Donald trump. what is your take on him?

[JohnRoberts]

I should be building drum tuners but I can waste a little more time today.

I read a funny joke today about economists... "You know they have a sense of humor when they use decimal points in their projections!"  ;D ;D

My response was shorthand for the historical reality that government generally destroys far more wealth than it ever creates, and is generally less efficient at managing resources. 

I'm not sure I agree that government generally provides a net loss of wealth. Again I think one has to first establish just what wealth is and how it's suppoesd to be measured, and only then can one talk about whether or not there's a net loss.

It is not just destroying wealth (by waste and misallocation, and over regulation, and...), but the missed opportunity of faster GDP with more private economy control of the means of production.

US GDP growth has been substandard for two administrations now. Higher GDP growth could actually support increased government spending (for productive things like infrastructure maintenance.)

As for "efficiency" I think that's again highly debatable. To me anything that adds to the actual cost of the good or service that I consume is a "waste". Why  should I pay for something that doesn't directly benefit me.

You shouldn't and you don't have to... In a free market you can shop around until you find a price you are satisfied by. Unless you are shopping in markets already controlled or over regulated by the government.

Over the last several decades (or longer) we have seen huge waste and inefficiencies squeezed out of mature products.  A new computer I buy today for a few hundred dollars, is incomparable, in memory, speed, and computing power, to a computer I paid several thousand dollars for in the '70s.  Unfettered by overregulation free markets and private business can continue to deliver more for less.

Of course, going down that line of reasoning will point the finger at capitalist organizations as well as governments. So I don't think it's at all clear that it's a net positive for the consumer to have a private enterprize provide goods/services compared to a non-profit organization.

Except private businesses have the implicit discipline of needing to make a profit, or go bankrupt. If government spends more than they have (called deficit spending), they just borrow and tax us more.

I concede the theoretical point, but argue in practice (with very few exceptions) government is a net wealth destroyer. The question is what "will" government do, not what "can" government do.

I don't thinkk that's as interesting as what the underlying principles are for management of resources and wealth etc. What do coprorations do? They do a tremendous amount of bad things, that's what they do. Of course they also do good. Just like governments. So the question isn't what they end up doing but why it's done and how various systems promote one thing over another.

Huh??  Management or allocation of resources is a well studied topic. Free markets with good price discovery provide the best and highest use of scarce resources. The government's idea of how to deal with scarcity is rationing and price control. Anyone remember the every other day, odd-even gasoline rationing back in the '70s? As soon as the government relaxed the price controls, adequate gas supply magically showed up.  Now we are watching oil/gas struggle with the underdamped loop stability of price-demand relationships as we unwind too much supply caused by high prices and too easy credit, that spurred too much investment (I blame poor governance for the economic distortions we are still experiencing from too easy credit). This low/negative interest rate experiment isn't over, and who knows how it will end (not me)?

The dominant force in education seems to be the teacher's unions arguing loudly against testing , perhaps because they fear being held accountable for their work product.  Life is a constant test, education is just another process to manage, and testing reveals how effective the teachers are.

I'm not really sure I agree with that.

If we don't test students how do we know how well they are prepared for the future, and if teachers are doing their job? Seems pretty simple to me.

I think it depends on what kind of society we want and what kind of labor market we want.

I don't know what skills students will need for the rest of their lives. Things I do today, were not even anticipated back when I was a student. But I was taught the basics and how to learn.

Some people I see get relatively far by working hard. They aren't particularly smart or talented, just hard-working. It doesn't really make a difference what profession they're in, they'll progress within any field due to working hard (assuming of course there is "space" for progression).

I have started several businesses and it requires a combination of both working hard and working smart... If just working hard was all it takes, ditch diggers would be millionaires. But instead, some millionaire invents a ditch digging machine.  Working hard is not enough, while too many are unwilling to even do that.

Others have progressed by being creative. Neither of those two require testing or high grades. That's not to say that there isn't a market for that type of education system.

I have 9 patents, and all are based on technology, so I couldn't invent anything without training and basic scientific knowledge. Some people are creative about how they arrange their flower garden, or put icing on a donut. Others combine electronic components to deliver some new and useful function.

I just read an article where a college teaching computer science, secretly used Watson (IBM's artificial intelligence program) to successfully replace one of the teacher's assistants. These are still early days for AI assisted teaching, and I am optimistic that even teacher's unions can not hold back this tide of progress. (I hate using that word for something good).

Of course that's progress, but it also progresses us towards ubiquity. And ubiquity and capitalism don't coexist.

Ubiquity is the state of being everywhere all the time. Some ubiquity is real (the ubiquity of sadness at a funeral), and some only seems real (the ubiquity of cowboy boots in Texas). A god is a great example of ubiquity: an all-knowing deity that exists in every nook and cranny.

?? I looked "ubiquity" up and I still don't know what you mean.

Of course teachers unions object to it as should any union in which its members are threatened with obsolescence.

Unions are useful to protect workers from abuse by business owners. Teachers are public servants, and their obsolete jobs do not need to be protected if it doesn't serve the communities greater good. While I find it hard to image ever not needing teachers, while they can be used far more effectively than they are now.

All of this only boils down to one's view on the potential amount of new types of labor available. I don't think there's an infinite amount of new types of jobs to soak up people not having jobs because technology made them obsolete. And the only "workable" alternatives to that are either lower wages - for a while - to compete on a Capitalist labor market, or not have Capitalism.

Redistributing wealth using government force is a zero sum game (actually less than zero sum as wealth is destroyed in the process). Creating new wealth seems unlimited. I can imagine programs to help underemployed people start businesses, but government regulations are a head wind that makes this more difficult.

PS: The China wealth creation engine is still a work in process and too early to judge as success or failure. The combination of centrally planned large industries (like steel), with some small private industries is growing GDP far faster than the west.

Yeah, I mean, China is hardly purely Socialist. It's an odd and interesting hybrid of many things. It's an interesting time we live in.

China is communist, but not very pure... The example was brought up to showcase the flaws of central planning (like their over capacity in multiple industries.)

JR

 

[mattiasNYC]

Surely immigration is fully controlled though whereas the influx of refugees might not be. The difference is important, is it not?

The UK government cannot control immigration from EU countries due to free movement etc.  That's what the're upset about.

Refugees are a different issue as you say.

DaveP

Ah, I see. Yes, that's a good point.

 

[mattiasNYC]

I should be building drum tuners but I can waste a little more time today.

I read a funny joke today about economists... "You know they have a sense of humor when they use decimal points in their projections!"  ;D ;D

lol

US GDP growth has been substandard for two administrations now. Higher GDP growth could actually support increased government spending (for productive things like infrastructure maintenance.)

Two administrations = 8 years = 2016-8=2008.... And we know what happened in 2008. Capitalism showed its ugly face.

As for "efficiency" I think that's again highly debatable. To me anything that adds to the actual cost of the good or service that I consume is a "waste". Why  should I pay for something that doesn't directly benefit me.

You shouldn't and you don't have to... In a free market you can shop around until you find a price you are satisfied by.

Ah, but notice how you actually changed the issue there. I said that anything beyond the actual cost of the good or service I want is a waste to me, whereas you said that I can shop around for a price I'm satisfied with. But the price includes that which I have no interest in paying for - profit. From my perspective there is no value in having my labor go to the excessive wealth of Bill Gates or any other very wealthy owner. Zero. Reinvestments are costs that are valid and deducted, so that's not what I'm talking about.

In addition to profits which do nothing for me there's everything else which supports the system chosen and would be inherently unnecessary with a different one. When I'm paying for a new phone I'm not just paying for R&D, manufacture and distribution, I'm also paying for marketing and profit. Why do I need marketing? I need information, not marketing. I also don't need any of the other costs directly related to a capitalist market. I need and want the phone, period. So from the standpoint of the consumer that's all wasted resources.

A new computer I buy today for a few hundred dollars, is incomparable, in memory, speed, and computing power, to a computer I paid several thousand dollars for in the '70s.  Unfettered by overregulation free markets and private business can continue to deliver more for less.

Modern computers are to a large extend designed and manufactured using modern computers. Computers is what has made us leap ahead, not the economic model. Correlation doesn't mean causation, to use an overused phrase.

private businesses have the implicit discipline of needing to make a profit, or go bankrupt. If government spends more than they have (called deficit spending), they just borrow and tax us more.

Sure, a private business should make a profit, except when it shouldn't. That's why I gave the school example in the first place. It wasn't to start a discussion about education as much as it was to point out that private business effects even education in a "Socialist" nation like Sweden. The school went belly-up but the parent company didn't. Someone made lots of money in the process. That's capitalism. Because the actual "profit" can "drift" and be made anywhere accounting allows for it to be made.

I don't thinkk that's as interesting as what the underlying principles are for management of resources and wealth etc. What do coprorations do? They do a tremendous amount of bad things, that's what they do. Of course they also do good. Just like governments. So the question isn't what they end up doing but why it's done and how various systems promote one thing over another.

Huh??  Management or allocation of resources is a well studied topic. Free markets with good price discovery provide the best and highest use of scarce resources.

My point was that profit provides incentives for people to do what any normal person would call "bad things", and that happens in private businesses. When that happens there's nothing good about management. But we sort of look the other way because it's "capitalism" and we pretend that it somehow works itself out in the end.

I have started several businesses and it requires a combination of both working hard and working smart... If just working hard was all it takes, ditch diggers would be millionaires. But instead, some millionaire invents a ditch digging machine.  Working hard is not enough, while too many are unwilling to even do that.

I mentioned that "space" to grow was important. The market puts an end to a ditch digger making billions. But that wasn't the point. The point was that just because someone makes millions doesn't mean they did well in school. It could just be that they're hard workers in a field in which they can make a lot of money, or that they were lucky, or that they were creative. Neither intelligence nor a good education is necessary. That was my point. And so it's difficult to ascertain just what is needed of future generations, and thus difficult to test for it. I'd say critical thinking, creativity and learning are probably the most important skills to obtain.

I do see your point with the need to somehow assess the quality of eduaction though. I guess regardless of what we teach we should hopefully know if it's done well enough. So I suppose we agree.

I just read an article where a college teaching computer science, secretly used Watson (IBM's artificial intelligence program) to successfully replace one of the teacher's assistants. These are still early days for AI assisted teaching, and I am optimistic that even teacher's unions can not hold back this tide of progress. (I hate using that word for something good).

Of course that's progress, but it also progresses us towards ubiquity. And ubiquity and capitalism don't coexist.

Ubiquity is the state of being everywhere all the time. Some ubiquity is real (the ubiquity of sadness at a funeral), and some only seems real (the ubiquity of cowboy boots in Texas). A god is a great example of ubiquity: an all-knowing deity that exists in every nook and cranny.

?? I looked "ubiquity" up and I still don't know what you mean.

What I mean is that once we have a good or service that is ubiquitous then its value is essentially zero. Market saturation of supply. With so much of the good or service available who's going to pay for it? This is no problem as long as whomever was involved in producing it can get another job, and so that led to my point that humans need labor to earn an income in Capitalist societies, and that this is going to be a problem in principle because (I think) we don't have an infinite amount of future labor. The alternatives then have to be picking something other than Capitalism or having a huge underpaid working class because well paying labor is scarce.

Unions are useful to protect workers from abuse by business owners. Teachers are public servants, and their obsolete jobs do not need to be protected if it doesn't serve the communities greater good. While I find it hard to image ever not needing teachers, while they can be used far more effectively than they are now.

I don't entirely disagree.

 

[JohnRoberts]

US GDP growth has been substandard for two administrations now. Higher GDP growth could actually support increased government spending (for productive things like infrastructure maintenance.)

Two administrations = 8 years = 2016-8=2008.... And we know what happened in 2008. Capitalism showed its ugly face.

To blame the financial system collapse in 2007/8 for sub trend growth now is just not logical. The first quarter GDP growth was 0.5%... (annualized rate).... Remember what I said about economists and decimal points. 

The rational explanation is increased regulation, increased employee costs (from ACA and the like), and a generally poor anti-business climate. Ask the coal miners in West Virginia about their business prospects.

Of course you can try to blame Bush, why not. 

As for "efficiency" I think that's again highly debatable. To me anything that adds to the actual cost of the good or service that I consume is a "waste". Why  should I pay for something that doesn't directly benefit me.

You shouldn't and you don't have to... In a free market you can shop around until you find a price you are satisfied by.

Ah, but notice how you actually changed the issue there. I said that anything beyond the actual cost of the good or service I want is a waste to me, whereas you said that I can shop around for a price I'm satisfied with. But the price includes that which I have no interest in paying for - profit.

Offer the merchant what you want to pay.... then leave without anything. Without profit there is no reason for business to exist.

If you leave it to government to manufacture goods for you without profit, you will find yourself driving a 1956 chevy like they do in Cuba, because your selection will be extremely slender, and not very desireable.

From my perspective there is no value in having my labor go to the excessive wealth of Bill Gates or any other very wealthy owner. Zero. Reinvestments are costs that are valid and deducted, so that's not what I'm talking about.

Bill Gates has not only made himself wealthy, but enabled millions of business people to be more productive and create wealth with the tools he created.

In addition to profits which do nothing for me there's everything else which supports the system chosen and would be inherently unnecessary with a different one. When I'm paying for a new phone I'm not just paying for R&D, manufacture and distribution, I'm also paying for marketing and profit. Why do I need marketing? I need information, not marketing. I also don't need any of the other costs directly related to a capitalist market. I need and want the phone, period. So from the standpoint of the consumer that's all wasted resources.

I don't think I can help you.

A new computer I buy today for a few hundred dollars, is incomparable, in memory, speed, and computing power, to a computer I paid several thousand dollars for in the '70s.  Unfettered by overregulation free markets and private business can continue to deliver more for less.

Modern computers are to a large extend designed and manufactured using modern computers. Computers is what has made us leap ahead, not the economic model. Correlation doesn't mean causation, to use an overused phrase.

Seriously do you believe computers designed themselves... ?

The terminator movies were fiction.

Humans are still very much involved in next generation computing technology.

private businesses have the implicit discipline of needing to make a profit, or go bankrupt. If government spends more than they have (called deficit spending), they just borrow and tax us more.

Sure, a private business should make a profit, except when it shouldn't. That's why I gave the school example in the first place. It wasn't to start a discussion about education as much as it was to point out that private business effects even education in a "Socialist" nation like Sweden. The school went belly-up but the parent company didn't. Someone made lots of money in the process. That's capitalism. Because the actual "profit" can "drift" and be made anywhere accounting allows for it to be made.

I don't thinkk that's as interesting as what the underlying principles are for management of resources and wealth etc. What do coprorations do? They do a tremendous amount of bad things, that's what they do. Of course they also do good. Just like governments. So the question isn't what they end up doing but why it's done and how various systems promote one thing over another.

Huh??  Management or allocation of resources is a well studied topic. Free markets with good price discovery provide the best and highest use of scarce resources.

My point was that profit provides incentives for people to do what any normal person would call "bad things", and that happens in private businesses. When that happens there's nothing good about management. But we sort of look the other way because it's "capitalism" and we pretend that it somehow works itself out in the end.

I have started several businesses and it requires a combination of both working hard and working smart... If just working hard was all it takes, ditch diggers would be millionaires. But instead, some millionaire invents a ditch digging machine.  Working hard is not enough, while too many are unwilling to even do that.

I mentioned that "space" to grow was important. The market puts an end to a ditch digger making billions. But that wasn't the point. The point was that just because someone makes millions doesn't mean they did well in school. It could just be that they're hard workers in a field in which they can make a lot of money, or that they were lucky, or that they were creative. Neither intelligence nor a good education is necessary. That was my point. And so it's difficult to ascertain just what is needed of future generations, and thus difficult to test for it. I'd say critical thinking, creativity and learning are probably the most important skills to obtain.

I do see your point with the need to somehow assess the quality of eduaction though. I guess regardless of what we teach we should hopefully know if it's done well enough. So I suppose we agree.

I just read an article where a college teaching computer science, secretly used Watson (IBM's artificial intelligence program) to successfully replace one of the teacher's assistants. These are still early days for AI assisted teaching, and I am optimistic that even teacher's unions can not hold back this tide of progress. (I hate using that word for something good).

Of course that's progress, but it also progresses us towards ubiquity. And ubiquity and capitalism don't coexist.

Ubiquity is the state of being everywhere all the time. Some ubiquity is real (the ubiquity of sadness at a funeral), and some only seems real (the ubiquity of cowboy boots in Texas). A god is a great example of ubiquity: an all-knowing deity that exists in every nook and cranny.

?? I looked "ubiquity" up and I still don't know what you mean.

What I mean is that once we have a good or service that is ubiquitous then its value is essentially zero. Market saturation of supply. With so much of the good or service available who's going to pay for it? This is no problem as long as whomever was involved in producing it can get another job, and so that led to my point that humans need labor to earn an income in Capitalist societies, and that this is going to be a problem in principle because (I think) we don't have an infinite amount of future labor. The alternatives then have to be picking something other than Capitalism or having a huge underpaid working class because well paying labor is scarce.

Unions are useful to protect workers from abuse by business owners. Teachers are public servants, and their obsolete jobs do not need to be protected if it doesn't serve the communities greater good. While I find it hard to image ever not needing teachers, while they can be used far more effectively than they are now.

I don't entirely disagree.

I need to get back to work... I don't think I have satisfied your complaints, or ever can.

JR 

 

[mattiasNYC]

To blame the financial system collapse in 2007/8 for sub trend growth now is just not logical. The first quarter GDP growth was 0.5%... (annualized rate).... Remember what I said about economists and decimal points. 

The rational explanation is increased regulation, increased employee costs (from ACA and the like), and a generally poor anti-business climate. Ask the coal miners in West Virginia about their business prospects.

Of course you can try to blame Bush, why not. 

Why would I blame Bush? Just because you blame Obama? If you go to stats.OECD.org for example, and create a graph for the US GDP growth rate from 1980 until latest value you'll see that there's been great variation over the decades;

- There was a peak in '83, followed by a lower plateau
- There was a big dip in the early 90's
- A lesser dip in '00
- After a brief increase a gradual dip from 2004 through the crash to 2009
- Then a climb again to 2010
- From 2010 it's been fairly steady

If you were to average growth rate over this entire period I wouldn't be surprised at all to see it be around where it is right now.

So I have absolutely no idea what data you're looking at. Am I looking at the wrong data?

Offer the merchant what you want to pay.... then leave without anything. Without profit there is no reason for business to exist.

You're making a category error. I've found this error repeatedly made by pro-Capitalists, and the only explanation I have for it is that (no offense) you've been so successfully "educated" by schools and society that you can't think your way out of it.

Profit is a function of a capitalist system. We already have non-profit organizations in capitalist societies but they're obviuosly a minorty. But more importantly you know very well that I'm not advocating capitalism. So, with a different system, is profit still a function? No, it isn't necessarily. And therefore your argument that there'd be no reason for business to exist without profit only holds true within a capitalist system. It's a category error. In a Socialist system the functions are different and the motivations are different.

If you leave it to government to manufacture goods for you without profit, you will find yourself driving a 1956 chevy like they do in Cuba, because your selection will be extremely slender, and not very desireable.

Cuba is a curious example considering that not only did the US sponsor an invasion of it but also enacted an embargo for decades. Plus it's a small nation. As an example it's not a particularly good one.

Plus, you're probably aware that people from all over the world try to go there to visit, and part of the charm are those old cars. They have a value both as a means of transportation as well as aesthetically/culturally.

Bill Gates has not only made himself wealthy, but enabled millions of business people to be more productive and create wealth with the tools he created.

So what? The point was exactly what you write at the end of the sentence: "create wealth with the tools". The only questions to ponder are whether it was possible to create the tools within a different system (it was) and whether they likely would have (the likely would).

Seriously do you believe computers designed themselves... ?

The terminator movies were fiction.

Humans are still very much involved in next generation computing technology.

Oh come on man, did you really not see my point? Take the knowledge we have today, put together a bunch of people, give them PEN AND PAPER AND A CALCULATOR, and then have them design a new CPU! How many man-hours would that require? Now give them as many computers as they want to do the same job. Now how many man-hours?

And then take manufacturing. Do the same thing. Replace your computer aided robots and machines that create CPUs and motherboards and replace with hand operated devices. What's the result in productivity? Zero?

As technology progresses we're able to use technological progress to progress technology further. That principle is entirely independent on the financial system chosen. It's been true in all societies throughout human history.

 

[JohnRoberts]

To blame the financial system collapse in 2007/8 for sub trend growth now is just not logical. The first quarter GDP growth was 0.5%... (annualized rate).... Remember what I said about economists and decimal points. 

The rational explanation is increased regulation, increased employee costs (from ACA and the like), and a generally poor anti-business climate. Ask the coal miners in West Virginia about their business prospects.

Of course you can try to blame Bush, why not. 

Why would I blame Bush? Just because you blame Obama? If you go to stats.OECD.org for example, and create a graph for the US GDP growth rate from 1980 until latest value you'll see that there's been great variation over the decades;

- There was a peak in '83, followed by a lower plateau
- There was a big dip in the early 90's
- A lesser dip in '00
- After a brief increase a gradual dip from 2004 through the crash to 2009
- Then a climb again to 2010
- From 2010 it's been fairly steady

If you were to average growth rate over this entire period I wouldn't be surprised at all to see it be around where it is right now.

So I have absolutely no idea what data you're looking at. Am I looking at the wrong data?

I could get anything to chart on the OECD site, but maybe i needed to figure out some more secret handshakes.

I looked at about 50 different GDP charts and it looks like there can be huge differences in how you define the parameters.

This one seems to represent the sub trend growth change I am speaking of.  I trust the St louis fed data, and using a 5 year running average reduces spikes from short term hi-lo data. Recessions, or several quarters of economic contraction tend to disappear when averaged over 5 years, especially since most post recession recoveries are generally pretty strong.  SAAR means the data is seasonally adjusted, but averaging over 5 years should already ignore short term seasonal variations.  (I also found some charts that show GDP growth falling off a cliff after 07-08, no doubt making a political statement. Lies, damn lies, and statistics. I trust the fed data and this above chart).

Putting on my economist hat for a minute (just a hat I am not an economist), productivity advances could not continue forever at the high rate we enjoyed over the past several decades, so there will be some natural slowing of GDP rate of increase due to lesser productivity advances. My judgement is that the last several years of very weak GDP growth ( 0.5% last qtr) reflect the administration's bad business climate, and uncertainty about tax policy, minimum wage, and regulation. When business is uncertain they don't invest in the future. 

I concede the reasons I propose are somewhat subjective, but the sub-standard growth trend seems to be reflected in the actual data.

Offer the merchant what you want to pay.... then leave without anything. Without profit there is no reason for business to exist.

You're making a category error. I've found this error repeatedly made by pro-Capitalists, and the only explanation I have for it is that (no offense) you've been so successfully "educated" by schools and society that you can't think your way out of it.

Profit is a function of a capitalist system. We already have non-profit organizations in capitalist societies but they're obviuosly a minorty. But more importantly you know very well that I'm not advocating capitalism. So, with a different system, is profit still a function? No, it isn't necessarily. And therefore your argument that there'd be no reason for business to exist without profit only holds true within a capitalist system. It's a category error. In a Socialist system the functions are different and the motivations are different.

If I did not make a profit from selling audio kits back in the '70s i would have never designed the kits and offered them for sale. In the 80's when automation and offshore manufacturing made my kit prices uncompetitive with already assembled units. I shut down my kit business (I had no choice).

Since I was seeing assembled units for sale, similar to my kits, for less than my parts cost me to purchase. I could not make a profit at competitive market pricing. If I tried to stay in business, selling kits for less than it cost me to buy the parts, I would have run out of money in short order.

When I started my drum tuner business over 10 years ago, I set my pricing such that I make a profit on each sale. If i didn't make a profit from selling the tuners I would deplete my personal capital, and have to close this business too.

Don't ask me to sell you a tuner for no profit, It's not going to happen. I can't afford to. IT'S A BUSINESS. No profit, no business.

If you leave it to government to manufacture goods for you without profit, you will find yourself driving a 1956 chevy like they do in Cuba, because your selection will be extremely slender, and not very desireable.

Cuba is a curious example considering that not only did the US sponsor an invasion of it but also enacted an embargo for decades. Plus it's a small nation. As an example it's not a particularly good one.

Plus, you're probably aware that people from all over the world try to go there to visit, and part of the charm are those old cars. They have a value both as a means of transportation as well as aesthetically/culturally.

Yes Cuba is charming... I am extremely disappointed that our leadership is helping Cuba gain much needed cash flow via tourism and expanded commerce, without extracting any concessions for the oppressed cuban people. Why not do both? The cuban people have suffered greatly. 

Castro just allowed a cruise liner to stop in Havana, he wasn't going to allow cuban born passengers to make the trip, until the cruise liner company threatened to halt the visits, unless they demurred. Castro is still a thug, oppressing his people, but apparently wants the greenbacks more than keeping a few cubanos off the ride.  Hospitality workers in Cuba have to turn over dollars to their employers and they get paid with cuban pesos. 

Bill Gates has not only made himself wealthy, but enabled millions of business people to be more productive and create wealth with the tools he created.

So what? The point was exactly what you write at the end of the sentence: "create wealth with the tools". The only questions to ponder are whether it was possible to create the tools within a different system (it was) and whether they likely would have (the likely would).

your optimism for the success of other economic systems is not reflected in history.

Seriously do you believe computers designed themselves... ?

The terminator movies were fiction.

Humans are still very much involved in next generation computing technology.

Oh come on man, did you really not see my point? Take the knowledge we have today, put together a bunch of people, give them PEN AND PAPER AND A CALCULATOR, and then have them design a new CPU! How many man-hours would that require? Now give them as many computers as they want to do the same job. Now how many man-hours?

And where did the computers come from?

I used to design electronic circuit PCB with tape and exacto knives.  It is almost silly to reflect on how we did stuff even a few decades ago. But don't confuse the chicken and egg... all these tools were designed by people.

Computers are not yet to the level where they can design themselves... they are still dumb helpers. 

And then take manufacturing. Do the same thing. Replace your computer aided robots and machines that create CPUs and motherboards and replace with hand operated devices. What's the result in productivity? Zero?

Manufacturing automation reached out and killed my kit business back in the '80s. 

But nowadays manufacturing is another unneeded capital expense. I can pay a contract manufacturer to assemble a few hundred PCB inexpensively without buying my own assembly machines or building a factory.

As technology progresses we're able to use technological progress to progress technology further. That principle is entirely independent on the financial system chosen. It's been true in all societies throughout human history.

Yes, but one more time for the cheap seats, there still needs to be creative humans operating the technology... The machines are not sentient (yet).  8)

JR

 

[mattiasNYC]

I looked at about 50 different GDP charts and it looks like there can be huge differences in how you define the parameters.

This one seems to represent the sub trend growth change I am speaking of.  I trust the St louis fed data, and using a 5 year running average reduces spikes from short term hi-lo data. Recessions, or several quarters of economic contraction tend to disappear when averaged over 5 years, especially since most post recession recoveries are generally pretty strong.  SAAR means the data is seasonally adjusted, but averaging over 5 years should already ignore short term seasonal variations.  (I also found some charts that show GDP growth falling off a cliff after 07-08, no doubt making a political statement. Lies, damn lies, and statistics. I trust the fed data and this above chart).

Putting on my economist hat for a minute (just a hat I am not an economist), productivity advances could not continue forever at the high rate we enjoyed over the past several decades, so there will be some natural slowing of GDP rate of increase due to lesser productivity advances. My judgement is that the last several years of very weak GDP growth ( 0.5% last qtr) reflect the administration's bad business climate, and uncertainty about tax policy, minimum wage, and regulation. When business is uncertain they don't invest in the future. 

But if you're looking at the graph you provided yourself you'll clearly see the dip around '08.  AFTER that, when "the administration's bad business comate" could have been in effect, the graph is fairly level - which is exactly what I stated is visibile on OECD's charts as well. So 'yes', over that time period it's worse now than before, but the drop to the current levels happened before the current administration took office.

I have no horse in the race between the two parties, but you can clearly see a trend. 1993 the graph shows a relatively flat line, and then growth ends up peaking around 2000. Then it begins to drop, with that minor uptick I mentioned, and then the crash in '08.

I mean, is that not clear by looking at what you posted?

Don't ask me to sell you a tuner for no profit, It's not going to happen. I can't afford to. IT'S A BUSINESS. No profit, no business.

You just made the same category error. Did you not read what I wrote?

your optimism for the success of other economic systems is not reflected in history.

Yes it is.

And where did the computers come from?

I used to design electronic circuit PCB with tape and exacto knives.  It is almost silly to reflect on how we did stuff even a few decades ago. But don't confuse the chicken and egg... all these tools were designed by people.

Computers are not yet to the level where they can design themselves... they are still dumb helpers. 

I didn't say things design themselves, even though the most advanced software can now rewrite itself on the fly (!). I also didn't say that computers initially designed themselves. What I said was that:

As technology progresses we're able to use technological progress to progress technology further. That principle is entirely independent on the financial system chosen. It's been true in all societies throughout human history.

Yes, but one more time for the cheap seats, there still needs to be creative humans operating the technology... The machines are not sentient (yet).  8)

JR

I know humans are currently needed, but that wasn't the point.

 

[Script]

Don't ask me to sell you a tuner for no profit, It's not going to happen. I can't afford to. IT'S A BUSINESS. No profit, no business.

You just made the same category error. Did you not read what I wrote?

Intersting discussion all of this, but now I'm lost -- and curious.

I guess I'm a capitalist too. What is the categorical error here? And what is the vision? Something like Star Trek where money has been abolished and actually not needed because all products and services are ubiquitous (i.e., equally accessible to all?), and people work purely on ethical grounds, for (self-)entertainment and the greater good, and if they do good get promoted to more prestigious positions and maybe earn some priviledges like a captain's cabin? And most important of all: Is Marvel Trump going to change this or not?

 

[mattiasNYC]

Don't ask me to sell you a tuner for no profit, It's not going to happen. I can't afford to. IT'S A BUSINESS. No profit, no business.

You just made the same category error. Did you not read what I wrote?

Intersting discussion all of this, but now I'm lost -- and curious.

I guess I'm a capitalist too. What is the categorical error here?

It is as I explained it. If you are advocating one system, and that system has as a part of it a specific function, and someone else advocates a different system within which that function doesn't exist, arguing that the latter system won't work because the function wouldn't work is a category error because it wouldn't exist in the first place.

It's like a discussion between us all about whether or not we should play American or Real Football (soccer). The objection by the Americans is that you can't score by shooting the ball above the bar in soccer, and therefore people wouldn't score any points and nobody would ever win. That's a category error. The function [shoot ball above bar] exists in AmFB but not in FB. In FB it's different. The rules and the goal is different. You don't "score" by shooting the ball like that. So why would you transfer one function in one system to another system in which the function doesn't apply? It's a category error.

And what is the vision? Something like Star Trek where money has been abolished and actually not needed because all products and services are ubiquitous (i.e., equally accessible to all?), and people work purely on ethical grounds, for (self-)entertainment and the greater good, and if they do good get promoted to more prestigious positions and maybe earn some priviledges like a captain's cabin?

Facetious much?

And most important of all: Is Marvel Trump going to change this or not?

Nothing changes much in the US.

 

[Script]

There was no need to explain /what/ a categorical error is. But thank you for taking your time to digress.

Still, what is the answer or //your alternative/ to selling a product for profit? I'm still a bit curious and you have not answered that one. Please allow me to give it another try: Exchanging what you "produce" (object or service) for something offered by someone who agrees on exchanging it with you? Needless to say I cannot rephrase this differently because it is to vague a definition.

And no need to diss Sci-Fi. I'm not a fan (it's against my nature), but when looking through all the distracting enterainment stuff, it raises some noteworthy questions -- including ethical ones.

Nothing changes much in the US? Hyperbole? I seriously hope not. Synchoresis --granted

Back to Donald Truck: if not for much else, I'll take him to make for good satire 8)

 

[mattiasNYC]

There was no need to explain /what/ a categorical error is. But thank you for taking your time to digress.

You're welcome.. 

Still, what is the answer or //your alternative/ to selling a product for profit? I'm still a bit curious and you have not answered that one. Please allow me to give it another try: Exchanging what you "produce" (object or service) for something offered by someone who agrees on exchanging it with you? Needless to say I cannot rephrase this differently because it is to vague a definition.

You're describing some sort of bartering system. I'm guessing you're heading down the road of "Well, if we're doing that then the easiest way to go about it is using money, so what's the difference?" One difference is that Socialists promote the common ownership and/or management of the means of production. The other that one shouldn't have profit in the sense that it exists in Capitalism. To put it bluntly; if I have sufficient funds I can buy part of or an entirey business, and then everyone in that company can do the labor that I then profit from (via the discrepancy between price of goods/services and the cost of producing them). So, I actually do no labor yet reap benefits from the labor of others. That's the best thing about Capitalism for a Capitalist. Don't work for money, make money work for you.

As for specific alternatives; there are a bunch of them. From the often touted government-planned centrally controlled economies, to arguably "less communist" systems, to participatory economics and Anarchism.

But to comment on my initial comment regarding a category error, the point was merely this: A big reason it's true that you need profit in order to be motivated to have a business in a capitalist system is because of competition and the fact that everything has an actual practical price in capitalism. You pretty much need profit. You could argue for non-profit of course, but I think you get the point. On the other hand, in a non-profit society you produce because a) you need stuff, b) you want stuff, and c) it feels good for people to do labor. The notion that there would be no motivation (in a non-profit system) to do anything a business does in Capitalism just because there's no profit is just nonsense.

And no need to diss Sci-Fi. I'm not a fan (it's against my nature), but when looking through all the distracting enterainment stuff, it raises some noteworthy questions -- including ethical ones.

I wasn't dissing Sci-Fi, it's my favorite genre, rivalled only by comedy. I just thought you were making a point, facetiously, rather than asking me a question.

Yes, I agree that it raises interesting questions that certainly are ethical in nature. Like I said, ubiquous supply of goods and services only serves to devalue those to near zero. So one can't make a living off of producing them. As we make production etc more efficient using machines and computers that's going to be a big problem. Those with money keep not wanting to spend it on education, so if knowledge is the way to new types of labor it doesn't seem a lot of people will be able to find work there. So I'm expecting either a much wider gap, a bigger underclass which I'm guessing is getting larger from a smaller middle class. And then we have the ever more wealthy upper class.

I don't think people will put up with this.

Nothing changes much in the US? Hyperbole? I seriously hope not. Synchoresis --granted

Financially? Structurally? It doesn't seem like it. Who are the "leftist" "liberals"? Clinton? Yeah, except he just perpetuated the trade liberalization trend which as far as I can tell did nothing for the American worker (though GDP went up, which again makes the point that GDP by itself is a meaningless measure for the average American if they don't get a slice of the pie). Obama? Well, people love to argue that the health care reform was a leftist thing that was essentially socialist, but they keep omitting that what happened was that people were forced under penalty to buy health care from private for-profit ensurance companies. Forced private consumption doesn't sound very "left" or "socialist" to me.....

So, no, I don't foresee much change. Clinton and Trump, the likely candidates, won't change much I think.

 

[JohnRoberts]

I heard an interesting, different theory for the slowing GDP growth (it has been gradually slowing for decades), while this long term slowing trend does not explain the last several years of unusually weak growth. 

http://video.cnbc.com/gallery/?video=3000518338  New book is called "Makers and Takers", but there are several similar titles out there.

The premise of (Adam Smith's) capitalism is that personal savings get invested in new businesses (through bank loans and stock purchases) to create new jobs and grow the economy.

Reportedly now only 15% of the total money supply is engaged in business investment while the other 85% is not in such productive use (trading assets for short term profit, stock buy-backs to manipulate earnings, and other financial engineering).

Tax policy that discourages these non-productive uses of capital, might help us get our growth mojo back so we could actually afford all the expanded entitlements we've been committed to. 

I am still chewing on this, and need to see more data (the author has a new book) ... but it sounds logical that this is one of several factors responsible for slowing GDP growth.

All the crony capitalists diverting capital (and power) for their own benefit, not to grow the private economy.

JR

 

[bluebird]

How does "crony capitalism" effect the ability of the government to regulate the private sector? Aren't these two opposing forces? Congress is lobbied by business not to be regulated right? Maybe we need some crony capitalism to keep business profitable. Could capitalism work without corruption?


I guess I mean if congress voted on laws purely on the merit of their constituents with no outside influence, what would our government look like?

 

[mattiasNYC]

The premise of (Adam Smith's) capitalism is that personal savings get invested in new businesses (through bank loans and stock purchases) to create new jobs and grow the economy.

Reportedly now only 15% of the total money supply is engaged in business investment while the other 85% is not in such productive use (trading assets for short term profit, stock buy-backs to manipulate earnings, and other financial engineering).

Tax policy that discourages these non-productive uses of capital, might help us get our growth mojo back so we could actually afford all the expanded entitlements we've been committed to. 

I am still chewing on this, and need to see more data (the author has a new book) ... but it sounds logical that this is one of several factors responsible for slowing GDP growth.

All the crony capitalists diverting capital (and power) for their own benefit, not to grow the private economy.

JR

I think there's probably quite a bit of truth to the above. Of course it doesn't help if a fair amount of production moves abroad because it's cheaper.

 

[JohnRoberts]

How does "crony capitalism" effect the ability of the government to regulate the private sector? Aren't these two opposing forces? Congress is lobbied by business not to be regulated right? Maybe we need some crony capitalism to keep business profitable. Could capitalism work without corruption?

Crony capitalism allows big businesses to engineer (lobby)  market advantages (through tax policy and regulation) that hurts small business competitiveness.

IMO small business is good  ;D, big business is a lot less good  .

If you think about the increases in regulation, only big businesses can afford to hire and assign full time employees to manage all the regulations.

We no longer just have banks, we have small banks and big banks. The big banks are connected at the hip with their regulators.

I do not see an easy remedy for this, Dodd-Frank sure wasn't the fix, they promised it would be.

They still haven't shut down or released Fannie and Freddie. The government is still sweeping all the profits from Fannie and Freddie into the treasury (to spend), instead of allowing them to build up capital reserves (during profitable times) to help them survive as a free standing business during bad times. Without reserves the taxpayers will be on the hook to back up F&F the next time, and there always is a next time.

This is just the government trying to control as many aspects of the private economy as they can get their tentacles into.

Of course maybe I'm wrong... nah.  8)

JR 

 

[mattiasNYC]

How does "crony capitalism" effect the ability of the government to regulate the private sector? Aren't these two opposing forces? Congress is lobbied by business not to be regulated right? Maybe we need some crony capitalism to keep business profitable. Could capitalism work without corruption?

I don't think any system is immune to corruption. "Could" it work? Probably. But the biggest problem with it is that once you have a profit motive that'll drive all sorts of nasty things, from dumping toxic waste in nature as opposed to properly disposing of it because it lowers cost, to creative accounting which lowers taxes and makes for faster higher profits in the purely financial sector, which is hardly productive in a different sense.

And for the record, I have no problem admitting that issue exists in for example Communist states with strong governments. The vehicle is different in those cases.

I guess I mean if congress voted on laws purely on the merit of their constituents with no outside influence, what would our government look like?

Well, in the US, define "constituents". I mean, where do politicians come from before becoming politicians (or government employees), and where do they go once they're done? Typically the argument has been "Oh, well, we need a banker to run the financial sector because they know banking." Of course if you then pick a banker who takes a hiatus from that sector but then later returns just what results do we expect. And more importantly, at that point just who are the constituents?

 

[ln76d]

 

[bluebird]

Well, in the US, define "constituents". I mean, where do politicians come from before becoming politicians (or government employees), and where do they go once they're done? Typically the argument has been "Oh, well, we need a banker to run the financial sector because they know banking." Of course if you then pick a banker who takes a hiatus from that sector but then later returns just what results do we expect. And more importantly, at that point just who are the constituents?

Well I suppose the constituents would be us the "people". I think what you are saying is that the system is a closed loop excluding the "people". No matter where politicians come from or what they first set out to do, the system is too strong for anyone to resist the power and money offered by business lobbying or campaign finance. Except maybe Bernie.

But this brings us back around to Trump. And oddly enough even though he represents big business, a lot of people feel he is not in "the loop". But he is soooo in the loop, he's just too dumb to realise it. That's why his banter seems like its from the heart and "real". I think he honestly believes that he is somehow immune to the system and just going to get in there and be king of the world. lol. I don't think people understand how easily he will fall right into the fold.

 

[mattiasNYC]

Well, in the US, define "constituents". I mean, where do politicians come from before becoming politicians (or government employees), and where do they go once they're done? Typically the argument has been "Oh, well, we need a banker to run the financial sector because they know banking." Of course if you then pick a banker who takes a hiatus from that sector but then later returns just what results do we expect. And more importantly, at that point just who are the constituents?

Well I suppose the constituents would be us the "people". I think what you are saying is that the system is a closed loop excluding the "people". No matter where politicians come from or what they first set out to do, the system is too strong for anyone to resist the power and money offered by business lobbying or campaign finance. Except maybe Bernie.

I think that's a pretty close description to what I think, yes. I also think that not only the political system but systems in general (i.e. corporations etc) have a the selection process that really filters candidates to perpetuate itself.

But this brings us back around to Trump. And oddly enough even though he represents big business, a lot of people feel he is not in "the loop". But he is soooo in the loop, he's just too dumb to realise it. That's why his banter seems like its from the heart and "real". I think he honestly believes that he is somehow immune to the system and just going to get in there and be king of the world. lol. I don't think people understand how easily he will fall right into the fold.

I think got traction by pushing the "right" buttons. Politicians of a certain kind can fight over gay marriage and Muslims and what have you, and it is of little consequence because they actually don't care that much about it, compared to, say, taxation of the wealthy and corporations, trade agreements, labor unions etc. So as you say we'll see just how different he really is in the end.

 

[Script]

You're describing some sort of bartering system. I'm guessing you're heading down the road of [...]

No, I wasn't. I just wanted to see the end of the footnote

TTTT, I'm a bit tired of hearing the ubiquitous phrase, "make money work for you." It's an advertising phrase turned battle cry, a catchphrase that blurs reality more than it helps clarify a thing. But I understand what you are driving at. And I think it's good and high time that the financial system as we have it got criticised and adjusted big time. But let's face it, it's either revolt (bloody), reform (maybe difficult and slow) or resignation (darn easy). I assume we all agree that just stating repeatedly how bad everything is, doesn't change anything.

---------------------

Back to topic, Hillary Clinton has advocated changing capital gains tax rates in her campaign. She proposes a sliding scale of tax rates for period of up to six years. Read here:
http://taxfoundation.org/blog/details-hillary-clinton-s-capital-gains-tax-proposal

Interesting idea, I think, since there seems to be little correlation between low capital gains tax and economic growth anyway. And it is scandalous that capital gains are taxed lower than regular (work) income! However, if you asked me, Hilary's ideas are not far-reaching enough. So how about some science fiction:

STEP 1
Abolish existing distinction between "long-term" versus "short-term" capital gains tax rates altogether and instead make all capital gains taxable like (or rather as) regular income.

STEP 2
Allow depreciation of negative gain (read: loss) only for private people, but not for businesses. Or, better even, abolish the capital gain depreciation system altogether (not sure this exists in the US!?). If that's not possible/existing, put a stop to cross-category depreciation and make it category-specific; that is, taxable income tax cannot be "reduced" by loss in capital gains and vice versa, meaning capital gains tax cannot be reduced by business investment depreciation. This would make all gains fully taxable and a loss a loss -- period.

STEP 3
Prohibit "short-selling" (and "long-selling"; ) of securities and other financial products to (1) get rid of "leeches" and (2) prevent systematic price manipulation and evil attacks against companies/markets/currencies.

STEP 4
Introduce a variable speculation tax (to be paid in addition to income/corporate tax) for gains realized within 24 hours between purchase and sale. We no longer have stock market floors where people bid, it's all computers now. So make the term "speculation" go with the time and make it correlate with the speed of computers.

STEP 5
Regulate hedge funds rigorously and take back more of the market deregulations from before the turn of the century (birth of derivatives).

STEP 6
Take the tax revenue and pump it into the education system and the education system only. The mid-term idea is to make education entirely free, top-notch and available to all (and I mean ALL). Pay teachers loads of money (more than they would make in private schools) and control their perfoemance. If money is short for this, raise the tax on all capital gains and in particular 24-h speculation. If money is still short, get it printed.

STEP 7
Make "macroeconomics", "economics", and "business ethics" compulsory subjects in all schools, and don't forget to also include a chapter on "criticism of capitalism."

STEP 8
If any of this is not doable within five years, start a nation-wide campaign to file a petition, and better even, sue the government quoting the constitution.

----------------

Not sure what DJ Trump has to say on this (haven't checked on it), but I assume his musical taste is different altogether. If I remember correctly, at some point he said he wanted to lower income tax for all households -- a very "popular" idea, I assume, and way easier to remember and understand than what Hilary proposed.