to optimize roads when privately owned is, well, optimized.

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Originally Posted by JKDS

@Renton/Wuf: Should society (through business or government) provide free resources to anyone? Of these, I include the physically disabled, the mentally impaired, the permanently hospitalized, the homeless, the unemployed, the uneducated, and the poor.

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I don't think the government should exist. The easiest case here is the unemployed. We know that unemployment insurance hurts job growth. The hardest case is the disabled. Since I don't think the government should exist, obviously I don't think it should pay for disability. I think in a private market, it would be the most common thing in the world for people to have insurance that covers disability. Insurance, and probably even law, would become HUGE in a non-government world. The need for actuaries and accountants and lawyers would skyrocket since basically everything would be insured and backed by contracts between parties.

It may help to view the government through its insurance lens. In many ways it behaves like insurance, with anything from healthcare to security. It's just that instead of people choosing to purchase the insurances they feel they need, we're all forced to pay for certain ones regardless of how much they help.

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I ask, because I strongly believe in a "No man is an island" kind of mentality, where we are all part of a larger whole and have an obligation to help our fellow man.

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If every man is an island, markets would fail too.

I think people really care about themselves, their families, their friends, and their communities. And I think we see that when it comes to things were the government isn't involved. Wear a Packers cap in Wisconsin and walk into a bar during a game and people who have never met you will treat you like family. I think one of the main reasons we don't see people take responsibility for bettering their lives and their communities is because the government is the one who claims responsibility. This is really subtle and indirect: I think one of the main reasons for our consumer culture is Social Security. In the back of our minds, we know we don't have to be frugal with our lives because the government has already told us it will pick up the slack.

Another example is I think we are far less security savvy because we live with an assumption that the government is taking care of many of our security needs. We know if our home gets broken into, we can call the police and they will take over investigation without us having to do more. Despite this being relatively fruitless, I think it's psychologically strong. Contrast this to if security was private. We would see people choosing between a wide variety of security strategies and insurance options. They would range from people buying no direct security insurance and just taking their own responsibility, to some people paying a fuckload for high quality service. In the middle would be a variety of options that could include, say, a company insures investigation of any stolen goods but only does so at its relatively low cost in conjunction with advising and approving certain security strategies of the household. We already have this sort of stuff, just not to its fullest extent since the security and law aspects are not insured on the same market.

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On another note, is physical labor long for this world? If it isnt (seems like it), what is to become of people who's only value is in hard labor?

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I think physical labor is long for the world. It's just more robotic, menial labor that is not. The nitty-gritty details are many, but history has shown us that mechanization doesn't reduce employment. I think the overarching picture of mechanization on the labor side is that it reduces labor costs for one specific task which allows funds to pay for a new kind of labor that creates an even better product. The food industry is a good example of this. Everybody used to be a farmer and there were no restaurants. But all the mechanization in the economy we've had over the last 150 years have made it so that people can now get waited on hand and foot and eat specialized meals for cheap. Pretty much all innovations are "job stealing" mechanizations. Cars, grills, plows, pesticides, computers, printers: all things that "stole" lots of jobs, yet also created even more jobs and increased prosperity for all. All the time not reducing need for human input.

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Originally Posted by Renton

It's actually likely that with free market roads most people would be paying less than they do now. As I mentioned before, the taxes don't really work because they aren't invested into new roads, they're often just spend on whatever the state wants to spend them on. They are also assessed in such a way that costs are flat. Someone driving twice as much doesn't pay twice as much as the average driver. Someone driving during rush hour doesn't pay more than someone who drives to work at 6am. The taxes are by and large a terrible disincentive for road overuse.



True monopolies are MUCH harder to create than the conventional wisdom suggests. There are almost always alternatives for any good or service in the economy, and where there aren't alternatives, there often are substitutes. There's simply never going to be a situation where a huge percentage of the people will not be able to afford to go to work, because there would be a huge profit in store for the entrepreneur who solves that problem.

Yes, roads are different from most services in that there are fewer distinct and different ways for them to exist. As for your example about the road connecting two cities with not enough traffic to support an additional road, that's simply impossible in a state of price gouging. The monopolist owner cannot raise his price past a point where it would attract a competitor to build an alternate road. As he gouges the price higher, there would necessarily be enough traffic for another road, because the amount of traffic on a road fluctuates based on the price of driving on that road.

In this way, we actually need to reevaluate our definition of monopoly. It is not simply the state of there being only one provider of a good or service. The criteria is more strict:

1) The monopoly is the only provider. (ex. it's the only road between A and B)
2) The monopoly prevents others from providing the same service. (ex. there are no other feasible places for roads nearby)
3) The monopoly prevents others from providing substitutes for that same service. (ex. no subterranean or superstructure can feasibly be built, no other modes of transportation are possible)

Even in the case where all three of these criteria are satisfied (this is unbelievably rare), the monopolist still can only gouge to a certain point because he must maximize his profit. This is like in poker when you're value betting the river with the nuts. You bet the maximum amount that will get called the highest percentage of the time such that the EV is maximized. Getting a 1/3p bet called 100% of the time is more profitable than getting a 3x pot bet called 10% of the time.

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This is just wrong. I'll explain why when I get a chance today.

A short version, ignoring math and graphs, the monopoly version of a road prices itself to max profit which typically is at a higher price and lower supply than perfect competition. This economic profit (profit beyond that received at free market price) is what you're saying is the incentive for a new supplier.

But 2 things effect this. Firstly the entry barrier of massive costs to enter the market ie build a new Road. Secondly the road has a maximum supply which the incumbent can take advantage of whenever it sees fit. This excess is pretty much the same as a factory increasing production capacity and not using it as a message to competition that it is willing to compete on price if required, thereby instantly removing the economic profit that exists in the status quo that is the incentive for a new entrant. And it's a very credible threat because the incumbent wants to maximise profits, hence it's current monopolistic pricing strategy. So a natural move for the incumbent upon realisation of a new entrant is one of 2 things. Either reduce price to competitive market points which will be standard profit maximisation or alternatively use the excess supply it has and reduce price below the competitive price at the cost of short term profit with the intention of crippling new entrant and then once new entrant fails increasing price back to monopoly profit maximisation point.

So with roads this is built in to the basic set up which is why it creates a quite natural monopoly.

That said, a new town starting from scratch with no roads and lots of new suppliers looking to enter the market might not have this problem, and certainly not in all cases with all roads. But an existing Road network would have this problem for anywhere with one big trunk road.

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Originally Posted by wufwugy

Now a question may be "why not reduce tax rates for the middle instead". It is a reasonable point. You could technically incentivize the middle brackets to work more by reducing their penalties for production. But there are three problems with this

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I don't think anyone expects people to work more if taxes are lowered, they expect them to spend more. The poor and a large part of the middle class would immediately spend every extra dollar they get, unlike the 1-percenters.

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Originally Posted by wufwugy

I don't think the government should exist.[...] Insurance, and probably even law, would become HUGE in a non-government world. The need for actuaries and accountants and lawyers would skyrocket since basically everything would be insured and backed by contracts between parties.

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Without a government (legislative, judiciary etc. branches), what laws exactly would there be?

For some reason the first thing that popped in my mind was Alabama overturning the Voting Rights Act, since you know, racism doesn't exist anymore so it isn't needed. Again, history knows a lot of examples of times when there was no government or organized police, and those times mostly aren't known for their lack of crime. Why is that? Wild west would have been a lot less wild without those damn sheriffs?

Also, my understanding is that the US already is pretty much run by lawyers and accountants, sounds awesome that in the future the need for them would skyrocket.

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Originally Posted by wufwugy

Another example is I think we are far less security savvy because we live with an assumption that the government is taking care of many of our security needs. We know if our home gets broken into, we can call the police and they will take over investigation without us having to do more. Despite this being relatively fruitless, I think it's psychologically strong. Contrast this to if security was private. We would see people choosing between a wide variety of security strategies and insurance options. They would range from people buying no direct security insurance and just taking their own responsibility, to some people paying a fuckload for high quality service. In the middle would be a variety of options that could include, say, a company insures investigation of any stolen goods but only does so at its relatively low cost in conjunction with advising and approving certain security strategies of the household. We already have this sort of stuff, just not to its fullest extent since the security and law aspects are not insured on the same market.

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So essentially things would be almost exactly as they are now, but people would be on average a lot more scared (read: triggerhappy) and a lot of people would have no protections whatsoever.

https://www.imf.org/external/pubs/ft...15/sdn1513.pdf

"First, we show why policymakers need to focus on the poor and the middle class. Earlier IMF work
has shown that income inequality matters for growth and its sustainability. Our analysis suggests
that the income distribution itself matters for growth as well. Specifically, if the income share of the
top 20 percent (the rich) increases, then GDP growth actually declines over the medium term,
suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the
bottom 20 percent (the poor) is associated with higher GDP growth. The poor and the middle class
matter the most for growth via a number of interrelated economic, social, and political channels."

Also:

http://www.bbc.com/news/blogs-magazine-monitor-31847943
http://www.oecd.org/social/income-di...n-database.htm

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Originally Posted by CoccoBill

I don't think anyone expects people to work more if taxes are lowered, they expect them to spend more. The poor and a large part of the middle class would immediately spend every extra dollar they get, unlike the 1-percenters.

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I covered this. The reason decreased marginal tax rates are favored by many economists is because it is expected to increase work; whereas, decreasing the lower brackets would not. Also no economists think that there would be more immediate spending with lowered taxes. The government already spends that money. What economists think is that private spenders are more productive than government spenders.

The wealthy do spend all of their money. Savings and investment ARE consumption. They are much more productive forms of consumption.

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Without a government (legislative, judiciary etc. branches), what laws exactly would there be?

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Lots. Have you ever even heard of businesses doing anything without contracts? People would choose to pay for their laws instead of their laws being paid for them by force.

Keep in mind that we already do this, just with horribly ineffective tools. Pro-democracy people love saying how they have the ultimate power because of their vote (which they technically do), so I find it incredibly frustrating when they deride a far more effective method to give people the same kind of power that their vote does.

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For some reason the first thing that popped in my mind was Alabama overturning the Voting Rights Act, since you know, racism doesn't exist anymore so it isn't needed. Again, history knows a lot of examples of times when there was no government or organized police, and those times mostly aren't known for their lack of crime. Why is that? Wild west would have been a lot less wild without those damn sheriffs?

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You've misunderstood my argument. Nobody proposes a lack of security. I propose that we more effectively use one of the things you value the most (the ability to choose) in order to get another thing you most value (security). This isn't about order vs chaos, it's one level of order vs a much more effective level of order.

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Also, my understanding is that the US already is pretty much run by lawyers and accountants, sounds awesome that in the future the need for them would skyrocket.

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That's really just a guess by me. I don't guess that often, but I did that for JKDS, who may like the idea of more lawyers, or at least more experts. Regardless, I don't want to go down this route because I don't like arguing for things based on a relatively weak guess.

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"First, we show why policymakers need to focus on the poor and the middle class. Earlier IMF work
has shown that income inequality matters for growth and its sustainability. Our analysis suggests
that the income distribution itself matters for growth as well. Specifically, if the income share of the
top 20 percent (the rich) increases, then GDP growth actually declines over the medium term,
suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the
bottom 20 percent (the poor) is associated with higher GDP growth. The poor and the middle class
matter the most for growth via a number of interrelated economic, social, and political channels."

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I already addressed this. The study just shows that when distribution is a certain way, it is that way. No economist argues that the reasons behind why certain distributions happen don't matter.

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Originally Posted by rong

A short version, ignoring math and graphs, the monopoly version of a road prices itself to max profit which typically is at a higher price and lower supply than perfect competition. This economic profit (profit beyond that received at free market price) is what you're saying is the incentive for a new supplier.

But 2 things effect this. Firstly the entry barrier of massive costs to enter the market ie build a new Road. Secondly the road has a maximum supply which the incumbent can take advantage of whenever it sees fit. This excess is pretty much the same as a factory increasing production capacity and not using it as a message to competition that it is willing to compete on price if required, thereby instantly removing the economic profit that exists in the status quo that is the incentive for a new entrant. And it's a very credible threat because the incumbent wants to maximise profits, hence it's current monopolistic pricing strategy. So a natural move for the incumbent upon realisation of a new entrant is one of 2 things. Either reduce price to competitive market points which will be standard profit maximisation or alternatively use the excess supply it has and reduce price below the competitive price at the cost of short term profit with the intention of crippling new entrant and then once new entrant fails increasing price back to monopoly profit maximisation point.

So with roads this is built in to the basic set up which is why it creates a quite natural monopoly.

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I'm going to skip arguing your points. There is something else I want to address.

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So with roads this is built in to the basic set up which is why it creates a quite natural monopoly.

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If I'm hearing you correctly, you're arguing that the reason a market is bad in this scenario is because it can create a monopoly, and your solution is to have a different monopoly instead? To be clear, you're saying a private company could have a monopoly, the bad part of this scenario is the monopoly factor, and therefore we need the state monopoly instead.

I don't know if this type of thing helps you, but this sort of contradiction in my own logic is what led me to reevaluate my views.

That's a pretty statement but the two lack equivalence because one sets to maximise profits where as the other sets to..... Well, that what it intends and achieves could be debated, but they are very clearly different and have different outcomes.

The point I was making us that with roads, privatising them won't necessarily give the assumed benefits of competition and optimal benefit to society.

Which is my point with all we discuss. It's not capitalism bad, government good. I just feel some things should remain in public control.

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Originally Posted by rong

That's a pretty statement but the two lack equivalence because one sets to maximise profits where as the other sets to..... Well, that what it intends and achieves could be debated, but they are very clearly different and have different outcomes.

The point I was making us that with roads, privatising them won't necessarily give the assumed benefits of competition and optimal benefit to society.

Which is my point with all we discuss. It's not capitalism bad, government good. I just feel some things should remain in public control.

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Since you think some things should be monopolized, why is it bad for those things to be monopolized?

I'm not trying to be cute here. It looks to me like you're saying a private monopoly is bad but a government monopoly is not.

To be clear, I'm not addressing the veracity of that claim. I disagree that a private monopoly would exist in your scenario, but that isn't relevant now since it seems like you're saying it would exist and it's bad which is why you think we should have a good government monopoly.

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Originally Posted by rong

A short version, ignoring math and graphs, the monopoly version of a road prices itself to max profit which typically is at a higher price and lower supply than perfect competition. This economic profit (profit beyond that received at free market price) is what you're saying is the incentive for a new supplier.

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I agree with this, I just wanted to establish that the price is still limited by a min-maxing algorithm that attempts to sell the most tolls for a moderately high (albeit likely too-high) amount. I would only caution against the use of the term "free market price." It is extremely difficult (impossible) to know what that would be, so it is merely a theoretical construct that is of limited use in these discussions. One which we hope is less than the monopolist's price.

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Originally Posted by rong

But 2 things effect this. Firstly the entry barrier of massive costs to enter the market ie build a new Road. Secondly the road has a maximum supply which the incumbent can take advantage of whenever it sees fit. This excess is pretty much the same as a factory increasing production capacity and not using it as a message to competition that it is willing to compete on price if required, thereby instantly removing the economic profit that exists in the status quo that is the incentive for a new entrant. And it's a very credible threat because the incumbent wants to maximise profits, hence it's current monopolistic pricing strategy. So a natural move for the incumbent upon realisation of a new entrant is one of 2 things. Either reduce price to competitive market points which will be standard profit maximisation or alternatively use the excess supply it has and reduce price below the competitive price at the cost of short term profit with the intention of crippling new entrant and then once new entrant fails increasing price back to monopoly profit maximisation point.

So with roads this is built in to the basic set up which is why it creates a quite natural monopoly.

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So if I'm understanding you, your point is the following:

1. Monopolist owns the only reasonable route between A and B. His costs are $10,000 per day. He charges an extravagant toll that allows him to gross $40,000 per day in revenue. The price is set at a rate that will min-max his price*volume.

2. Would-Be Competitor considers building up an alternate route which might cost him $15,000 per day, at least initially.

3. Would-Be Competitor decides not to risk it for fear that Monopolist will simply lower his revenues to $14,000 per day (or $10,000 or $2,000), which will make it impossible for him to recoup his investment in a reasonable amount of time.

This is challenging, but I don't think its necessarily a market failure yet. For one thing, if Would-Be Competitor assesses the market value of the route at $20,000 per day (which is greater than $15,000), he may still choose to take the hit and weather the storm of price manipulation by the Monopolist, with the expectation that eventually the price will stabilize at around $20,000, and he will begin earning a $5,000/day profit. Monopolist cannot manipulate the market forever, he pays dearly every day. Would-Be Competitor can be capable of playing the long game if the profit potential is there.

The other thing is that while there may be no similar alternate, there are very likely to be inferior routes unless it's a single bridge to an island or something. The monopolist can only gouge his price to a height that will get people to grudgingly choose his route over inferior alternatives. Basically, that's one of a lot of fail-safes that prevent such blatant gouging from being practical.

Finally, lets be real. The state is going to stick its nose in and bust up suspected monopolies. It has a hair trigger for that sort of thing, often when there's actually no monopoly at all, so I wouldn't be that worried about it.

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Originally Posted by Renton

1. Monopolist owns the only reasonable route between A and B. His costs are $10,000 per day. He charges an extravagant toll that allows him to gross $40,000 per day in revenue. The price is set at a rate that will min-max his price*volume.

2. Would-Be Competitor considers building up an alternate route which might cost him $15,000 per day, at least initially.

3. Would-Be Competitor decides not to risk it for fear that Monopolist will simply lower his revenues to $14,000 per day (or $10,000 or $2,000), which will make it impossible for him to recoup his investment in a reasonable amount of time.

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Given 1 and 2, 3 doesn't happen. Monopolist Company would be in shambles if it lowered revenues so much. I'm not technically savvy on economics enough to explain why, but we see the dynamic in play all the time.

Also, 1 and 2 are not assumptions representative of how the economy would have worked up to this point. There is continual competition at every stage, and we wouldn't see one company get so far ahead. The perfect analogy in this is tech. Apple very quickly got lots of competition and it's probably only like 20% chance it will lead in smart phones in 15 years. Microsoft has even gone so far as to "lose" tons of money in Bing because it knows it has to in order to compete in the market on a broader stage. Microsoft was once considered a great case for a monopoly. The government stepped in, which did basically nothing to change their status, but now, by market forces, a couple decades later it is the underdog and overhauling much of its business model in order to survive.

I'm sure you know this, I just wanted to point out that the framework that creates this private road monopoly is not sound. Sadly, I would need a bit better economics understanding to give the exact details for why.

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Originally Posted by wufwugy

Since you think some things should be monopolized, why is it bad for those things to be monopolized?

I'm not trying to be cute here. It looks to me like you're saying a private monopoly is bad but a government monopoly is not.

To be clear, I'm not addressing the veracity of that claim. I disagree that a private monopoly would exist in your scenario, but that isn't relevant now since it seems like you're saying it would exist and it's bad which is why you think we should have a good government monopoly.

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I'm not saying specifically that a private monopoly is bad or that a government monopoly is good. I'm saying that a free market doesn't necessarily give the benefits which it is claimed it does.

I also disapprove of referring to state control as a monopoly. The term monopoly brings all sorts of feelings with it which I don't think help the conversation. And it's not like saying state run doesn't have its own set of negative associations (inefficiency, wastefulness, slow reaction to change etc).

I don't think wealth should automatically entitle you to the best of everything. Just because you are rich, why should your trip to work be easier than mine? Why should you get access to better health care while maybe I have practically none? Why should you have access to justice which I don't?

I like to think that certain things are worthwhile giving up some form of profit for. And what we are essentially saying is a reduction on growth rate and perhaps marginally higher indirect cost. I agree with lots of the stated benefits of free trade, I just don't think the sacrifices required to obtain those benefits are worthwhile in every case.

So as I've stated before, basic infrastructure, utilities, health care, education, policing, justice and defence, should all be state run or at least heavily regulates by the state. This ensures certain freedoms exist for all. ie the freedom to travel around, to access a good quality of health care, to be safe and be protected and expect justice, to receive a decent level of education. To be free from being held to ransom over basic needs like electricity.

These freedoms are enough of a platform to be able to build something from and I think ensuring these has an effect on social mobility and opportunity.

So it's not about one monopoly over another, it's about the implications of private ownership and state ownership.

In terms of disagreeing with me about the monopoly in the road example above, I'll respond to Rentons comment below.

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Originally Posted by Renton

I agree with this, I just wanted to establish that the price is still limited by a min-maxing algorithm that attempts to sell the most tolls for a moderately high (albeit likely too-high) amount. I would only caution against the use of the term "free market price." It is extremely difficult (impossible) to know what that would be, so it is merely a theoretical construct that is of limited use in these discussions. One which we hope is less than the monopolist's price.



So if I'm understanding you, your point is the following:

1. Monopolist owns the only reasonable route between A and B. His costs are $10,000 per day. He charges an extravagant toll that allows him to gross $40,000 per day in revenue. The price is set at a rate that will min-max his price*volume.

2. Would-Be Competitor considers building up an alternate route which might cost him $15,000 per day, at least initially.

3. Would-Be Competitor decides not to risk it for fear that Monopolist will simply lower his revenues to $14,000 per day (or $10,000 or $2,000), which will make it impossible for him to recoup his investment in a reasonable amount of time.

This is challenging, but I don't think its necessarily a market failure yet. For one thing, if Would-Be Competitor assesses the market value of the route at $20,000 per day (which is greater than $15,000), he may still choose to take the hit and weather the storm of price manipulation by the Monopolist, with the expectation that eventually the price will stabilize at around $20,000, and he will begin earning a $5,000/day profit. Monopolist cannot manipulate the market forever, he pays dearly every day. Would-Be Competitor can be capable of playing the long game if the profit potential is there.

The other thing is that while there may be no similar alternate, there are very likely to be inferior routes unless it's a single bridge to an island or something. The monopolist can only gouge his price to a height that will get people to grudgingly choose his route over inferior alternatives. Basically, that's one of a lot of fail-safes that prevent such blatant gouging from being practical.

Finally, lets be real. The state is going to stick its nose in and bust up suspected monopolies. It has a hair trigger for that sort of thing, often when there's actually no monopoly at all, so I wouldn't be that worried about it.

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We'll not really. And central to this is that it's selling off existing Road networks as opposed to starting from scratch as I said in the post following the one you quoted.

But let's say there is a road between a and b. Let's say it's a trunk road connecting to towns or whatever. There are currently shittier routes through the country or though neighbourhoods or whatever but the big main road is considerably quicker.

The state sells the roads and company A gets this big one.

It is already big enough to handle all traffic as it stands with quiet times and very busy times.

Let's say the going rate in a competitive market is £5 per car. He charges £8 per car and due to the lack of real alternatives there is some reduction in demand due to car pooling and maybe people don't always make the journey they otherwise might have but there is enough demand still for it to be an optimal price.

If company b wants to enter that market, he's never getting that economic profit of £3 per car, because it ceases to exist once he enters. Now to compete it's not a case of a cost of £10k per day it's upfront investment of maybe £30 Mil (estimated cost to build one mile of motorway so probably a lot more but whatever) and then a cost of £10k per day (or whatever). Now the road that already exists could handle all the traffic that exists at competitive market prices anyway (the excess capacity I referred to earlier) so there isn't a need for another Road and the increase in supply would reduce prices further in the new competitive market.

So company b would need to be willing to invest a huge sum upfront (the entry barrier) when he knows the incumbent has the excess capacity which will force prices down as well as the financial muscle to enter a price war if required.

That's a perfect setup for a monopoly, surely?

And did your last line say the government would step in? Well ok glad we agree the government has some value, but I thought we didn't have one of them in your world.

The last line was snarky, I retract the last line.

Also, I've not idea if that road would create a monopoly. But it certainly could. Which is the point.

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Originally Posted by rong

We'll not really. And central to this is that it's selling off existing Road networks as opposed to starting from scratch as I said in the post following the one you quoted.

But let's say there is a road between a and b. Let's say it's a trunk road connecting to towns or whatever. There are currently shittier routes through the country or though neighbourhoods or whatever but the big main road is considerably quicker.

The state sells the roads and company A gets this big one.

It is already big enough to handle all traffic as it stands with quiet times and very busy times.

Let's say the going rate in a competitive market is £5 per car. He charges £8 per car and due to the lack of real alternatives there is some reduction in demand due to car pooling and maybe people don't always make the journey they otherwise might have but there is enough demand still for it to be an optimal price.

If company b wants to enter that market, he's never getting that economic profit of £3 per car, because it ceases to exist once he enters. Now to compete it's not a case of a cost of £10k per day it's upfront investment of maybe £30 Mil (estimated cost to build one mile of motorway so probably a lot more but whatever) and then a cost of £10k per day (or whatever). Now the road that already exists could handle all the traffic that exists at competitive market prices anyway (the excess capacity I referred to earlier) so there isn't a need for another Road and the increase in supply would reduce prices further in the new competitive market.

So company b would need to be willing to invest a huge sum upfront (the entry barrier) when he knows the incumbent has the excess capacity which will force prices down as well as the financial muscle to enter a price war if required.

That's a perfect setup for a monopoly, surely?

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My point was that (using your example, not mine) if the Would-Be Competitor's overhead is less than the estimated competitive market value of £5, then he could still enter, even though he won't get the additional £3. If you're claiming that by merely entering the market, he would lower the market value from £5 to even lower, that sort of invalidates idea of a £5 "competitive market value," doesn't it? This harks back to what I was saying about being careful with that term. If there is only one reasonable route between point A and point B, then necessarily that is a very valuable road. It isn't gouging to attempt to sell your product for as much as you can if its a legitimately invaluable product. The "monopolist" is well within his right to charge a high price, and a high price is a merely a problem for the market to solve.

There's only a monopoly if the incumbent is actively sabotaging alternatives from emerging. It is quite difficult to do this without the use of force or state influence, both of which are morally wrong and hopefully illegal.

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And did your last line say the government would step in? Well ok glad we agree the government has some value, but I thought we didn't have one of them in your world.

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I'm a realist. If there's a stateless world in our future, I'm sure it is hundreds or thousands of years away. I prefer to apply free-market sensibilities to expected reality. My personal opinion is that anti-monopoly laws do more harm than good, and that true monopolies are nearly impossible to form. I can safely assume that a minimally-corrupt state will squash anything that even comes remotely close to the type of monopoly you're imagining here, for better or worse.

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Originally Posted by rong

I also disapprove of referring to state control as a monopoly. The term monopoly brings all sorts of feelings with it which I don't think help the conversation. And it's not like saying state run doesn't have its own set of negative associations (inefficiency, wastefulness, slow reaction to change etc).

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It technically is a monopoly. The monopoly on violence. The government uses this monopoly to structure everything else how it sees fit, so when the government owns the highway, it has a monopoly on the highway.

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I don't think wealth should automatically entitle you to the best of everything. Just because you are rich, why should your trip to work be easier than mine? Why should you get access to better health care while maybe I have practically none? Why should you have access to justice which I don't?

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Morally: because you're the one with the resources. The guy who kills the meat gets to do with the meat what he chooses. If it isn't structured like this, civilization falls apart. You use your resources to support your family. Why would it better for you to not have that option?

Socially and economically: because it makes the world a better place. Meritocracy drives abundance and prosperity, regardless of if you "earned" the merits or "just have" the merits. Macroeconomics is counter-intuitive. We may think that helping the poor with things like wage floors or price caps on goods helps them, but macroeconomics says otherwise. It isn't even that macro says it doesn't help them, but that it actually hurts them. I don't really even understand it that well, but I'm not going to tell economists at large that they're wrong about economics. Maybe an easy way to visualize it is that when regulations make it hard to have a job without a car (which ours very much do), it undercuts the poor since they have to waste so much of their resources on a car.

It is important that people pay for what they have with the resources they have. Not doing this is what the Soviet Union tried to do. Socialism in the West is not any different whatsoever. We are just lucky that only some aspects of our society have embraced the ideology; whereas the USSR embraced it for all aspects of its society.

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I like to think that certain things are worthwhile giving up some form of profit for. And what we are essentially saying is a reduction on growth rate and perhaps marginally higher indirect cost. I agree with lots of the stated benefits of free trade, I just don't think the sacrifices required to obtain those benefits are worthwhile in every case.

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Profit is essential to driving abundance and innovation. There are no known exceptions.

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So as I've stated before, basic infrastructure, utilities, health care, education, policing, justice and defence, should all be state run or at least heavily regulates by the state. This ensures certain freedoms exist for all. ie the freedom to travel around, to access a good quality of health care, to be safe and be protected and expect justice, to receive a decent level of education. To be free from being held to ransom over basic needs like electricity.

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The reason I keep mentioning food is because it is equally as essential to life as the other things you mentioned (more than most of them, actually), yet it is not heavily influenced by the state and it works better than every one of your examples. So the question is "what gives?" How can it be that government ownership is better for essentials when the facts show that markets are better?

Go ask the poor homeless fuck on the streets of new York, find one who fell through the cracks, and ask him how his private health care compares to my state provided health care.

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Originally Posted by wufwugy

It technically is a monopoly. The monopoly on violence. The government uses this monopoly to structure everything else how it sees fit, so when the government owns the highway, it has a monopoly on the highway.

This is irrelevant to the point I was making. And anyway, technically, it it state run. It is run by the state, therefore it is state run. Why aren't you calling it what it is? (DYSWIDT?)

Morally: because you're the one with the resources. The guy who kills the meat gets to do with the meat what he chooses. If it isn't structured like this, civilization falls apart. You use your resources to support your family. Why would it better for you to not have that option? Morally? Really? Morality doesn't side with the capitalists.

Socially and economically: because it makes the world a better place. Meritocracy drives abundance and prosperity, regardless of if you "earned" the merits or "just have" the merits. Macroeconomics is counter-intuitive. We may think that helping the poor with things like wage floors or price caps on goods helps them, but macroeconomics says otherwise. It isn't even that macro says it doesn't help them, but that it actually hurts them. I don't really even understand it that well, but I'm not going to tell economists at large that they're wrong about economics. Maybe an easy way to visualize it is that when regulations make it hard to have a job without a car (which ours very much do), it undercuts the poor since they have to waste so much of their resources on a car. Sociably, no. Economically yes. You could possibly make it cheaper and more efficient, I give you that. But more expensive and given to everyone can be sociably better than cheaper and more efficient.

It is important that people pay for what they have with the resources they have. Not doing this is what the Soviet Union tried to do. Socialism in the West is not any different whatsoever. We are just lucky that only some aspects of our society have embraced the ideology; whereas the USSR embraced it for all aspects of its society. Funny, but health care over here is pretty good yet people don't pay for what they use. Which demonstrates my point perfectly. There is no reason not to have a mixture of both.



Profit is essential to driving abundance and innovation. There are no known exceptions. That is bullshit! Some people do things for other reasons than profit. And anyway, this is irrelevant. You can still have some things given to everyone for free and have plenty of innovation across the board. A little bit of free at point of use and paid for via tax doesn't destroy everything.



The reason I keep mentioning food is because it is equally as essential to life as the other things you mentioned (more than most of them, actually), yet it is not heavily influenced by the state and it works better than every one of your examples. So the question is "what gives?" How can it be that government ownership is better for essentials when the facts show that markets are better?

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Food stumps me for a good answer. I need to think about that.

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Originally Posted by rong

Go ask the poor homeless fuck on the streets of new York, find one who fell through the cracks, and ask him how his private health care compares to my state provided health care.

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City homeless exists because of government policies. Their skills are far below the demand needed in a city, they live on government property, and they are disincentivized to use their skills in the first place. Homelessness begins to disappear as you get more rural for these reasons.

Poking holes in the system does nothing because each element is built many layers deep on the foundation of dysfunction.

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Morally? Really? Morality doesn't side with the capitalists.

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Please reconsider what I said. Socialism does not have the moral high ground here. According to the moralism that socialists claim is their high ground, the right thing would be for you to let others decide what to do with the resources you have or acquire.

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Sociably, no. Economically yes. You could possibly make it cheaper and more efficient, I give you that. But more expensive and given to everyone can be sociably better than cheaper and more efficient.

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This has been tried. It produced horrible results. Society is dependent on its economy in order to function. Additionally, sacrificing efficiency for distribution is stagnation. The further in the future we get, the more harm sacrificing efficiency does. Treating things like public goods helps us right now and a couple years in the future, but because it ends innovation, it makes things further in the future worse. If we sacrificed efficiency for the public good back in the 80s, there would probably be no personal computers, no smart phones, no internet, and no forum debates.

It needs to be abundantly clear that the backbone of communism is sacrificing efficiency for distribution of a "public good". Russia became a hellhole after it adopted this.

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Funny, but health care over here is pretty good yet people don't pay for what they use. Which demonstrates my point perfectly. There is no reason not to have a mixture of both.

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Actuaries don't agree. Everybody on Medicare thinks it works very well, but the actuary profession at large says it does not. Economists are less specific on healthcare than actuaries, but they mostly also say it is not nearly as effective and resilient as current recipients claim.

I don't know much specifically about UK healthcare, but I do know that it doesn't hold a candle to what an economically sound approach does. The country closest to this approach is Singapore. Its healthcare is several times cheaper yet just as effective.

It should also be noted that socialist healthcare systems rely on the capitalist ones for much of their technological advancements.

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That is bullshit! Some people do things for other reasons than profit. And anyway, this is irrelevant. You can still have some things given to everyone for free and have plenty of innovation across the board. A little bit of free at point of use and paid for via tax doesn't destroy everything.

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That's not me talking, that's consensus among economists.

You just dodged questions in order to continue stating your dogma. I think this conversation is done.

I agree that long term capitalism would be expected to provide more growth, Greater innovation and greater efficiency. However it comes at a short term cost. Which is the less received by those at the bottom of the food chain whilst we wait for progress to make it cheaper so that more people can afford it.

I don't think that cost is acceptable in some areas, you do.

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Originally Posted by Renton

My point was that (using your example, not mine) if the Would-Be Competitor's overhead is less than the estimated competitive market value of £5, then he could still enter, even though he won't get the additional £3. If you're claiming that by merely entering the market, he would lower the market value from £5 to even lower, that sort of invalidates idea of a £5 "competitive market value," doesn't it? This harks back to what I was saying about being careful with that term. If there is only one reasonable route between point A and point B, then necessarily that is a very valuable road. It isn't gouging to attempt to sell your product for as much as you can if its a legitimately invaluable product. The "monopolist" is well within his right to charge a high price, and a high price is a merely a problem for the market to solve.

There's only a monopoly if the incumbent is actively sabotaging alternatives from emerging. It is quite difficult to do this without the use of force or state influence, both of which are morally wrong and hopefully illegal.



I'm a realist. If there's a stateless world in our future, I'm sure it is hundreds or thousands of years away. I prefer to apply free-market sensibilities to expected reality. My personal opinion is that anti-monopoly laws do more harm than good, and that true monopolies are nearly impossible to form. I can safely assume that a minimally-corrupt state will squash anything that even comes remotely close to the type of monopoly you're imagining here, for better or worse.

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I worded that badly. It would still be £5 per car. However demand receives at £5 per car, which would have to be the minimum profitable price, would be split between 2 roads. So your return on investment would be much lower than normal which means you'd be likely to seek alternative investments instead.

Pricing once in a market is a very different decision than whether or not to enter the market in the first place.

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But more expensive and given to everyone can be sociably better than cheaper and more efficient.

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You've said a lot of things on the last page that I'd like to reply to, but this quote seems to encapsulate your argument so I'll just focus on it for now.

That quote is correct for a few types of resources, most of which aren't scarce. Air, for example, would be sociably better if it were given to everyone. I think an ultra-capitalist dystopia where only land owners have the right to free air (and the technology to exclude air to others) would definitely suck.

The quote is also correct for 100% inelastic resources. For example, if in the far future the atmosphere was polluted with some deadly contaminant, and each living person on the planet required one iodine pill per day to avoid getting sick from it, then that would be an appropriate item to socialize. The reason has nothing to do with everyone needing it, and everything to do with the fact that there would pretty much no competing alternative use for iodine in the market, and no need for anyone to use more than one per day.

The thing is, there really are no purely inelastic resources. I had to bend over backwards to contrive an example of one. Almost every scarce resource in the economy has alternative uses of varying levels of value or urgent need to people. Water, for example, is fairly inelastic, as everyone needs a couple of liters of it per day to survive, but it is a resource with thousands of alternative uses, some of which are vital to a functioning economy. Free water is far more likely to be squandered, while priced water is more likely to be conserved. Thus, it is a very bad idea to socialize water to a large extent, other than making sure everyone gets the necessary two liters. This argument is lost on all well-meaning socialists who believe water should be a basic right of citizens to have. And the socialists are currently winning this battle. Private water is practically non-existent in developed countries, and it shows. Shortages are emerging all over, with California being in a really bad one, currently.

Healthcare is elastic as well, but in a different way. When you're having a heart attack, you need bypass surgery, there is often no feasible alternative. When you have cancer, you need chemotherapy. The elasticity with healthcare demand comes because our behavior has an effect our likelihood of getting sick. People who smoke are more likely to get lung cancer. Obese people are more likely to get diabetes or heart disease. Regulating risky behavior sort of comes with the universal healthcare package, and that's one of the many reasons I am against it. If the state could just give out the free healthcare and leave it at that, I would have less quarrel with it. But that's not ECONOMICALLY feasible for them is it? The economics express themselves regardless of whether you have a free-market, socialist, or even communist-based system.

I'm sure there's middle ground here.

For example, say top quality free health care to anyone under the age of 18. That ensures all kids get it, which ties in with my thoughts on ensuring equal opportunities in terms of social mobility.

What s you're thoughts on that kind of watered down free health care?

There aren't many negatives with that type of system, other than the redistribution and perhaps the minor distorted incentives for poor people to have more children. It's kind of a non-problem though. A lot of private charity gets thrown at sick children already, and children are statistically very unlikely to get expensively sick. The huge majority of healthcare needs are for elders, and the watered down healthcare we have for them in America is a total disaster that is likely to crash the economy in my lifetime.

There's also the simple practical issue that the state doesn't directly allocate resources from tax category A to benefit category A. The taxes just go into the pool that they spend from and they practically always run a deficit. The amount a government spends is directly related to what they take in taxes, multiplied by some sort of debt factor that is essentially how much debt they're comfortable adding to the next taxpaying generation. This is such a universal certainty at this point that I'm not sure reform is even possible.

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Originally Posted by rong

You just dodged questions in order to continue stating your dogma. I think this conversation is done.

I agree that long term capitalism would be expected to provide more growth, Greater innovation and greater efficiency. However it comes at a short term cost. Which is the less received by those at the bottom of the food chain whilst we wait for progress to make it cheaper so that more people can afford it.

I don't think that cost is acceptable in some areas, you do.

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You can show me the questions if you like. I responded to the one I saw.

As for the short/long term cost thing, that's probably accurate. The short term wouldn't last that long, and the long term is ultimately what we're trying to make better, since the long term today is the short term a few years from now. Iceland is a good example that some like to use for why the short term pain of jailing fraudsters that the rest of the world supposedly didn't jail only caused them extra pain for a short period of time but by now they're already doing better than most of the rest of the world.

It should also be noted that reforms should be gradual. Fully reforming healthcare should probably take 50 years or something. It would have to start with zero changes to people who have already been given assurances that are relatively needed. You can't much change Social Security for people who have been taxed for it all their lives, but you can do that for the young who have not.

I found thus interesting
https://agenda.weforum.org/2015/03/w...rent-in-japan/

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Originally Posted by rong

I found thus interesting
https://agenda.weforum.org/2015/03/w...rent-in-japan/

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Japan's GDP hasn't gone up since 1995, so I'm not sure they're a good example of distributive policy leading to economic prosperity.

I didn't think they helped my argument. I just though it was interesting and relevant enough for the thread.

Yeah, not all is bad in Japan either. They've always had <5% unemployment, and a lot of their GDP stagnation probably is related to their declining and aging population. It's just a very mixed bag country. Depression and suicide is high there, the economy isn't growing, and the currency is declining pretty hard. I think its enough bad things happening there to estimate with reasonable accuracy that their policies aren't doing them many favors.

Thinking more, if we take the assumption that a privatised health care system leads to Greater innovation then what I want is for the rest of the world to do that while we keep a free at point of use state run system. That way innovation continues around the world which we can take advantage of yet we still get the benefits of our existing system.

But that makes me feel mean because I strangely Carr about everyone else.

Yeah, you're getting it for free in the U.K. for now, but your debt to GDP ratio is like 80% and ever rising. You're also locked in a several year recession with the rest of Western Europe. You're paying for free healthcare in the same manner that the U.S. has been paying for its wars, by burdening your children with a shitty economy. It's not free healthcare at all. Everyone in your country, including the poor, is paying dearly for it. In seen and unseen ways.

I'm not sure if you're implying that a pro-capitalism position lacks empathy for others. If you are, I would certainy take issue with that. It bothers me tremendously that the left thinks it has a monopoly on concern for poor people. I'm deeply concerned for poor people. Real, actual poor people, as in the kind that are probably less than 0.5% of the populations of the U.S or U.K but are a majority of people in India or Indonesia. I'm also concerned with the lower quintile income people of first-world countries, and I feel that the welfare state has entrenched them in a perpetuating cycle of victimhood and (relative) poverty.

The welfare state in America, along with its supporters, has convinced a significant percentage of the population that they are victimized by rich (especially white [especially male]) people, that they must fight an uphill battle to secure any ends for themselves, and that they probably shouldn't even try. And shockingly, that actually has an effect on people's behavior. There was a poll recently that asked people if they would consider voting for a socialist presidential candidate. Nearly 50% of the country said they would. Nearly 30% of conservatives said they would, and over 70% of people between 18-28 said they would. In the country that supposedly hates socialism more than any other. The state is a self perpetuating behemoth, ruining people's lives and all the while convincing them that all they need is a little more state. There just wasn't enough previously, that's why the shit didn't work. This is how Greece just elected its new communist PM.

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Originally Posted by Renton

Yeah, you're getting it for free in the U.K. for now, but your debt to GDP ratio is like 80% and ever rising. You're also locked in a several year recession with the rest of Western Europe. You're paying for free healthcare in the same manner that the U.S. has been paying for its wars, by burdening your children with a shitty economy. It's not free healthcare at all. Everyone in your country, including the poor, is paying dearly for it. In seen and unseen ways.

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http://i61.tinypic.com/msga1.png
http://i57.tinypic.com/34i4y9d.png

You can see we was trundling along quite nicely with average say 4% growth and debt to gdp ratio of aound 40% which I believe is within acceptable boundaries, all this with our lovely free at point of use health care provided to everyone.

It's not the NHS that has caused all our problems, it was a bunch of people working in the financial services industry. Now you can blame all sorts of things for why the whole 2008 financial crisis happened, but it wasn't free healthcare.

As for the shitty economic environment here, that's got a lot to do with the governments policy of austerity which I shan't go on about any more because I think I've done it to death.

It's definitely not healthcare that's totally to blame, but the post-war generation is beginning to die off and that's accounting for a sharp rise in NHS spending as well as medicare in the U.S. It's likely to become a pretty big problem.

Capitalism works out of helping others. People don't buy products or services unless they think they're better for them. Capitalism is the empathic system, if there truly is one. Socialism is the one that mandates products and services based on the ideals of the controlling powers. That sounds selfish to me.

I'd like to clarify that the financial sector didn't cause the recession. Several other modern countries did the exact same stuff and didn't have such calamitous effects. The one thing they all share in common is central banks that were targeting a growth level. These countries has stable money while the ones where money collapsed ended up having huge recessions. Most of the central banks of the West are still operating on monetary regimes of meager growth. The BoE has been much better than the rest of the EU, and the results have been great in comparison.

Giving freedom to thrive or rot as opportunity and chance allow does not equate to empathy.

The end-game of capitalism is likely a world where all of the essentials for life support are cheap enough for practically anyone to afford. Shades of this can already be seen in many third-world countries where hunger is rare and basic healthcare and medicine is dirt cheap. I caught a parasite in Cambodia and bought anti-parasitic drugs over the counter for like $0.75. In America I would have paid at least 100x more and needed a prescription. I don't doubt that proponents of the welfare state have the best intentions for the poor, but the welfare state is not the Robin Hood fantasy that it is made out to be. In many cases the state robs the poor to prop up the middle class. Empathy for poor people isn't even a politically popular sentiment to have. Nearly all of the entitlement agendas are in service to the middle class, while being misleadingly framed as class warfare.

I don't know enough about UK policy so I'll just cite US examples of this. Social Security is a regressive program, disproportionately benefiting the middle class at the expense of the poor. The tax takes a larger percentage of low incomes and the budget depends on the poor having a lower life expectancy than average. They're now trying to raise the retirement age to sharpen this effect even more.

The minimum wage is in many ways also anti-poor and anti-minority. It essentially props up the wages of the lower income people who already have jobs at the expense of those who are looking for a job. It also encourages hiring discrimination by reducing the number of people who can be hired for low-skill work. If I'm an employer and I *kind of* don't like blacks, with no minimum wage I'm probably still going to hire them if the price is right. If I'm forced to pay a higher-than-market wage and I have a stack of applications of people of all colors, I'm obviously going pick the non-blacks first.

The newest welfare agenda sought after in the US by the democrats is free university education. This is clearly a middle class subsidy that will in many ways be a reverse robin hood. The children of poor people in the U.S. are far less likely than average to even graduate high school, much less go to college. The taxes to pay for free college will come out of their pockets all the same.

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Originally Posted by wufwugy

I covered this. The reason decreased marginal tax rates are favored by many economists is because it is expected to increase work; whereas, decreasing the lower brackets would not. Also no economists think that there would be more immediate spending with lowered taxes. The government already spends that money. What economists think is that private spenders are more productive than government spenders.

The wealthy do spend all of their money. Savings and investment ARE consumption. They are much more productive forms of consumption.

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That's assuming that building a luxury yacht is better for the society than shopping groceries for the same amount. It also assumes that the highest economic growth rate, regardless of who directly reaps the benefits of it, is the most favorable option. There is no evidence of a trickle-down. Savings by definition is income minus consumption.

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Originally Posted by wufwugy

You've misunderstood my argument. Nobody proposes a lack of security. I propose that we more effectively use one of the things you value the most (the ability to choose) in order to get another thing you most value (security). This isn't about order vs chaos, it's one level of order vs a much more effective level of order.

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Not really a misunderstanding, more like my personal opinion of the outcome. Not everyone has equal ability to choose due to lack of resources. Security works a bit like vaccinations, there's herd immunity if you live among people with high security. The opposite is true for lower security areas, which would lead to ghettofication. I'll leave out the whole conversation of knowing on a personal level what the most practical and cost-effective security measures to invest in are, and assume all people would become security experts.

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Originally Posted by wufwugy

I already addressed this. The study just shows that when distribution is a certain way, it is that way. No economist argues that the reasons behind why certain distributions happen don't matter.

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Then why is the distribution that way, which regulation is cockblocking the trickle-down?

Are there scales where certain socioeconomic systems provide advantages?
Within most households / businesses, there is a whole lot of sharing and community property going on. Within small neighborhoods, there is a similar feeling of shared goals and economic same-ness that spurns a less capitalistic pattern of trade within the group.


How does a state-level capitalistic system intersect with these smaller socialisms?

Are these consequences good for the growth of said economic sectors?

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What causes poorness?

Is it a personal choice?
Are there any extenuating circumstances whereby a 'great person' could find themselves destitute?
Are there any extenuating circumstances whereby a 'worthless person' could find themselves wealthy?

Is it fair to have a society with punishments and rewards based on factors which are beyond the control of its members?

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Originally Posted by MadMojoMonkey

Are there scales where certain socioeconomic systems provide advantages?
Within most households / businesses, there is a whole lot of sharing and community property going on. Within small neighborhoods, there is a similar feeling of shared goals and economic same-ness that spurns a less capitalistic pattern of trade within the group.




How does a state-level capitalistic system intersect with these smaller socialisms?


Are these consequences good for the growth of said economic sectors?

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There's a very simple reason why those social constructs work well and the state works poorly. It has nothing to do with scale, and everything to do with consent. They're all voluntary contracts. That said, there is a such thing as a dis-economy of scale that larger states suffer from more than smaller states and communities do. It also can exist with large corporations.

To say that those constructs are "less-capitalistic" betrays a basic misunderstanding of capitalism. Collaboration is an essential aspect of capitalism, and people who are part of a coalition have a big competitive advantage over lone wolves.

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Originally Posted by MadMojoMonkey

What causes poorness?

Is it a personal choice?
Are there any extenuating circumstances whereby a 'great person' could find themselves destitute?
Are there any extenuating circumstances whereby a 'worthless person' could find themselves wealthy?

Is it fair to have a society with punishments and rewards based on factors which are beyond the control of its members?

---

This is the question that hung me up the most when I was a liberal. I thought that distributive policy was necessary to smooth out the variance of being born into any of a range of wealth states. I thought that the state afforded greater social mobility to the poor. I also benefitted from some of these programs personally, going to a decent public school and having much of my tuition paid for by a state scholarship program.

My general opinion now is that the social programs put in place to help poor people are framing a dichotomy that isn't entirely true. That it's either the way things are, or poor people have no opportunity to advance in our society. The truth is that the very existence of the public institutions preclude private alternatives from existing. Better private schools. Cheaper private healthcare. A more efficient transportation system. Cleaner, more abundant energy. The state is likely to slow or outright prevent all of these advances. Sometimes in the name of social justice, other times for no good reason at all.

Capitalism is all about leveraging resources into larger and larger gains. There's this myth that capitalism "needs" destitute people to exploit to benefit the rich. It actually needs valuable people. The system needs highly-trained competent people who produce at ever-increasing levels to continue to grow the economy. This simply doesn't square with the notion of 1% of people having all of the stuff and the remaining 99% being uneducated malnourished peasants.

I may just not be getting it, but I feel like you dodged the questions. I can talk to your first two paragraphs, but after that, I feel like you changed topics on me. Please help me correlate your answers back to my questions.

***
I kind of see where you're coming from with the voluntary contract, thing. I appreciate that it re-characterizes my question away from arbitrary size onto a collective of individual decisions to have un-quantized trade (sharing).

I am still curious over the broad advantages to this decision. Mostly, I'm curious about the "line" where the decision to quantize trade (capitalism) becomes advantageous.

What are the factors at play?

I don't think it's a misunderstanding of capitalism to say there are communities inside which money is completely unnecessary. The system of trade is left unquantized - not capitalistic. Please correct me if my understanding of capitalism is at odds with yours.

Quote:

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Originally Posted by MadMojoMonkey

I may just not be getting it, but I feel like you dodged the questions. I can talk to your first two paragraphs, but after that, I feel like you changed topics on me. Please help me correlate your answers back to my questions.

***
I kind of see where you're coming from with the voluntary contract, thing. I appreciate that it re-characterizes my question away from arbitrary size onto a collective of individual decisions to have un-quantized trade (sharing).

---

It wasn't my intention to dodge your questions. I felt like the questions in the first box I quoted (re: scale) were a bit ill-conceived.

Households share property largely because children aren't yet fit to make economic decisions, and because people value being in relationships more than having absolute autonomy over their stuff. It's voluntary mutual benefit unless you're one of the children (you can't choose where you grow up) or unless you're in a shitty relationship. Basic economics are at play here.

Businesses have social constructs because they are formed based on a hierarchy of responsibility levels with ownership at the top. Everyone involved is a voluntary participant in this, and that is why it works. States would be fantastic if anybody could opt out, and this is largely why smaller states or more local forms of government are more effective.

Small neighborhoods aren't that dissimilar to to the economic advantages of cooperation in business. There are forms of mutual benefit that don't involve exchanging currency. A neighborhood that mutually agrees to keep nice lawns benefits by having an increased property value. If one of them wants to opt out, he's perfectly able to in a free society, and there are some economic disadvantages to this. It is immoral for the other members to use force to compel him to mow his lawn, but there are non-aggressive ways to motivate him. They can exclude him from the social benefits of being in the community.


Now for the second quote box:

Poorness is sometimes caused by bad choices. I would guess it is largely due to being born to poor parents though, so in that way it is caused by other people's choices. Obviously it is possible for a 'great person' to lose everything. Life is full of risk, and even leading a risk-averse life is not without risk. I don't know what a 'worthless' person is. I guess a social parasite like a non-functioning drug addict would qualify? I don't understand the value of these questions. Our wealth is tied to our choices and to our circumstances.

Is the free market fair? The first two definitions on dictionary.com are "free from bias, dishonesty, or injustice," and "legitimately sought, pursued, done, given, etc.; proper under the rules." Certainly under those definitions a world where people of all levels of fortune are treated the same, i.e. not rewarded or penalized in any way, could be called fair. I would say being born in poor conditions is unfortunate, not unfair. Having a health catastrophe at age 25 is unlikely, not unjust. If you start a business that doesn't work out and forces you into bankruptcy, I wouldn't say you suffered any bias, you just made a bet that didn't pan out. Why is it fair to take from others to benefit these people?

Quote:

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Originally Posted by MadMojoMonkey

I don't think it's a misunderstanding of capitalism to say there are communities inside which money is completely unnecessary. The system of trade is left unquantized - not capitalistic. Please correct me if my understanding of capitalism is at odds with yours.

---

I think I kind of covered this earlier in the post, but one more thing. The form of trade of which you speak may not be capitalistic, but it is economical in the sense that it is people acting on incentives. I think there are also a lot of ways in which capitalism enhances the value of non-monetary social constructs.

Quote:

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Originally Posted by Renton

I think I kind of covered this earlier in the post, but one more thing. The form of trade of which you speak may not be capitalistic, but it is economical in the sense that it is people acting on incentives. I think there are also a lot of ways in which capitalism enhances the value of non-monetary social constructs.

---

This is exactly what I'm curious about.
Within an overriding framework of capitalism, there are pockets where other economic systems enhance value.
(I assume the opposite is true, as well.)

I'm interested in how these systems blend, and where each offers advantages.

***
I asked this:
Is it fair to have a society with punishments and rewards based on factors which are beyond the control of its members?
(Although, I wish I had asked, "Is it just?" rather than, "Is it fair?")

You interpreted it as this:
Is the free market fair?

I don't see them as the same question. I am not stipulating any particular market strategy (or whatever).

We largely agree that children (so... everyone) is born into a socioeconomic setting that is not by their choice.
The early, some would say "formative," years of a person's life are set against this backdrop.

I think we can agree that there are dramatic differences in the public education system based on the economics of the local region.
At the very least, I think we can agree that the number and quality of economic opportunities that are presented across different economic profiles vary dramatically.

So we agree that the system we revere as being open to, or even encouraging, social mobility has its flaws.

Which seems to imply that we agree that, while there are individual exceptions, most people enter their adult life with a certain amount of financial acuity, and that this is (at least for many) beyond their control.

So I'm back to the question, is it just to have a legal system which rewards and punishes citizens based on circumstances that are largely beyond their control?
If no: What are the perils of attempting to address this systemic injustice?

Quote:

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Originally Posted by MadMojoMonkey

This is exactly what I'm curious about.
Within an overriding framework of capitalism, there are pockets where other economic systems enhance value.

---

Maybe you should elaborate on what these pockets are. Did you mean when someone enters into a relationship, it enhances their value? Okay, I can get behind that, but again, consent is crucial to the equation. I don't believe it can be stated that there are pockets within a capitalist framework wherein coercion enhances value.

Quote:

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Originally Posted by MadMojoMonkey

I asked this:
Is it fair to have a society with punishments and rewards based on factors which are beyond the control of its members?
(Although, I wish I had asked, "Is it just?" rather than, "Is it fair?")

You interpreted it as this:
Is the free market fair?

I don't see them as the same question. I am not stipulating any particular market strategy (or whatever).

---

I felt you were implying that a system where everyone voluntarily agrees to all exchanges of resources was necessarily one in which punishments and rewards are sometimes based on factors outside of the control of the actors. Did I jump to the wrong conclusion? Of course, this is what a capitalistic society is, and of course, that is true of capitalistic societies. And it is fair and just by a reasonable interpretation of the definitions of those words.

Quote:

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Originally Posted by MadMojoMonkey

What are the perils of attempting to address this systemic injustice?

---

You need first to establish why it is unjust for two people to have different levels of wealth from birth. Not state it as a given. It is a fact of life that fortunes are distributed unevenly. Life is risk, the concepts are inseparable. And its not only with wealth. Some of us are born with favorable genetics. Two children may be born with enormous worldly wealth but one has shitty parents who don't hug him enough. He grows up to be a neurotic mess. Does the state need to enforce hugs as well?

If you want to make a case for states to subsidize the poor, it needs to be from a different point of view than social justice. An economic case needs to be made that this actually benefits society. At the very least it needs to benefit the poor people you mean to help. In most cases the anti-poverty measures even fail at that. In other cases, the programs simply increase the population growth of the poor by directly incentivizing single motherhood. If the aim is to even the playing field and smooth out the variance of being born, then the methods need to be subtle. The state is never subtle.

Succinctly put.

And the things I say should be state controlled, ie education, health care, basic infrastructure, tie in nicely with this question.

^^^^ at mmm

And a good response.

Quote:

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Originally Posted by rong

Succinctly put.


And the things I say should be state controlled, ie education, health care, basic infrastructure, tie in nicely with this question.

---

Assuming the question (in question) was "what are the perils of the state running these programs?"


I've already beaten the dead horses of healthcare and basic infrastructure into a bloody pulp in this thread, so I'll say a bit about public education.


I think we're going to have front row seats to view the perils of public education during the next 10 or 20 years. The internet is about to revolutionize education, and this is going to be a big problem for public education. We're still using the same 12-13 year primary/secondary + 4-6 year post-secondary template for education that has been in play for like 150 years. It's in the nature of state institutions to get put into place, added on to, even revised occasionally, but never ever removed. I believe we're going to soon discover that it shouldn't take 13 years to train someone to be a person, nor should it take 4-6 years to train them to be a scholar. But these institutions will have an incredible amount of inertia when millions of public sector jobs are at stake.

Quote:

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Originally Posted by Renton

Maybe you should elaborate on what these pockets are. Did you mean when someone enters into a relationship, it enhances their value? Okay, I can get behind that, but again, consent is crucial to the equation.

---

Pockets can vary. A family sharing all resources. A company with a store room of paperclips and other supplies that are freely available to employees. Communities with parks or other building projects. Complicated "you scratch my back; I'll scratch yours" arrangements between businessmen or politicians.

All of these are exchanges of a good or service for an unspecified, non-capitalized amount. The economics of those interactions are, as you put it, based on the contractual agreement, perhaps unspoken or implicit.

I'm not sure informed consent is crucial. Which makes a world of difference. People are victimized by hidden information in personal and business dealings all the time. I'm not talking about someone lacking their own due diligence. So I see there is a boundary of trust involved in where the pockets extend.

Is that the only factor?

Quote:

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Originally Posted by Renton

I don't believe it can be stated that there are pockets within a capitalist framework wherein coercion enhances value.

---

Arrest is coercion. Imprisonment is coercion. Wufwugy would likely argue that taxation is coercion.

Quote:

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Originally Posted by Renton

I felt you were implying that a system where everyone voluntarily agrees to all exchanges of resources was necessarily one in which punishments and rewards are sometimes based on factors outside of the control of the actors. Did I jump to the wrong conclusion? Of course, this is what a capitalistic society is, and of course, that is true of capitalistic societies. And it is fair and just by a reasonable interpretation of the definitions of those words.

---

You jumped to the conclusion that I have any conclusions. I'm still asking questions. This topic is overwhelming. You have a massive head start on me.

I'm very much trying to acknowledge my ignorance of these matters. I'm trying to establish a baseline of sorts. As I was reading this thread, I felt like there's this often one-sided stance taken by various posters. I think you all make some good points. I'm struggling to piece a coherent picture of it all.

Frankly, if I put forth any opinion in this thread as far as a plan for society, I would almost definitely regret it within hours. If anything, it should be considered the idle musings of someone who's in over their head. I'm mostly trying to clear up some of my more mundane assumptions.

Quote:

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Originally Posted by Renton

You need first to establish why it is unjust for two people to have different levels of wealth from birth. Not state it as a given. It is a fact of life that fortunes are distributed unevenly. Life is risk, the concepts are inseparable. And its not only with wealth. Some of us are born with favorable genetics. Two children may be born with enormous worldly wealth but one has shitty parents who don't hug him enough. He grows up to be a neurotic mess. Does the state need to enforce hugs as well?

---

That's a fair point. It's complicated, perhaps self-contradictory. I think it's unjust for people to be treated differently under the law for factors which are beyond their control. I believe it's an individual's right to seek wealth and share it with whomever they choose. There may be contradictions in there. Especially as pertains to raising a family.

Historically, what has been the counter to growing wealth disparity?

Actually, no. We're drifting off topic of the notion that a strictly capitalistic society has never been practiced. Within the society there are other socioeconomic nuances.

What the benefits of those nuances?
Is a single economic methodology truly viable on a worldwide scale?
Is the choice of an economic methodology a function of resource pressures, such as geopolitical stability or access to technology, etc.?

It seems like even within a chosen methodology (I don't know the right word), there will be pockets where other dynamics provide advantages.

Quote:

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Originally Posted by Renton

If you want to make a case for states to subsidize the poor, it needs to be from a different point of view than social justice. An economic case needs to be made that this actually benefits society. At the very least it needs to benefit the poor people you mean to help. In most cases the anti-poverty measures even fail at that. In other cases, the programs simply increase the population growth of the poor by directly incentivizing single motherhood. If the aim is to even the playing field and smooth out the variance of being born, then the methods need to be subtle. The state is never subtle.

---

I really don't want to talk about subsidizing the poor. I agree that the case needs to be made that it benefits society in the long-term / big picture.

I'm intrigued by your point at the end, there.

@Me: Actually, no. We're drifting off topic of the notion that a strictly capitalistic society has never been practiced. Within the society there are other socioeconomic nuances.

***
That's unfair. I brought up the relationship between wealth inequality and equal rights. I meant it as a side topic, but it has become the focus.

I'm confusing two concepts, I think.

I will continue on this line of questioning, if there are questions directed to me.

Quote:

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Arrest is coercion. Imprisonment is coercion. Wufwugy would likely argue that taxation is coercion.

---

I will reply to the other stuff when I wake up, but the anarcho-capitalist view is that coercive acts are only justified in response to coercive acts. That is, if someone is aggressive toward you or your stuff, then you (or your goons [or the state, by proxy]) have the right to reply with aggression yourself. Thus, in a minarchist state, people would only be arrested and jailed for crimes like theft, fraud, assault, rape, and murder. And taxation is certainly coercive and immoral from this perspective. I'm not that interested in having a broad "is taxation theft?" debate, though certainly I hope we can all agree that taxes generally suck and should be minimized, at the very least.

Quote:

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Originally Posted by CoccoBill

That's assuming that building a luxury yacht is better for the society than shopping groceries for the same amount. It also assumes that the highest economic growth rate, regardless of who directly reaps the benefits of it, is the most favorable option. There is no evidence of a trickle-down. Savings by definition is income minus consumption.



Not really a misunderstanding, more like my personal opinion of the outcome. Not everyone has equal ability to choose due to lack of resources. Security works a bit like vaccinations, there's herd immunity if you live among people with high security. The opposite is true for lower security areas, which would lead to ghettofication. I'll leave out the whole conversation of knowing on a personal level what the most practical and cost-effective security measures to invest in are, and assume all people would become security experts.



Then why is the distribution that way, which regulation is cockblocking the trickle-down?

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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.

Quote:

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Originally Posted by rong

Giving freedom to thrive or rot as opportunity and chance allow does not equate to empathy.

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I'm not the biggest fan of claiming that capitalism is empathic. I think that kind of statement is wrought with holes. But if we're using this frame, there are two points to make here

(1) What's more selfish: allowing people the freedom to choose or coercing conformity? Capitalism is the former and socialism is the latter. Even if socialism has a heart of gold and means only the best, it is still the latter. And even if capitalism is hard and brutal, it is still the former.

(2) Let's pull a logical tactic out of the hat the left often wears: Just like "institutional racism" is somehow a thing, "institutional empathy" can now be a thing. The way the left finds "institutional racism" is data-mining any statistics that show ethnic disparity in outcomes and laying the blame on some form of racism. Likewise, we can examine what capitalism does for societies compared to socialism and determine which creates more "institutional empathy".

Historically, there is no competition. Capitalism beats the piss out of socialism. Its streets are safer, people are more prosperous. By a ton. Theoretically, capitalism is the mechanism by which products and services are made better for cheaper costs. Over time, this creates a more prosperous, safer, advanced society with people who find it much easier to engage empathy.

One of the economics professors who blogs at econlog (I forget who, but I think it was David Henderson), has briefly commented on some long-term friends he's had who grew up in Soviet bloc countries under strict socialism. He claims they are weirdly selfish. One of his examples comes from playing beach volleyball with them over the years. They consistently would make any questionable calls in their own favor (like if the ball hits right next to the line but nobody could tell if it was in or out). It wasn't that they would sometimes call it in their favor, but that without question they would call it in their favor. He thinks that this anecdote could be representative of the type of mentality that socialism fosters. The rationale is that because socialism cares fuckall about merits and everybody is granted what they are determined to "need" based on some abstract disassociated ideal, maybe the people have to take every tiny win they possibly can. They have no freedom to be better (and none to be worse), and the society this creates may be one of ultra entitled selfishness. This is just one guy's anecdote, not any known social or economic theory.

The power of choice that people have over their own circumstances that the vote gives them: +1 strength.

The power of choice that people have over their own circumstances that capitalism gives them: +1000 strength.



I think this my new go-to logic. I mean, most people claim democracy is good because the vote gives people power over their circumstances. So if something is better than the vote at doing that, then doesn't that mean that all pro-democracy people should become pro-that-other-thing people instead?

Quote:

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Originally Posted by wufwugy

The power of choice that people have over their own circumstances that the vote gives them: +1 strength.

The power of choice that people have over their own circumstances that capitalism gives them: +1000 strength.



I think this my new go-to logic. I mean, most people claim democracy is good because the vote gives people power over their circumstances. So if something is better than the vote at doing that, then doesn't that mean that all pro-democracy people should become pro-that-other-thing people instead?

---

An adjunct to this is that my own personal theory is that the benefits people got from the democratic constitutional revolutions are in how the constitutions restrain government power. Before the US Constitution, it was legal for the government to do 100% of things. But then the operating difference became that some things are illegal for the government to do. The plaintext declares that our freedoms emerge from this regulatory restraint:

Quote:

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Amendment I

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

---

Quote:

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Originally Posted by wufwugy

Before the US Constitution, it was legal for the government to do 100% of things.

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Which government? There wasn't really a US government before the constitution. There was a provisional government. I understand they had laws, too.

I don't know how far back into history you have to look to find an ungoverned people. Do you know of any?

Quote:

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Originally Posted by MadMojoMonkey

Which government? There wasn't really a US government before the constitution. There was a provisional government. I understand they had laws, too.

I don't know how far back into history you have to look to find an ungoverned people. Do you know of any?

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I worded that weirdly, but I'm referring to every government I've read about. At least ones that arose after the classical Greeks. Unless I'm wrong, I think the revolution of the US Constitution was that it was the first state with an actual constitution with restraints on government.

I miiiiiight be wrong on this, but I don't think so: the constitutional revolutions overthrew monarchies with technically total legal power.

Quote:

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Originally Posted by MadMojoMonkey

Pockets can vary. A family sharing all resources. A company with a store room of paperclips and other supplies that are freely available to employees. Communities with parks or other building projects. Complicated "you scratch my back; I'll scratch yours" arrangements between businessmen or politicians.

All of these are exchanges of a good or service for an unspecified, non-capitalized amount. The economics of those interactions are, as you put it, based on the contractual agreement, perhaps unspoken or implicit.

I'm not sure informed consent is crucial. Which makes a world of difference. People are victimized by hidden information in personal and business dealings all the time. I'm not talking about someone lacking their own due diligence. So I see there is a boundary of trust involved in where the pockets extend.

Is that the only factor?

---

Only consent is crucial. Informed consent is preferred for a "perfect" economy, but it is not required. Say you're the owner of a plot of land rich with oil, and you have no idea. You go on for decades not knowing the true value of your land. I'm an experienced oil speculator who knows there's an excellent chance your land has oil, and I offer to buy your land without making you aware of my intentions for its use. We agree to an amount that is consistent with your (probably incorrect) valuation of the land. Then I find the oil and get rich from it.

Basically your post says that I victimized you here because I had hidden information. In reality I increased the wealth of the human race by tapping into a resource you had no idea about. Should I have been a good samaritan and said "dude, dig a well on your property, trust me"? Shouldn't I profit from the expertise I offered to this problem?

Quote:

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Originally Posted by MadMojoMonkey

That's a fair point. It's complicated, perhaps self-contradictory. I think it's unjust for people to be treated differently under the law for factors which are beyond their control.

---

I couldn't agree more. I think the law should treat everyone the same as well. I think the misunderstanding is that you're relating "equal treatment under the law" with having an equal amount of stuff as everyone else. A wealth disparity can exist and the law still treat everyone equally.

Quote:

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Originally Posted by MadMojoMonkey

Historically, what has been the counter to growing wealth disparity?

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To paint in extremely broad strokes, unfettered capitalism likely increases the wealth of the rich more quickly than that of the poor. The problem with assessing this as a negative is that it ignores the fact that the entire pie which is the economy also grows. Basically the more stuff there is in the world (stuff being goods, offered services, capital instruments, collective knowledge, etc.), the richer we all are. So the poor person gets an ever-smaller slice of the pie in terms of radians, but an ever-larger slice in terms of area. The empirical data largely agrees with this.

Quote:

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Originally Posted by MadMojoMonkey

Actually, no. We're drifting off topic of the notion that a strictly capitalistic society has never been practiced. Within the society there are other socioeconomic nuances.

What the benefits of those nuances?
Is a single economic methodology truly viable on a worldwide scale?
Is the choice of an economic methodology a function of resource pressures, such as geopolitical stability or access to technology, etc.?

---

I'm not a historian, but I'm sure there's a reasonable case to be made that traditional state functionality was important to pre-information age society. I think the changes that are being made just in my generation alone are momentous enough to warrant shedding many of our institutions. It is scarcely imaginable what innovations may emerge in the next 100 years to completely revolutionize how we organize our society.

Quote:

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Originally Posted by Renton

I'm not a historian, but I'm sure there's a reasonable case to be made that traditional state functionality was important to pre-information age society. I think the changes that are being made just in my generation alone are momentous enough to warrant shedding many of our institutions. It is scarcely imaginable what innovations may emerge in the next 100 years to completely revolutionize how we organize our society.

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How has the game changed?

We may be in a new environment, but we still act the same as we always have.

http://cushmanlab.fas.harvard.edu/do...an_inpress.pdf

Quote:

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Originally Posted by wufwugy

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.

Quote:

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Originally Posted by a500lbgorilla

How has the game changed?

We may be in a new environment, but we still act the same as we always have.

http://cushmanlab.fas.harvard.edu/do...an_inpress.pdf

---

I think technology is interconnecting us in a way that will allow the market to handle a lot of things we previously thought not possible. Of course human frailty hasn't changed at all, but I don't think the institutions are doing a particularly good job at safeguarding us from that. It will express itself regardless of how we organize society.

Could this human frailty upset the economically understood functioning of markets?

https://en.wikipedia.org/wiki/Tulip_mania

As an aside, I was thinking about capitalism as the 'perfect' set of incentives to motivate workers and it strikes me as kind of like how bodybuilders become addicted to the iron once they start seeing results. For some, they get a taste of profitability and its cocaine like spell rewires them to want more, and more. But just like in body building, you need to get over that initial lethargy, that front-heavy sacrifice and investment before tasting those sweet results that drive so many to really run wild. Perfect with flaws, methinks.

Quote:

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Originally Posted by a500lbgorilla

Could this human frailty upset the economically understood functioning of markets?

https://en.wikipedia.org/wiki/Tulip_mania

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It's an interesting story but is it a market failure? I would say that something like this would be far less likely to be possible today, but I've seen it compared with bitcoin. Honestly I'm not well enough educated about bitcoin to determine whether the comparison is fair.

Quote:

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Originally Posted by CoccoBill

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.

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

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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.

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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.

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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.

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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.

Markets are like evolution. Extremely macro. Lots of survival of the fittest and not-survival of the not-fittest. Science is the same way. We don't judge a field based on some experiments that didn't go our way.

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Originally Posted by wufwugy

Markets are like evolution.

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No.

There is a distinct difference between systems with rules that change over time.

https://www.youtube.com/watch?v=C2vgICfQawE

Rules-bound behavioral systems that change over time, like the meta game of poker for instance.

And actual natural evolution.

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Originally Posted by wufwugy

Science is the same way. We don't judge a field based on some experiments that didn't go our way.

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Because they're a science, practicing the scientific method. Every experiment moves a scientific field forward. Economics is not a science, though.

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Originally Posted by Renton

It's an interesting story but is it a market failure? I would say that something like this would be far less likely to be possible today, but I've seen it compared with bitcoin. Honestly I'm not well enough educated about bitcoin to determine whether the comparison is fair.

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It certainly is an example of people participating in a marketplace.

I just don't think it is a failure. The tulip REALLY WAS worth that much. Intrinsic value is mostly a fantasy. Did anyone other than speculators suffer harm? Maybe some tulip farmers lost their jobs, but they were likely serfs who weren't profiting at all from the bubble anyway.

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Originally Posted by a500lbgorilla

No.

There is a distinct difference between systems with rules that change over time.

https://www.youtube.com/watch?v=C2vgICfQawE

Rules-bound behavioral systems that change over time, like the meta game of poker for instance.

And actual natural evolution.



Because they're a science, practicing the scientific method. Every experiment moves a scientific field forward. Economics is not a science, though.

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Markets are like this.

I think perhaps you're not understanding why I compare markets to evolution. Evolution is a process of variants within populations being selected for over time. The market is a process of variants within populations being selected for over time.

I'm confused on why you seem to disagree with this, so I don't have much more I can say.

What happened was a spectacle. People thought they found a new honey, and the same old ancient drives that dictate what you do when you find honey had them pumping up that bubble.

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Although Mackay's book is a classic, his account is contested. Many modern scholars feel that the mania was not as extraordinary as Mackay described and argue that not enough price data are available to prove that a tulip bulb bubble actually occurred

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Originally Posted by wufwugy

Markets are like this.

I think perhaps you're not understanding why I compare markets to evolution. Evolution is a process of variants within populations being selected for over time. The market is a process of variants within populations being selected for over time.

I'm confused on why you seem to disagree with this, so I don't have much more I can say.

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Evolution is. Our explanation and understanding of Evolution is very strong. You can look into the furthest reaches of the biological world and find that we're close on the money. And our understanding of how it works in an incredible testament to what happens when brilliant minds with a lot of information apply the scientific method.

When you talk about markets, you aren't talking on the same level. I've made this point a dozen times in a dozen different ways. What you're talking about is some imagined system that has rules for how every step will unfold. Rules like, people will allocate their money based on their preferences and so each person will allocate his surplus of work to another whose work they need and will keep it from another whose work they don't need. And so the system will grow those works that are needed and shrink those works that are not.

What that is is playing imagination games with rules, it is not anywhere close to the same plane as what happens when people discuss the mechanism of evolution.

The first link I shared shows how you can craft rules to make systems 'evolve', the second was an example of how people playing under the constraints of rules can evolve (which is where markets fit in), and both of them are a far cry from natural evolution and our understanding of it.

Basically, the thing you're missing is how hard it is to be right. How hard it is to guess the future.

"Bubble" is a false narrative. Nobody has yet described what they really are, and the data show they're not real. Example: several western countries are still running strong on their "housing bubbles" that never collapsed. Another example: the "China bubble" is suppose to collapse every six months. It continually defies this prediction and provides no evidence suggesting it will do otherwise.

There is a dark streak in the western psyche that when something goes good, it's too good to be real. The Federal Reserve is not unshackled by this delusion either. It believed the Roaring 20s was a bubble that needed to be popped, and we got the Great Depression out of their lunacy.

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Originally Posted by wufwugy

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Exactly what Economics is. An argument. Pick a side, if you want.

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Originally Posted by a500lbgorilla

What happened was a spectacle. People thought they found a new honey, and the same old ancient drives that dictate what you do when you find honey had them pumping up that bubble.

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Do you think speculators are this stupid, even in the 1600s? That there weren't shrewd ones who jumped ship early and made off rich? Any non-fool understands the risk involving in speculating during a possible bubble, and he accepts that risk or sells off. Yes there were apparently a lot of people who didn't see it coming, but I don't think its an inevitable consequence of lizard brain that bubbles happen. And finance has come a long way in 400 years. Also, the government has been directly responsible for the worst bubbles of the last 200 years, so again, I don't see a favorable comparison to market behavior in this regard.

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Originally Posted by Renton

Do you think speculators are this stupid, even in the 1600s? That there weren't shrewd ones who jumped ship early and made off rich? Any non-fool understands the risk involving in speculating during a possible bubble, and he accepts that risk or sells off. Yes there were apparently a lot of people who didn't see it coming, but I don't think its an inevitable consequence of lizard brain that bubbles happen. And finance has come a long way in 400 years. Also, the government has been directly responsible for the worst bubbles of the last 200 years, so again, I don't see a favorable comparison to market behavior in this regard.

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The bubble actually happened. Many someones fell on the stupid side of things.

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Originally Posted by a500lbgorilla

The bubble actually happened. Many someones fell on the stupid side of things.

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How do you know they were stupid? What if they they were making bets that had an 5/6 chance of winning X and a 1/6 chance of losing 4X? That's a perfectly profitable bet to make even if you lose big 1 out of 6 times.

I'm betting they were stupid because there's no reason to think they were smart.

http://www.amazon.com/Influence-Psyc.../dp/006124189X

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Originally Posted by a500lbgorilla

Evolution is. Our explanation and understanding of Evolution is very strong. You can look into the furthest reaches of the biological world and find that we're close on the money. And our understanding of how it works in an incredible testament to what happens when brilliant minds with a lot of information apply the scientific method.

When you talk about markets, you aren't talking on the same level. I've made this point a dozen times in a dozen different ways. What you're talking about is some imagined system that has rules for how every step will unfold. Rules like, people will allocate their money based on their preferences and so each person will allocate his surplus of work to another whose work they need and will keep it from another whose work they don't need. And so the system will grow those works that are needed and shrink those works that are not.

What that is is playing imagination games with rules, it is not anywhere close to the same plane as what happens when people discuss the mechanism of evolution.

The first link I shared shows how you can craft rules to make systems 'evolve', the second was an example of how people playing under the constraints of rules can evolve (which is where markets fit in), and both of them are a far cry from natural evolution and our understanding of it.

Basically, the thing you're missing is how hard it is to be right. How hard it is to guess the future.

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People don't want evolutionary biology to be predictive, but they do want economics to be predictive. None of the "guessing of the future" matters with my analogy to evolution. If it did, I wouldn't make the comparison in the first place. The comparison I'm making is when you step back and look at how the entire system functions on a philosophic level. They both are about competition of variants that are selected for by their environments.

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Originally Posted by wufwugy

People don't want evolutionary biology to be predictive, but they do want economics to be predictive. None of the "guessing of the future" matters with my analogy to evolution. If it did, I wouldn't make the comparison in the first place. The comparison I'm making is when you step back and look at how the entire system functions on a philosophic level. They both are about competition of variants that are selected for by their environments.

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Yes, on a philosophical level, what you're doing is playing imagination games with rules. These rules-based systems change over time. You don't gotta bring evolution into this.

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Originally Posted by a500lbgorilla

Exactly what Economics is. An argument. Pick a side, if you want.

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The last thing we need to do is rehash this.

Just because economics is much more difficult to study than physics, doesn't mean what study we can do is hogwash. While it does mean there is more to debate (since there is more unknown), it doesn't mean that its inquiries require less rigor.

It's like me saying that my lifting schedule is just like the 12 labors of Hercules.

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Originally Posted by wufwugy

The last thing we need to do is rehash this.

Just because economics is much more difficult to study than physics, doesn't mean what study we can do is hogwash. While it does mean there is more to debate (since there is more unknown), it doesn't mean that its inquiries require less rigor.

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Economics is incredibly strong at argumentation. Models, while always wrong, are usually better than any other game in town. Economics stands above everyone else at what it's trying to do, but don't forget its short comings.

I'm betting that they were stupid too because it was sixteen god damn hundred, but my point is that speculation during a possible bubble is not automatically stupid because the probability of the bubble bursting is not necessarily 1. As wuf mentioned, some of the housing "bubbles" have been inflating for a very long time now. In the same way, it is not automatically smart to take a position when a stock has dropped to 1% of its peak price. It can always go lower, and often it does.

If your point is that human nature makes people susceptible to making idiotic bets in either of these cases, I'm inclined to agree with that. But again, I don't consider it a limitation of markets. People are susceptible to drug addiction too, but that doesn't make drug prohibition any less of a disaster. Capitalism generally rewards profitable behavior and penalizes unprofitable behavior. What better answer to human frailty is there?

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Originally Posted by a500lbgorilla

Yes, on a philosophical level, what you're doing is playing imagination games with rules. These rules-based systems change over time. You don't gotta bring evolution into this.

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But I do because it suggests that markets are the same type of thing as something else that is widely accepted. That doesn't give markets veracity, but it does provide perspective about them.

I remember thinking "the way people are saying markets organize looks to me to be the same way species organize, so since the way it is said that species organize is true, maybe I should rethink my discarding of markets".

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Originally Posted by Renton

If your point is that human nature makes people susceptible to making idiotic bets in either of these cases, I'm inclined to agree with that. But again, I don't consider it a limitation of markets. People are susceptible to drug addiction too, but that doesn't make drug prohibition any less of a disaster. Capitalism generally rewards profitable behavior and penalizes unprofitable behavior. What better answer to human frailty is there?

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I don't consider it a limitation of markets or an expression of failure either. Just a feature.

And to the last question, I dunno, I'm still trying to get a full glimpse of our frailty.

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Originally Posted by wufwugy

But I do because it suggests that markets are the same type of thing as something else that is widely accepted. That doesn't give markets veracity, but it does provide perspective about them.

I remember thinking "the way people are saying markets organize looks to me to be the same way species organize, so since the way it is said that species organize is true, maybe I should rethink my discarding of markets".

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Yes, my point exactly. And when you look at the reasons to accept evolution versus the reason to accept markets, one is left desperately wanting.

And I contend that in a rhetorical sense, it does try to give them unearned veracity.

Also re: not a science. Economics is not the only discipline that must rely on models and make judgments about probabilities that are less than 1. Try theoretical physics. Newton's laws aren't even provable. There's no such thing as an inertial reference frame. Cosmology isn't a science by your definition either. What about the life sciences that attempt to make sense out of unimaginable complexity? You've repeatedly cited psychology, which might as well be astrology compared to economics in the "is it a science?" department.

http://www.project-syndicate.org/com...is-a-scientist

Not really a rebuttal article, just an economist's pretty balanced take on the question.

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Originally Posted by Renton

Newton's laws aren't even provable.

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https://www.youtube.com/watch?v=b9F8Wn4vf5Y

Newton was wrong. But for a wide range of natural phenomenon, he was close enough. And the trick is that we have a way for Nature to tell us this. Something we don't have in Economics.

Plus, I've already made this point. Models are always wrong, but usually better than anything else. If you're lucky enough to build your model on assumptions that are pretty well observed and steady, and if you're lucky enough to test all the consequences of your model against reality, then you're a science. But Economics is not so lucky.

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Originally Posted by Renton

Also re: not a science. Economics is not the only discipline that must rely on models and make judgments about probabilities that are less than 1. Try theoretical physics. Newton's laws aren't even provable. There's no such thing as an inertial reference frame. Cosmology isn't a science by your definition either. What about the life sciences that attempt to make sense out of unimaginable complexity? You've repeatedly cited psychology, which might as well be astrology compared to economics in the "is it a science?" department.

http://www.project-syndicate.org/com...is-a-scientist

Not really a rebuttal article, just an economist's pretty balanced take on the question.

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PS I've seen this article before. Welcome to the world of argument. Every side can be fought for. It usually takes Nature to step in to settle the debate.

Look here, someone like me: http://www.thecrimson.com/article/20...-science-wang/

A scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die and a new generation grows up that is familiar with it. - Max Plank, a dude that was right in the face of a bunch of dudes that were wrong.

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Originally Posted by a500lbgorilla

Yes, my point exactly. And when you look at the reasons to accept evolution versus the reason to accept markets, one is left desperately wanting.

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I wouldn't argue with that. Though I'm not a fan of the disparaging language. The answer to "is evolution true?" is "about as true as you can get" while the answer to "are markets true?" (a weird question, but whatever) is "all signs point towards yes, but if you're picking the nits, it's not the most robustly known thing in the world".

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And I contend that in a rhetorical sense, it does try to give them unearned veracity.

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Sure. I think you could describe arguments that way.

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Originally Posted by a500lbgorilla

https://www.youtube.com/watch?v=b9F8Wn4vf5Y

Newton was wrong. But for a wide range of natural phenomenon, he was close enough. And the trick is that we have a way for Nature to tell us this. Something we don't have in Economics.

Plus, I've already made this point. Models are always wrong, but usually better than anything else. If you're lucky enough to build your model on assumptions that are pretty well observed and steady, and if you're lucky enough to test all the consequences of your model against reality, then you're a science. But Economics is not so lucky.

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The thing is that while I'm okay with saying "sure" to this, I don't think this is the entirety of what's going on with your argument. Sometimes it sounds like you're saying "economics is really tough therefore economists don't know shit".