It's not working
First quarter data look terrible, with another productivity slam but we once more get the media spin: be happy because things are getting worse at a slower pace that before.
Say, does anyone remember that President Bush's amazing Keynesian program of countercyclical policy--debt, spending, inflation, regulation, bailouts--was supposed to prevent exactly what we are seeing now?
The full story of what we've seen is here.
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Comments (56)
Comments (56)
John Brock
Talk about media spin, look at this article on CNN:
http://money.cnn.com/2009/05/29/autos/uaw_changes/index.htm?postversion=2009052905
What a crock of empathetic dung.
This is my response to the author:
"...meant an instant ticket to the American dream, even for someone with little formal education."
That's was the problem, still is the problem and will remain the problem until the "American Dream" begins to really mean something in our country again. Such jobs requiring little formal education were (are) over-paid, over-protected and padded with benefits in order to ultimately grow the union, without any regard to what it was (is) doing to the "American Dream". The auto industry ceased to be an "industry" and was turned into a marketing label for American pride and false ingenuity. As soon as this happened, normal economic forces no longer applied and it was doomed. ...the bottom (not personal) line is that the education of many of these workers should have never allowed them to achieve an "instant ticket" to the "American Dream".
Published: May 29, 2009 8:46 AM
Lucas M. Engelhardt
I can see the headlines...
"Unemployment increases from 30% to 31% - a slower rate than the 28 to 30% jump: Economists say a turnaround is around the corner."
I'm a natural optimist, but the way they're reading the data still makes me sick.
Published: May 29, 2009 8:57 AM
John Brock
Parts of the media are becoming part of the problem. When the media is able to interfere, I have a real problem with that.
Published: May 29, 2009 9:02 AM
Nate
The problem with politicians is that they seem to view the "American Dream" as meaning the same thing for every person, and that somehow they could adopt policies to make sure everyone could achieve that dream. (such as the case with housing policies)
I prefer to substitute "American Dream" with "The American Way" which at one time meant that a person had the liberty to pursue any legal avenue (from a libertarian viewpoint) in an attempt to turn their dream into a reality.
Published: May 29, 2009 9:11 AM
Dennis
I believe that the Krugmanites would argue that Bush's countercyclical policy of debt, spending, inflation, regulation, and bailouts was not aggressive enough. However, Obama's program, since it is more aggressive, should do the trick, and if it does not, we can always institute an even more aggressive program.
It is a shame that such nonsensical and/or power-driven individuals hold the great economic and political power that they do.
However, both the Bush and Obama programs have succeeded in one of their most important goals, i.e., keeping many of the politically powerful financial institutions in business. In addition, another important goal of Obama's framework is to subsidize not only financial institutions but other politically favored interest groups.
Published: May 29, 2009 9:20 AM
John Brock
Nate: "The problem with politicians is that they seem to view the "American Dream" as meaning the same thing for every person, and that somehow they could adopt policies to make sure everyone could achieve that dream. (such as the case with housing policies)"
Nice point. The American Dream is not the same for everyone.
Published: May 29, 2009 9:24 AM
Jonathan Finegold Catalán
I wonder why these "economists" don't start suggesting full collectivization. Because, if government spending on a scale a fraction of the total value of the aggregate wealth of the nation "helps", then obviously if the government had full access to everybody's capital then it could work wonders.
It's funny how mainstream economists don't take it to that extreme, because they know that wouldn't work, but then fail to apply the same logic to government spending, in general.
Maybe in thirty years people will look back and call Obama laissez-faire. My Keynesian economics professor dared to call FDR laissez-faire.
Published: May 29, 2009 10:06 AM
2nd Amendment
"be happy because these are getting worse at a slower pace that before."
It could all go to hell at a very slow but steady pace. What's to be so happy about that ?
Published: May 29, 2009 10:19 AM
2nd Amendment
"if the government had full access to everybody's capital then it could work wonders."
It already does, it's called hyper-inflation. It can inflate you out of your savings.
Published: May 29, 2009 10:21 AM
fundamentalist
No matter how bad it gets, the cult of intervention will always claim it would have been worse without the stimuli. If everyone in the world starved to death except one ten-year old boy, he would say, "It would have been worse without the stimulus packages."
Published: May 29, 2009 10:28 AM
Ron
Excellent point, Nate. Politicians in general have zero understanding of the concept of subject value. They believe everyone should have the same values as them. This explains not only their desire to push the "American Dream" as they see it, but also their insistence upon constant meddling with prices.
Published: May 29, 2009 10:28 AM
fundamentalist
No matter how bad it gets, the cult of intervention will always claim it would have been worse without the stimuli. If everyone in the world starved to death except one mainstream economist, he would say, "It would have been worse without the stimulus packages."
Published: May 29, 2009 10:28 AM
Ron
Sorry...meant to say "subjective value" in my earlier post.
Published: May 29, 2009 12:04 PM
(8?»
Whut?? What do you mean "It's not working?"
I cannot see where divide and conquer tactics coming from government have failed to work now (or ever) in destroying the ability of society to self-regulate. The real problem is, it is actually working far too well.
Oh, wait, you're talking about their "stated goals," aren't you?
In that case, why bother to waste your time pointing out the obvious? It just gives "the other side" of the faux left-right debate some new arguing points on how if only they were in power to implement new destructive tactics, then everything would be better.
Published: May 29, 2009 2:54 PM
John Brock
Nate: "The problem with politicians is that they seem to view the "American Dream" as meaning the same thing for every person, and that somehow they could adopt policies to make sure everyone could achieve that dream. (such as the case with housing policies)"
Nice point. The American Dream is not the same for everyone.
Published: May 29, 2009 3:07 PM
John Brock
Nate: "The problem with politicians is that they seem to view the "American Dream" as meaning the same thing for every person, and that somehow they could adopt policies to make sure everyone could achieve that dream. (such as the case with housing policies)"
Nice point. The American Dream is not the same for everyone.
Published: May 29, 2009 3:42 PM
Derek Blain
That is the point though - the American Dream was never the same for anyone. The American Dream used to be that hard work, brains, and guts could get you anywhere - you could become anything!
But that was slowly transmuted into "The American Dream is - everyone owns a home!" with the passing of the very fist Fair Housing Act.
I wonder what the government's next American Dream is going to be? "Everyone has the right to Government Debt!"
Published: May 29, 2009 5:01 PM
Bruce Koerber
Education and Ethics
Friday, May 29, 2009
Where Is The Ethics In These Economic Forecasts?
We have two manifestations of error-based thinking operating in full force.
First there are the ego-driven interpreters who are empiricists who are unaware of any ethical link to economics. They either manipulate the data to serve their overlords or try to piece together something coherent using the incorrect economic methodology of empiricism.
Second there are the ego-driven interventionists who try to seize power and to hold onto power by corrupt and error-based intervention into the economy. Their propaganda always insinuates that their pea-brained ideas can comprehend the infinitely vast and dynamic market process when in reality they are oppressors and all their intervention results in theft, suffering and injustices.
Published: May 29, 2009 10:13 PM
Emil Suric
Jonathan Finegold Catalán said:
"My Keynesian economics professor dared to call FDR laissez-faire."
Isn't college terrible? My father once told me "being intelligent means knowing who to listen to!" This is why I purposely forget everything I "learn" in class.
Published: May 30, 2009 6:00 AM
Stephen Yearwood
Bush did one Keynesian thing: deficit spending. Keynes proposed that government tax the rich (1) to keep too much money from getting into the hands of too few people (the cause of speculative bubbles) and (2) to subsidize the middle class, to be sure it was large and economically healthy, because they have enough money to consume, save, and speculate in more optimum proportions. His insight was the same as Adam Smith's: The key to greater propserity for all is the optimum level of general economic activity. The key to the present problem (and the key cause of the Great Depression) was that there was a surge in productivity while worker's incomes remained flat, at best, with demand being sustained via a huge increase in private debt (then, the newly invented 'installment plan', now credit cards). Austrians fail to account for the need to have increases in productivity shared by the workers in general, blaming everything on the credit bubble.
Published: May 30, 2009 8:12 AM
Emil Suric
Stephen Yearwood
Actually, Keynes proposed tax cuts during recessions in order to stimulate aggregate demand. Bush then, was the ultimate Keynesian; huge tax cuts, massive deficit spending, bailouts, and stimulus packages. Austrians focus on the actual causes of trade cycle volatility, and their downturns, namely depressions. You should read some Austrian literature if you wish to learn more about Austrian doctrine; there's a reason why only Austrian economists are able to accurately forecast economic conditions.
As far as his insight being the same as Smith's, you're simply wrong:
“The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted to no council and senate whatever, and which would nowhere be so dangerous in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” – Adam Smith
“Such taxes [upon the necessaries of life], when they have grown up to a certain height, are a curse equal to the barrenness of the earth and the inclemency of the heavens; and yet it is in the richest and most industrious countries that they have been most generally imposed. No other countries could support so great a disorder.” – Adam Smith
Published: May 30, 2009 9:31 AM
HM Lee
Once again, the followers of Keynes cite the changes in wage level with the accumulation of wealth. That is simply not the case. Productivity gains generally can lead to lower price levels. The marxists cited lower prices as a bullwork against worker revolution. They hated the lower prices that generally were achieved in market economies.
Growths in productivity and reductions in the costs of inputs allow a business to deliver goods at lower prices, but preserve their current profit margins. It is a competitive decision that good business managers make every day. Especially the businesses that can't count on some gov't bailout or a regulatory agency protecting them from failure.
Published: May 30, 2009 11:30 AM
Stephen Yearwood
Mr. Suric:
Re. my ignorance: Please don't immediately cop a patronizing attitude. These blogs aren't a place for complete dissertations, so arguing that someone is wrong for details they left out is being disingenuous. Actually, the discussion of 'neutral money' by Hayek, et al. was a topic in my Master's Thesis. Re. quotations of Smith: Keynes didn't advocate telling anybody how to employ their capital; the specific level at which taxes become such a burden becomes the question. Finally, those quotes don't go to Smith's basic insight. He was presenting an alternative to mercantilism, which was focused on, basically, hoarding money.
Published: May 30, 2009 11:40 AM
Stephen Yearwood
HM Lee:
It's clear that in the past expansion profit margins increased, while wages lagged. Consider the benefit to employers if wages (as well as salaries)were directly (and honestly) tied to productivity gains (and losses). That would be quite an incentive for employees to work harder.
Published: May 30, 2009 11:49 AM
HM Lee
Stephen:
You seem like a thoughtful and good person. I appreciate the dialogue. My observations are that the best companies do share their productivity gains. Every company that I have worked for 1) food products, 2) automotive (not Detroit), and now industrial products has had a program to deliver back to our team members the gains from our business. It has been a prerequisite to getting good talent.
While I'm confident that every company doesn't do this, some organizations have accepted wage and benefit increases far out of context with their gains in productivity. It is their fault. They should stop buying labor from a monopoly.
Again, thanks for the dialogue. My opinion is that how wage/benefit gains are distributed to workers is a purely private matter.
Published: May 30, 2009 12:00 PM
Emil Suric
Stephen Yearwood
"He was presenting an alternative to mercantilism, which was focused on, basically, hoarding money."
An interesting and convenient way to present mercantilism, and Smith's position, once again. I'm certainly no expert, but I was under the impression that mercantilism promoted protectionism, colonialism, and heavy regulations. Smith countered this by explaining the positive sum game associated with free trade, and the advantages of specialization and a further division of labor; and of course, limited government intervention. But your usage of the term "hoarding" is quite interesting.
Published: May 30, 2009 12:01 PM
Stephen Yearwood
HM Lee:
I like a good, respectful discussion, too. John Locke defined injustice as being subject to the arbitrary will of another person. I have a slightly different take on it, but it amounts to about the same thing. At any rate, I would say that the distribution of remuneration in a business in which the employees have no say in the matter would be unjust under Locke's definition.
Published: May 30, 2009 12:11 PM
Stephen Yearwood
Emil Suric:
Y'all aren't tag-teaming me, are you? Really, I'm having a big time here. The way I've kind of summarized it in my own mind (and it has been a while since I read Smith) is that he was addressing monarchs, who did regulate business in their realms, and had traditionally employed mercantilism as their overall guide to policy. I would say that the specific tactics you mentioned were intended to maximize the revenue coming into the monarch's coffers and minimize the outflow of money to the realms of other monarchs. So, to complete the thought, Smith was telling monarchs that they wouuld actually get more money in their coffers by abandoning those tactics, which tended to stifle the general level of economic activity.
Published: May 30, 2009 12:21 PM
Emil Suric
Stephen Yearwood
"Y'all aren't tag-teaming me, are you?"
Would never dream of it =D
Published: May 30, 2009 12:29 PM
Cathye Smithwick
Monsieur’s Yearwood and Lee:
HM Lee wrote: "My observations are that the best companies do share their productivity gains. Every company that I have worked for 1) food products, 2) automotive (not Detroit), and now industrial products has had a program to deliver back to our team members the gains from our business. It has been a prerequisite to getting good talent.
While I'm confident that every company doesn't do this, some organizations have accepted wage and benefit increases far out of context with their gains in productivity. It is their fault. They should stop buying labor from a monopoly. "
____________
I don’t believe that using US industrial production is the best way to examine productivity issues in the 21st century. Going back to classical theory, are we not forgetting the fallacy of using comparisons between labor today (most employed in service sector) and labor in the 18th and 19th centuries? Adam Smith's pin factory is a great example of the impact that the division of labor has on productivity in a manufacturing context. Henry Ford rapidly advanced that concept with the assembly line.
In the US today, however, at least 70% of workers are employed in the service sector, where measuring productivity is exceedingly difficult. Is the call center employee that handles 75 calls/hour more productive than one that handles 50? The answer is unclear if the “more productive” employee is unable to resolve issues on the first call, generating multiple callbacks. Extend this to middle and upper management, and the difficulty is compounded. Extend it to education and healthcare, and we see the follies of the current administration compounded. For example, data show that the predictions of productivity gains due to adopting electronic medical records have not come to pass. Productivity gains in these sectors are slow, painful and difficult to quantify.
Published: May 30, 2009 1:01 PM
HM Lee
Stephen:
I don't often see Locke presented here, so it is good to bring him up. I still think that workers are in a market like everyone else. As profits rise so do costs of inputs (including labor). I agree that there could exist a time lag, but more profitable businesses tend to pay a higher wage simply because it is difficult to sustain a high level of profitability without attracting and retaining the best talent.
Even (possibly especially) companies in so-called low cost countries have to get the best talent. Lower costs don't necessarily create greater profits.
Published: May 30, 2009 1:02 PM
Cathye Smithwick
Lucas Englehardt wrote:
“I can see the headlines... ‘Unemployment increases from 30% to 31% - a slower rate than the 28 to 30% jump: Economists say a turnaround is around the corner.’
I'm a natural optimist, but the way they're reading the data still makes me sick.”
_______________
How true Lucas, but put things into context and you’ll feel a little bit better: Those alleged economists that beat us over the head on a daily basis with their pitiful attempts to interpret data are not economists (unless a guest is introduced as such). They are journalists. Period.
Even our own Larry Kudlow, whom I admire on many levels (and is in a league of his own), is not an economist by education. He has a degree in history; and later studied public policy and economics at Princeton, but never completed his education. Look at the backgrounds of others working in a similar space and you will see that few, if any, come close to Mr. Kudlow’s experience at the NY Fed, OMB and Wall Street.
Lesson learned: don’t fall into the trap of confusing financial reporters and their agendas (carrying water for Obama? For Wall Street? For themselves?), with the economics profession.
Published: May 30, 2009 1:29 PM
Stephen Yearwood
Ms. Smithwick:
(Sounds so very English.) Still, the gross numbers do indicate that productivity for the U.S. economy as a whole did increase substantially--and substantially more than incomes of the middle to lower economic groups--from, really, the middle 1980's onward.
Published: May 30, 2009 1:55 PM
Stephen Yearwood
HM Lee:
Markets are arbitrary, at best. I would say that the point is that human beings interacting with one another demands justice, no matter when, where, or how.
Published: May 30, 2009 1:59 PM
HM Lee
Cathye:
You, like so many other here, bring forward great points. My point is that profit not productivity is the key. That is easily measured. Even the most labor intensive manufacturing companies have some service level jobs (sales, accounting, etc.). The measure that I place forward is profit per hour worked. Some calculation of economic value added could also be done, but be careful when considering time of return.
The bottom line is if an organization's wages/benefits do not climb with profits, as more organizations enter the market, they will pull that labor away by paying more for it. It is easer to see it in manufacturing, but IT services are a perfect example of this happening in a service sector industry. Von Mises taught us that as profits rise so do costs of inputs. Supply and Demand will create a new price point, and those paying less than it will realize shortages. The ability to remain at the previous profit level is in jeopardy without the resources previously allocated.
Modern productivity measures put forward by management scientists can often tell you to do the absolute wrong thing. Units per direct labor hour is a popular metric, but it assumes that you can sell everything that you purchase. You can, but not always at a profit. OEE is also popular, but it could lead you to overproduce easy (often less profitable) products.
Nice dialogue. I appreciate your postings.
Published: May 30, 2009 2:06 PM
HM Lee
Stephen:
I see your point, but I believe that the markets create the best opportunity for justice. Justice is balance and fairness. I think markets are the embodiment of justice. They may at times seem unempathetic, but should justice include an expression of empathy?
I arrived at the Austrian point-of-view simply because I love humanity. I see no benefit to society by trying to create some arbitrary standard. Society is satisfied one person at a time, not as a collective.
I am made better by this dialogue. I appreciate it.
Published: May 30, 2009 2:19 PM
Stephen Yearwood
HM:
Please don't take my disagreement with you as disrespect. You obviously are an intelligent, reasonable, decent person. We do seem to be in agreement that justice is the most important thing. I would say that justice is about mutual respect, not necessarily empathy. I agree that markets can function on that basis, but they don't always function that way. I would say that the income of individuals is too important to leave to markets that may or may not be functioning in a way that is compatible with justice.
Published: May 30, 2009 2:39 PM
HM Lee
I detected no disrespect at all. I hope that you feel none from me, since none is intended. You are right that we agree philosophically. We just advocate different methods.
That is why this is the only site where I post. Too much rancor, malice, and labeling everywhere else.
Nice to talk to you.
Published: May 30, 2009 3:03 PM
Emil Suric
Stephen Yearwood
"I would say that the income of individuals is too important to leave to markets that may or may not be functioning in a way that is compatible with justice."
It is my opinion that real justice, real equality, entails an equal opportunity in acquiring wealth, not the equal distribution of wealth. This naturally means winners and losers, but the outcomes will be determined by one's own merit. There's never been a case where the government has acted more efficiently than the market. Though I'm no fan of Friedman, he was correct when he said, "you shouldn't judge policies by their intention, but rather by their results."
Published: May 30, 2009 3:03 PM
Stephen Yearwood
Emil Suric:
Welcome back. Nobody said anything about "an equal distribution of wealth." Everybody knows that outcomes, say, in the competition for a job, do not always come down to merit (sex, office politics, "It's not what you know, but who you know," etc.). The question isn't the efficiency of government, it's the justness of the basic institutional structure of the economy. Even if a more just institutional structure is less "efficient" (a term that is thrown around rather loosely), if justice is the most important thing, then that is a cost of justice. [Don't jump to the conclusion that I am getting around to arguing for socialism or communism; I think, in general, markets are fine. My only problem is with the distribution of remuneration within any given individual firm--which in itself really isn't a market at all, anyway.]
Published: May 30, 2009 3:24 PM
Stephen Yearwood
Well, it looks like I got in the last word on everybody. I'll check back in on this dialogue tomorrow morning, though.
Published: May 30, 2009 3:57 PM
damocles
Our government is about buying votes and contributions from interest groups--Obama's favorites being unions, Wall Street, and bureaucrats--and pushing fiscal disaster off until the next guy is in office. Clowns like Krugman, Geithner, and CNN's wackjobs are rewarded for selling the story to a gullible public--they'll all move to Europe or Singapore when the balloon goes up.
Published: May 30, 2009 8:35 PM
newson
to stephan yearwood:
i'd point out that income distributions have become markedly more skewed since the 'seventies, when the last vestiges of the gold standard disappeared. the demonetization of gold, allowing vertiginous growth in money supply, has given rise to multiple, successive bubbles. asset-surfers (and these include those who earn enough to enjoy option packages) have been able to ride the waves more successfully than wage-earners. cure the monetary malaise and the income distribution curve should return to a more traditional shape (albeit always skewed).
Published: May 30, 2009 10:04 PM
Fyodor Dostoevsky
Nate: "The problem with politicians is that they seem to view the 'American Dream' as meaning the same thing for every person, and that somehow they could adopt policies to make sure everyone could achieve that dream. (such as the case with housing policies).'"
Only one thing to say: "Ah, gentlemen, what will have become of our wills when everything is graphs and arithmetic, and nothing is valid but two and two make four? Two and two make four without any will of mine! Is that what one's will means?" - F. Dostoevsky
Published: May 31, 2009 1:22 AM
Stephen Yearwood
to newson:
The relationship between the money supply and the distribution of incomes is something I've never considered. I agree completely that the supply of money is something that should be beyond the control of any person or organization. (That proves I'm not a Keynesian.) Also, I would say that differences in income, in and of themselves, and no matter how large, are not an injustice. They do, however, reflect the underlying process, which, in capitalism in all of its forms to date, has been unjust (according to Locke's definition of injustice, which I put in a previous post, and with which I do agree).
Published: May 31, 2009 6:15 AM
Stephen Yearwood
to Fyodor Dostoevsky:
You write amazingly well for such a dead person. I can't say I loved Crime and Punishment, but I did read it (and though I have to say Poe was inifnitely more efficient in The Tell-Tale Heart). At any rate, what I wanted to say is that, while I appreciate the sentiment you expressed (if "sentiment" is the right word), unless the ethic of justice is as free of willing as "two and two make four," any attempt at applying that ethic to the affairs of human beings becomes a matter of some imposing their wills on others. I have to admit I honestly don't know if you would agree with that statement or not.
Published: May 31, 2009 6:45 AM
Stephen Yearwood
to Damocles:
One issue that Austrians, Libertarians, Republicans, and economic conservatives of all other stripes have failed to acknowedge, much less address, is that economic power corrupts, too.
Published: May 31, 2009 6:56 AM
newson
to stephen yearwood:
well, many austrians would take the view that the fractional reserve system, fiat money and central banking serve precisely to steal from the many and give to the few. if you're interested, i think hulsmann's book is a good read
http://mises.org/books/moneyproduction.pdf
Published: May 31, 2009 7:19 AM
Stephen Yearwood
to newson:
Thanks. I'll check it out. My idea is that fiat money would be fine as long as the size of the supply of it couldn't be arbitrarily manipulated. Then, it would serve the same purpose as a metallic-based supply of money. My understanding is that the ultimate economic benefit of a metallic-based money supply is that it is determined by factors outside the economy, so it becomes an exogenous variable to which all other variables must adjust. That was what gave rise to the idea that such a money supply could be 'neutral'. As long as the determination of the amount of the money supply was beyond the reach of any person or group, I'm saying, fiat money could serve that purpose.
Published: May 31, 2009 7:57 AM
fundamentalist
Stephen Yearwood: “John Locke defined injustice as being subject to the arbitrary will of another person. … I would say that the distribution of remuneration in a business in which the employees have no say in the matter would be unjust under Locke's definition.”
A prisoner convicted of murder and sentenced to life is at the arbitrary will of another, but that’s not injustice. Children are subject to the arbitrary will of their parents and students are subject to their teachers. However, employees are not subject to the arbitrary will of their employers. They can quit when they want. The fact that quitting may be difficult because they haven’t saved enough to live on without working until they find another job doesn’t mean they don’t have that choice. And the will of employers isn’t absolute, as it was with monarchs. Even without state regulations, employers must retain the best employees if they want their companies to succeed.
The free market can’t eliminate all injustice and it was never intended to. Free markets are nothing more or less than the instantiation of property rights.
Stephen Yearwood: "I would say that the income of individuals is too important to leave to markets that may or may not be functioning in a way that is compatible with justice."
Can you point me to a system that has done a better job of distributing wealth than the relatively free markets of the past? All socialism has done is make everyone equally poor. Of course, many people, such as Russians and most Europeans, prefer to be equally poor than to have everyone well off with unequal distribution of wealth.
Published: May 31, 2009 8:34 AM
Stephen Yearwood
to fundamentalist:
You raise issues which a complete account of justice must address (and which I do address in my book, A Just Solution). That "the free market can't eliminate all injustice and it was never intended to" is precisely the problem, when it some to people's incomes. As I wrote in an earlier post, I'm not advocating socialism or communism. I can't show you a system that has been better, as far as the distribution of well-being, than capitalism has been, either currently or in history (at least not in the history of civilization). I have come up with a system, though, that would retain free markets, yet solve the problem of justice in remuneration. The institutional structure necessary to achieve that goal would also produce an economy with neutral money. There would be no limit on how much money anyone might earn or how much property anyone might acquire. At the same time, there would be no transfers of wealth or income. For that matter, there would be no taxes of any kind--no income tax, no payroll tax, no property tax, no sales tax, no excise taxes--no taxes, period. Government gets funded in that model as a function of the circulation of the money supply, from consumers, to businesses, to government, and back to the monetary agency (which has no discretionary power of any kind whatsoever). I know that's a heck of a lot to throw out there all at once, but it seemed like that was the point at which this discussion had arrived. I hope that doesn't end the discussion.
Published: May 31, 2009 9:04 AM
vc
@Yearwood
"My idea is that fiat money would be fine as long as the size of the supply of it couldn't be arbitrarily manipulated."
The only reason to have fiat money is to manipulate the supply. Can you provide another reason?
"As long as the determination of the amount of the money supply was beyond the reach of any person or group, I'm saying, fiat money could serve that purpose. "
Have you considered what you are saying here? Since, by definition, the fiat money supply is determined by the issuing body, fiat money can not possibly serve any purpose that requires its supply to be "beyond the reach of any person or group".
"That 'the free market can't eliminate all injustice and it was never intended to' is precisely the problem, when it some to people's incomes. As I wrote in an earlier post, I'm not advocating socialism or communism."
Yes, you are. Either you agree with free voluntary exchange or you believe in taking from one to give to another, which is theft, in the name of "justice".
Published: May 31, 2009 9:16 PM
newson
fundamentalist:
i've got take issue with you here, everyone was not equally poor under socialism! the standard-of-living spread was probably more pronounced under socialism than under capitalism. (castro was reported to be furious at appearing on forbes' "rich list", with an estimated effective wealth of $550m. compare that to the average cuban.)
Published: May 31, 2009 11:19 PM
filc
No offense Yearwood but I highly suggest doing more reading on what Fiat currency is, how it works, and what its purpose is before you make an argument for or against it.
Published: June 1, 2009 12:41 AM
Stephen Yearwood
vc & filc:
All I can say at this point is that my plan accomplishes all that any Austrian or libertarian could hope to accomplish, including minimal government and no taxes at all while retaining the free-market system for the production and distribution of goods and services. If you're interested, there is more at my website, ajustsolution.com. (It's very rudimentary, but it's there.)
I will say you're in good company, though. Marxists don't like my economic plan because it doesn't conform with their ideology, either. It doesn't conform with any ideology, because the ethic that underlies it, mutual repsect in effecting choices, isn't based on any belief, whether a belief in equality or the existence of Natural Rights or any other pre-existing rights (rights that are supposedly perceived by people, as opposed to being conceived by them). It follows from the observation that every human being exhibits a capacity to choose for oneself, but no one can prove that anyone is inherently more (or less) worthy of having one's choices be effected than is any other person. While that takes us toward equality, mutual respect in effecting choices is the most immediate ethical conclusion to be drawn from that observation. Unlike equality, mutual respect is an ethic that can be applied to the economy, in particular the process of remuneration.
Published: June 1, 2009 7:51 AM
fundamentalist
Newson, Good point! We tend to think that everyone is equal under socialism because the number of wealthy people has shrunk so much that they're hardly noticeable. The leadership of the USSR was very wealthy, too.
Published: June 1, 2009 8:10 AM