The Economics Thread

[Dak]

Awesome, someone I agree with so far over 90% of the time ~

 

[Orion Crystal Ice]

Everyone else usually beats me to it or puts things a bit better/easier to understand than I may, in threads such as this, so I typically just lurk. But I'm going to also vouch for a good amount of the meh post.

 

[The Ozzman]

http://www.thefreemanonline.org/featured/the-great-depression-according-to-milton-friedman/

Good article.

 

[Cythraul]

I think a good argument against this is that you need money to make money. This means without any type of equalization, rich people will keep getting richer while those without money will continue to get poorer. There would be no social mobility. I'm sure plenty of rich people got there through talent and ability, but I'm also sure that there are plenty of poorer people with that same talent and ability who can't afford to invest or can't afford to go to college and therefore can never achieve what they possibly could.

You're committing a very basic economic fallacy here. A market economy is not a zero sum game. The source of the fallacy is thinking of income and wealth as a fixed pie where the more somebody gets, the less we're all left with. You shouldn't conflate real wealth and prosperity with the amount of green pieces of paper that are floating around. What I'm against are policies that tend to inhibit real growth. What I think we should be interested in is raising standards of living, which is not achieved by shuffling green paper around.

Also, inequalities are not inherently objectionable, even from a consequentialist standpoint. After all, to say that there is an inequality is to say virtually nothing about how the less well-off are doing.

@virus gravy: I'll respond to your post in its entirety later. Right now I must go out and have a bite to eat.

 

[Einherjar86]

I think a good argument against this is that you need money to make money. This means without any type of equalization, rich people will keep getting richer while those without money will continue to get poorer. There would be no social mobility. I'm sure plenty of rich people got there through talent and ability, but I'm also sure that there are plenty of poorer people with that same talent and ability who can't afford to invest or can't afford to go to college and therefore can never achieve what they possibly could.

There are many exceptions to this rule, though. A college education is not necessary for success, and it's more than possible for people to elevate their social status; mobility is possible, but not easy, and it shouldn't be easy.

 

[Meh]

I'm good friends with some people that went to Princeton, class of '06 in Mechanical Engineering and Aerospace Mechanical Engineering. There are some bona fide dumbasses that go to Princeton, a college education can very easily not be an education at all.

Sure it helps, but it's not required.

 

[Cythraul]

By that I mean enough disposable income to take business risks and make investments of the kind you referred to earlier.

Okay. Y'know, it takes a whole lot of money to take such risks/make such investments. Something to consider.

You seem to think it's perfectly fine that nearly all of the disposable money in a society pool up at the top of the economic food chain, which makes very little sense in my opinion.

Yup, it is perfectly fine to me, and that's because I don't find inequalities to be inherently objectionable. If holdings (i.e. income, wealth, goods) are acquired through just, legitimate exchanges then who am I to force somebody to spread them around?

People with great ideas only account for a fraction of those who are filthy rich, and god only knows how many people of comparable talent among the middle and lower classes could do just as much good for our society if they had at least a modest budget for personal projects and business endeavors.

It's not so much an issue of determining who does and doesn't have the good ideas. We discover that through the mechanism of profit and loss anyway. The point is that (large) savings is required in the first place to put the ideas to use that are beneficial to an economy. I just do not see the benefit of forming a huge, expensive bureaucracy in order to help people do what other people already do.

I freely admit that there is inefficiency in maintaining a group of tax collectors and enforcers. That's a small price to pay for ensuring that more than a tiny fraction of society is able to live comfortably and have the opportunity to rise above the harsh necessity of making ends meet.

Are you claiming that it's actually the case that only a tiny fraction of society is able to live comfortably and has the opportunity to rise above the harsh necessity of making ends meet, or are you claiming that this would be the case in some counterfactual situation?

Anyway, I think you're way off the mark when you say that people who are filthy rich typically offer more bang for your buck.

I think it's the case for those that run businesses. After all, it's a surefire way to turn a profit. Everyone knows this.

What about people who get rich merely by having claims to oil fields and mineral deposits, or - even worse - through inheritance?

I don't know what the relevance of this is. I was making a claim about incentives. I don't see how people who have claims to oil fields or mineral deposits don't have the same incentives that all business people have. At any rate, it doesn't undermine the 'typically' part in the claim I made. Also, so what if somebody got an inheritance? Who exactly did they hurt in receiving it?

I'm pretty sure that geniuses and innovators do not make up the majority of the super-rich.

I understand that. Smart people come from everywhere. After all, I'm not rich and I'm a fucking genius. My whole point has more to do with savings, not necessarily ideas.

 

[Meh]

I take issue with this 'more bang for your buck' theory. Turn a profit?

Things are not designed to last anymore, therefore you don't get any bang for your buck.

Obviously, since shit is designed to fall apart in under 10 years depending on what it is, that you would turn a profit because stupid people keep buying.

As for the economic elite having a legitimate purpose; their entire goal is power now - they have all the money they need. Their objectives do not benefit anyone but themselves.

 

[Cythraul]

I take issue with this 'more bang for your buck' theory. Turn a profit?

Things are not designed to last anymore, therefore you don't get any bang for your buck.

Obviously, since shit is designed to fall apart in under 10 years depending on what it is, that you would turn a profit because stupid people keep buying.

You're missing the point. Look at it this way: Consider two companies who make essentially the same product. Suppose that one company finds a way to reduce the cost of production and pass the savings on to the consumer. Which company is likely to turn more of a profit? Who's offering the consumer more bang for their buck? I never made any claim that there is no trade off between cost and durability. Furthermore, if I were to take your objection seriously, I'd have to assume that the trade off in question must be, or typically is, a negative for the average consumer. Now that's certainly a grand, sweeping conclusion if I ever saw one.

 

[The Ozzman]

For most products, the cost of buying something every 10 or 15 years or so is most likely going to cost less than maintaining the thing for 30+ years.

Fun fact: There was a GMAT essay question similar to this subject

 

[Meh]

For most products, the cost of buying something every 10 or 15 years or so is most likely going to cost less than maintaining the thing for 30+ years.

Fun fact: There was a GMAT essay question similar to this subject

For most things, but automobiles shouldn't fall to shit or wind up with blown transmissions after 10 years.

 

[divine_torture]

Unless it's a Kia.

 

[Meh]

A couple years ago I did automotive detailing as a side job and someone brought in a Kia, that was the most piss-poor put together vehicle I'd ever seen.

 

[divine_torture]

I had a Rio for about a week. Brand new. The timing chain went out and that was the end of that.

 

[The Ozzman]

I had a Rio for about a week. Brand new. The timing chain went out and that was the end of that.

 

[Dak]

Ron Paul's new legislation: Audit the Fed, then end it

I have been very pleased with the progress of my legislation, HR 1207, which calls for a complete audit of the Federal Reserve and removes many significant barriers towards transparency of our monetary system. This bill now has nearly 170 cosponsors, with support from both Republicans and Democrats. Senator Bernie Sanders has introduced a companion bill in the Senate S 604, which will hopefully begin to gain momentum as well. I am very encouraged to see so many of my colleagues in Congress stand with me for greater transparency in government.

Some have begun to push back against this bill, and I am very happy to address their concerns.

The main argument seems to be that Congressional oversight over the Fed is government interference in the free market. This argument shows a misunderstanding of what a free market really is. Fundamentally, you cannot defend the Federal Reserve and the free market at the same time. The Fed negates the very foundation of a free market by artificially manipulating the price and supply of money -- the lifeblood of the economy. In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market. The only legitimate, Constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters.

Instead, Congress has abdicated this responsibility to a cabal of elite, quasi-governmental banks who, instead of stabilizing the economy, have destabilized it. It took less than two decades for the Federal Reserve to bring on the Great Depression of the 1930's. It has also inflated away the value of our currency by over 96 percent since its inception. It has invisibly stolen from the poor and given to the rich through this controlled inflation, and now openly stolen through recent bank bailouts. It has predictably exacerbated the very problems it was meant to solve.

Detractors have also argued that the Fed must remain immune from the political process, and that that more congressional oversight would distort their very important decisions. On the contrary, the Federal Reserve is already heavily entrenched in the political process, as the Fed chairman is a political appointee. High level officials routinely make the rounds between positions at the Fed, member banks, Treasury and back again, taking care of friends and each other along the way.

As far as the foolishness of placing complex monetary policy decisions in the hands of politicians -- I couldn't agree more. No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself. The failure of central economic planning has been witnessed over and over. It is frankly beyond me why we ever agreed to try it again.

To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have. They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability. Thus the loudest arguments against greater transparency are likely to come from those friends, and understandably so.

However, it is the responsibility of every member of Congress to represent the interests of the people that sent them to Washington and find out what has been happening with our money. As the branch of government with the power of the purse, we really have no other reasonable choice when the economy is in the shape it is in.

http://www.youtube.com/watch?v=mpMM3zsdDUw&eurl=http%3A%2F%2Fwww%2Ecampaignforliberty%2Ecom%2Farticle%2Ephp%3Fview%3D82&feature=player_embedded

 

[Dak]

US Federal financial obligations exceed GDP of world.

 

[Cythraul]

I've been following the progress of HR 1207 for a while now. I'm really pleased (and kind of surprised) to see so much support for it, even from people on the left.

 

[Dak]

If only the kind of common sense behind this bill was president.

 

[V.V.V.V.V.]

I totally trust a source citing a website called "SHADOW GOVERNMENT STATISTICS", absolutely.