Trickle-down theory once again proven wrong
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bluebird
Well-known member
Thank you for your informative posts Dogears. What is your view on capitalism with more regulation pertaining to the Scandinavian countries or Canada? It seems to me the success of these economies are ignored by free market/less regulation advocates. What do you see as the problem here? Thanks!
P.S.
Food for thought, as I am gleefully irrational in my consumerism against (in ignorance of) my better judgment... :-X
P.S.
dogears said:
Food for thought, as I am gleefully irrational in my consumerism against (in ignorance of) my better judgment... :-X
dmp
Well-known member
As much fun as a spirited Capitalism vs Socialism debate would be - I am not arguing for a command economy. Since listing argumentative falsies is all the rage these days, this would be a false dichotomy or whatever fallacy happens when you assign a extreme position to your opponent and argue that instead. ;D
As I've said before, I think unregulated Capitalism has many flaws, therefore, I am arguing for a middle ground - preserving the power of free markets, while moderating the extremes of Capitalism. Additionally, a strong progressive tax system to replace the failure of trickle-down economics (including inheritance tax!) - to connect get back to the thread topic.
The real difficulty in economic theory is the nuances of real experience and the inability to fit simple theories to it . Evidence contradicts much of the dogmatic Mises / Austrian school.
For instance:
I personally don't like facebook because of how they use private data (which is a cost to the user), but I don't have any alternative to switch to (for local events with friends/bands in town). Facebook is enormously profitable and has a legal natural monopoly with their network. The government shielded them from responsibility for content with section 230 of the CDA and has considered it a legal natural monopoly. In my view, an unregulated free market / Capitalist system allowed companies like facebook to create legal network monopolies that harm consumers. How do you think the government "intervened or protected" facebook to create a natural monopoly?
The facebook platform is like the road or a railroad line in an area with a monopoly. You have your own car (UGC) but you can only drive it on the facebook platform.
If the response to this is then don't use it - well, that could be a response to any monopoly. Don't ride the train, don't buy the product, etc... etc...
About pollution:
You're free to believe that free market participants will individually make the right choice and not harm the environment, but unfortunately history makes it clear this is often not true. If anything there is overwhelming evidence that people in power will make the selfish greedy shortsighted decision for personal profit.
But it isn't always about dumping toxins in rivers, it can also be about how we as a society develop technologies that reduce pollution.
As a real world example:
Cars and trucks before 1980 had significant tailpipe emissions - CO, NOx, soot. Caused significant environmental damage - asthma, acid rain, smog.
Consider two alternatives (#1 is a description of what actually happened, #2 is the free market alternative):
1) the government mandates emission reductions. Automakers respond with massive investments in technology development, developing aftertreatment devices that reduce those pollutants dramatically. By spreading the costs of clean technology onto every car, which consumers have to pay for, the investment for those companies is acceptable. Some engine makers cannot meet the requirements and go bankrupt or buy engines/technologies from other companies. After 30 years, the reduction in tailpipe emissions from vehicles is a tremendous success. But throughout those 30 years, consumers paid more per car (maybe $ thousands more) and were not give the choice to buy a cheaper car without the clean technology. The aftertreatment devices on off road engines adds thousands to the price that flows through to buyers.
2) the government does nothing, individual car makers invest in cleaner engines ONLY based on what they expect consumers will pay for. If one company invests heavily and makes a slightly cleaner car, the consumer will have to chose to pay more for the cleaner car. Will they? How much of a premium will individual consumers pay for car for incrementally cleaner emissions? How much more would construction pay for construction equipment with aftertreatment devices? How much clean technology would exist today?
>>>>>>>>>>>>>>>>>>>>>>>>>>>
Looking forward, there is more progress to be made. For instance, natural gas from fracking could be replaced with gas generated by solar generated electricity. Should we wait for the free market to do this, if it ever would?
As I've said before, I think unregulated Capitalism has many flaws, therefore, I am arguing for a middle ground - preserving the power of free markets, while moderating the extremes of Capitalism. Additionally, a strong progressive tax system to replace the failure of trickle-down economics (including inheritance tax!) - to connect get back to the thread topic.
The real difficulty in economic theory is the nuances of real experience and the inability to fit simple theories to it . Evidence contradicts much of the dogmatic Mises / Austrian school.
For instance:
I personally don't like facebook because of how they use private data (which is a cost to the user), but I don't have any alternative to switch to (for local events with friends/bands in town). Facebook is enormously profitable and has a legal natural monopoly with their network. The government shielded them from responsibility for content with section 230 of the CDA and has considered it a legal natural monopoly. In my view, an unregulated free market / Capitalist system allowed companies like facebook to create legal network monopolies that harm consumers. How do you think the government "intervened or protected" facebook to create a natural monopoly?
The facebook platform is like the road or a railroad line in an area with a monopoly. You have your own car (UGC) but you can only drive it on the facebook platform.
If the response to this is then don't use it - well, that could be a response to any monopoly. Don't ride the train, don't buy the product, etc... etc...
About pollution:
You're free to believe that free market participants will individually make the right choice and not harm the environment, but unfortunately history makes it clear this is often not true. If anything there is overwhelming evidence that people in power will make the selfish greedy shortsighted decision for personal profit.
But it isn't always about dumping toxins in rivers, it can also be about how we as a society develop technologies that reduce pollution.
As a real world example:
Cars and trucks before 1980 had significant tailpipe emissions - CO, NOx, soot. Caused significant environmental damage - asthma, acid rain, smog.
Consider two alternatives (#1 is a description of what actually happened, #2 is the free market alternative):
1) the government mandates emission reductions. Automakers respond with massive investments in technology development, developing aftertreatment devices that reduce those pollutants dramatically. By spreading the costs of clean technology onto every car, which consumers have to pay for, the investment for those companies is acceptable. Some engine makers cannot meet the requirements and go bankrupt or buy engines/technologies from other companies. After 30 years, the reduction in tailpipe emissions from vehicles is a tremendous success. But throughout those 30 years, consumers paid more per car (maybe $ thousands more) and were not give the choice to buy a cheaper car without the clean technology. The aftertreatment devices on off road engines adds thousands to the price that flows through to buyers.
2) the government does nothing, individual car makers invest in cleaner engines ONLY based on what they expect consumers will pay for. If one company invests heavily and makes a slightly cleaner car, the consumer will have to chose to pay more for the cleaner car. Will they? How much of a premium will individual consumers pay for car for incrementally cleaner emissions? How much more would construction pay for construction equipment with aftertreatment devices? How much clean technology would exist today?
>>>>>>>>>>>>>>>>>>>>>>>>>>>
Looking forward, there is more progress to be made. For instance, natural gas from fracking could be replaced with gas generated by solar generated electricity. Should we wait for the free market to do this, if it ever would?
I think you have to be really careful when you're talking about regulation with regard to what is economics and what is politics. Correlation and causation are tough, and this is not simple stuff to begin with.bluebird said:
A signficant part of their story is simply fortune. Norway has oil. Sweden has copper and iron. Iceland has abundant geothermal energy. They also have comparatively small populations to spread these geographic resources across. Also, generally speaking, none were decimated by WWII, giving them advantage along the same time period as the US enjoyed.
Second, the regulation they have is not, generally speaking, the kind that people are describing here as a sort of check against "unbridled capitalism". They're free-market oriented, it's easy to hire and fire people, start businesses, be entrepreneurial. The "regulation" is more oriented toward a social safety net. People often call this socialism, but that's imprecise. Socialism isn't about a social safety net but who owns the means of production. In other words, their "social" aspects are not in opposition to their capitalist ones.
Third, I think that what works for them is cultural, too. I don't think you can export political systems or regulatory frameworks as drop-in successes. If that were the case, Liberia would as wealthy and prosperous as the US.
I think of it this way. The Nordic countries are wealthy because of their geographic positioning and resources combined with a free-market approach to managing those resources. What they choose to do with that wealth is create an expensive social safety net, not dissimilar to the kind of subsidies and other programs KSA or Dubai run with their oil wealth. I think these in theory are economic drags to their system. But - and this is important - they have a culture which values what I would call virtuous behavior (hard work, self-reliance, etc) which prevents people from rationally misbehaving within the system. Not all nations have that.
I actually bought a brand new copy of "Wealth of Nations" a couple years ago for a young neighbor kid to read when I couldn't find my own copy... Far from a criticism of trade and markets...dmp said:
I wonder why my better books grow legs?
That young kid is in the army now and turned into a man when I wasn't looking. 8)
JR
Strawman, which you engaged in earlier. But, I never suggested you were arguing for a command economy. I said you're conflating social and political problems with economic ones.dmp said:
Nothing you've talked about has really been a problem with capitalism. I don't see anything about moderating capitalism with regulation relating to markets, only to social behaviors. Taxation is not exclusive of capitalism. You can have a pure capitalist system with no market regulation whatever and extremely high income taxes.
Evidence contradicts Keynesian theory as well. I love how everything I talk about is "simple" and everything you talk about is "nuanced". Its as if you can't help but talk down. Why is that?
Their profitability is not relevant to the discussion...nor is section 230 of the CDA unless you are making a case for how they've benefited from government intervention (I reckon you'd leave that to me?)
The first problem is they don't have a natural monopoly in either the classical or modern sense of the term. The classical sense being existing in a market that allows them to prevent competition naturally (due to barriers of entry of whatever sort) and the modern sense being in a market where additional competitors raise prices to consumers.
For starters, you are not facebook's customer. You are their product. Facebook sells demographic data and advertising. In this business they have a huge amount of competition - everything from billboards to banner ads on this site, and any number of big data bundling competitors. And of course, in the modern sense, an additional entry into either of those markets (data and advertising) don't in any way raise the price to the consumer (i.e., advertisers or data purchasers).
From the user's perspective there are numerous competing platforms like MeWe, Sociall.io, Diaspora, vero - along with competing different social networks like Twitter, or social media in general like this very site. Ironically, there is an alternative called bandsintown.com.
Can you tell me about a case where a railroad had a monopoly that wasn't enforced by government? :
If your argument, though, is that facebook offers a unique service or product you'd have to argue against Coca Cola, Disneyland, API, Neumann, etc. This is not a discussion about a monopoly at all, any more.
You've completely missed my point. I'll try one more time.
Both markets and elections are ways of assessing aggregated individual preferences, values, beliefs, etc. It doesn't matter whether you're measuring people's concern for the environment by their purchasing habits or their votes. The people in power in either case are either empowered financially through many individual economic decisions or politically through many individual political decisions. If the people don't care about the environment, they'll vote that way that the polls or with their dollars. This is a behavioral question, not an economic one.
Your last sentence is as true about corporations in capitalist societies as it is about dictators in command economies as it is about bureaucrats in corrupt governments. Trying to frame it as a product of capitalism is simply wrong.
Again, you're talking about A but calling it B. This is not an economic question. You're not trying to optimize an economic outcome, but to optimize a behavioral one. The desired outcome here is not greatest economic utility for the most people, it's a completely unrelated question, or perhaps even one that comes at an economic cost. This is not a question about socialism or capitalism, command or free market. You can see this easily because the solution you present is identical whether it is done in a command economy or a free market one: legislative requirement.
Let's examine for a moment your first description. You say that the investment of these companies is "acceptable". Acceptable to whom? And by what measure? You point out that companies have gone bankrupt. This means people lost their livelihoods, their capital, through no fault of their own . Is that acceptable to them? Consumers have paid, you say, thousands of dollars without a choice. Who chose then?
Consider for a moment the underlying question: do we collectively want cleaner cars? Are we willing to pay for them, personally? How would you find this out? There is one sure way to know, and that's what you present in number 2.
However, you seem to think that we would not have arrived at the same solution we did. The first statement talks all about the cost, the lack of choice, but says it is acceptable. What does this tell you?
It tells me that you suspect that collectively we do not want, or are not willing to pay for, cleaner cars. How do you then justify a minority portion of society imposing their will on the majority? Clearly this is "acceptable" to that minority. Great. With this logic we can justify nearly anything.
There's no slight of hand here. This isn't a trick question. I'm not even necessarily arguing against emissions mandates! What I'm pointing out is that you have a fundamental opposition here: free markets are utterly democratic, the most democratic thing that could ever exist. They aggregate billions and trillions of individual actions into the dramatically clear piece of communication possible: price. And you're suggesting that this would not, in fact, produce the answer you like, and therefore we are justified in going against the will of the people to impose our will on them. Note that we're no longer talking about the people in power making selfish, greedy, shortsighted decisions - now we're talking about in aggregate everyone being forced to do something they wouldn't actually do on their own.
This is ruling. This is reality: "Who? Whom?" always has an answer. The ruling and the ruled. So why are YOU right, and by what do you justify imposing YOUR will on the aggregate even when you suspect they do not want it?
Yes, of course. Because if it wouldn't, that means people didn't want it. You said you read Hayek. It seems you missed his point: you either like freedom or you don't.
Seems to me behind every claim of "let's temper unregulated capitalism" lurks a person who really just wants to use the power of the state to impose their political aims on others, not their economic ones.
Kinda reminds me of Heinlein - "Must be a yearning deep in human heart to stop other people from doing as they please. Rules, laws - always for other fellow. A murky part of us, something we had before we came down out of trees, and failed to shuck when we stood up. Because not one of those people said: 'Please pass this so that I won't be able to do something I know I should stop.' Nyet, tovarishchee, was always something they hated to see neighbors doing. Stop them 'for their own good' "
We have to temper capitalism to represent "labor" which presumably means "all the people" unless "all the people" won't do what we want them to do, so we pass a law making them do it, even if it puts them out of business and costs thousands of dollars. "For their own good."
Kinda reminds me of Heinlein - "Must be a yearning deep in human heart to stop other people from doing as they please. Rules, laws - always for other fellow. A murky part of us, something we had before we came down out of trees, and failed to shuck when we stood up. Because not one of those people said: 'Please pass this so that I won't be able to do something I know I should stop.' Nyet, tovarishchee, was always something they hated to see neighbors doing. Stop them 'for their own good' "
We have to temper capitalism to represent "labor" which presumably means "all the people" unless "all the people" won't do what we want them to do, so we pass a law making them do it, even if it puts them out of business and costs thousands of dollars. "For their own good."
dmp
Well-known member
Wow there's a lot of anger there.
I don't want you to lose your sh*t because I disagree with you so I'm going to bow out of this I think.
Hopefully you can talk to people here in a civil way even if they don't see things the same way.
I don't want you to lose your sh*t because I disagree with you so I'm going to bow out of this I think.
Hopefully you can talk to people here in a civil way even if they don't see things the same way.
living sounds
Well-known member
dogears said:
That's cherry-picking the data. Commodities tend to be more of a bane than a boon, see
https://en.wikipedia.org/wiki/Resource_curse
Nobody is argueing for central-planning here (at least I think so). But it should be clear to anyone, especially engineers, that a given system is only stable with some kind of negative feedback. And we know from countless studies that human's aren't rational actors for whom it is the natural state to make informed decisions. Capitalism left unchecked allows for the system to drift apart and get unstable quickly, and it also allows the myriad weaknesses of people to be exploited.
Social democrats (not socialists, let alone communists) understand these realities and advocate for feedback mechanisms in the form of taxes (yes, redistribution) and for regulation to stop exploitative actions.
bluebird
Well-known member
dogears said:
Lol, perfect...
living sounds said:
yes, thats what us pinko-commies ;D are advocating for here, more feedback. Its not wanting to control OTHER people its wanting to put restrictions on our selves as well, coming to terms with our own greed and flaws.
dogears said:
Well that's getting a little eugenic-y if you ask me. I don't want to believe that other countries do better because they just have better people. I would like to think they are better informed. People here need to be better informed but there are forces beyond the individual preventing that. You know...CORPORATIONS and REPUBLICANS...hahaha... Seriously, I know its not that simple hence I'm enjoying everyone's viewpoints on this...
Ha - ok bud. That's why Dubai, KSA, Norway are all so poor, right?living sounds said:
You can certainly mismanage your wealth. See: Argentina, Iraq. But that's not for lack of good fortune. This is like arguing that strong, beautiful, intelligent people are cursed.
Of course people are arguing for central planning. Anyone arguing for regulation is arguing for central planning to some degree. I haven't ever said regulation is essentially bad, but let's not be unreasonable about what it is.
Many, many systems are stable without negative feedback.
A pendulum, for example.But regardless, markets have feedback in spades. What do you think makes prices fluctuate? What do you think demand is?
This is a terrible argument. Humans are irrational, I agree, but the rest of it does not follow from your premise. And, again, every flaw you're outlining is one of humanity at large and is neither exacerbated or corrected by capitalism. This is the big thing that is so confusing.
Humans are irrational and power hungry, so we need to check them. But we check them by giving power to other humans who have sought this power. Do you not see the problem with this?
Again, you're mixing and matching all kinds of things.
This is not a question of socialism vs capitalism even in a shades-of-gray. Taxation is wholly irrelevant to this discussion. Seriously, increasing or decreasing taxes is not capitalist or socialist, at all. Even redistribution of wealth is not inherently socialist or capitalist.
The entire premise of your way of thinking is wonky. Behavioral or political or social questions don't inherently impinge on the question of free markets.
Haha, come on man. Of course its wanting to control other people. If people don't do what we want them to do - donate enough money to feed the poor, decide to buy green energy, whatever - we force them to do it by regulation. If it was simply about yourself, do it yourself. There's nothing wrong with this. That's what government is for. That's why it exists - to control people.bluebird said:
If you want to come to terms with your own greed and flaws, meditate or something. There's no need to pass a law to force others do it.
The market has more feedback than any single person could ever contrive, because every pricing decision is feedback and it is communicated in a wonderfully efficient fashion.
Better people or better culture? It's not eugenics, I don't think they're genetically superior. But culturally superior? Sure, why not? The culture in the US is better than the culture in Liberia. For example, we frown upon cannibalism. It's silly to dance around this.
It's not about information. Look, y'all want curbs to greed. You know what curbs greed? The idea that there are things more important than wealth. The Platonists called it virtue; Christians call it fruit of the Spirit. The Stoics called it eudaimonia, personal human flourishing. These are cultural things, social things, not economic ones. The absence of these cultural signals that tell people "don't do that...even if its not overtly wrong, it's sketchy" are the problem. Laws only curb direct behavior, create legalism, and a never ending game of loopholes being opened, closed, exploited, with always more power flowing to those who can either exploit, or open, or close the loopholes.
Plato in the Republic talked about how societies devolve from best rule by philosophers who held virtue as the highest good, to those who held honor or esteem, to those who held money, and eventually to tyranny. This is a human truth, it's a social problem.
Capitalism simply reflects an efficient mechanism to set prices, and it requires the individuals in the system to have a degree of economic freedom in order to work. Economic freedom and political suffrage aren't fundamentally linked. Economic freedom and social or cultural values aren't either. This is the classic example of the folly of rewarding A by expecting B.
learn how to be a better winner... when you win an argument.dogears said:
That is as good as you are going to get around here.
JR
A pendulum has gravity as negative feedback and some friction for extra measure.dogears said:Many, many systems are stable without negative feedback.
JR
Hmmmmm. I’m not sure I would call that feedback. Any system that has a stable equilibrium doesn’t need feedback to achieve equilibrium. I think that expands the concept of feedback so broadly as to apply to nearly anything. If we think about chemistry you could call energetically favorable outcomes feedback by Gibbs free energy or the decay of thermodynamic systems feedback by entropy. Or stable orbits feedback by... space time? Or a door with a spring hinge...Even an open loop audio system can be stable without feedback, right?JohnRoberts said:
Hmm.. or something with resonance... it’s unstable at some conditions but stable at others. Stability is state dependent, but we don’t call avoiding resonance feedback..?
I think of feedback more as a feature of a control system where some aspect of system state is actively summed, or integrated, or....uhh... used? Haha.. to stabilize the system around some desired state.
There’s a difference between a forcing function and feedback isn’t there? I dono. Rambling.
Edit to say:
Kinda funny. I went on an expedition to learn more and came across this quote on Wikipedia:
Over the years there has been some dispute as to the best definition of feedback. According to Ashby (1956), mathematicians and theorists interested in the principles of feedback mechanisms prefer the definition of circularity of action, which keeps the theory simple and consistent. For those with more practical aims, feedback should be a deliberate effect via some more tangible connection.
[Practical experimenters] object to the mathematician's definition, pointing out that this would force them to say that feedback was present in the ordinary pendulum ... between its position and its momentum—a "feedback" that, from the practical point of view, is somewhat mystical. To this the mathematician retorts that if feedback is to be considered present only when there is an actual wire or nerve to represent it, then the theory becomes chaotic and riddled with irrelevancies.
;D
boji
Well-known member
Chiming in about the nuclear thing a few threads back, did anyone mention the new type of solid fuel system, the one that works a bit like a slow burning solid rocket? My understanding is it solves the problems of meltdown and alleviates the need for the massive, redundant cooling system balancing acts. In short it's way safer.
Sorry for the veer, I was trying to be cute and I am not enough of a gymnast to contort pendulum's simple harmonic motion into some kind of feedback relationship.dogears said:
Feedback both negative and positive is understood(?) and utilized across different disciplines to modify behavior or characteristics of connected systems.
JR
living sounds
Well-known member
dogears said:Ha - ok bud. That's why Dubai, KSA, Norway are all so poor, right?
You can certainly mismanage your wealth. See: Argentina, Iraq. But that's not for lack of good fortune. This is like arguing that strong, beautiful, intelligent people are cursed. Of course people are arguing for central planning.
It just shows you original argument isn't valid. And beauty and popularity in early life often turns out to be a curse for people, who never learn to fight because they get anything handed to them.
[quote author=dogears]
Many, many systems are stable without negative feedback.
A pendulum, for example.[/quote]
There's a little thing called gravity that keeps the pendulum stable.
[quote author=dogears]
But regardless, markets have feedback in spades. What do you think makes prices fluctuate? What do you think demand is?
This is a terrible argument. Humans are irrational, I agree, but the rest of it does not follow from your premise. And, again, every flaw you're outlining is one of humanity at large and is neither exacerbated or corrected by capitalism. This is the big thing that is so confusing.
Humans are irrational and power hungry, so we need to check them. But we check them by giving power to other humans who have sought this power. Do you not see the problem with this? Again, you're mixing and matching all kinds of things.
This is not a question of socialism vs capitalism even in a shades-of-gray. Taxation is wholly irrelevant to this discussion. Seriously, increasing or decreasing taxes is not capitalist or socialist, at all. Even redistribution of wealth is not inherently socialist or capitalist.
The entire premise of your way of thinking is wonky. Behavioral or political or social questions don't inherently impinge on the question of free markets.
[/quote]
I wasn't talking about free markets in my original post. I was talking about taxes. I think capitalism is a great idea. It only needs checks and balances to keep it working.
From my work I have had a got look at how the media industry operates. Intellectual property laws were originally designed in the 19th century to help creative innovaters get revenue from their ideas for a few years. Fast forward to 2019, and you see a few huge conglomerates sucking up and drying out the market, aquiring rights left and right and perpetuating exploitation of said rights ad infinitum. There is a universal tendency in a given system of the big getting bigger at the expense of the rest.
Could things work without any IP laws? No. Countries who don't have them don't seem to innovate much. Is the current state an efficient, thriving market? Hardly. The only way to have this work is common sense regulations, that help the small and keep the big ones from getting bigger. That's what social democracy wants. Taxes are part of the toolbox.
I couldn't find the original reference but there are several generation IV nuclear power systems in various stages of development. You may have conflated several items or issues... The Russian nuclear accident (still being covered up) was apparently a nuclear cruise missile rocket motor that exploded.boji said:
Rather than solid fuel the new generation are smaller scaled down versions of older fission technology using other than water for cooling media. "SMR" small modular reactors, use different cooling media so we don't need electricity to pump cooling water after a failure. Alternate cooling media range from sodium used by at least one Chinese project, Canada is working with molten salt as a coolant. Another Chinese nuclear power project uses helium as the coolant media (operates up to 1000'C).
These Chinese power projects are at risk of conflicts from technology restrictions related to current trade negotiations.
I am a fan of the generation IV technology but we would have to fast forward all the way to nuclear fusion (still not practical for commercial use) to completely eliminate the weapons proliferation risk. Since continuous containment of fusion reactions still has not been mastered, the current approach is short pulsed fusion reactions.. promising but crazy expensive so far.
I still see politics and public perception as the biggest issue thwarting wider adoption of nuclear power generation.
JR
