[GeneV]

The problem I have with the conflation of "socialist" and the taking of any steps by government which might affect the economy is that it depends upon an 18th or 19th century concept of earning money.

When the world consisted of about 98% farmers and ranchers it was very easy to say, "that's my money; I made it." When the world consisted of agriculture and manufacturing by companies operated by their founders, it became more complicated, the world may have been still capable of conception of what is "my money" that I earned. However, so much of our economy, and so much of the earnings of the most prosperous seems to depend upon complex systems of manipulation, gambling and just finding a stream of someone else's productivity to dip into as it flows by.

We define and redefine robbery, theft, fraud, embezzlement, prostitution, gambling, drugs, and on and on as unacceptable ways to obtain more money than our next door neighbors. Many of the definitions are not black or white, but matters of degree. Part of what government has always done is to define how money can be made. Calling that socialism is neither accurate nor productive. Calling every dollar over which one manages to get control "my money" as if it were earned by hours of sweat is also not accurate.

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Last edited by GeneV; 12-02-2010 at 08:19 AM.

[Nesster]

Dave, what you say makes sense... you leave out the third variable in all this: simply educating and tax-subsidizing the work force won't mean they are employed. Simply taxing the wealthy won't make the economy more even - the wealthy will simply factor in the taxation, like they always have, and continue being wealthy.

We've got the post industrial information and service economy now. It's to be seen how real this virtual wealth and value remains - as long as there's a paying audience I suppose it's viable. Both parties mouth nostalgic words and ideas about what it means to get America working again - ideas from the industrial economy and the pre-industrial one, depending on party. And while the Democrats are at least willing to implicate business in the problem and solution, the effects of big business on ordinary American life and economic future is something completely absent from Republican thought. Of course in the end, the game is rigged that either way, big business interests are well catered to by both parties.

[newarts]

... you leave out the third variable in all this: simply educating and tax-subsidizing the work force won't mean they are employed. Simply taxing the wealthy won't make the economy more even - the wealthy will simply factor in the taxation, like they always have, and continue being wealthy.......

I tired to make the point that simply tax-subsidizing the workforce is not sufficient. Rather, they must contribute to production at least to the point where they have a net neutral economic influence. How to accomplish that is another matter....saving GM was a good example of effective public meddling in production.

Similarly, how tax incomes are spent is of critical importance to getting out of this hole we are in; blowing it on F43's or expensive, strategically inconsequential or counterproductive wars won't help much.

The key thing is to invest some of the country's existing wealth to building a more productive wealth generating society.

Note I emphasize using existing wealth rather than future wealth (ie. taxing vs borrowing); actually both are important, but issuing bonds isn't as effective a transfer means.

[newarts]

...finding a stream of someone else's productivity to dip into as it flows by...

Bank A issues a complex security to Bank B for a fee and a bonus to the people involved. Bank B then issues a complex security to Bank A for a fee and a bonus to the people involved, etc...

Where does the cash taken in the form of fees, bonuses, etc come from? It must come from the general economy. Is it a de facto tax on production?

[GeneV]

Bank A issues a complex security to Bank B for a fee and a bonus to the people involved. Bank B then issues a complex security to Bank A for a fee and a bonus to the people involved, etc...

Where does the cash taken in the form of fees, bonuses, etc come from? It must come from the general economy. Is it a de facto tax on production?

• Credit card companies take a percentage of every transaction on which a card is used--in addition to interest on any borrowing.

• Brokers of some kind or another take a percentage of transactions of any size from loans to sales.

• Want to have a pleasant day? Spend it in your shop helping customers with your expertise as you attempt to sell mechandise you chose to stock (buy) for your store. Want to get rich? Set up an internet site taking a percentage as you drop-ship cheap merchandise to the person with whom that shopkeeper spent time.

• Turning to my own profession, if you want to get truly wealthy as a lawyer, don't work by the hour--find a niche such as tort litigation or securities where you take a percentage.

Yes, there are arguments that these arrangements are beneficial incentives, but some do look a bit like taxes, and one does wonder whether they are the most economically efficient ways to handle these services. One also wonders about an economy that has its best and brightest "earning" in this manner.

[jolepp]

Bank A issues a complex security to Bank B for a fee and a bonus to the people involved. Bank B then issues a complex security to Bank A for a fee and a bonus to the people involved, etc...

Where does the cash taken in the form of fees, bonuses, etc come from? It must come from the general economy. Is it a de facto tax on production?

In a more general sense it seems to me that there might be something wrong in a system where the banking/finance sector is perhaps the most lucrative of all; these provide services akin to a utility (like electricity, water, gas ...) where the point is providing a reliable (and boring) essential service to the rest of the economy/society.

[GeneV]

In a more general sense it seems to me that there might be something wrong in a system where the banking/finance sector is perhaps the most lucrative of all; these provide services akin to a utility (like electricity, water, gas ...) where the point is providing a reliable (and boring) essential service to the rest of the economy/society.

Which brings us to the issue of insurance--which plays such an important role in so many of the issues of U.S. society--from finance to healthcare to tort litigation.

[Nesster]

There was an interesting article in a recent... what, New Yorker? ... where some old Brit dude in the bank business criticizes some of the practices. One term he used was 'rents':
Economic rent - Wikipedia, the free encyclopedia

[les3547]

I'll see if I can recreate a little of what I wrote earlier but which has now vanished into the ether.

If effective economics is the concern, then the broad question in the "should we socialize more or less" issue seems to be: Is some degree of redistribution of wealth beneficial overall/in the long term to the health of an economy? IOW, consider the question not from morality or feeling empathy for one's fellow human being, but strictly from the perspective of what "works."

A debate on this with a successful CPA friend of mine had him upset that nearly half of Americans pay no income taxes, while his tax rate under Obama's plan was going to cost him. I asked him why, if he cared about wealth, he wasn't concerned that so many people are making too little money to be taxed? Isn't the ability to spend a crucial part of what drives a market economy?

My friend wanted tax cuts, making the usual claim that it is good for business. I referred him to a recent documentary on America's crumbling infrastructure, and its important observation that looking at past failed civilizations, a crumbling infrastructure was a typical symptom of decline. An effective infrastructure is absolutely key to economic health, it is what keeps things moving.

If nobody pays taxes, as Tea Partiers seem to want, how do we not only keep our infrastructure up to date, how do we prepare citizens to contribute to our economy? One of first items hit when taxes are cut is education. Who needs education assistance the most? Those destined to make so little money they won't pay income tax, nor contribute much to the wealth of our nation.

The practical side of socializing aspects of society that ensure a healthy, productive citizen emerges from childhood is that healthy productive citizens will contribute, not take from, the economy. They pay more taxes, they spend more, they are more creative, they are less likely to turn to crime and therefore reduce the need for police, prisons, higher insurance premiums, etc. . . . all of which costs taxpayers.

Economist Robert Reich's recent book "Aftershock" makes all these points, but even more interesting is his UC Berkeley lecture in 2005, "How Unequal Can America Get Before We Snap" that seems eerily prophetic (his discussion of 19th century Populism, for example, foreshadows the Tea Party):

You Tube

You Tube

The insidiousness of America sliding toward plutocratic conditions is that it will bring destruction without us realizing what's doing it as those in power maintain the status quo with all their energy (and power is what it takes to change things) without realizing they are shooting themselves (and us all) in the foot.

As a pragmatist, I strive to understand what "works," so if redistributing wealth doesn't work, the heck with it. If too much redistribution doesn't work, then redistribute less. If redistributing into pure welfare only creates dependent citizens, then redistribute it to what does work, say education. And as a lifelong student of organizational development, I have repeatedly seen the truth of Maslow's simple premise for his "hierarchy of needs" link; that is, when "lower" needs are met, a person is more likely to self actualize. At first what I thought was just a business principle I have realized is true for all organizational endeavors, from family to a nation as a whole. Aren't self-actualizing citizens what we most want in our society?

[GeneV]

I have something of a concern about the term "redistributing" wealth. Partly, a society is involved in defining what is wealth--what endeavors should be rewarded and what costs need to be deducted before there is net wealth.

To pose an extreme example, if a drug dealer makes millions selling cocaine, and the government takes that profit, is that "redistributing" wealth, or is it deciding that drug money never was wealth in this society to begin with? Our society made a moral judgment disfavoring wealth from taking money from addicts pay for drugs. Is that socialism? For an intellectual exercise, how is that moral judgment different from deciding, say, that it is immoral to make money as a health insurer skimming from money paid by sick people for drugs? (BTW, I'm not saying there is no difference)

[les3547]

I have something of a concern about the term "redistributing" wealth. Partly, a society is involved in defining what is wealth--what endeavors should be rewarded and what costs need to be deducted before there is net wealth.

To pose an extreme example, if a drug dealer makes millions selling cocaine, and the government takes that profit, is that "redistributing" wealth, or is it deciding that drug money never was wealth in this society to begin with? Our society made a moral judgment disfavoring wealth from taking money from addicts pay for drugs. Is that socialism? For an intellectual exercise, how is that moral judgment different from deciding, say, that it is immoral to make money as a health insurer skimming from money paid by sick people for drugs?

If your remarks are in response to what I wrote, I'd have to say they don't seem to apply.

First a couple of preliminary points. The term "socialism" confuses all discussions because it automatically links things to communist regimes or Marxist thought. That is not what most Americans hoping for more socialization are longing for.

Also, any business, whether it is health care or automobile manufacturing, needs to be profitable to survive. So it is in everyone's interest to have sound businesses.

And then (still assuming you were responding to me), I proposed leaving morals out of it, and rather to strictly limit deciding what is best by what works. What "works" has to include long term efficacy . . . drug pushers, to use your example, make lots of money, spend lots of money, and therefore it works for those doing well financially through drug sales. However, it devastates so many more lives that while it "works" in a small way, it harms overall.

Further, in the case of an economy, we are talking about a system. If a system of gardening, analogously, produces great crops for 4 years, but becomes less profitable for fewer people with each passing year, we can't only look at initial profits or those limited few who are benefitting to judge if a system works.

Getting back to the idea of redistribution, it isn't a moral thing, it is a system dynamic. The money made by all a country's citizens is, to some degree or another, pooled through the process of taxation, and then spent on ???

How much is collected from whom is the first aspect of redistribution, and how it is spent is the second aspect. If a society is to stay unified, and not separate into rich and poor, then the rich need to help the poor get richer. That is how you redistribute through taxation.

However, just any old redistribution won't work because you want to redistribute in a way that helps the poor learn how to produce their own wealth. We've seen what simply giving money does, it creates welfare-dependent citizens. And of course there has to be efficiency in the redistribution, plus it wouldn't be smart to overburden the upper income brackets either.

So you pump the money into education and other services that ensure people's health and safety. When health and safety don't so distract as it does in many poor neighborhoods, kids can better learn, become more skilled, enter the work force and make enough money to spend; that in turn boosts the overall economy.

This, to me, is the way to discuss redistribution . . . pure economic pragmatism. We need to keep our market system full of productive and spending citizens, and the best way to do that is to make sure everybody can participate.

[GeneV]

If your remarks are in response to what I wrote, I'd have to say they don't seem to apply.

* * *

This, to me, is the way to discuss redistribution . . . pure economic pragmatism. We need to keep our market system full of productive and spending citizens, and the best way to do that is to make sure everybody can participate.

The first paragraph of my response applies very much to your post. The second is not so much.

Using terms like "redistribution" charges the discussion with terms associated with the "socialism" which you discount. I agree with a pragmatic approach, but I don't see it as "redistribution." It is defining distribution. There are costs to maintaining a viable society, and the distribution of wealth comes after the costs of that society have been paid.

[les3547]

Using terms like "redistribution" charges the discussion with terms associated with the "socialism" which you discount. I agree with a pragmatic approach, but I don't see it as "redistribution." It is defining distribution. There are costs to maintaining a viable society, and the distribution of wealth comes after the costs of that society have been paid.

True, so I've thought of another term (other than redistribution) to use as a discussion point: mandatory system investment.

Our economic system requires certain needs to be filled to remain effective, chief among them is having people who create, buy and sell. If an economic system is depleted of buyers and creators because the most successful sellers take from the system but do too little help develop the supply of buyers and creators, then it is setting itself up for self-destruction.

Of course, in the case of sellers taking too much, initially it is the buyers who complain the most because they first feel the pinch of being unable to buy. Sellers, addicted to keeping all they take, try to justify not investing in buyer development in various ways, but all that really matters is if we see more buyers. If we don't, then all the rationales in the universe aren't going to change the economic situation.

Therefore, a smart government insists on contributions to a MSI fund (Mandatory System Investment) from all users; the more one takes from the economic system, the more one must invest in this fund. The fund is used only to help develop new buyers and creators, and so is concerned primarily with education and what it takes for future buyers to actually survive to adulthood (so they can be long living buyers and creators). Sick and threatened citizens make poor economic partners.

I do understand that sellers need capital for their creator role, so it wouldn't be prudent for the MSI fee to be exorbitant; and too, the system established (i.e., govt.) for redistri . . . er, mandatorily reinvesting in buyer-creator programs must itself be run efficiently.

In this way, we can see the logic of requiring the most economically successful not to just drain resources for their own selfish pursuits, but to take responsibility for the health of the economic system in proportion to how much they are benefitting from it.

[Nesster]

Nah, 'mandatory' and 'system' are both bad words

How about "Investment in Traditional American Values"

[wizofoz]

This statement confuses me. Were the voters of 1912 prescient? They seem to have predicted the future outbreak of hostilities and acted on that information.

"In 1912, Debs received 900,000 votes, which was six percent of the presidential votes cast that year, principally for his stand against America's involvement in World War I"