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Anti-Capitalist Sentiment (with some morality)

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  1. #526
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    ... the president isn't an expert. The speaker of the house isn't an expert. The people they employ are the experts.

    Will the socios and meglos in the private sector driven by the profit incentive and market forces solve the problems, or will the socios and meglos on gov't pay driven by the mandate of the people solve the problems?

    I see a role for both. You see a role for one.

    "Maximal societal harm"... man. You'd think societies couldn't exist with gov'ts.

    edit: It obviously can't be maximal. If it were, they'd just detonate the bomb over everywhere. That'll do.
    Last edited by a500lbgorilla; 05-21-2015 at 05:05 PM.
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  2. #527
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    There are crazy people at the top of any social heirarchy, public or private. You need to be crazy to get there. Remember Steve Jobs thought he could cure cancer with fruit.
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  3. #528
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    Quote Originally Posted by Renton View Post
    I believe the state does a much better job at attracting megalomaniacs and sociopaths into positions to cause maximum societal harm than it is at attracting experts to solve society's ills. I don't disagree that human beings can be easily manipulated. I disagree that states offer a solution to the fallibility of human beings. Your argument doesn't seem to be serving your point of view very well, actually, as the political system exhibits and often magnifies all of the human flaws you're talking about. At least the free market attempts to serve consequences to people for their successes and failures. Maybe a positive incentive structure would foster more enlightened human beings than a perverted incentive structure does.
    The carrot AND the stick, though.

    PS the environment and time drives evolution. There'll still be teen pregnancies between cheerleaders and QBs well before they can be groomed by the world's economic structure.

    Thinking about it further, the wealthy and enlightened folk will have fewer kids than the dumb poor. You showed this. The wealthy nations have fewer kids because the economics of it changes.
    Last edited by a500lbgorilla; 05-21-2015 at 05:09 PM.
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  4. #529
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    And very clearly the state does offer solutions to the fallibility of human beings. It reduces crime rates. It can reduce these behaviors, why not those?
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  5. #530
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    I believe societies are incredibly resilient. Economic forces are generally stronger than even fairly strong and oppressive states. Most of what states do merely retards advancement. I wouldn't claim that many of the governments of the world are actually regressing their societies through policy, though that could change pretty soon. Markets will solve problems where people value the solutions, and that's all. States tend to make up phantom problems, or attempt to solve problems that aren't high priorities for enough people for market-based solutions to gain traction.

    Re: the corporate sociopaths, their fallout is generally limited to a smaller area than the political system would have allowed, and they're accountable, unlike politicians. And most importantly it would be nice if they didn't have so much facility to lobby the state to leverage their harm.
  6. #531
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    Quote Originally Posted by a500lbgorilla View Post
    And very clearly the state does offer solutions to the fallibility of human beings. It reduces crime rates. It can reduce these behaviors, why not those?
    1) Crime rates naturally decrease in a growing/stable economy
    2) Law enforcement and litigation are valued institutions, and there's no reason to believe that they wouldn't exist in a stateless society, and be more accountable, effective, and less of a financial boondoggle.
  7. #532
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    Quote Originally Posted by Renton View Post
    1) Crime rates naturally decrease in a growing/stable economy
    2) Law enforcement and litigation are valued institutions, and there's no reason to believe that they wouldn't exist in a stateless society, and be more accountable, effective, and less of a financial boondoggle.
    Chicken or egg?

    Growing stable economies require low crime rates...

    And while they're valued institutions, it's only ever been states with the ability to institute them. Show me a free society with a justice system to rival Britains.
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  8. #533
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    Quote Originally Posted by Renton View Post
    I believe societies are incredibly resilient. Economic forces are generally stronger than even fairly strong and oppressive states. Most of what states do merely retards advancement. I wouldn't claim that many of the governments of the world are actually regressing their societies through policy, though that could change pretty soon. Markets will solve problems where people value the solutions, and that's all. States tend to make up phantom problems, or attempt to solve problems that aren't high priorities for enough people for market-based solutions to gain traction.

    Re: the corporate sociopaths, their fallout is generally limited to a smaller area than the political system would have allowed, and they're accountable, unlike politicians. And most importantly it would be nice if they didn't have so much facility to lobby the state to leverage their harm.

    Yes, but it'll also value anti-solutions where anti-solutions are valued. You can't pretend to know how the market will behave. It could literally move in any direction. I saw that John Oliver piece about chicken farmers and I still ate chicken today and will tomorrow. How many people know the iPhone is manufactured by blood but still snatch it up every year? There have been reports about how many workers are dying to make the next big soccer tourny happen, and the world will still gobble it up. And I'm super jazzed for this year's college football season.

    To the second bold, ENRON though. The global financial crisis, though.

    And yeah, a better form of gov't would omit this kind of lobbying I agree. I don't think we've seen the best mix of public and private institutions. I suspect there will be a gov't and it will have a regulatory force in industry on behalf of the consumer and then the companies will compete under those rules. There's no reason to believe human society can ever achieve any better than, "well, this is crap but it's good enough."
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  9. #534
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    Quote Originally Posted by a500lbgorilla View Post
    Yes, but it'll also value anti-solutions where anti-solutions are valued.
    And if I'm remembering correctly, even in Hong Kong with a gov't that could not give a shit about the chinese population in the colony, they were still forced to intervene because of conditions in the cities during one of the boom times. I'm really scratching the back of my memory, but I remember the wealthy businessmen had set up some sort of public service hospital and community center and I can't remember if it was in response to the British governor or a separate thing entirely... I need to read that book again.
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  10. #535
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    I don't want to get into stateless law enforcement because it's too radical in a thread where I can't even convince people that the government should stop taking huge shits on every facet of the economy. I believe it could exist, but I'm quite alright with a minimal state that provides non-excludeable services like defense and law and order type stuff.

    Anti-solutions are like... your opinion, man. The chicken farmer piece didn't really convince me of much, and I don't understand how the iphone is manufactured by blood, maybe you could link me to something for that? If its the standard sweatshop stuff, I think you know my position on sweatshops and how they're dramatically improving the lives of the poor in third world countries. Qatar is fucking Qatar, no libertarian or anarcho-capitalist on this planet is in favor slavery, and no slavery could exist without a government to enforce it.

    ENRON was accountable for its crimes in a way that no politician or government entity in history has ever been accountable. It went bankrupt and its fallout was mainly self-contained. Seems fine. The global financial crisis is 100% state. The private sector played a role to be sure, but the incentives, artificially low interest rates, and heavily-subsidized home-owning was all state.
  11. #536
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    Global financial crisis was 100% state saying the private banks knew exactly what they were doing. It was a complete failure on both ends.
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  12. #537
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    I think an entire thread could be about unsound currency, which plays a major role in business cycles as well. Free market money and interest would make it much less likely for these crises to occur.
  13. #538
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    Quote Originally Posted by Renton View Post
    Free market money and interest would make it much less likely for these crises to occur.
    I'll be honest. I don't even know what this sentence means.

    And is this with a gov't or without? Because if it's without a gov't, we're looping way back around to one of my original points. Solve one problem over here in the market place, create others over here against marauders and theives.
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  14. #539
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    Quote Originally Posted by Renton View Post
    I think an entire thread could be about unsound currency, which plays a major role in business cycles as well. Free market money and interest would make it much less likely for these crises to occur.
    Also, it might be interesting to have a thread dedicated to the global financial crisis.
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  15. #540
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    Quote Originally Posted by Renton View Post
    ENRON was accountable for its crimes in a way that no politician or government entity in history has ever been accountable.
    French revolution, though?

    What we see is all there is. Just because you can't think of one, doesn't mean their isn't one. Just because you can't think of how the Free Market might fail, doesn't mean it can't.
    Last edited by a500lbgorilla; 05-21-2015 at 06:21 PM.
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  16. #541
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    I read a really great comment in a reddit thread that helps highlight what I don't like about the way you make your cases, Renton. Your beliefs are always so crystalline and absolute. This is how it would be. That you believe things about the free market and its consequences which are obvious. That people just need to be convinced of the viability of stateless police forces and justice systems. That the state is overwhelmingly sociopathic and dolling out maximal damage to all it governs...

    "One rather strong example of the whole "it's common sense" idea stands out to me from my first day as a neuroscience student. My professor got up in front of the entire class and told the class that "babies do not recognize the difference between an attractive and an unattractive face." He then asked who thought this was common sense. A significant portion of the class raised their hands, and when he asked a student why the student responded, "Duh, babies aren't sexually active. Anyone could have told you this."

    The professor then switched to the next slide and pulled up a study that read something like "infants display gaze preference for faces rated as highly attractive." The whole room went totally silent and my professor told us, "Psychology seems like common sense. But this is a trap, because the right answer and the wrong answer may both seem to make logical sense. What matters is what we actually observe, not what we imagine to be the truth."

    I don't care what can be argued to make logical sense. I only care what can be shown to be the case.
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  17. #542
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    Wait, is anarcho-capitalism built upon the Austrian School. I remember sorta reading the first paper by the guy who made that.

    Carl Menger, Principles of Economics.

    https://mises.org/sites/default/file...conomics_5.pdf

    This is why I have such trouble with your positions. They require all of these fundamental tenets to be true. They don't take them because they observe them to be true, just that they take them to be true.

    http://en.wikipedia.org/wiki/Austria...amental_tenets

    I don't like when they invent tenets where there are no demonstrations for them and you just can't argue against them. Where the counter is, "well how else could it be?"
    Last edited by a500lbgorilla; 05-21-2015 at 07:01 PM.
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  18. #543
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    Mainstream economists have argued that Austrians are often averse to the use of mathematics and statistics in economics.[71] However, independent scholar Martin Sibileau, in 2014, offered a formal proof that, based on the Church-Turing thesis, human action is not "decidable", "computable" and therefore cannot be mathematized. He also suggested a logics-based approach for a definitive formalization of the Austrian thought.[72]
    Haha, that's awesome. And fair. But I don't believe so deeply in logic as these cats do. You need the scientific method to tell you your logic isn't wrong

    Economist Paul Krugman has stated that because Austrians do not use "explicit models" they are unaware of holes in their own thinking.[74]
    hahaha, oh man. I have an even more esoteric position than Krugman.
    Last edited by a500lbgorilla; 05-21-2015 at 07:09 PM.
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  19. #544
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    just watch the first 15 seconds... and then all of the rest of his lectures.
    Last edited by a500lbgorilla; 05-21-2015 at 07:37 PM.
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  20. #545
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    Quote Originally Posted by a500lbgorilla View Post
    I'll be honest. I don't even know what this sentence means.

    And is this with a gov't or without? Because if it's without a gov't, we're looping way back around to one of my original points. Solve one problem over here in the market place, create others over here against marauders and theives.
    Free market interest is simply a state where banks or whomever can lend at whatever rates they need to in order to cover their bets. Additionally, they would need to insure their deposits by private means, and thus would be financially accountable for the risks they take with depositors' money.

    Free market currency is a state where banks or whomever can issue their own brand of legal tender and trade with others. Or it could be a cryptocurrency. Or it could be a government fiat currency where the gov't doesn't have the authority to inflate it whenever they want. Anything but the current system.

    Quote Originally Posted by a500lbgorilla View Post
    French revolution, though?

    What we see is all there is. Just because you can't think of one, doesn't mean their isn't one. Just because you can't think of how the Free Market might fail, doesn't mean it can't.
    Yes, armed rebellion is one of the rare ways in which governments-run-amok receive comeuppance. My point is that the self-accountability is not, nor has it ever been, an important component of modern government. It is built in to market activity though. Also, I'm not sure we have the same standards for what constitutes a market failure. Maybe you could make a post about some situations that you would consider to be market failures, real or hypothetical.

    Quote Originally Posted by a500lbgorilla View Post
    I read a really great comment in a reddit thread that helps highlight what I don't like about the way you make your cases, Renton. Your beliefs are always so crystalline and absolute. This is how it would be. That you believe things about the free market and its consequences which are obvious. That people just need to be convinced of the viability of stateless police forces and justice systems. That the state is overwhelmingly sociopathic and dolling out maximal damage to all it governs...
    Look, the farther you get into anarcho-capitalism, the farther you have to wander into theory land. That's just the way it is when proposals become farther and farther removed from current reality. That's why I have low interest in talking about strictly stateless society in this thread. The positions that I have absolute confidence in are demonstrable woes of state policy and boons of free enterprise. There is no theory necessary to prove that stepped-on currency is bad for us. There are no logical leaps required to prove that >95% of price control regulations hurt more people than they help. There's every reason to believe that individual liberties are nearly universally good and coercive acts nearly universally wrong.

    I never said that the state is overwhelmingly sociopathic. I said that it is a mechanism that attracts sociopathic alphas into a position that they're able to cause maximum damage. Evil-doers are a pretty tiny percentage of the population regardless if there is a state or not, and their lack of empathy for others all but ensures that they'll thrive. The only difference is that arbitrary authority allows them to leverage their mayhem on a larger scale than would be otherwise possible, and the state usually shields them from much of the liability for their behavior. Police officers are an excellent example of this.
    Last edited by Renton; 05-21-2015 at 11:23 PM.
  21. #546
    Sorry guys I think I'm done debating this stuff. My energies are going elsewhere.

    Maybe I'll join the Free State Project at some point.
  22. #547
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    Quote Originally Posted by Renton View Post
    I never said that the state is overwhelmingly sociopathic. I said that it is a mechanism that attracts sociopathic alphas into a position that they're able to cause maximum damage. Evil-doers are a pretty tiny percentage of the population regardless if there is a state or not, and their lack of empathy for others all but ensures that they'll thrive. The only difference is that arbitrary authority allows them to leverage their mayhem on a larger scale than would be otherwise possible, and the state usually shields them from much of the liability for their behavior. Police officers are an excellent example of this.
    I tend to think no "evil" or "good" exists in the traditional sense. Pretty much all sane, whatever that means, people tend to want good things for the people they care about, and are indifferent to a varying degree to all others. From what I've read there's no strong genetic component to this, it's mostly all caused by social factors, such as poverty, inequality, personal tragedy.

    I'd argue that looking into the actions and aims of everyone, you would see they're working towards what they think is "good" and just, according to their own moral frame of reference. Terrorists are trying to avenge their loved ones and fight the (perceived or real) oppression. Hitler was trying to make the world better according to his own set of ideals that we're (need I say it?) obviously twisted. The circle of friends you care about may vary people to people, but it seems our tribal past makes this circle usually pretty small, from tens to hundreds of people, out of the 7 billion.

    If you're not related to someone, not born in the same country/state/city/neighborhood, share the same core beliefs or root for the same causes or soccer teams, chances are they don't give a shit about you. They may not be actively trying to harm you, but might do that in a blink of an eye if they feel you're threatening their circle, or at least won't necessarily lift a finger even if they see you being wronged. There's no evil, just indifference and conflicting goals. My point being, potential evil-doers aren't a tiny percentage of the population, but the vast majority, arguably everyone.
    Our brains have just one scale, and we resize our experiences to fit.

  23. #548
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    Obviously a huge percentage of the population is capable of evil depending on your definition of evil. I think setting the line at aggressive violence is about right. Violence when not acting in defense of oneself is wrong. Governments are the only entities with monopolies on violence (thats an Obama quote), and you have to frame any pro-government argument as being a "necessary evil."

    The conversation about what is evil or what isn't is a boring one. The relevant conversation should be about how incentives affect aggressive behavior.
  24. #549
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    Hypothetical Situation

    A large U.S. corporation employs thousands of workers, most of whom are around the 25th percentile income. Certainly below middle class. They can probably afford a frugal lifestyle but definitely aren't making enough to be able to save a large percentage of their incomes or have investment portfolios etc. Currently the compensation model of this company is an hourly wage dispensed bi-weekly. Let's say for the sake of argument that the average sub-management employee earns $10/hour, or about $20,000 annually for full time work.

    Consider two scenarios:

    Scenario A

    The company offers an optional deal to each employee. They agree either to the current compensation arrangement OR a new one in which they are paid 80% in cash and 20% in equity. Good news and bad news though. Good news is that for their 20% salary investment they get 1.5 times the market value of the company. In other words a $10/hour wage pays $8 cash and $3 in equity. The bad news is that there's a clause in the agreement that says they cannot sell the equity for some period of time (say 6 months) unless they quit the company.

    So as the employees who choose this offer continue to work, they build equity in the company, and will earn quarterly dividends if the company makes a profit, which they can either receive as cash or as equity, same deal as before. However, the value of their equity could also decrease if the company posts losses.

    What percentage of employees would take the deal?


    Scenario B

    Everything is the same as Scenario A, with the following exceptions. Instead of offering a 20% cut in pay that is replaced by the profit sharing / equity program, the employees are allowed to choose between a straight cash raise to 120% of their previous wage, or the same deal as above with 100% of their original wage + 20% equity. Again, they get 1.5 times the value of their investment.

    What percentage of employees would choose the equity program over the cash raise?


    Bonus question (for either scenario): How much (if at all) do you think you would you need to sweeten the equity deal for a majority of the employees to choose it over the alternative?
    Last edited by Renton; 05-27-2015 at 08:30 AM.
  25. #550
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    Quote Originally Posted by Renton View Post
    Scenario A

    What percentage of employees would take the deal?
    Close to none. The cost of living is simply too high, and a $2/hr cut in pay for 6 months would put most of them in the street.

    Scenario B

    What percentage of employees would choose the equity program over the cash raise?
    A lot more would take the deal, but I think most still take the straight up cash raise. Its much easier to understand a 20% raise than it is to understand getting an equity thing and figuring out what to do with it.

    Bonus question (for either scenario): How much (if at all) do you think you would you need to sweeten the equity deal for a majority of the employees to choose it over the alternative?
    Thats really neat. I think the biggest hurdle is people's need for more money now though. If there was an option for say, 110% pay + 10% equity, I think most would take that over the 100% + 20%. People want to feel like they made the right choice, and seeing the increase in actual pay accomplishes that very well.
  26. #551
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    I'm in line with JKDS on this one on both points + the bonus.

    Personally, I would take the investment option in A as, at the time I was working at this sort of job, I was well supported by my parents and would recognize the growing benefit of the equity.

    It's funny because this sort of thing could be framed differently, instead of equity in the company, it could be company-bucks where they can spend some of their wages on goods and services provided by the company (and have the company bucks be worth 1.5 normal bucks).
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  27. #552
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    I think the question gets to the root of how wages are determined. It's easy to say things like "companies ought to share the profits with their employees," but when you look more closely at the issue, it becomes clear that mandating this sort of thing would just hurt workers. I personally believe less than 1% would take the deal in the first case, and less than 5% in the second case. I also think that the percentages would be terribly low even up into middle class salaries. I believe a huge majority of people earning 45k a year would rather get the cash instead of 36k + equity.

    Similarly, this logic can be extended down to the lowest wages paid in third-world countries. If you offered Cambodian garment workers a proposal where they would make 80% as much, but have air-conditioning, more time off, and nicer working conditions, they would almost always want the extra money instead.
    Last edited by Renton; 05-27-2015 at 05:30 PM.
  28. #553
    Equity means nothing to most people. I don't think peoples' view of equity changes with economic status, but with level of familiarity with finance. With financial familiarity, even the poorest people would choose the equity options because spending can always be shifted on the margins.
  29. #554
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    I don't agree with that at all. I think its demonstrable that money now is worth more than money later, and that the comparison is the most sharp when you don't have much of it on hand. Rich and upper middle class people invest money because the marginal value of money is much-decreased for them. Basically, people with more wealth are able to ascribe greater value to long term financial security, retirement, etc, than poorer people, who simply do not have the privilege of thinking that far ahead.
  30. #555
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    I agree and I disagree. I think at poor levels, where you're investing so much stress into budget management, you probably won't take on the additional burden of stretching it even more. But yeah, the more familiar you are with the boon of equity, the more likely you'll be to try to take advantage. Especially if you're like a once successful financier who went to jail and this is the first job he could find once he got out, you better bet that guy will be living under a bridge for a period to build up the equity and give him a shot at building a business or some shit.
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  31. #556
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    Quote Originally Posted by Renton View Post
    I don't agree with that at all. I think its demonstrable that money now is worth more than money later, and that the comparison is the most sharp when you don't have much of it on hand. Rich and upper middle class people invest money because the marginal value of money is much-decreased for them. Basically, people with more wealth are able to ascribe greater value to long term financial security, retirement, etc, than poorer people, who simply do not have the privilege of thinking that far ahead.
    I invest money because I want to be able to retire. So some of my money now is not worth more to me than more money later. So this explanation is not true.

    edit Read your post wrong. I guess I got spun around by "money now is worth more than money later."
    Last edited by a500lbgorilla; 05-27-2015 at 05:54 PM.
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  32. #557
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    Well it's just possible that its a bad investment for people someone with no bankroll. Someone making only 10 dollars an hour might be better off putting 20% of what he makes in a savings account in case his car breaks down or something. Equity is risky, and putting 20% of your money on one stock probably isn't a great investment.


    Quote Originally Posted by a500lbgorilla View Post
    I invest money because I want to be able to retire. So some of my money now is not worth more to me than more money later. So this explanation is not true.

    I guess I got spun around by "money now is worth more than money later."
    I mean dollar for dollar, money now is worth more than money later. If you could put money away and be assured that it would be locked to inflation forever, but never actually increase in value, you're probably still taking a loss there, because there are usually ways of putting your money to actual productive use. A poor and unskilled person would be far better off spending 20% of their income on tuition for night classes or on productivity-enhancing measures like a better computer, or on risk-mitigating measures like a better health insurance policy. A retirement fund should usually be pretty far down the list of priorities for someone earning 10 dollars an hour.
    Last edited by Renton; 05-27-2015 at 06:01 PM.
  33. #558
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    I agree that dollar for dollar money now is valued more than money later, but my personal preference is for money later, especially when it's usually offered as more money later.

    I'd rather just manage my way through today with less and have a money cloud floating over my future...
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  34. #559
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    My point is that the acceptable conversion rate for present money to future money is different for different people, and tends to be higher for people with low incomes. Only the ultra rich would be correct in putting a large amount of money on an investment with a tiny return, even if the risk is nearly zero and the return nearly guaranteed.
  35. #560
    Quote Originally Posted by Renton View Post
    My point is that the acceptable conversion rate for present money to future money is different for different people, and tends to be higher for people with low incomes. Only the ultra rich would be correct in putting a large amount of money on an investment with a tiny return, even if the risk is nearly zero and the return nearly guaranteed.
    When we assume the equity investment has enough ROI for the investor, this doesn't matter, but it looks like you're not assuming that while I am assuming that. Poor people save all the time. They used to far more than they do today, probably mostly due to welfare incentives and probably also lack of education on finance and a cultural shift away from frugality towards current consumption as opposed to future consumption.
  36. #561
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    If you think poor people save money now, you're too far removed from the poor.
  37. #562
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    Quote Originally Posted by Renton View Post
    I don't agree with that at all. I think its demonstrable that money now is worth more than money later, and that the comparison is the most sharp when you don't have much of it on hand. Rich and upper middle class people invest money because the marginal value of money is much-decreased for them. Basically, people with more wealth are able to ascribe greater value to long term financial security, retirement, etc, than poorer people, who simply do not have the privilege of thinking that far ahead.
    This. Very much this. Investments are a luxury the poor typically can't afford. And another £50 a week when you are on min wage goes a long way. That's not to say poorer people wouldn't save any of an extra £50, but it would always need to be instantly accessible. It's not saving for retirement, it's saving for an unexpected car break down or broken washing machine.
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  38. #563
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    Actually I'll walk back my claim a little bit. I believe that the value of savings is high for everyone at every level of income, only the value is only high at lower amounts of savings. Let me try to explain.

    Suppose you draw a graph where the y-axis is is the amount of "value" in saving, and the x-axis is the amount of money saved.



    The red line is the poor person, the blue line is the middle class person, and the green line is the upper middle class person. The benefits of saving for the poor person are in mitigating the risks of minor catastrophes like needing to fix their car or have some money stashed in case they don't get enough hours at work. Past a point though, they just need to be investing their money into increasing their human capital.

    So when I said that the poor shouldn't save, what I meant was that they shouldn't save a lot as their need for money in the present is just too great.
  39. #564
    JKDS, Ronk, investment is future consumption. The metric of savings being the same thing as consumption in the future doesn't change regardless of current income or current consumption status. The poor definitely do spend a higher percentage of their incomes on current consumption, but this doesn't mean that they cant save because saving is also consumption. Total expenses are not equidistant, and what we find for the perpetual poor is that when they have profits left over, they spend it on non-essentials instead of savings. If, instead, they saved, they would increase the ability to consume in the future, which necessarily means that there isn't any true "paycheck to paycheck" poor.

    I feel like I didn't explain that well. Basically, if a person is in a situation where they're at their consumptive limit, savings increases that limit since it accumulates a higher rate of capital and is the same thing as consumption down the road. Obviously still the majority of expenses for the poor are necessary and current. But not all.

    It used to be very standard for the poor to save. Also the marginal utility of savings for poor people is substantially higher than for rich people. We live in a society where the poor live paycheck to paycheck unrelated to reasons that they "can't save". That aside, it's definitely far harder to save when you're poor, mostly for cultural reasons, but some for technical reasons.

    JKDS going to law school is a great example of this actually. AFAIK he's having to live more frugally than he otherwise would if he was not going to law school and being otherwise productive, but the law school is enough of an investment to increase his future consumption prospects, so he does it.


    This stuff is also one of the reasons why the wealthy are taxed far more heavily than we think and why taxes on capital are among the worst you can have in an economy. Some capital taxes end up being taxed double or triple by our current paradigm. Our incentives are setup in such a way that they encourage only the super rich to save or invest, and the poor end up seeing far lower ROI than they should because of these taxes, so the incentive is pushed towards just consuming now.
  40. #565
    Quote Originally Posted by Renton View Post
    Actually I'll walk back my claim a little bit. I believe that the value of savings is high for everyone at every level of income, only the value is only high at lower amounts of savings. Let me try to explain.

    Suppose you draw a graph where the y-axis is is the amount of "value" in saving, and the x-axis is the amount of money saved.



    The red line is the poor person, the blue line is the middle class person, and the green line is the upper middle class person. The benefits of saving for the poor person are in mitigating the risks of minor catastrophes like needing to fix their car or have some money stashed in case they don't get enough hours at work. Past a point though, they just need to be investing their money into increasing their human capital.

    So when I said that the poor shouldn't save, what I meant was that they shouldn't save a lot as their need for money in the present is just too great.
    I don't think this means the poor shouldn't save, but that they can save less. But also the marginal utility of savings for the poor is way higher than the rich. If you make 20k a year and have 5k in the bank, your choice to save up that 5k was magnitudes better for you than if you make 200k and saved 5k.

    One of the best ways for the poor to become rich is merely to engage a frugal enough lifestyle that they can save/invest 5-10% of their incomes. After a lifetime, you've created a pretty big estate. If you teach your kids the same principles, they'll end up being quite rich.

    In this country, and many others actually, there has been major generational shifts in income largely because of this. There is also a major age gap in income because the older tend to have accumulated savings.
  41. #566
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    Quote Originally Posted by rong View Post
    As far as I can see, the main thing people dislike about capitalism and free markets is the fact that some people will be forced into low wage jobs and that wage will be barely enough to survive and certainly not enough to live a pleasant life by modern western standards. By allowing the competition of labour to reduce its value to the bare minimum, the fact that corporations have huge incentive to ensure this happens, and the imbalance of power between individual supplier of labour and corporation, some people will get stuck here and will probably have little way of getting out of it.

    But perhaps it's just a fact of life that some people are too stupid or lazy to deserve any better.

    Interesting that lots of evidence points to the fact that min wage increases have little to no effect on employment though.

    So it could be argued that it's nothing more than a preference. We could pay people more via min wage laws and reduce poverty with very little negative effect. Or we say tough, you eat what you kill, get on with it.
    Actually, capitalism provides every motivation for poor people to be upwardly mobile. The ultra simplified model that capitalism trends society from a equal state to an unequal one is absurd. There is nothing economically attractive about a state of the world where 1% of people have all of the stuff and the other 99% are gutter scum. Sellers need buyers who can afford their products. Employers need quality people who will produce at a high level. Such people are scarce, and the value of their labor can be quite high. The capitalism end-game isn't wealth concentration, but a state of superabundance and near immortality where even relatively less-useful people are able to leverage their productivity to that of 50 or 100 people.

    The problem with subsidizing the poor directly is that your idea of a "pleasant life by modern western standards" is not universal. Everyone has a different ideal of their own personal prosperity, and a different perspective of how much effort should be necessary to achieve it. If you subsidized a subsistence farming community in a third world country with a universal income consistent with the minimum wage in the U.S., they wouldn't all go to university and become accountants. They would just let their fields go fallow and have a lot more kids. To them, prosperity is a state where they don't have to work as hard and they're able to have a larger family. This has nothing to do with them being lazy or stupid or anything like that. They're just entrenched in their reality like everyone else. This is what we mean when we say that the welfare state breeds poverty. The best you can hope for with a direct cash subsidy is that the poor people will just multiply and have slightly improved lives, but nowhere near enough improvement to justify the taxpayer load.

    More targeted and conditional subsidies (especially education) can have more positive impacts, but can be just as wasteful. I benefitted from financial aid when I went to college, but I squandered a lot of the aid on bullshit. Worse, a vast majority of my peers who got similar state scholarships dropped out somewhere along the 5 years of Architecture school. Billions of dollars wasted. Billions more are wasted on people getting degrees in fields that have practically no job demand.

    Interesting that lots of evidence points to the fact that min wage increases have little to no effect on employment though.
    I'm skeptical of such evidence, because it seems to be textbook seen vs. unseen fallacy. How can you assess the unseen effects of a minimum wage increase? Companies don't exactly record in their ledger the times that they would have expanded but decided not to because of increased labor costs. Or the times that they sold less of a product than they would have had they been able to offer a cheaper price. Or the times that they would have hired a new person but instead employed a robot.

    The evidence just tends to be directly comparing unemployment at time A to unemployment at time B, in a world where a myriad of forces factor into how many jobs there are.
  42. #567
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    Somewhat going off on a tangent here, and not really sure where I'm headed.

    But it's odd that owners of capital and land use labour.

    Owners of labour do not use capital or land.

    I'm not sure why this is the case.

    To produce something you need all 3 and there is an abundance of all 3. Further, the one thing nobody can own originally is land, at least not in the sense that you own your own labour. Yet somehow the one thing you truly own is the thing that other people use.

    So say I have land, you have capital and some other guy is not busy so can provide labour, surely the fruits of our joint efforts should be equally owned and distributed. But instead the land owner gains from the growth in value of the land and the rent received. The capital owner gets the profits. Where as the labour provider just gets a wage.

    Anyway, like I said, not sure where I'm headed here. Nowhere probably.
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  43. #568
    Quote Originally Posted by rong View Post
    Somewhat going off on a tangent here, and not really sure where I'm headed.

    But it's odd that owners of capital and land use labour.

    Owners of labour do not use capital or land.

    I'm not sure why this is the case.

    To produce something you need all 3 and there is an abundance of all 3. Further, the one thing nobody can own originally is land, at least not in the sense that you own your own labour. Yet somehow the one thing you truly own is the thing that other people use.

    So say I have land, you have capital and some other guy is not busy so can provide labour, surely the fruits of our joint efforts should be equally owned and distributed. But instead the land owner gains from the growth in value of the land and the rent received. The capital owner gets the profits. Where as the labour provider just gets a wage.

    Anyway, like I said, not sure where I'm headed here. Nowhere probably.
    In your hypothetical, each party likely would split it three ways. But it's not wholly analogous to the real economy. Land and capital almost always have more built up value in them than labor. But not always. Sometimes in your hypothetical, labor gets the majority of equity.

    Let's say you're a fantastic software programmer. Your labor value is very high, but you don't have any capital or land. There are many places you can go to develop software where you control majority equity. But if you want to take your labor to more effective capital or land developments, the relative value of your labor reduces to where you won't get majority equity anymore. Many (possibly most) successful companies arise from origins where the laborer had more equity than the land and capital.

    The laborer still gets the better of it when he's the opposite, unable to speak the language, whose only skill is basic physical labor. Put him in a situation where the land owner is incapable of work and the investor is small-time. The laborer then has a ton of equity.

    We could go more into this if you want.


    Here's the broken record version: The protection for the parties with the least leverage is the freedom to choose. Imagine if Ong was uninhibited by the government and free to choose. He tells us he would grow pot and be quite productive. But he's not allowed to choose this and the economy is worse because of it. Additionally, the "inherent" value of each person's attributes is determined by supply and demand. Government intervention attempts to discard supply and demand and micromanage the negotiation, but all this has done is anything from making societies poorer to mass starvation.
  44. #569
    Quote Originally Posted by rong View Post
    Thank you so much for posting this. It provides a new avenue that we have not discussed here before, and something I didn't have that great of a grasp on just a month or so ago.

    Also this post is a monster, but I only made it because it's all new stuff, no repeating of the same old argument.

    Before we get started, this study does not find that wealth doesn't trickle down. What it finds is that when wealth goes to the rich and doesn't go to the poor, it is that way because, well, it is that way. There is no determination of causality. My explanation is probably much more confusing than it should be. The paper is looking at situations where capital acts a certain way and then says "hey look it is acting this way". It is essentially saying "when it doesn't trickle down, we don't see effects of trickle-down". Ho Lee Shit Batman!

    Now onto the concept for why trickle-down is a thing. First off, "trickle-down" is a dysphemism. Economists talk about policies regarding supply, and the media has attached this misnomer. It doesn't help that a politician favorable to supply expansion reforms first coined the term. It isn't exactly off base, but it is just a metaphor that is honestly very misleading. I will refer to supply-side from now on instead of trickle-down.

    Economic growth happens only when the nominal economy increases in size. It doesn't grow when any of just prosperity increases, real GDP increases, inflation increases, money supply increases, productivity increases, production increases, etc. It grows only when any combination and quantity of those things turn the nominal value of the economy into a bigger number than previous. This is important because supply-side reformers are concerned with growth specifically (I'll explain why later). Now, with this understanding of growth, what happens when we redistribute? Well, you could say the middle gets bigger and the top gets smaller. If true, the math still adds up to no growth. It is popular today to claim that this would spur growth by putting more resources into the hands of consumers. But this would only be true if it came from growth. If it didn't come from growth, we have just created magic and the only thing we need to make everybody as prosperous as humanly possible is to spend as much as possible. Clearly there is something wrong with this idea.

    Hopefully we can agree that the economics profession agrees that growth is the focus and that we don't really have much mechanism to expand prosperity for any group except through growth. What they want is growth to be made up of is productivity and production (instead of something like hyperinflation), because those are the only known reasonable metrics by which to evaluate prosperity increases.

    So let's assume you agree with this. You're probably still confused as to why reducing top tax rates are the preferred mechanism to achieve this growth. I mean, it honestly sounds ridiculous in common sense terms. But regardless of what it sounds like, there are specific technical things in play that entirely change the scenario. It's not unlike how quantum mechanics is as wrong as you can get when it comes to common sense, but it is still technically correct.

    The technical concept behind this is margins, more specifically the marginal utility of each new dollar/product (or each tiny piece of new economic growth). Economic growth occurs on the margins. Always, with zero exceptions. Real economic growth also occurs only when production increases. This piece is more complex than that, but the bottom line is that if there is not more supply in an economy, it has not grown in real value.

    Trickle-down is a narrow view of a much broader supply-side approach. The theory for it is that by reducing marginal tax rates, increased production is incentivized. This is to say that people who enter the marginal brackets, at lower tax rates, would have a greater incentive to work more, and thus this additional work would create more product and create economic growth. And it all "trickles down" because that's "just" how it works. Economists don't like that they don't better understand growth, but it is universally understood that real growth disperses throughout the entire economy. This is so universally understood that I'm pretty sure they have equations to back it up. I just don't know them.

    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 (at least when we discuss trickle-down specifically): (1) the middle already works near or at its peak. Not that many people who already work full-time will choose to work more because of a reduce penalty. The incentive for them to work more at current tax rates is already really high, but also the incentive to not work beyond full-time is much higher. Leisure and family time has higher marginal utility to the middle class worker who already hits full-time.

    (2) As a corollary to (1), the marginal utility of work to those in the top bracket is higher than those in the middle brackets because they don't work as much already. The utility of every new dollar achieved by work to the rich is lower than the utility of every new dollar achieved by work to the non-rich. This is sorta similar to what we had discussed a few weeks ago when Renton was looking at investment incentives. It's complex because incentives and utilities are always relative and always moving around. Like, the rich have lower marginal utility with each new dollar than the poor, but the poor have much higher marginal utility of leisure than the rich. All of this means that if we want to grow the economy through tax rates, we won't be able to do it much by increasing the marginal utility of work for the poor/middle, but we can do it by increasing the marginal utility of work of the rich.

    Which brings us to (3): the marginal utility policy-wise and politically of reducing top tax rates is much higher than for middle/low rates. When comparing top rate cuts to middle rate cuts, the top rate cuts reduce total taxation by a much smaller percentage and achieve a higher percentage of production. Where middle bracket tax cuts would grow the economy if coupled with govt spending cuts and reduced regulations, they would not incentivize much in more hours worked. But rate cuts at the top spur growth with that one additional technical factor that the middle bracket doesn't have so much: marginal utility of extra production.

    To wrap it up, economists, the wealthy, most politicians, and market-oriented voters do not support marginal tax rate cuts just because they want the rich to get richer. They want the economy to grow, and marginal rate cuts are among the easiest way to achieve them. Additionally, we have the last several decades of evidence to show that they're probably right. I'm sorry that I couldn't find it again (it's buried in Sumner's blog), but there is a ton of data showing that the US has outperformed Europe for the last approximately four decades. The primary correlation discovered is *cough* Reaganomics *cough* (also known for its primary focus of reducing marginal rates).

    Thanks for listening. I hope this helps.
  45. #570
    To piggyback some on what Spoon said about minimum wage


    Studies evaluating minimum wage/employment effects are basically a joke. They're like studying the ocean by evaluating waves on a beach. The vastness and depth that studies would require to demonstrate wage floor and employment effects is several magnitudes greater than any study has done.

    What we do have is theory and models. We also have tons of data, but as with lots in economics, it's tangential and marginal. The value in economics comes mostly from engaging its concepts. Studies are great but they are hard as shit to conduct properly. Economics is a field of rigorous logic more than a field of experimentation, even though experimentation is great for it.

    To conceptually see why the minimum wage negatively affects employment, all we have to do is conduct a simple thought experiment: make the minimum wage $1000 and evaluate what you think is going to happen. The sensible will say "prices will increase by that dollar amount and that's it". Which is true in a vacuum, and it shows that wages by themselves should not be expected to increase prosperity.

    I'll try to get brief here on out (fat chance): the short of the effects of relatively small minimum wage increases do include price increases as an offset and a reduction in new hiring and higher structural unemployment. But I want to hit more deeply on how minimum wage harms the several different groups it tries to help. The two groups are the poor-poor and the "well-off" poor, so to speak.

    The poor-poor are typically minorities with low skills. Think: large percentages of black or Hispanic. The well-off poor are typically white and educated. Think: liberal arts graduate baristas. The latter is the less egregiously affected group.

    As was pointed out by Renton and Spoon, the most valuable tool any laborer has is the value employers find of their skills and their ability to negotiate. If a laborer produces $7 in value, he won't have a job if his skills only produce $6 in value. A minimum wage forces him out of the labor force and makes him perpetually dependent on the taxes taken from people in the labor force. Additionally, the most effective method for a low-skill laborer to increase his skills is on-the-job work. Not allowing low-skilled individuals to work for whatever they can get, no matter how low, is the poverty trap. Wage floor and barrier-to-entry regulations is a system of productive laborers being forced to subsidize maintenance of non-labor.

    But what about for laborers with low-skill who still have their jobs even with increased wage floors? Well, guess what, their jobs just got worse. Take a laborer who creates $11/hr and is paid $9/hr. Bump his minimum wage up to $15/hr. Now he is losing money for his company and either has to get fired or increase productivity. So now instead of making 20 burgers/hr he makes 30. But wait, the sales don't call for 30 burgers/hr, so instead he has to do other stuff to justify his employment. Those 20 burgers he makes now must achieve specs better. No more leeway on tiny portion discrepancies. The managers install a new ridiculous measurement technique to keep costs down. He now has to keep the kitchen cleaner. The dishwasher's hours now have to be cut and the cook now is responsible for two jobs during non-peak hours. The fry cook no longer works in non-peak hours, so our protagonist now works grill and fry simultaneously from 1-4PM. Our protagonist making $15/hr now has three jobs when he previously had just one job. His stress is through the roof and he hates his fucking job now. He blows all his extra money on needless consumer goods to keep him from going insane. He wishes he could go back to a time when the government didn't force his employer to pay him more money than he wants to work for.

    Enter: the well-off poor. He got his degree. He can think critically and he has a work ethic, but his skills are not terribly effective for well-paying business, and honestly he doesn't want to wear a button up shirt to work or sit in a cubicle. His productivity is double that of the low-skill employees in his sector. A minimum wage boost to $15 doesn't hurt him much since he was already pretty good at his job and his employer was already paying him accordingly. But now, all of a sudden, nobody named Jose or Tyrone seems to get hired anymore. Every new employee is another college educated hipster. He rooms with three of them. Together they make just enough to "live the dream" in the most vibrant city in the region.

    Nevermind that this sounds to me like that "institutional racism" that the left-wing falsely blames the market for creating. Here we have a scenario that vastly subsidizes one group of people. The group that that isn't wealthy or terribly poor, but isn't that interested in using all their tools. Their education is subsidized, their culture is indirectly subsidized, and they're inadvertently locked into their income bracket. They're the only beneficiaries of minimum wage, at the cost of the poor non-majority groups and the productive business/labor classes. But the benefits they receive from the wage floor is the worst thing for them. They may not be stuck in a poverty trap, but they're certainly stuck in a trap of what one of my friends called "baristas who want to maintain the lifestyle one would normally only get if not a barista".
    Last edited by wufwugy; 06-16-2015 at 03:15 PM.
  46. #571
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    Quote Originally Posted by Renton View Post
    Actually, capitalism provides every motivation for poor people to be upwardly mobile.
    "This is how it'll be."

    How every explanation of capitalism/economics/whatever has always gone. This is how it will be. Well, it's never been like that, but that's just because we never really did it/gov't/outside forces/whatever kept it from being. But this is how it will be.
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  47. #572
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    Quote Originally Posted by rong View Post
    As far as I can see, the main thing people dislike about capitalism and free markets is the fact that some people will be forced into low wage jobs and that wage will be barely enough to survive and certainly not enough to live a pleasant life by modern western standards. By allowing the competition of labour to reduce its value to the bare minimum, the fact that corporations have huge incentive to ensure this happens, and the imbalance of power between individual supplier of labour and corporation, some people will get stuck here and will probably have little way of getting out of it.

    But perhaps it's just a fact of life that some people are too stupid or lazy to deserve any better.

    Interesting that lots of evidence points to the fact that min wage increases have little to no effect on employment though.

    So it could be argued that it's nothing more than a preference. We could pay people more via min wage laws and reduce poverty with very little negative effect. Or we say tough, you eat what you kill, get on with it.
    Yup, every successful model of capitalism splashes in some socialism somewhere to prevent stuff like this.
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  48. #573
    Quote Originally Posted by a500lbgorilla View Post
    Yup, every successful model of capitalism splashes in some socialism somewhere to prevent stuff like this.
    That's the narrative at least. I'd like to see any compelling reason to think it's true.
  49. #574
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    Hong Kong, Singapore, America, Canada, Germany...
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  50. #575
    Quote Originally Posted by a500lbgorilla View Post
    Hong Kong, Singapore, America, Canada, Germany...
    This narrative which every modern country has adopted aside, let's think more critically about this.

    Most serious economists claim the Federal Reserve caused the Great Recession. They also claim the Fed caused the Great Depression. The Fed itself about a decade ago apologized for having caused the Great Depression. The short of how this central bank caused these problems is that their policies deviated from stable monetary regimes.

    AFAIK, the best estimate in political science for how socialism gained traction in the US was as a response to the Great Depression. The short of it is in that when society runs downhill, the populace gravitates towards centralized solutions. They seek government to solve the problems. The Great Depression ushered in a new era of US socialism, starting with the New Deal. The entitlement programs of a couple decades later are thought to be of the same mold. The Great Recession has shown the same type of circling of the wagons and declaring government the champion, the ACA being the biggest example. In between these two calamitous economies, we have an era of mild supply-side, anti-government reforms (very mild ones), and the data suggests they caused a boom greater than similar economies that did not reform.

    So here we have a situation where the government creates a huge recession with its own incompetence. Then the populace gives the government more power to ward off the misdiagnosed symptoms in the future. But this new power doesn't have the intended effect. Instead it has a detrimental effect. Then the government creates another major recession, and the populace leaps back into the mode of giving government more power to "fix" the problem.

    The narrative is wrong. Socialism is not adopted because it helps people. It's adopted because people think it helps them, when the reality is that macroeconomics operates on a scale that isn't perceived experientially. The market is so powerful that even when large sections of it are socialized and subsequently function horribly, our society is still getting better.
  51. #576
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    Quote Originally Posted by a500lbgorilla View Post
    "This is how it'll be."

    How every explanation of capitalism/economics/whatever has always gone. This is how it will be. Well, it's never been like that, but that's just because we never really did it/gov't/outside forces/whatever kept it from being. But this is how it will be.

    The past is filled with examples that agree with my point of view. Let's disregard the theory-crafting that has been going on in here, because obviously that stuff was for intellectual curiosity. Socialism can be dismantled entirely with the terms set about by the socialist himself. There's no need for me to make grand suppositions about alternative reality to prove it.

    The policies do not work. They don't reduce poverty, they increase it. And its not just a splash of socialism that all of your success stories countries have. The tax burdens hover around the 40-50% area in those countries, and that's not even considering all of the land the state owns and the currency manipulation they get away with. And the debt, let's not forget about the debt.
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    Quote Originally Posted by wufwugy View Post
    Thank you so much for posting this. It provides a new avenue that we have not discussed here before, and something I didn't have that great of a grasp on just a month or so ago.

    Also this post is a monster, but I only made it because it's all new stuff, no repeating of the same old argument.

    Before we get started, this study does not find that wealth doesn't trickle down. What it finds is that when wealth goes to the rich and doesn't go to the poor, it is that way because, well, it is that way. There is no determination of causality. My explanation is probably much more confusing than it should be. The paper is looking at situations where capital acts a certain way and then says "hey look it is acting this way". It is essentially saying "when it doesn't trickle down, we don't see effects of trickle-down". Ho Lee Shit Batman!

    Now onto the concept for why trickle-down is a thing. First off, "trickle-down" is a dysphemism. Economists talk about policies regarding supply, and the media has attached this misnomer. It doesn't help that a politician favorable to supply expansion reforms first coined the term. It isn't exactly off base, but it is just a metaphor that is honestly very misleading. I will refer to supply-side from now on instead of trickle-down.

    Economic growth happens only when the nominal economy increases in size. It doesn't grow when any of just prosperity increases, real GDP increases, inflation increases, money supply increases, productivity increases, production increases, etc. It grows only when any combination and quantity of those things turn the nominal value of the economy into a bigger number than previous. This is important because supply-side reformers are concerned with growth specifically (I'll explain why later). Now, with this understanding of growth, what happens when we redistribute? Well, you could say the middle gets bigger and the top gets smaller. If true, the math still adds up to no growth. It is popular today to claim that this would spur growth by putting more resources into the hands of consumers. But this would only be true if it came from growth. If it didn't come from growth, we have just created magic and the only thing we need to make everybody as prosperous as humanly possible is to spend as much as possible. Clearly there is something wrong with this idea.

    Hopefully we can agree that the economics profession agrees that growth is the focus and that we don't really have much mechanism to expand prosperity for any group except through growth. What they want is growth to be made up of is productivity and production (instead of something like hyperinflation), because those are the only known reasonable metrics by which to evaluate prosperity increases.

    So let's assume you agree with this. You're probably still confused as to why reducing top tax rates are the preferred mechanism to achieve this growth. I mean, it honestly sounds ridiculous in common sense terms. But regardless of what it sounds like, there are specific technical things in play that entirely change the scenario. It's not unlike how quantum mechanics is as wrong as you can get when it comes to common sense, but it is still technically correct.

    The technical concept behind this is margins, more specifically the marginal utility of each new dollar/product (or each tiny piece of new economic growth). Economic growth occurs on the margins. Always, with zero exceptions. Real economic growth also occurs only when production increases. This piece is more complex than that, but the bottom line is that if there is not more supply in an economy, it has not grown in real value.

    Trickle-down is a narrow view of a much broader supply-side approach. The theory for it is that by reducing marginal tax rates, increased production is incentivized. This is to say that people who enter the marginal brackets, at lower tax rates, would have a greater incentive to work more, and thus this additional work would create more product and create economic growth. And it all "trickles down" because that's "just" how it works. Economists don't like that they don't better understand growth, but it is universally understood that real growth disperses throughout the entire economy. This is so universally understood that I'm pretty sure they have equations to back it up. I just don't know them.

    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 (at least when we discuss trickle-down specifically): (1) the middle already works near or at its peak. Not that many people who already work full-time will choose to work more because of a reduce penalty. The incentive for them to work more at current tax rates is already really high, but also the incentive to not work beyond full-time is much higher. Leisure and family time has higher marginal utility to the middle class worker who already hits full-time.

    (2) As a corollary to (1), the marginal utility of work to those in the top bracket is higher than those in the middle brackets because they don't work as much already. The utility of every new dollar achieved by work to the rich is lower than the utility of every new dollar achieved by work to the non-rich. This is sorta similar to what we had discussed a few weeks ago when Renton was looking at investment incentives. It's complex because incentives and utilities are always relative and always moving around. Like, the rich have lower marginal utility with each new dollar than the poor, but the poor have much higher marginal utility of leisure than the rich. All of this means that if we want to grow the economy through tax rates, we won't be able to do it much by increasing the marginal utility of work for the poor/middle, but we can do it by increasing the marginal utility of work of the rich.

    Which brings us to (3): the marginal utility policy-wise and politically of reducing top tax rates is much higher than for middle/low rates. When comparing top rate cuts to middle rate cuts, the top rate cuts reduce total taxation by a much smaller percentage and achieve a higher percentage of production. Where middle bracket tax cuts would grow the economy if coupled with govt spending cuts and reduced regulations, they would not incentivize much in more hours worked. But rate cuts at the top spur growth with that one additional technical factor that the middle bracket doesn't have so much: marginal utility of extra production.

    To wrap it up, economists, the wealthy, most politicians, and market-oriented voters do not support marginal tax rate cuts just because they want the rich to get richer. They want the economy to grow, and marginal rate cuts are among the easiest way to achieve them. Additionally, we have the last several decades of evidence to show that they're probably right. I'm sorry that I couldn't find it again (it's buried in Sumner's blog), but there is a ton of data showing that the US has outperformed Europe for the last approximately four decades. The primary correlation discovered is *cough* Reaganomics *cough* (also known for its primary focus of reducing marginal rates).

    Thanks for listening. I hope this helps.
    I haven't had time to read the paper, just an article on it in the guardian, but I find it interesting that it seems we all use it to confirm our polarised views.
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  53. #578
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    Quote Originally Posted by Renton View Post
    The past is filled with examples that agree with my point of view.
    Great. Show 'em. It's all I've ever wanted. Some explanation that doesn't trace back to first principles or the geometry of human action. Some explanation where you show, "it's this way because look, we can show it's this way."

    Let's disregard the theory-crafting that has been going on in here
    I fully disregard it.
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  54. #579
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    Quote Originally Posted by a500lbgorilla View Post
    Hong Kong, Singapore, America, Canada, Germany...
    All of them capitalist in practice but with distinct social flavorings. All of them work.
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    Quote Originally Posted by a500lbgorilla View Post
    Great. Show 'em. It's all I've ever wanted. Some explanation that doesn't trace back to first principles or the geometry of human action. Some explanation where you show, "it's this way because look, we can show it's this way."



    I fully disregard it.
    The problem is that my views are unprovable because every modern society is a capitalism/socialism hybrid, and your views are unfalsifiable because it's never been any other way.

    We can prove on a really basic level that certain things about capitalism's positive effect on world poverty are true by noting that each shithole third world country perpetually remains a shithole until free (or freer) trade is allowed to take place. After that, the poverty always gets better, and this is especially impressive when you realize that its taking place in the most corrupt nations in the world. The single party governments of places like Cambodia are doing everything they can to rob their citizens blind and yet their lives are still improving. Double digit economic growth is taking place. Middle class amenities like gyms and malls are cropping up everywhere.

    But me telling you that is pointless because you already agree that capitalism is a good thing, you're just filled with paranoia that too much of a good thing can be a bad thing. You're asking me to explain why capitalism doesn't concentrates wealth, or doesn't allow monopolistic mega-corporation-states to form, or whatever other dystopian idea. My response would be to put the ball in your court and ask you to tell me about one case of anything like that ever happening*.

    * that wasn't aided/enabled by a state.
    Last edited by Renton; 06-18-2015 at 12:43 AM.
  56. #581
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    Once again, Renton, me saying you're wrong isn't me saying the polar opposite of your position is right.

    When I raised those concerns, we were playing imagination with a world of no-states and only corporations, and in that imagination-land they were perfectly coherent critisms.

    Now that we're talking about this world, I think it's clear that Capitalism is awesome, but that pure Capitalism very likely is not more awesome than some modified form of Capitalism.

    I don't think this because I'm afraid of capitalism, or because I can't conceive of the infinitude of wealth/jobs/resources, or because I'm tripping over fallacies I can't see, or don't believe in true freedom, or whatever reason you have to believe of me to believe that you are right and for some reason I can't get there.

    I believe the method you use to come to the sort of absolute statements about capitalism is obviously flawed. It's great for a lot, but it can not tell you the future. It isn't predictive without error.

    So when you say things like

    "We can prove on a really basic level that certain things about capitalism's positive effect on world poverty are true by noting that each shithole third world country perpetually remains a shithole until free (or freer) trade is allowed to take place."

    Prove is absolutely the wrong word. You can demonstrate that given certain simplifying assumptions and constraints not prove. Or that's what you meant about 'basic level' but in Economics, the things that hold for basic-levels do not necessarily hold when you scale up.

    I found a great site that seems to have pretty level headed people chipping in their thoughts and on it, one great comment I found that helps make my point.

    http://economics.stackexchange.com/q...igor/6141#6141

    A brilliant overview on the flaw of Economic thinking. A weakness that is inherent in EVERY statement you make about Capitalism or people or whatever that is informed by your understandings.

    "Results in Economics can be fully rigorously argued, ever since Economics adopted mathematical symbolism to express itself. The issue is not with the process of argumentation, but with the premises one starts from."

    This is the absolute rub. The one thing I can give to you that I know is right. Everything you think you know is balanced on where you start. And if you start somewhere that isn't reality, well, you're overwhelmingly likely to be wrong. So you always have to keep an open mind and let in the fact that the future you imagine probably won't pan out for reasons you're completely unaware of.

    http://economics.stackexchange.com/q...-loses-correct

    Bonus thread where people argue that economics isn't a zero-sum game. A premise I accept in the large blurry view, but that I don't accept as definitively true of every corner of an economy as it could ever exist between people. One commenter mentions the existence of lose-lose trades, I still believe in win-lose trades, but all of this, as another commenter mentions, is built on a world where people don't take forcibly, don't steal, don't find anyway to play the game of free-trade with an advantage outside the rules. Which I believe they will, because we are selfish creatures developed by a mechanism that drives for selfish gains.

    Bonus post for inspiration on that selfishness.

    https://www.reddit.com/r/askscience/...e_many/cs8poh5

    Natural selection doesn't care about specieis, it cares about individuals. When you say stuff like "Well, we all see the value in police/justice system/lack of violence/whatever, so we value these things, so we'll invest that value to maintain them." I think you have to consider that "we" would need to selfishly value these things for them to exist, and I don't suspect that'll ever happen.

    Bonus bonus on selfishness

    http://econlog.econlib.org/archives/...d_economi.html
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  57. #582
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    And that selfishness scales up from people who will try to game each other, to corporations that'll try to establish faux-competition/effective monopolies etc etc. And for all the innovation you can imagine driven by the perfect incentive of capitalism within the rules, this selfishness can match it to circumvent those rules.
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  58. #583
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    Quote Originally Posted by a500lbgorilla View Post
    And, I would say on the social sciences right now, Economics could learn a lot from psychology and history. Pay attention to what is observed, and be highly skeptical of the guy telling you what is observed*.

    *Especially when it's you. #goddamnImdeep
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  59. #584
    Quote Originally Posted by a500lbgorilla View Post
    And, I would say on the social sciences right now, Economics could learn a lot from psychology and history. Pay attention to what is observed, and be highly skeptical of the guy telling you what is observed*.
    Textbook economics pays attention to what is observed, but sadly consensus among professional economists doesn't always. Scott Sumner created his blog in 09 because he was baffled at how the economics profession had swiftly discarded its own teachings during 07-09. This isn't the first time the profession has done this. I think the reason is because of how political the field becomes when outside academia. Even brilliant people like Paul Krugman often lose their better judgment when engaging in punditry. At least that's my guess as to why academic economics and political economics are not always the same.
  60. #585
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    I'm looking for skeptical economists and pragmatic economists and applied economists and experimental economists right now. Someone knows what I know and also studies economics. I wanna find 'em.
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  61. #586
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    Selfish people are going to cause mayhem regardless of the economic system. I don't want to give the idea that an unfettered free market world would be devoid of evil. I just don't think private evil can go unchecked nearly as easily as public evil can. It's something I've brought up before. The state attracts sociopaths to positions where they could cause vastly more damage than would even be imaginable in the private sector.

    Pretty much any time I make an economic argument, I'm doing so from a purely comparative perspective. For strategy A to be preferable to strategy B, it needs only to improve expected value. It does not need to maximize it. That's why I really hate the word "utopia" that is often pejoratively ascribed to my arguments. I spend a lot of time in this thread talking about far-future hypothetical free states, but that is mainly to plant seeds of doubt about statist principles in general. I'm in no way advocating the wholesale dismantlement of governments overnight. I believe incremental is the way to go, and that should be consistent with the rillian worldview of not over-relying on basic economic theory. I believe the feedback of incrementally weakening the state will lead the human race in the right direction. To that end, I believe it is quite likely that representative democracies were a necessary stepping stone from monarchies to whatever comes next.

    I rail hard against socialism because I believe it to be oddly reactionary. Oddly because reactionary is a typical pejorative that is ascribed to libertarian views. Socialism has already been tried many times and it failed at nearly every conceivable scale. And yet we continue to see the tired-bordering-on-desperate claims that maybe this time it will be good. "The problem is we need better leaders." "We need campaign finance reform." "We have to eliminate the corruption in our democracy." Blah blah blah. I've never seen a decent economic argument for socialism. I'm not talking about the 'it's debatable' type stuff. The arguments fail on the most basic accepted axioms.

    I'm rambling but here's an example:

    http://forumserver.twoplustwo.com/41...forum-1539134/

    Starting with post #22, a guy thinks everyone should have free drinking water and it is barbaric to think otherwise. I reply with the most basic economic argument and I get this absurd response on post #24:

    You should at least realise that subjecting everything on earth, especially things we need to survive, to 'basic economics' is a contentious viewpoint, and not present it as if it's common sense. You really think that all the people who don't want a price on water don't understand the econ101 benefits of the idea?
    This is the type of completely-missing-the-point idea that has infected the left. Claims to know basic economics, doesn't care because feelings.
    Last edited by Renton; 06-19-2015 at 08:57 AM.
  62. #587
    Quote Originally Posted by Renton View Post
    This is the type of completely-missing-the-point idea that has infected the left. Claims to know basic economics, doesn't care because feelings.
    They believe the desire to build a car is the same thing as the building of a car. They believe that if we all just agreed that cars should be built and distributed to all, they would be. Meanwhile, science is telling them it doesn't work that way.
  63. #588
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    Quote Originally Posted by Renton View Post
    Selfish people are going to cause mayhem regardless of the economic system. I don't want to give the idea that an unfettered free market world would be devoid of evil. I just don't think private evil can go unchecked nearly as easily as public evil can. It's something I've brought up before. The state attracts sociopaths to positions where they could cause vastly more damage than would even be imaginable in the private sector.
    It's not evil. It's human. And that's why more capitalism is not comparatively better than less capitalism in all cases in my mind. There's something missing in the analysis that's baked into the solutions that 'work' but don't work as well as we could imagine them to.
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  64. #589
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    Quote Originally Posted by Renton View Post
    I rail hard against socialism because I believe it to be oddly reactionary. Oddly because reactionary is a typical pejorative that is ascribed to libertarian views. Socialism has already been tried many times and it failed at nearly every conceivable scale. And yet we continue to see the tired-bordering-on-desperate claims that maybe this time it will be good. "The problem is we need better leaders." "We need campaign finance reform." "We have to eliminate the corruption in our democracy." Blah blah blah. I've never seen a decent economic argument for socialism. I'm not talking about the 'it's debatable' type stuff. The arguments fail on the most basic accepted axioms.

    I'm rambling but here's an example:

    http://forumserver.twoplustwo.com/41...forum-1539134/

    Starting with post #22, a guy thinks everyone should have free drinking water and it is barbaric to think otherwise. I reply with the most basic economic argument and I get this absurd response on post #24:



    This is the type of completely-missing-the-point idea that has infected the left. Claims to know basic economics, doesn't care because feelings.
    That's the game. People are trying to nudge and push and hope and windge for whatever they think will benefit them, will empower them or keep them safe. Free water or priced water? Free sounds easy to me! You try to play the game of "first principles and argumentative rigor are more robust methods of guessing than whatever you're doing". You want to win the argument, you've got to make it so they'll feel like your system is better for specifically them.
    Last edited by a500lbgorilla; 06-20-2015 at 07:10 AM.
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  65. #590
    It should be noted that probably the biggest reason for horrible traffic is zoning. The main reason people don't live in the city near where they work is that housing is through the roof expensive. The main reason housing is through the roof expensive is zoning and other things like rent ceilings. Making a profit by building homes in cities is one of the hardest things to do, despite that the demand for affordable housing is through the roof. The regulations are higher than the roof and it's virtually illegal for companies to build affordable housing.

    The government tries to build affordable housing by ignoring the profit incentive. The irony is that affordable housing is a product of the profit incentive. If only there was some way to disabuse ourselves of the anti-scientific dogma that profits are the root of evil. More irony in that a whole bunch of atheist lefties are hook, line, sinker deep into this Biblical dogma.
  66. #591
    The framing of "progressive tax" is backwards. The wealthy use the least amount of government services and entitlements (by a lot), yet per capita they pay the most for those (by a lot). A mere flat tax is progressive in nature for this reason. Additionally, since everybody moralizes that since the wealthy can spare more money they should pay the most, maybe people should moralize fairly and also say that since the non-wealthy use most of the proceeds of taxes, they should pay the most.

    The public's misunderstanding of this is partly rooted in the media's ignorance on income data. Notice that they never reference a multitude of relevant factors, like benefits or age. Or that the vast majority of the wealthy's capital is in investment form, which is another way of saying making-cheaper-products form.

    I'm amazed by two things: (1) at how extreme socialist so much of the West is, and (2) how I used to be an extreme socialist. I think the reason I talk economics a lot is that reading what economists think is the only real reason why I'm no longer a Marxist Leninist Fascist Communist. Yes those are all the same thing. All are collectivism and centralization. The only differences are window dressing.
  67. #592
    I wanted to point out that the reason I'm so sick of the media's coverage on taxes is that it always follows this formula: "does the poor or middle class pay a larger percentage of direct taxes? If yes, it hurts them, if no, it helps them." This is wrong wrong wrong. No economist would say something so stupid (Krugman might, but he checks his econ badge at the door some days). It could be emphatic textbook economic theory that reducing corporate tax rates helps the poor the most even though the rate isn't directly paid by the poor, yet the media would still blare its horns of perpetual ignorance.
  68. #593
    Quote Originally Posted by wufwugy View Post
    They believe that if we all just agreed that cars should be built and distributed to all, they would be.
    Huh? I think we should be making less cars. Find another bad analogy.

    It should be noted that probably the biggest reason for horrible traffic is zoning.
    Wrong. A few days ago I had to go out with a friend to get some weed. Like idiots, we left at 5.30pm and hit the rush hour traffic. It gets a nightmare here in Kidderminster because we have two very close smaller towns, and the three bascially form a mini city. People work in Kidderminster but live in Bewdley or Stourport. Of course, there's plenty of busses, but people insist on driving. Even though it takes just as long as the bus in rush hour. Even though finding a parking space in Kiddy is difficult. As we were waiting, we were noting that nearly every car had one stressed looking person in it.

    The reason that traffic is so stupid is because people refuse to use public transport.

    So... make driving more expensive, while making public transport either free, or at the very least much cheaper and easier than driving during rush hour.
    Quote Originally Posted by wufwugy View Post
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  69. #594
    It's probably different in particularly well designed modern cities, in fairness. Most of England is old, and the local roads are not designed for heavy traffic, which results in multiple bottlenecks. As the population has increased, the transport infrastucture has struggled to keep pace. And because people insist on driving to work alone, there are significantly more cars on the roads than needs be.

    People are stupid, lazy and selfish, that's why there's so much traffic.
    Quote Originally Posted by wufwugy View Post
    ongies gonna ong
  70. #595
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    The reason that traffic is so stupid is because people refuse to use public transport.
    And because people insist on driving to work alone, there are significantly more cars on the roads than needs be.
    These are both true because there isn't enough motivation for people to deviate from their behavior. This is a classic consequence of a freely-shared public good. If people had to pay to use roads, they would obviously be a lot less likely to commute alone, and they would be a lot more likely to use mass transit.
  71. #596
    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. 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.

    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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  72. #597
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    Quote Originally Posted by OngBonga View Post
    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. 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.
    This type of crony privatization never works. The state would actually need to sell the roads on the open market. There's simply no non-corrupt way of awarding contracts. If the roads were made to literally be private property, there would be a very real cap on profits, thanks to competition.

    Quote Originally Posted by OngBonga View Post
    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.
    Merely charging people for using the roads isn't enough to cause the level of benefit that true privatization would. States fine and charge people for things all the time and it's a terribly weak motivator of behavior. Look, people already are perfectly willing to commute 2 hours to work in bumper to bumper traffic if it enables them to have a nice suburban home where the land values aren't as high. Only by making people totally accountable for the resources they use, can you motivate conservation to take place.

    The other thing is that the government isn't guaranteed to invest the fees into better infrastructure. The money most often gets thrown right into the same budget that pays for wars, healthcare, and interest on the state debt. Profits get recapitalized into innovation and expansion. Profits create an incentive for competitors to build up alternative routes.
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    Quote Originally Posted by Renton View Post
    These are both true because there isn't enough motivation for people to deviate from their behavior. This is a classic consequence of a freely-shared public good. If people had to pay to use roads, they would obviously be a lot less likely to commute alone, and they would be a lot more likely to use mass transit.
    Bare in mind in the UK they already have to pay for the car(+ tax), MOT costs(+ tax), plus road tax (tax for having a car) regardless of whether they use the car , but even when they use it they pay for fuel (++++++ tax), parking (+ tax) and wear and tear costs/ servicing (+ tax). So in the current tax environment there is a large additional cost to deciding to drive to work. Yet still tonnes of people do it.

    Why is that? Clearly it really matters to people and they find it important. As someone who has both used public transport and a personal car for commuting I for one fucking hate using public transport.

    So we have ths something that loads of people really hate, and your argument is to increase the price of the solution so they hate that financial cost even more than they hate public transport. Way to make the masses happy.
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    Also wouldn't roads create quite a natural monopoly? I mean once a company owns a bunch, there isn't much you can do to compete with them. There's only so much space to build competing roads. Also say building another big road connecting 2 cities, knowing there is only really enough traffic to support one (albeit with investment required to the existing one) isn't particularly smart either.
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    Quote Originally Posted by rong View Post
    Bare in mind in the UK they already have to pay for the car(+ tax), MOT costs(+ tax), plus road tax (tax for having a car) regardless of whether they use the car , but even when they use it they pay for fuel (++++++ tax), parking (+ tax) and wear and tear costs/ servicing (+ tax). So in the current tax environment there is a large additional cost to deciding to drive to work. Yet still tonnes of people do it.

    Why is that? Clearly it really matters to people and they find it important. As someone who has both used public transport and a personal car for commuting I for one fucking hate using public transport.

    So we have ths something that loads of people really hate, and your argument is to increase the price of the solution so they hate that financial cost even more than they hate public transport. Way to make the masses happy.
    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.

    Also wouldn't roads create quite a natural monopoly? I mean once a company owns a bunch, there isn't much you can do to compete with them. There's only so much space to build competing roads. Also say building another big road connecting 2 cities, knowing there is only really enough traffic to support one (albeit with investment required to the existing one) isn't particularly smart either.
    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.
    Last edited by Renton; 06-21-2015 at 01:11 PM.

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