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12-21-2011, 01:44 AM | #31 |
If half decent products can be churned out by a machine, this frees up labour to be able to pursue other society enhancing employment. In days of old, the otherwise unemployed sometimes worked on major state infrastructure. Although at the time building castles ,palaces, cathedrals and mausoleums seemed frivolous, it found long term benefits in the tourist currency and employment it brought in. Given that part of our overall standard of living is those items of consumerism, the capital of the rich to be able to buy the labour saving machinery creates the high-tech jobs involved in design, construction and maintenance of said machinery. The financial dividends from the profits filter through the shareholders to eventual consumption of other goods and services and long term retirement livelihood. The job losses caused by machines "taking" unskilled tasks tend to be dead - end crap jobs that have no long term prospects for those trapped in this cycle of poverty. In the ever changing world we live in, new industries will emerge to replace those "lost" jobs. Given that the produce is still being churned out, people will still be able to consume. Surely humans are not mere factory machines but a society that can reach for the stars? | |
12-21-2011, 03:34 AM | #32 |
If half decent products can be churned out by a machine, this frees up labour to be able to pursue other society enhancing employment. In days of old, the otherwise unemployed sometimes worked on major state infrastructure. ..... The job losses caused by machines "taking" unskilled tasks tend to be dead - end crap jobs that have no long term prospects for those trapped in this cycle of poverty. In the ever changing world we live in, new industries will emerge to replace those "lost" jobs. Given that the produce is still being churned out, people will still be able to consume. Surely humans are not mere factory machines but a society that can reach for the stars? Of course there's nothing we can do about automation, but when manufacturing jobs disappear, the replacement jobs all somehow seem to be a lot less satisfactory. Probably because the manufacturing industries had unions, and the service industry jobs which come after usually do not. Last edited by ihasa; 12-21-2011 at 03:41 AM. | |
12-21-2011, 12:10 PM | #33 |
In the ever changing world we live in, new industries will emerge to replace those "lost" jobs. Given that the produce is still being churned out, people will still be able to consume. Surely humans are not mere factory machines but a society that can reach for the stars? Enforced work is not a good thing in itself. The amount of time spent with work decreased until around 1980. But ever since, things went out of control and we work more, for a lower standard of living, despite global work sharing, automation and the end of cold war. There clearly is a fundamental flaw in our current economic ruleset. It is simply not efficient enough. It produces a ridiculous amount of unwanted redundancy and at the same time, a shortage of true diversity. And it has nothing to do with socialist ideas. In that respect, I disagree with all articles cited by jeffkroll. | |
12-21-2011, 01:09 PM | #34 |
Sure, but you entirely miss the point: Enforced work is not a good thing in itself. The amount of time spent with work decreased until around 1980. But ever since, things went out of control and we work more, for a lower standard of living, despite global work sharing, automation and the end of cold war. There clearly is a fundamental flaw in our current economic ruleset. It is simply not efficient enough. It produces a ridiculous amount of unwanted redundancy and at the same time, a shortage of true diversity. And it has nothing to do with socialist ideas. In that respect, I disagree with all articles cited by jeffkrol. Maybe a brief explanation of your dys.. err utopia.............. As to mass produced products being "cheap" that is more of a mindset.. Take adding pennies to some of the capacitors on a motherboard (cheap capacitors are my pet peeve) and a mass produced product can last decades with a minor bump in cost or minor decrease in profit.. It is a CHOICE not a reality........ Quote: many people don't work because their work is needed or even useful. They work because otherwise, they wouldn't earn any money. And this is due to the high productivity we have reached. separate what you think is "right" from what is possible... Case in point: The mortgage crunch in the US.. "WE" paid banks yet left the problem to fester.. No "economic stimulus" was forthcoming because the "rich" decided to sit on the cash (technically a wise move since the "masses" experienced no worthwhile rise in disposable income) Soooooooooooo if instead the Fed had paid off the mortgage to the bank and assigned the "asset" to the household their net worth would have skyrocketed to start another spending cycle (upgrade house, borrow on equity for any dozens of economic stimulating endeavors) ........ And the reason it couldn't be done had ABSOLUTELY nothing to do w/ economic sense nor logic but COMPLETELY emotional and by "principal".......... I believe (based on the understanding of what drives the economy) our "problems" would already be solved and we would be dealing w/ the concept of SLOWING the economy.......... not just limping along until it is naturally corrected w/ all the needless (though biblical) suffering in the process........No grand concepts or discoveries will come in this festering time and the world will not be a better place for quite some time........... (barring LENR. ) most peole are wage slaves.. not doing even what they are better at, for the simple fact that (specifically in the US) they won't take chances for fear of losing health ins ect.. IF "wage slavery" is removed the ability to utilize more "mental resources" is exponentially increased...... currently I could list a host of people who would be better suited to other tasks but cannot budge due to economic constraints...... the pipe dream of mobility is just that for the majority........ Quote: In mainstream economic philosophy, wage labor is seen as the voluntary sale of one's own time and efforts, just like a carpenter would sell a chair, or a farmer would sell wheat. It is considered neither an antagonistic nor abusive relationship, and carries no particular moral implications. From this perspective, the problem of poverty comes from an unequal distribution of income and can be addressed by government programs like social security and progressive taxation, and does not reflect a fundamental flaw in the capitalist system. Basic Income in Times of Economic Crisis Quote: The economic crisis has not ended, but the consequences for broad sectors of the population have been evident for months: more poverty, higher unemployment, inferior working conditions, salary cuts and reduction of social security benefits. The IMF and ILO report published in September specifies that 30 million people have joined the ranks of the unemployed worldwide since the start of the crisis, almost 10% of whom are from the Kingdom of Spain. This crisis is the result of a previous growth period driven by the financialisation of capital and a marked regression in the distribution of income and wealth. In the European Union of the 15, for example, the income from labour now represents 56% of national income when just a few years ago it accounted for nearly 70%. In Latin America, even after a slight improvement in the growth of some countries over the last decade, the figures for participation in the total wage bill are well below these estimates, and the Gini indexes still show this to be the most unequal region of the planet. This rapidly growing inequality consolidates a tendency described in 2006 by one of the richest men in the world, Warren Buffet, in strikingly graphic detail: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” Quote: A society in which nobody lacks the basic necessities is good for everyone. It is the only society worth striving for. Last edited by jeffkrol; 12-21-2011 at 01:51 PM. | |
12-23-2011, 07:56 AM | #35 |
Please explain ..and if you like you can use it in reference to MMT which basically states you don't have to tax to pay for anything......... ... Maybe a brief explanation of your dys.. err utopia.............. ... separate what you think is "right" from what is possible... ... I believe (based on the understanding of what drives the economy) our "problems" would already be solved and we would be dealing w/ the concept of SLOWING the economy.......... Wrt "utopia" and "right vs. possible" ... That's my whole point! What I propose is 100% possible. But it is normally confused with similiar ideas which are utopia. That's why I took issue with the articles you cited. I actually did a model for the economic implications and judged it based on experience with the dynamic behaviour of complex systems I gathered during my PhD thesis. But to actually carry the discussion any further, I really have to publish all my stuff. It doesn't fit into this thread. The publication title will be "Random allocation of Money". Maybe one last comment on slowing down... According to my dynamic system studies, complex systems often jump between multiple attractors rather than approaching a single point of stability. This is unhealthy. The corresponding Hamiltonian (Theoretical Physics slang, sorry) then lacks a strong first order term. Such systems are recognized by fractal growth, i.e., the grow fastest where growth already takes place. Like a snow crystal does, or a tree. That's partly good and partly bad, applied to human society. To bring things back to a healthy state, such first order terms need be created. They will introduce dampening into the system, i.e., slow down some parts f the economy. The financial transaction tax would be such a thing and it would make economy more efficient. Has nothing to do with taxing the rich. PS All these ideas are my personal thinking, not influenced by aby political movement. The ideas developped over the past decade after I started to observe that we are blind wrt our system deficit's as the communist countries used to be. I mean observe, i.e., by watching people. E.g., I discussed what now is called unconditioned base income around 1995 before anybody even coined a term for this. Last edited by falconeye; 12-23-2011 at 08:03 AM. | |
12-23-2011, 11:10 AM | #36 |
Jeff, you ask exactly the right questions (IMHO) and I think we would basically agree if we spent more time to exchange ideas. (btw, what s MMT?) Wrt "utopia" and "right vs. possible" ... That's my whole point! What I propose is 100% possible. But it is normally confused with similiar ideas which are utopia. That's why I took issue with the articles you cited. I actually did a model for the economic implications and judged it based on experience with the dynamic behaviour of complex systems I gathered during my PhD thesis. But to actually carry the discussion any further, I really have to publish all my stuff. It doesn't fit into this thread. The publication title will be "Random allocation of Money". Maybe one last comment on slowing down... According to my dynamic system studies, complex systems often jump between multiple attractors rather than approaching a single point of stability. This is unhealthy. The corresponding Hamiltonian (Theoretical Physics slang, sorry) then lacks a strong first order term. Such systems are recognized by fractal growth, i.e., the grow fastest where growth already takes place. Like a snow crystal does, or a tree. That's partly good and partly bad, applied to human society. To bring things back to a healthy state, such first order terms need be created. They will introduce dampening into the system, i.e., slow down some parts f the economy. The financial transaction tax would be such a thing and it would make economy more efficient. Has nothing to do with taxing the rich. PS All these ideas are my personal thinking, not influenced by aby political movement. The ideas developped over the past decade after I started to observe that we are blind wrt our system deficit's as the communist countries used to be. I mean observe, i.e., by watching people. E.g., I discussed what now is called unconditioned base income around 1995 before anybody even coined a term for this. Chartalism - Wikipedia, the free encyclopedia #Monetary Sovereignty – Mitchell Blog | MMT Wiki | a Modern Monetary Theory Wiki The Center of the Universe To sum up the basics.. the only reason to tax is to take money out of an inflating economy.. makes little difference where the tax comes from except at a social level.. And the only way to have a growing economy is w/ a growing "money creator" (incorrectly called gov. debt). There is no need to "tax the rich" when you realize we can pay for the poor without it....... eliminating the erroneous belief in "give:take" financing is required....... Unfortunately this only applies to a soviergn nation using fiat currency (which currently eliminates the EU who have now become slaves to the banks) .................... Quote: I discussed what now is called unconditioned base income around 1995 before anybody even coined a term for this. Back to MMT: http://pragcap.com/resources/understanding-modern-monetary-system Quote: Modern Monetary Theory (MMT) is based on the following principles: The Federal government is the monopoly supplier of currency. The modern floating exchange rate system helps to maintain equilibrium and flexibility in the global economy. The currency unit created by the state via deficit spending can only be extinguished by payment of taxes. Therefore, a modern monetary system can best be thought of as a system of debits and credits where government deficit spending credits the private sector and payment of taxes debits the private sector. Quote: Back To Basics Getting back on track though – let’s understand a few things first: 1. We tax in order to create demand for the currency. In addition, it controls aggregate demand or effectively, the money supply 2. The bond market is a monetary tool. NOT a fiscal financing tool. 3. Foreigners do not fund our spending. 4. Money must be created before government bond auctions can occur and before taxes can be enforced. Otherwise, there is no currency in the system to tax and no money to raise via bond auctions. This is just basic logic in terms of the way the current system works. It can be no other way. 5. Households, states, Europe and the gold standard are not remotely similar to the modern monetary system in which the Federal government of the USA functions. Last edited by jeffkrol; 12-23-2011 at 11:20 AM. | |
12-23-2011, 12:14 PM | #37 |
Only simple to a simpleton. Will one person with 10 million dollars create as many jobs by spending money as 10 people with a million each? How about a thousand people with 100K each? Will they create, by spending, more jobs or fewer jobs than one person who has all of that money? | |
12-23-2011, 12:25 PM | #38 |
Quote: Simple Example Of Why 'Rich People' Don't Create Jobs MILLIONAIRE'S ISLAND: A Henry Blodget|December 15, 2011| As everyone in this country keeps blaming everyone else for our high unemployment rate, one assertion gets repeated so often that it is now regarded as fact: Rich people create jobs. Specifically, the argument goes, entrepreneurs and investors create jobs. So if we want to create more jobs, the argument continues, we need to cut taxes on entrepreneurs and investors--to increase their incentive to create jobs. Now, I'm an entrepreneur, and Business Insider employs about 75 people, up from zero four years ago. So if this assertion were true, I'd happily espouse it. It would make me feel great, believing that I had created all those jobs. And it would make me feel perfectly justified in paying historically low tax rates. (After all, I created these jobs!). Unfortunately, as I explained in detail here, this assertion is wrong: Entrepreneurs and investors actually don't create jobs, at least not by themselves. What creates jobs is a healthy economic ecosystem, of which entrepreneurs and investors are only parts. The more important part of the job-creation engine is a huge base of people and companies with plentiful disposable income. Specifically, millions upon millions of customers with money to spend. Without our generous readers and sponsors and dedicated team, all the jobs I "created" at BI would immediately cease to exist (including mine). I'm patient and determined, but I'm not Sisyphus. And our investors are good people, but they're also, justifiably, impatient (they, too, have clients to serve and jobs to keep). And I certainly couldn't produce BI by myself. So if BI hadn't quickly gained traction with readers and sponsors and hired a great team, my investors and I would have switched the lights off. And all those jobs would have gone "poof." Without healthy customers, in other words, entrepreneurs and investors can create prototypes, or do R&D, but they can't create self-sustaining jobs. To create self-sustaining jobs, companies need to sell their products and services into a marketplace that 1) wants them, and 2) can afford them. The marketplace also needs laws, law-enforcement, property rights, transportation systems, resources, rules, and other attributes of healthy free-market economies that help companies and society function. Without all those things, entrepreneurs and investors can't create jack. Biggest problem in the world is ego and fighting reality................. Quote: We do not need to further incentivize entrepreneurs and investors to start companies--they already have plenty of incentives to do so. What we do need to do is find ways to give our vast middle class more purchasing power again. http://www.businessinsider.com/rich-people-do-not-create-jobs-2011-12 Quote: Yes, that's the way it's supposed to work. Unfortunately, that's not the way it actually works. And Hanauer explains why. Hanauer takes home more than $10 million a year of income. On this income, he says, he pays an 11% tax rate. (Presumably, most of the income is dividends and long-term capital gains, which carry a tax rate of 15%. And then he probably has some tax shelters that knock the rate down the rest of the way). With the more than $9 million a year Hanauer keeps, he buys lots of stuff. But, importantly, he doesn't buy as much stuff as would be bought if that $9 million were instead earned by 9,000 Americans each taking home an extra $1,000 a year. Why not? Because, despite Hanauer's impressive lifestyle — his family owns a plane — most of the $9+ million just goes straight into the bank (where it either sits and earns interest or gets invested in companies that ultimately need strong demand to sell products and create jobs). For a specific example, Hanauer points out that his family owns 3 cars, not the 3,000 that might be bought if his $9+ million were taken home by a few thousand families. If that $9+ million had gone to 9,000 families instead of Hanauer, it would almost certainly have been pumped right back into the economy via consumption (i.e., demand). And, in so doing, it would have created more jobs. Hanauer estimates that, if most American families were taking home the same share of the national income that they were taking home 30 years ago, every family would have another $10,000 of disposable income to spend. That, Hanauer points out, would have a huge impact on demand — and, thereby job creation. It's time we stopped mouthing the fiction that "rich people create the jobs." Rich people don't create the jobs. Our economy creates jobs. Reality's a beach............ Last edited by jeffkrol; 12-23-2011 at 12:31 PM. | |
12-23-2011, 12:35 PM | #39 |
Anderson Cooper has a classic Matt Damon smack down of a Ayn Rand disciple... Video - Breaking News Videos from CNN.com - Matt Damon takes on a wannabe reporter in a debate on education. -- What we tend to lose sight of is Rand's fascist side in all the celebration of the Fully Human Creator. That is, the ordinary drones are there only to aid or impede the Creator Human, i.e. they are less than fully human... and are an evil when they impede and machinery when they aid. | |
12-23-2011, 12:50 PM | #40 |
I don't say either approach is better or worse. Just different. E.g., from my own analysis, banks create much more money any gov. could ever create in debts If you think down to the base of things, money is nothing else but a promise. You don't even need a bank or a gov. Making promises creates money, breaking promises destroys it. And a credit is nothing but a promise which is why banks and stock exchanges create much more money any gov. does. EDIT: to explain in more simple terms: Assume "A" saving $1 million at a bank and "B" taking a $1 million credit from the bank. Now both "A" and "B" think they have $1 million to spent each. There is $2 million in the system now. Which collapses if both try to spent all their money. Because there are more promises than can be fulfilled now. And this is even possible with a system where banks are required to own 100% coverage of credits (which they don't which makes them spending the same money over and over again by being paid by other bank's credits ...). Tax and gov. debts play a minor role in all this. Last edited by falconeye; 12-23-2011 at 01:01 PM. | |
12-23-2011, 01:03 PM | #41 |
An interesting difference between us is that you work on good sources you find in the literature and I am much more centered about deducing things from 1st order principles, untrusting any source, esp. if is has "economic science" in its name. That must be the physicist in me You know, physics started out from not trusting the old gods any longer ... I don't say either approach is better or worse. Just different. E.g., from my own analysis, banks create much more money any gov. could ever create in debts If you think down to the base of things, money is nothing else but a promise. You don't even need a bank or a gov. Making promises creates money, breaking promises destroys it. And a credit is nothing but a promise which is why banks and stock exchanges create much more money any gov. does. sorry just a sideline.. Anyways MMT: Quote: MMT considers that understanding reserve accounting is crucial in understanding interactions between the government and the private sector. Thus, MMT pays considerable attention to the operational reality of interactions between government, the central bank, and the commercial banking sector.[9] A sovereign government will typically have a cash operating account with the central bank of the country. From this account, the government can spend and also receive taxes and other inflows.[10] Similarly, all of the commercial banks will also have an account with the central bank. This permits the banks to manage their reserves (that is, the amount of available short-term money that a particular bank holds). So when the Federal government spends, Treasury will debit its cash operating account at the central bank, and deposit this money into private bank accounts (and hence into the commercial banking system). This money adds to the total reserves of the commercial bank sector. Taxation works exactly in reverse; private bank accounts are debited, and hence reserves in the commercial banking sector fall. I'd not support the "theory" if it didn't pass my "smell test"......... Quote: Here are some MMT bloggers for those interested in pursuing this: Marshal Auerback Scott Fulwiller Bill Mitchell Warren Mosler Winterspeak L. Randall Wray There are also a number of working papers by these and others writing in the field that are available (free) at The Levy Institute and the Center for Full Employment and Price Stability Quote: E.g., from my own analysis, banks create much more money any gov. could ever create in debts http://bilbo.economicoutlook.net/blog/?p=14620 Banks and MMT........... Last edited by jeffkrol; 12-23-2011 at 01:17 PM. | |
12-23-2011, 01:16 PM | #42 |
But I am sceptical. There is a trivial link between tax and a fed. bank: "printing money" can substitute tax and vice versa. This trivial link could easily obfuscate the true mechanisms of the monetary system to any thinker who doesn't go to the core root of things. And if you do, you don't need experts because then everything is amazingly simple and clear. This is why I hate citations and love arguments | |
12-23-2011, 01:37 PM | #43 |
I'll have a closer look into this (MMT). But I am sceptical. There is a trivial link between tax and a fed. bank: "printing money" can substitute tax and vice versa. This trivial link could easily obfuscate the true mechanisms of the monetary system to any thinker who doesn't go to the core root of things. And if you do, you don't need experts because then everything is amazingly simple and clear. This is why I hate citations and love arguments The biggest gothcha (i.e. "exceptional case") was "stagflation" and that has been ironed out though I don't have the direct MMT link.. (it's here somewhere) BUT Mitchell addresses it a bit...... who is a bit of an "outlier" if you get my drift........ –The “impossible” cure for stagflation MMT Wiki ...a Modern Monetary Theory Wiki Stagflation - MMT Wiki counterpoint: http://www.nber.org/chapters/c11065.pdf bit more chatter on stagflation: http://mikenormaneconomics.blogspot.com/2011/08/mmt-hits-canada.html Personally I think in a oil induced stagflation we do what China does.. gov. buys the oil and supplies it at a reduced cost...... AND in re: again to your bank statement.. Quote: E.g., from my own analysis, banks create much more money any gov. could ever create in debts Quote: However, the central bank could equally just pay the commercial banks the target rate of interest on all overnight reserves which would achieve the same end without the need to issue debt. So there is no intrinsic reason for a sovereign government to borrow to “finance” its net spending. The reality is, however, that the neo-liberal era has forced the governments to adopt voluntary constraints on its fiscal activity which are tantamount to those that operated during the gold standard period. So the federal government now issues debt to the private markets via an auction system $-for-$ with net government spending (deficits). This allegedly imposes “fiscal discipline” on the government (it is totally unnecessary from a financial perspective) because the rising debt becomes a political issue. In conclusion, much of the deficit-debt hysteria that defines the current macroeconomic debate is based on false premises about the way the monetary system operates and the financial constraints on government spending. Modern monetary theory provides a sound basis for understanding the intrinsic opportunities available to governments in a fiat monetary system and exposes most of the constraints that are imposed on the conduct of fiscal policy as being of an ideological origin. Last edited by jeffkrol; 12-23-2011 at 01:59 PM. | |
12-23-2011, 03:07 PM | #44 |
ADDENDUM: Quote: We WON!!! MMT got everything right...EVERYTHING!!! Modern Monetary Theory (MMT) scored a knockout this year, correctly predicting all the major economic events and their outcomes. From the downgrade of the US credit rating and the resulting interest rate decline, to the lack of hyperinflation from QE, to the increase in deficits in Eurozone countries imposing austerity, MMT had it all right...EVERYTHING. The other guys have egg all over their face and continue to look like ignorant fools. | |
12-23-2011, 08:49 PM | #45 |
A bit harsh..... but american funny Europe: The definition of insanity - YouTube historically funny........... Addendum....... http://www.cnbc.com/id/45765009 Quote: There's a lot more to MMT than its view of monetary operations and government funding, however. They believe the government should guarantee jobs for everyone, that the financial system tends toward crisis and corruption, that capitalist economies are not self-regulating, and that fiscal policy should be measured by its effect on the economy not on whether budgets are balanced. Some of this is fine, other parts I regard as distractions (such as the jobs guarantee). But my biggest point of departure with the MMTers is they display a political and economic naivete when it comes to the effects of government spending. When they talk about spending it is almost always in terms of abstract aggregates, which is weird for a school of economics so focused on the specifics of monetary operations. What this means is that they miss the distortions of crony capitalism the accompanies so much government spending. Quote: Some of this is fine, other parts I regard as distractions (such as the jobs guarantee). BTW: Just noticed that there is a comment on the above link @ Mike Norman Economics................ Quote: Where I think we can agree is on crony capitalism and political corruption. These are central topics on this blog because they ae central to MMT as an aspect of institutional economics. Warrem Mosler often says of problems, "It's the institutional arrangements." Economics is largely about reciprocal relationships — production-consumption, investment-income, supply-demand, credit-debt, and so forth. A lot of the debate in economic is over which of the complementary opposites is causal — supply side v. demand side, for example. Similarly, the debate in political economy today is over the complementary opposites of business-government, and which is causal in the crisis. The correct institutional answer is that this is a chicken and egg question. The real issue is how to reform or reorganize existing institutional arrangement that result in imperfections and frictions in a way that produces an optimal result that is also practically feasible to institute. This requires a correct theoretical understanding. As Thomas Aquinas said at the beginning of De Ente et Essentia, paraphrasing Aristotle, "A small mistake in the beginning becomes a great one by the end." MMT holds that understanding how the existing monetary-financial system works is a sine qua non. A great deal of the contribution of MMT comes from the work of MMT economists on government finance, building on Post Keynesian circuit theory developed by Basil Moore, for example, in Horizontal Money. MMT makes the key distinction between horizontal money and vertical money. http://rodgermmitchell.wordpress.com/2011/07/09/why-bank-lending-leads-to-re...itive-finding/ Quote: (As an aside, this is one reason the early stimulus efforts had so little effect. People used the stimulus money to pay off loans, so while the federal deficit spending created money, the loan pay-downs destroyed it. Debt reduction destroys debt/money.) Quote: As we've seen, the Fed has an unlimited balance sheet, something that Greece and Italy do not enjoy. Our government will never run out of money. Greece and Italy can definitely run out of money. So it's a shame to see Mitt Romney, the Republican frontrunner for president, spouting this nonsense. Last edited by jeffkrol; 12-23-2011 at 09:42 PM. | |
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