@renatojj It's nonsense that lower taxes on the wealthy means they become more productive, that's simply a rumor spread by the rich. The problem with low/no corporate taxes (which is what RP wants) is that over time more and more wealth accumulates in the top bracket and less and less is available to the middle and lower classes, the wealthy then use this money to influence policy making and the problem becomes worse - which is exactly what is happening now. Yes, this is going to happen anyway, but poor tax policy exacerbates it.

If you don't believe me then just look at history: Coolidge became president in 1923 and signed into law the Revenue Act of 1924, the tax rate for the those earning above $10,000 (about $120,000 by today's standards) was only 6%, there was a surtax added to higher incomes but it only crept up very slowly. Guess what happened? 10 years of economic hell for America - otherwise known as the great depression. Guess what kick started the economy? In part higher taxes. For example the highest period of growth for America was when it had the highest tax rate for the upper bracket (91%) - which was during WWII. Once the tax rate's started coming down again, guess what happened to economic growth - right, it slowed.

If you look at one specific person that makes a lot of money, and you double there taxes, it's easy to make the assumption that you are harming them - but a countries economy is far more complex than that and works in ways most economists don't even understand. To assume that you know what is best for American tax policy is ridiculous unless you happen to know more than every other economist on the planet (and same goes for me). What is clear from history though is that lower tax rates on the wealthy do not help the economy grow, that is pure myth that has been perversely thrown out there to misdirect the general population while the wealthy accumulate more and more money.
http://www.huppi.com/kangaroo/L-taxgrowth.htm

As far as the RP - Chile connection - RP's 'free market' approach to education is exactly what has already happened in Chile - this privatization of higher education has resulted in Chile's technical schools, colleges and universities having the "highest costs of higher education of any OECD country and the lowest public expenditure" (from the doco I link below). And the quality of the education? Very poor according to an October Economist article:
http://www.economist.com/node/21531468

Is that what you want to happen to American education?

More info about the issues and protests:
http://en.wikipedia.org/wiki/2011_Chilean_protests

And I've sifted a documentary on the issue if you want to watch:
http://videosift.com/video/Chile-Rising

And lastly, maldistribution is simply uneven distribution - e.g. according to the NY Times "The current maldistribution of wealth is also scandalous. In 2009, the richest 5 percent claimed 63.5 percent of the nation’s wealth. The overwhelming majority, the bottom 80 percent, collectively held just 12.8 percent"

Please justify that to us.

Congress does not have a century of a generally poor track record. The US has been the most prosperous country in the history of the planet the last century, and it's not even close. And much of what has made the US so economically prosperous had a lot to do with gov't decisions on where to spend money such as creation of the Fed, FDIC, etc., funding the industrial/military complex which led to things like NASA, computers, the internet; federal grants, scholarships, and funding for public universities; nuclear technologies that led to things from nuclear reactors to home microwaves, electrification with programs like the TVA and the Hoover Dam which developed entire regions economically, medical funding, I could go on and on and on.



Private citizens are responsible for quite a number of things you've mentioned, and their success.

but it's lunacy to say federal gov't spending didn't play a major role



Agreed. Why did you say that? No one is arguing that point. Government revenue should be spent on these things. My argument is about who is making those decisions and if they can be better made by those who experience these things firsthand.

Have you looked at the kind of financial decisions we Americans are making?



Yep. Personal savings has been bad only for the past decade or so. Economic growth in the US is primarily driven by consumer demand.

So let's talk about those million voters. Have you looked at the kind of financial decisions we Americans are making. With all the talk about how banks screwed consumers in mortgages, who were the idiots who agreed to said mortgages? Way too many Americans, even during the boom, were a paycheck or two away from being broke, had virtually no savings, overpaid for houses, weren't investing/saving for retirement, etc. I'm sorry, but the general public, including voters, are god awful at handling money. Even some people who are generally financially responsible are this way because of hardline rules they refuse to break like never using credit to buy anything other than a house or MAYBE a car. Can you imagine how many businesses would exist if loans weren't taken out to start them? Such people have no idea how to be entrepreneurial and borrow money to increase productivity.



Now you're just making gross generalizations. You've given good examples of how government funded programs in the last century helped lead to economic prosperity, but cited one poor example within the last 5 years of how a minority (yes. minority) of the population made bad financial decisions. By that logic, *my* money management is bad because of someone in Nevada bought a house and couldn't afford it.

I know you're upset at my tiny, detailless post, but I think it's you who needs to get perspective before so obviously jumping the gun.

Everyone, including the president, says that "we have to work together blah blah" but time and time again it does not happen. Then comes the proof that lobbyists pay congressmen to speak on their industry's behalf, completely undermining the voters who placed them in office in the first place.

As a result of narrow mindedness and rigidity, the US is performing average in reading and science, and below average in math. College tuition is rising much faster than home prices. Gas is higher. Food is less quantity but more expensive. Healthcare costs are exhorbitant. Social security is dying a slow death thanks to Reagan. Medicare is always on the chopping block because it's costs are absurd. Unions are losing their rights. Meanwhile, the military industrial complex is doing very well, and corporate entities have cleaned up their books and are in the best financial position in decades *but refuse to hire people*.

You can have your opinions on why things are the way they are; republicans do this, democrats do that. The president did this, Bush did that. None of that matters because NOW..NOW you're unemployed,and/or your house is in foreclosure, and/or your kids won't be able to goto college because it's too expensive. And those jobs that were lost during the crisis? They're gone. They are not coming back. It's a mathematical reality.

Let's do some numbers now.

US tax revenue: 2.3 trillion
Currently 535 people in position to control budgetting = 4.3 billion worth of financial leverage each.
130 million people = popular vote in 2008 election
So hypothetically, if voters controlled federal budgets, each voter would have ~17500$ worth of financial leverage.

Every year, each person elects where they think all US revenue should be allocated. This, in essence, gives each voting citizen of the united states direct control of the united states federal budget. Also, each state could give their population voting control of their state budgets. For those people who elect to not make their allocations, either congress and state congress will allocate for them as usual, or the leverage they had is transferred into the remaining pool.

Why do this?

1. Because the people, the majority, know best. Congress by nature of their numbers is incapable of providing the best decisions because this country is a huge melting pot of cultures. Each state has different problems and different benefits, and the local citizens deal with them firsthand everyday. The representative system of governance worked a century ago because the population was a fraction of what it is today.

2. The entire us lobbying institution would literally collapse overnight. Lobbyists exist to manipulate congress into moving money into their direction. Since the budgeting decision has been given to millions instead of a couple, money spent lobbying is rendered ineffective to produce their desired outcome.

3. No more blame game since you now have a piece of how the pie gets sliced. Do you support the military? Allocate money to military spending. Support stem cell research? Allocate money to science and R&D. Want to get off foreign oil? Allocate the money to alternative energy sources. Worried about social security? Allocate more to the fund. Worried about our country's ability to compete? Allocate the distribution to education. Worried about debt? Pay it down. People always hate the government because of the financial decisions they make. Not anymore.

4. The internet can be the primary vehicle of how people cast their tax allocation and educate themselves on this important decision. For those who do not have access, they can cast their allocation at designated locations such as their local library or post office.

5. There are times when emergency funds are needed for disasters; Economic, weather, unforeseen events. Congress shall have control over that as time is of the essence. But if the money exceeds a set amount, the voting power shall be delegated to the people (for example, bank bailouts).

Look, it's just an idea and it doesn't deserve to be insulted. But if you feel better, then GO FOR IT! I'd like constructive feedback though.

@Winstonfield_Pennypacker Thanks for displaying this website's bias expressed via a blatently crazy conspiracy theory - presented as one of the first things you can read on that page, no less.

"The plan was a simple one. The path to Obama’s second term requires that enough voters forget that our current economic woes are the fault of a failed President who enjoyed two years of having every single item on his wish-list passed by Congress. And so the idea was to create Occupy in order to give the MSM the cover they desired to spend every single day up until the election talking about greed and income inequality in order to blame both for the stagnant economy.

The hope was that by repeating this message incessantly, enough voters could be convinced that Wall Street, and by extension, evil Republicans, were to blame for our chronic unemployment, record deficits, and stillborn economic growth. President Obama who?"

.....what??

He really drank the OBAMA koolaid. What a fool OBAMA does not compromise and has accelerated the downward spiral of the economy.

This weekend he Insulted Americans call them lazy. How insulting, Fuck him and all his ilk. link Americans work more that most nations. Many of us need 2 job earners just to make ends meet. Under his watch he has not turned around unemployment.
He has done nothing to help promote economic growth, other than trying to tax more people and give it to "green" companies, And doesn't forget the stimulus that did lined the pockets of his union finds and Union pensions,

There is one thing that he has created --- inflation --

A corpse would make a better President. At least it would not turn up into a Greece or Italy.

Sorry to bust your bubble, but infinite growth is simply not possible, nor is it desirable. For economic growth you need demographic growth (just look at how EU keeps sucking in immigrants to counterbalance the non-renewing fertility rate... it's definitely not out of kindness of heart). More people = more mouths to feed, but also exchanging cultivated land for inhabited land. Moreover, even if we manage to have 100% renewable power, much of the material we use (metals, gases, etc) are of a finite nature and rapidly depleting. Recycling is great, but can never be 100% effective, and even if it could, there are elements (think helium) that once they're gone they're gone, basta.

In the long run, we can only have a sustainable society if the growth imperative is scratched out of our mentality.

>> ^artician:

>> ^hpqp:
As long as our society is built around the imperative of growth (economic, demographic), we will continue to irretrievably destroy ourselves. The equation is simple: infinite possibility for growth - finite resources = self-destruction.

The thing is, renewable resources = infinite resources. I really believe infinite possibility for growth can be sustained, but what we have here is irresponsible growth. It's not growth as much as a viral consumption.
I think the next step is to start getting some names. Company names, shareholder names, CEO names. Find the people responsible for making these decisions, and education or kill them. Wait... what?
Anyway, this will never stop unless you confront individuals directly. It's very rare that indirect opposition (pacifist movements, ghandi/king jr. civil rights) works. So rare that I've given up on it for such dire circumstances.
Dear America: still feeling all that white guilt from the complete genocide of several hundred thousand indigenous natives on the norther continent? Well it's still happening right now. Now's your chance to make up for it.

>> ^mgittle:
The problem with fractional reserve systems using fiat currency is their reliance on growth. It should be obvious even to children that "growth" cannot be sustained indefinitely in a closed system (the planet Earth). You can argue technology will fix our problems before nature fixes them for us, but that's gambling, IMO.
The biggest problem with growth, IMO, is a moral and philosophical one reflected by its influence on our culture. People talk about growth and progress as being some sort of universally good thing. cough AynRandobjectivism cough Growth needs to be a means to an end, not an end in itself. The problem with growth and progress being an end in itself is that we cannot have a conversation about what we're growing into or why we're even bothering to grow in the first place.


You're talking about economic growth. I don't see the planet Earth being a limit like you're describing. That's more of a close-minded assumption. We've always been able to invent and innovate with the opportunity. Putting a limit on that, is denying ourselves that opportunity. Surely a 100 years ago, people never envisioned our present world. And a 100 years from now, I hope people can say the same about us.

The problem with fractional reserve systems using fiat currency is that it's fiat. Even if you could match inflation with economic growth (which you can't), you would still have an elite class collecting interest from loans of magically created cash.

I want to repeat first your original claim is the US outproduced the rest of the world many fold from 1700 to 1900, which as I stated is absurdly false.

Percentage of increases is NOT total GDP. Just because we grew more doesn't mean we outproduced another country. Higher GDP = higher production.

Right now, China's economy is growing faster than the US economy. Does that mean their GDP is higher? According to you, apparently, the answer is yes, but it's not. US GDP is higher than China.

Of course, this also doesn't take into account that population impacts GDP, as the larger your population, the more labor resources you have to produce goods and services. GDP per capita also comes into play in factoring relative productivity.

Using your own link, Great Britain's total GDP was higher than the US all the way up to 1913. Therefore, sometime between 1870 and 1913, the US GDP surpassed Britain and every other country on earth in raw amounts, but to claim we did from 1820 - 1913 is by your own data patently false. We outgrew everyone else, this is true, but we did not outproduce everyone else that entire time. In fact, for most of that time, we were outproduced by several Western European countries in raw amounts.

Then there's the question of GDP per capita.

In 1913, US population is estimated to be about 100,000,000. 517,000/100000000=0.00517

In 1913, the British population is estimated to be about 45,000,000. 225000/45000000 = 0.005.

IE, RIGHT ABOUT around 1913 the US began to be more productive per capita than Great Britain, but for most of 1870 to 1913 (and prior), Great Britain outproduced the US per capita. Therefore, your assertion the US outproduced every other country on earth per capita is wrong, and Great Britain outproduced the US in raw amount in 1870.

As I said, most historians do not consider the US an economic superpower until at least WWI. There's ample explanation for this. Great Britain industrialized before the US did. The US also suffered a massive interruption in economic production due to the US Civil War in the 1860s. This is plain as day fact, even with your own data you're providing.

And btw, what were the contributing factors to the US surge in production? Industrialization coupled with massive immigration. To discount the role of immigration into the US as a key contributor and say it was all about free market economics is ridiculous. Are you suggesting we need to allow Mexicans and anyone else to immigrate into the US again?! We also cashed in on imperialist gains at the expense of Mexico, gaining a massive amount of natural resources in the Mexican Cession. You don't honestly think the US Industrial Revolution would have been as wildly successful as it was without that massive resource of various metals, do you? So we're supposed to start taking land from other countries because it's god's will?

And now, to my absolute favorite part of your analysis. You attempted to show the US's slowing economic growth in the 20th century compared to the previous century, because that central banking and regulation we got post 1913 apparently really hurt us.

1820 - 1870 = 50 years
1870 - 1913 = 43 years
1913 - 1950 = 37 years
1950 - 1973 = 23 years
1973 - 1998 = 25 years

So how much did we grow comparing 1870-1913 vs 1950 - 1998, over a comparable time span?

526% vs. (7394598-1455916)/1455916 = 407%

Considering how unproductive humans were before and after industrialization, improving on top of that another 407% is EXTREMELY impressive. On top of that, US economic output was severely reduced because of the Civil War in the 1860s and had not recovered from it by any stretch of the imagination, so simply recovering from that would fuel a massive percentage increase. By 1950, we had already recovered from the Great Depression, and we STILL managed to grow the US economy 4x in the next 50 years.

Now, on top of that, keep in mind that with smaller numbers, percentage growth gets exaggerated compared to bigger numbers. IE, it's easier to double when you start with 1 than 1,000,000.

From 1820 to 1913, US GDP went from 12,548 to 517,383. From 1913 to 1998, we went from 517,383 to 7,394,598! That's less successful?! OH POOR US!

Compared to the rest of the world, we didn't grow as fast percentage wise from 1950-1998. We did however grow the most in raw amounts. By your analysis, Mexico has done a better job growing their economy from 1973 to 1998 than the US did because of percentage growth. Uhh, seriously?! growing 279,302 to 655,910 is more impressive than 3,536,622 to 7,394,598?! Then WHY ARE MEXICANS TRYING TO IMMIGRATE HERE!?

Why is Africa, Asia, etc. growing so much faster than we did? Because they are industrializing, which results in percentage gains greater than the switch to info tech because they're starting from a very low number. That doesn't mean they're outproducing us. It means they have more low hanging fruit to improve their productivity than we do. You're also cherrypicking another historically convenient time. Europe and Asia in 1950 were still recovering from the destruction of WWII, where entire cities were leveled. Simply rebuilding from that would give a massive boost. US industrial capacity was never threatened during WWII. Therefore, we won't start suddenly artificially lower in 1950 compared to a Japan, China, Germany, Britain, France, or Russia.

Your historical analysis is laughable. I have never seen anyone claim that the US economy was better off from 1800-1900 than they have been from 1900-2000. Kudos for attempting to provide statistics for your crackpot retelling of American history.

>> ^marbles:

>> ^heropsycho:
Except you're completely, utterly, 100% wrong about when the US became an economic superpower.
Most historians do not recognize the US as a global economic or military superpower until at least WWI, and it's hard to argue that even then because the US paled in comparison to the likes of Britain until WWII, so your claim we outproduced every other country many times over from 1700-1900 is absurdly and patently false. The 16th Amendment was ratified in 1913 (just prior to WWI), which allowed constitutionally for the first time a federal income tax. The Federal Reserve Bank was also established in 1913, which I guess is what you're referring to as "central banking". The US was undoubtedly recognized as a global Superpower, both economically and militarily, by the end of WWII, some 30+ years later, and it's been one undoubtedly ever since, with the FED and the federal income tax in existence that entire time. During that time, the US has outproduced economically every other country on earth with the dreaded "central bank" and federal income tax you think is destroying our economy.
You might actually want to look stuff up before you say something that grossly incorrect.
>> ^marbles:
>> ^raverman:
... Let me introduce you to the period of history from 1700 - 2000.
Specifically the industrial revolution, the breaking of the class system in the UK, the empowerment of the middle class as both consumers and producers.
...
Look a little bit closer, like 1700-1900, where there was no tax on production (i.e. income tax) and limited periods of economic central planning (i.e. central banking). The US became an economic powerhouse, outperforming the rest of the world many times over.
Imagine that, economic freedom leading to economic prosperity. What a fluke, right?


Don't let facts get in the way of your clouded thinking.
http://www.theworldeconomy.org/MaddisonTables/MaddisontableB-18.pdf
We were the most prosperous country in the world prior to income taxes and the federal reserve.
In 1820, US GDP was less than 2% of the world's GDP. By 1913, US GDP was more than double any other country and 1/5 of the world's. Funny thing about freedom, it works.
From 1820 to 1870, US GDP increased 784% while the world GDP had only increased 59%. From 1870 to 1913, US GDP increased 526% while the world GDP had only increased 246%.
Period, Increase in US GDP, Increase in World GDP
1820 to 1870, 784%, 59%
1870 to 1913, 526%, 246%
1913 to 1950, 281%, 197%
1950 to 1973, 243%, 300%
1973 to 1998, 209%, 210%
And if you do the math per capita, the numbers are even uglier for the US 20th century.
But not surprising one thinks that printing money to pay for bombs and tanks makes a country prosperous. How's that government stimulus working out present day? Funny we still haven't paid off that debt from WWII stimulus. We've being paying the interest on it though.
Did expanding the monetary base (i.e. inflation) make us richer? The father of the theory that government stimulus is the way to fight severe downturns, John Maynard Keynes, famously said about inflation:
By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.

So let's deal with some factual claims here. Cafferty's entire premise hangs on this Washington Times article, which makes the claim that there are $3 in tax increases for every $1 in cuts.

Except, the Washington Times is lying when it says that. According to the WT article itself, the proposal outlines $4.4 trillion in deficit reduction, $1.5 trillion of which is tax increases. That's $1.93 in cuts for each $1 in taxes, nowhere near the $0.33 in cuts per $1 in taxes that the Washington times states.

So how do they arrive at their figure? Well, they subtract out a bunch of things that are "supposed to happen anyways". Things that people like @blankfist insist Obama won't do, such as ending the wars in Afghanistan and Iraq, and a series of budget cuts that he'd agreed to in the debt ceiling deal a few months back.

Never mind that ending the Bush tax cuts is also something that is "supposed to happen anyways", and the new taxes proposed are more than offset by specific new cuts.

Which reminds me, Cafferty says there are no specific cuts of any kind. Before saying that, maybe he should read the plan? Or maybe even just read the entire Washington Times article he's relying on so heavily. The Washington Times' own conservative (in every sense of the word) estimate is that there are $580 billion in specific cuts, mostly coming from Social Security and Medicare, which Cafferty says have been left untouched.

Then, Cafferty says we have a $1 trillion a year deficit. Except now he is adding in all the things he subtracted from Obama's plan because they were "going to happen anyway." He's including the cost of Iraq and Afghanistan, he's including all the spending that will be cut because of the debt ceiling deal, and he's including the deficit from the Bush tax cuts.

If you're going to subtract those things out as legitimate sources of deficit reduction, then you've also got to subtract them out of your estimate of what the deficit is going to be in the future. If you don't, then you're being straight up dishonest, and exaggerating the size of the gap between the plans for deficit reduction, and the deficit itself.

I suspect Cafferty did this accidentally, but still, it's not like there aren't people at CNN who could've fact checked him before he said this on air.

Anyways, here's a much more fair assessment of the Obama plan, if you're looking for some balance on the topic.

I think your post and your sentiment is very shortsighted. The US government has a long history of subsidizing high tech. It's why we lead the world in this area. Countries like China are following the US example and gaining fast, since the US seems to be regressing. China's government's investment in private solar companies dwarfs America's, and is one factor in Solyndra's failure; Solyndra found it hard to compete against chinese products.

I could give numerous example of corporations that receive "Recovery Act" funds that have moved jobs to China this year. Since the Recovery Act is paying off those corporation that "Dey Took Ar Jawbs!" Is it wrong to conclude the recovery act is a product of the Corporate Dominated Politics?

What does this have to do with the video? If anything, Solyndra is a counterexample: an american company building a factory and research facilities in the states, opting to compete on innovation rather than cheap overseas labor. Despite its failure, we should invest in 10 more Solyndras. We need a high skill base in this country; not a population of burger flippers and day laborers.

The WPA (in teh great depression, part of the new deal) provided direct employment. They build the hoover dam, other stuff.

Contrast this to the recovery act, which spends about 80 billion on education, half that on infrastructure, and spreads the rest of the 600 billion all over.

This is a very bad comparison, and a flawed summary of what the recovery act does. For example, the 80 billion in education helped to keep teachers employed. Is that a waste?





From the recovery website:
http://www.recovery.gov/About/Pages/The_Act.aspx

The Recovery Act intends to achieve those goals by:

•Providing $288 billion in tax cuts and benefits for millions of working families and businesses
•Increasing federal funds for education and health care as well as entitlement programs (such as extending unemployment benefits) by $224 billion
•Making $275 billion available for federal contracts, grants and loans
•Requiring recipients of Recovery funds to report quarterly on how they are using the money. All the data is posted on Recovery.gov so the public can track the Recovery funds.
In addition to offering financial aid directly to local school districts, expanding the Child Tax Credit, and underwriting a process to computerize health records to reduce medical errors and save on health care costs, the Recovery Act is targeted at infrastructure development and enhancement. For instance, the Act plans investment in the domestic renewable energy industry and the weatherizing of 75 percent of federal buildings as well as more than one million private homes around the country.

Construction and repair of roads and bridges as well as scientific research and the expansion of broadband and wireless service are also included among the many projects that the Recovery Act will fund.

While many of Recovery Act projects are focused more immediately on jumpstarting the economy, others, especially those involving infrastructure improvements, are expected to contribute to economic growth for many years.

>> ^pyloricvalve:

That's a good summary of the Keynesian response. I guess my answer would be that even supposing the 10% unemployed were neatly then employed in building these weapons this would just be temporary. Later they will eventually all be unemployed again having wasted time and money in training for "fictional" work.

It seems to me that building real military spaceships would require real skills, real work, real factories, real technology, and there's no particular reason why if the demand for military spaceships evaporated, that they wouldn't just pivot into trying to serve a different market, like, say, commercial spacecraft.

That's the kind of adaptation free markets are supposed to be good at, right?

>> ^pyloricvalve:

Even if that work had some beneficial side effects, making unnatural economic growth will still be a net cost to the economy versus spending time finding real jobs. These are what they really 'should' in some sense be doing. To do this would surely be better unless you claim the 10% will continue unemployed permanently.

There's no reason to think additional idleness accelerates the process of someone finding their "right" job. That also presupposes that there's a right and a wrong job, and that there's inherently some economic damage being done by seeing someone doing real work producing real goods rather than having them stay idle and wait for Godot.

>> ^pyloricvalve:

These arguments can be seen in the two Hayek/Keynes rap videos. There are two inconsistent models of the economy. How can we decide which one is right? This argument is very old so I guess it's not that easy... Maybe look at long run growth in more and less interventionist countries? I suspect growth will be faster in the less interventionist nation.

Actually, it's not really a persisting argument amongst actual trained economists. The Austrian theory of economics has been invalidated time and time again by facts, but it lives on because it's a branch of economics that appeals to the ideological right.

That's not to say everything Hayek ever said was wrong, but the Hayekian idea that Keynesian fiscal and monetary policy will inevitably lead to utter ruin has definitely not been borne out by the facts. Also, no country that has followed a Hayekian prescription for recessions (keep money tight, and implement fiscal austerity) has ever done anything but deepen their recession and prolong their recovery.

That's a good summary of the Keynesian response. I guess my answer would be that even supposing the 10% unemployed were neatly then employed in building these weapons this would just be temporary. Later they will eventually all be unemployed again having wasted time and money in training for "fictional" work. Even if that work had some beneficial side effects, making unnatural economic growth will still be a net cost to the economy versus spending time finding real jobs. These are what they really 'should' in some sense be doing. To do this would surely be better unless you claim the 10% will continue unemployed permanently.

A typical argument against my response is that the economy is like a pump and that this is pump priming. Demand from these people's fictional labour will create the new jobs. The Austrian reply to that is that the pump metaphor is simply not valid and the economies grow organically. If you force a branch to grow with artificial sunlight, when that fake light gets turned off the branch will wither and all the people involved in its support spend a lot of time looking for what they should have been doing. I think Hayek would claim this type of fake labour policy is what causes the 10% unemployment to begin with.

These arguments can be seen in the two Hayek/Keynes rap videos. There are two inconsistent models of the economy. How can we decide which one is right? This argument is very old so I guess it's not that easy... Maybe look at long run growth in more and less interventionist countries? I suspect growth will be faster in the less interventionist nation.


>> ^NetRunner:
>> ^pyloricvalve: Just seems like straight up broken windows fallacy. If we spent 18 months preparing for war with aliens we might all be employed but we'd end up with a bunch of weapons pointed at the sky. Otherwise we could have spent the time making ipods, cars or whatever good or service you might want. Doesn't what he's saying just sound wrong? It clearly would not be a good thing for the world to spend 18 months that way.. I think that's the real problem with the broken window "fallacy" -- it assumes that as your starting point you already have full employment and no idle infrastructure or capital. That's not true in our situation at all. Unemployment is around 10%, factories are being left idle, and companies are sitting on mountains of cash. The idea here is to get people back to work doing something, because even if they're producing things there isn't a high demand for (windows, alien-fighting spaceships), it's not like those things come at the cost of the other things they would've otherwise been producing, since they're not producing anything at all right now. Oh, and in the case of alien-fighting spaceships, there's a pretty high chance that the technology and industrial infrastructure that's developed to build them will be able to be re-purposed for consumer goods once the alien threat is shown to be fake. Ideally instead of faking an alien invasion, we'd just have the government go and invest directly in our infrastructure (transportation, education, power generation), but without the alien threat it doesn't seem like Congress is willing to engage in any more fiscal stimulus, no matter how economically sound it would be.

@westy

Yes nearly every business tries to game the system that's the point of capitalism and that's why it will always fail ( im not on about simply ballencing your books and deprecaiting assets and playing that sytem , evan though that is gamed in the same way) I'm on about the system at large , surely you can see the difference between a butcher and a company that offers high interest loans to desperate people , when instead of offering the loan the ethical thing would be for them to tell them to contact citizens advice ?

I don't think capitalism (by which I mean a regulated but moderately free market) will fail as (at least so far) it's provided the best manner of funneling people's naturally selfish/nepotistic tendencies in a productive way.

Let's be clear here, generally brokers were responsible for writing subprime loans with botched (or outright false) assessments of income and capacity to pay. These brokers were essentially gaming the investment banks (like Bear Sterns) into buying fraudulent securitised loans. Bear Sterns along with Lehman Brothers didn't survive and many other banks got taken over. There was clear motivation for them to perform more due diligence and they paid for their mistakes by going bankrupt or being taken over. The credit rating agencies and the insurers who backed CDOs also had poor judgement. My point is, the people who benefited from writing these bad loans weren't the banks.

thats the piont im making , you can have companies that game the system but also privde a service but the people that have caused this economic crisis are people that are at the pinicale of gaming the system and do not care to provide a service and purely participate to game the system purely exist to make money at whatever cost to society.

They're not gaming the system if they're going bankrupt. You know as well as I do that banks borrow money from those with savings and selectively lend them out to generally good investments thus creating economic growth and jobs. Let's not get carried away with populism here.

luckily we have people that are ethical and don't just think of the profit bottom line , but in general you will see that a good proportion of those successful at business and profiting are ones that couldn't give a shit about other people or there effect on the environment.

The difference between the butcher and a large financial institution is size. If this was a national specialty chain business, you can bet that they would be lobbying their congressman and receiving favors and payouts. Don't get me wrong, I'm not for crony capitalism and I understand that banks weild considerable leverage over the economy and politicians. They should be more regulated commensurate to their significance and intractability with the economy, particularly shadow banking system (securitisation of loans and credit derivatives) should be regulated to prevent crises. This is a failure of regulation though, not a failure of banking in general. As I mentioned, every large industry/corporate body curries favors.

"Either way they are both pretty beneficial to a functioning economy"

so the bankers that turned a blind eye to the toxit assits were beneficail to the econimy ?

how about the lobiests and deregulation that made it possable ?
what about the real estate agents that knew the people they were selling the houses to could not maintain the mortgage?

What about the marketeers that designed the sales materail to obscure the mortgage rates to hide the fact that they would increase and specifcaly designed the brouchers and trained the sales teams to exploit unknowlageable people ?

No they weren't and many of their businesses went out of business. These are all issues of regulation. Corporations (as opposed to say partnerships) are by legal design geared towards maximising profit. If you come in with expectations that any corporation will not do this, you are making flawed assumptions.

"hedge funds don't gamble shares, they trade them based on discrepancies between actual price and fundamentals"

Defanitoin of Gambling from Wikipedia - "Gambling is the wagering of money or something of material value (referred to as "the stakes") on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods."

something doesn't have to have unfavourable odds to be considered gambling for example there are many professional gamblers that make a living of horse betting , and in that exact same way there are many people that profestinaly gamble on the stock market , and I would argue that they are themselfs not providing a use to socity. I would however contrast that against sum-one that invests in a company because that company is doing good or employs many people or is developing beneficial technpligy.

the problem is in general capitalism in its current form is fucked , and i belive we need to move towards something that is what I would describe as a

"democratic socialist capitalist system" where we have as free a market as possable and that is achived through democratic regulation guided by socialist princapels. so you try to give every citizen as equal a chance as possible at having free will and succeeding in what they want to do.

the current system allows the top 10% fantastic freedom and chances but at the expense of the majorty of people.

It's not a wager of value, it's a transfer of value. Which is critically what makes it different from gambling. If you have agricultural produce and you want to hedge the risk that your harvest will go down in value when it comes to fruition, it's typically an investment bank/hedge fund/commercial bank that takes the counterparty position. Without someone taking that counterparty position, you couldn't eliminate your risk of a fall in prices. If someone buys a newly listed share of your company, they're contributing to your capacity to invest and pay wages. During the process of gambling before someone is declared the winner, there is no value being created. That's a pretty crucial difference. The main point is though that banking creates value, hopefully I've already illustrated that beforehand.

I don't disagree with what you're saying at the end, but as far as I'm concerned you should be resentful towards campaign finance rules. Instead, it's like trying to treat the symptom not the cause.

What Keynes was talking about was that the gold standard was causing deflation because there just wasn't enough gold in the world to make enough currency to keep up with economic growth. Put that in your pipe and smoke it.

>> ^lampishthing:

He's a little bit obsessed with gold. He sounds like an intelligent crackpot though, has points but they sound silly because he's predicting Armageddon.


When I was a young lad, gold was trading at 300. It is now well over 1600, dabbling into 1700s. Pretty crazy. I have been re-investigating bit-coins again. Seems mostly immune to the kinds of political hijinx that go on with paper money. And unlike Gold, isn't as susceptible to deflationary spiral due to economic growth. It has a built in 4% inflation based on Milton Friedman's own formula for monetary growth. That was his main gripe with gold, is it is prone to tampering, and (rapid) deflation in times of (rapid) growth. I might start bit coin mining here in the future, a small investment of time and energy is a good opportunity cost for a money that doesn't rely on petty people making all the calls.

>> ^blankfist:

Two comments in and you're back to your old games again. Where did I say "all" immigrants will be poor or "all" immigrants will refuse to pay taxes? Notice I mentioned US citizens as well. But you probably missed that while only listening to what you wanted to hear.

Seriously blankie, what's with the hostility? Forgive me for just this once talking like a normal person and saying "all" when I should've said "disproportionately."

I was mostly just asking about whether you thought immigrants were a special class of people with different demographics than the indigenous population, because I don't see the how you link immigration to the solvency of a social safety net unless you presuppose that immigrants are either going to be disproportionately poor, or disproportionately likely to commit some form of fraud (tax or entitlement).

>> ^blankfist:
It's not that "all" immigrants are poor, it's that if you were poor and you realized you could go somewhere and have access to things you'd not normally have access to, then what're the odds of you exploiting that?
It's a numbers game. The more you allow for exploits in a system, the more it'll be exploited. Etc. Same goes with citizenry and citizenry birth. But the real difference, I believe, is that if you are stable in your home country, you're probably less likely to migrate somewhere just for the entitlements. The opposite is probably more likely however if you're not stable. Is that not a reasonable assumption?


So here's the part where I walk on eggshells and gently point out that you do seem to be saying that immigrants will be disproportionately likely to be poor or commit fraud.

You're also tossing in that you think native born citizens will be that way too. If that's the case, then we're back to "so what does immigration have to do with anything?"


Let's say we turned America into a Finnish-style welfare state -- taxes are high, infrastructure is modern and in good repair, our public schools are the best in the world, our health care system is both cost effective and provides quality care, unemployment is low, our budget is in surplus, our unemployment benefits are generous (and have no time limit), and we have a growing private sector with a heavy technology focus.

If we then threw the gates wide open on immigration, I think you're right; most of the people coming here would be poorer than the average American, and at least in the short run, it'd be bad for the government's net fiscal situation -- more people on welfare, without a completely offsetting tax revenue increase.

But over the long run, I think the situation would reverse. The immigrants and their children would get a free, quality education. They'd get first class health care. They'd have access to public transportation, and a healthy jobs market. For the most part, they'd "exploit" the advantages offered to them to bootstrap themselves into a more productive, wealthier, tax-paying lifestyle. In the long run, the state's investments in the human capital of those immigrants would pay dividends that go beyond mere economic growth, it'd also diversify and enrich the culture of their nation, and bring new ideas and different ways of thinking into the shared project of their society.

Which is to say, I don't think immigration poses a fiscal problem for welfare states.

Bigotry on the other hand, that poses a problem for left-wing policies of all kinds. I don't really think that's a strike against the policies of the left though.