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Getbig Main Boards => Gossip & Opinions => Topic started by: Palumboism on May 13, 2016, 02:42:54 PM
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Does Capitalism Exploit the workers?
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The Economic way of thinking.
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The Austrian business cycle explained.
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Tom Woods is a buffoon. Austrian Economics ignores political expediency.
Steve Keen interviewed in second half of this clip
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Joseph Schumpeter is my favorite Austrian Economist. His ideas about the entrepreneur and creative destruction were fifty years ahead of his time. I think Schumpeter is the most penetrating analyst of capitalism who ever lived. He saw things other people didn't see,
From Capitalism and Socialism and Democracy Ch 7.
Capitalism is by nature a form or method of economic change and not only never is but never can be stationary. The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates. The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. Capitalism requires the perennial gale of Creative Destruction.
It is not that kind of competition which counts but the competition from the new
commodity, the new technology, the new source of supply, the new type of
organization (the largest-scale unit of control for instance)—competition
which commands a decisive cost or quality advantage and which strikes not
at the margins of the profits and the outputs of the existing firms but at their
foundations and their very lives.
Think: Apple, Google, Amazon, Netflix
"Without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion."
Joseph Schumpeter
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Capitalism has worked very well. Anyone who wants to move to North Korea is welcome. Bill Gates
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Tom Woods is a buffoon. Austrian Economics ignores political expediency.
Tom's explaining what the Austrian Economic school believes causes the business cycle. Mainly, that the government dropping the interest rate to stimulate the economy, lays the seeds for the next bust.
Every time the government turns on the printing presses, it's an inflation tax on everyone.
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Tom's explaining what the Austrian Economic school believes causes the business cycle. Mainly, that the government dropping the interest rate to stimulate the economy, lays the seeds for the next bust.
Every time the government turns on the printing presses, it's an inflation tax on everyone.
Dropping interest rates to record lows has not worked too well in Europe...
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Dropping interest rates to record lows has not worked too well in Europe...
No Kidding. Dear customer: negative interest rates; let us give them to you.
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Dropping interest rates to record lows has not worked too well in Europe...
It's not so bad when you have investment loans to service and the equity in your investments are still going up ;)
tbh there was no choice but to slash interest rates or we would have ended up with rampant deflation and a depression.
interest rates won't be going anywhere until there is some degree of sustainable inflation. which doesn't seem to be on the way any time soon.
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Tom's explaining what the Austrian Economic school believes causes the business cycle. Mainly, that the government dropping the interest rate to stimulate the economy, lays the seeds for the next bust.
Every time the government turns on the printing presses, it's an inflation tax on everyone.
the problem was greenspan growing credit faster than nominal gdp. bernanke and yellen have had to face the consequences since.
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Dropping interest rates to record lows has not worked too well in Europe...
Nor has it worked in Japan and the United States.
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Nor has it worked in Japan and the United States.
japan has been at zero interest rates for around 3 decades iirc. but it has/is working. the alternative would be a 30s style great depression.
the 'crash' destroyed investment and consumer confidence, even with near zero interest rates investment is still weak and money is not really moving. if interest rates were higher there would be even greater incentive to hold onto money.
printing money is supposed to devalue a currency, but even with all the new money that's been printed in the states and europe it hasn't managed to spike any sustainable inflation. deflation is still the big threat, so it would be suicide to raise interest rates.
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the problem was greenspan growing credit faster than nominal gdp. bernanke and yellen have had to face the consequences since.
The Austrian point of view is that governments shouldn't influence interest rates. Private banks should set their own interest rates based on how much money they have to lend. When economies are left on their own without government intervention you don't have the booms or the busts. The natural state of the economy is very stable because it's self correcting.
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Tom Woods is a buffoon. Austrian Economics ignores political expediency.
Steve Keen interviewed in second half of this clip
Steve Keen has some very dangerous ideas. At the 23 minute mark he starts to talk a about a debt jubilee where the government gives everyone $10,000 to pay down their debts. the problem with this is it inflates away the value of the money held by the savers.
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$10,000 after having increased your debts for things like housing already by $100,000.
Get to work.
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The Austrian point of view is that governments shouldn't control interest rates. Private banks should set their own interest rates based on how much money they have to lend. When economies are left on their own without government intervention you don't have the booms or the busts. The natural state of the economy is very stable because it's self correcting.
Private banks do set their own interest rates anyway. the base rate set by the central bank is just used to influence the market and the rate they charge other banks and financial institutions.
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Private banks do set their own interest rates anyway. the base rate set by the central bank is just used to influence the market and the rate they charge other banks and financial institutions.
I changed it to influence.
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Steve Keen has some very dangerous ideas. At the 23 minute mark he starts to talk a about a debt jubilee where the government gives everyone $10,000 to pay down their debts. the problem with this is it inflates away the value of the money held by the savers.
the only other way to get rid of excess debt is default. idiot.
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The way western societies work today:
Capitalism for the working class, but Socialism for the rich. The working class must pull themselves by their boot straps, work hard and make something of themselves, while corporations get a handout and get bailed out by the government and the tax payers.
Liberalism for the working class, but Conservationism for the rich. The working class must contribute to handouts for the poor and share bathrooms with "transformers", but corporations contribute nothing and "transformers" can go pee in a bucket in the alley.
Double standards of peace.
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the only other way to get rid of excess debt is default. idiot.
Or earn money and pay it off like you're supposed to. :D
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The real meaning of competition using the airline industry as an example.
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Or earn money and pay it off like you're supposed to. :D
that is mathematically impossible. you should go and study monetary economics. or watch this.
debt in the US is growing more than 3x faster than gdp.
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that is mathematically impossible. you should go and study monetary economics. or watch this.
debt in the US is growing more than 3x faster than gdp.
Now it's mathematically impossible to spend less than you earn. When did that happen? :D
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Now it's mathematically impossible to spend less than you earn. When did that happen? :D
Because your saving is someone else's income loss which when dine across a highly leveraged economy creates a financial crisis ie a minsky moment
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By L. Gordon Crovitz
July 22, 2012 6:21 p.m. ET
A telling moment in the presidential race came recently when Barack Obama said: "If you've got a business, you didn't build that. Somebody else made that happen." He justified elevating bureaucrats over entrepreneurs by referring to bridges and roads, adding: "The Internet didn't get invented on its own. Government research created the Internet so that all companies could make money off the Internet."
It's an urban legend that the government launched the Internet. The myth is that the Pentagon created the Internet to keep its communications lines up even in a nuclear strike. The truth is a more interesting story about how innovation happens—and about how hard it is to build successful technology companies even once the government gets out of the way.
Who Really Invented the Internet? (http://www.wsj.com/articles/SB10000872396390444464304577539063008406518)
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Because your saving is someone else's income loss which when dine across a highly leveraged economy creates a financial crisis ie a minsky moment
The problem is that people are borrowing in order to spend more than they make and aren't saving enough. The savings that's in our bank accounts is lent to companies for capital equipment to provide jobs.
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How people think minimum wage works vs how it actually works.
(https://mises.org/sites/default/files/styles/full_width/public/static-page/img/how-the-minimum-wage-works-comic.png?itok=TDqrMkj5)
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The problem is that people are borrowing in order to spend more than they make and aren't saving enough.
That's what greenspan bankrolled.
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By L. Gordon Crovitz
July 22, 2012 6:21 p.m. ET
A telling moment in the presidential race came recently when Barack Obama said: "If you've got a business, you didn't build that. Somebody else made that happen." He justified elevating bureaucrats over entrepreneurs by referring to bridges and roads, adding: "The Internet didn't get invented on its own. Government research created the Internet so that all companies could make money off the Internet."
It's an urban legend that the government launched the Internet. The myth is that the Pentagon created the Internet to keep its communications lines up even in a nuclear strike. The truth is a more interesting story about how innovation happens—and about how hard it is to build successful technology companies even once the government gets out of the way.
Who Really Invented the Internet? (http://www.wsj.com/articles/SB10000872396390444464304577539063008406518)
Still going with these fairytales? The government created all aspects of the economy that are dynamic. We already reviewed GM. The model is the same everwhere. Put the koolaid down son.
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That's what greenspan bankrolled.
We save if you are getting 0% return on your savings/capital?
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the free market only exist on paper
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Still going with these fairytales? The government created all aspects of the economy that are dynamic. We already reviewed GM. The model is the same everwhere. Put the koolaid down son.
Yep, I'm still going with the fairytales.
Alfred Sloan's accomplishments at GM are impressive to this day. From the time he started as CEO until he retired GM's market share went from 12 percent to 54 percent. This is a perfect example of creative destruction, mainly of Ford.
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Yep, I'm still going with the fairytales.
Alfred Sloan's accomplishments at GM are impressive to this day. From the time he started as CEO until he retired GM's market share went from 12 percent to 54 percent. This is a perfect example of creative destruction, mainly of Ford.
dont forget the part where the government had to buy the company. talk about creative destruction. must be nice when you're too big to fail.
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dont forget the part where the government had to buy the company. talk about creative destruction. must be nice when you're too big to fail.
GM wasn't too big to fail, they went bankrupt. The GM you see now is a different company. The government could have stayed out of the whole process and they probably would have at any other time.
In 2015 GM sold 9.8 million cars and trucks and had a profit of $9.7 billion, both records for the company. The Austrian point of view is that profits are an indication that a company is doing good for mankind.
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Joseph Schumpeter is my favorite Austrian Economist.
Mine as well.
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Mine as well.
Schmoepeter is the bomb.
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Mine as well.
“I set out to become the greatest lover in Vienna, the greatest horseman in Austria, and the greatest economist in the world. Alas, for the illusions of youth: as a horseman, I was never really first-rate.” :D
Joseph Schumpeter
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GM wasn't too big to fail, they went bankrupt. The GM you see now is a different company. The government could have stayed out of the whole process and they probably would have at any other time.
In 2015 GM sold 9.8 million cars and trucks and had a profit of $9.7 billion, both records for the company. The Austrian point of view is that profits are an indication that a company is doing good for mankind.
So the government spends 80billion on the US auto industry but GM is not too big to fail. What was the purpose of the auto industry bailout?
???
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So the government spends 80billion on the US auto industry but GM is not too big to fail. What was the purpose of the auto industry bailout?
???
Purpose of the auto industry bailout was to insure union votes to the democratic party.
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japan has been at zero interest rates for around 3 decades iirc. but it has/is working. the alternative would be a 30s style great depression.
the 'crash' destroyed investment and consumer confidence, even with near zero interest rates investment is still weak and money is not really moving. if interest rates were higher there would be even greater incentive to hold onto money.
printing money is supposed to devalue a currency, but even with all the new money that's been printed in the states and europe it hasn't managed to spike any sustainable inflation. deflation is still the big threat, so it would be suicide to raise interest rates.
Yet, the Fed has been indicating that they plan to increase interest rates.
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Purpose of the auto industry bailout was to insure union votes to the democratic party.
80 billion for the union votes!!?
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80 billion for the union votes!!?
The amount doesn't matter when it's other people's money.
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Yet, the Fed has been indicating that they plan to increase interest rates.
i'm pretty sure they did raise the base rate a few months back by a 1/4 percent but that still only puts it at 0.5%, which is the same as base rate has been in UK for nearly a decade.
bank of england has also been "indicating" they are going to raise interest rates for past 6 or 7 years but it's still not happened. raising interest rates by any significant margin when there is no real inflation would be a disaster.
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80 billion for the union votes!!?
If you take the entire Troubled Asset Relief Program bailout into account, taxpayers spent a total of $79.7 billion on the auto bailout, received only $63.1 billion back, for a total loss of $16.6 billion.
http://townhall.com/tipsheet/conncarroll/2015/02/04/its-official-the-auto-bailout-cost-taxpayers-166-billion-n1952771 (http://townhall.com/tipsheet/conncarroll/2015/02/04/its-official-the-auto-bailout-cost-taxpayers-166-billion-n1952771)
Keep in mind the government didn't need to sell it's share of GM when it did and could have actually made money on the bailout, but Obama wanted to get re-elected.
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If you take the entire Troubled Asset Relief Program bailout into account, taxpayers spent a total of $79.7 billion on the auto bailout, received only $63.1 billion back, for a total loss of $16.6 billion.
http://townhall.com/tipsheet/conncarroll/2015/02/04/its-official-the-auto-bailout-cost-taxpayers-166-billion-n1952771 (http://townhall.com/tipsheet/conncarroll/2015/02/04/its-official-the-auto-bailout-cost-taxpayers-166-billion-n1952771)
Keep in mind the government didn't need to sell it's share of GM when it did and could have actually made money on the bailout, but Obama wanted to get re-elected.
So how does $430 billion from the gov to prop up whole industries fit into the fairytale?
GM is making a profit and so are the banks. You said this means they are doing good things!!! Right??
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So how does $430 billion from the gov to prop up whole industries fit into the fairytale?
GM is making a profit and so are the banks. You said this means they are doing good things!!! Right??
The Austrian point of view is the Government should have done nothing and they should have done nothing sooner. Meaning staying on the gold standard, no Federal reserve, no Fannie Mae and Freddie Mac.
Also, the government doesn't need to get involved with monopolies. As long is there's no restriction from a competitor entering the business, there is competition, even if the company has a monopoly. For example, if United, American, Delta, and Southwest all wanted to merge, Austrians believe the government should allow this.
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The Austrian point of view is the Government should have done nothing and they should have done nothing sooner. Meaning staying on the gold standard, no Federal reserve, no Fannie Mae and Freddie Mac.
Also, the government doesn't need to get involved with monopolies. As long is there's no restriction from a competitor entering the business, there is competition, even if the company has a monopoly. For example, if United, American, Delta, and Southwest all wanted to merge, Austrians believe the government should allow this.
this excludes the "golden age of capitalism" post war period of explosive growth (government driven of course!).
Plenty of Ford Model-T's needed for the war effort! Who bought those? The free market?
seems like the Austrians want to throw the baby out with the bath water!
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I can tell you the ass really fell out of the kangaroo hide game. Wrecked 'em.
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Bloomberg
China May Never Get Rich
[snip]
Weighing these factors, DeLong comes to a stark conclusion -- China has only five years of rapid growth left. Since China's per capita GDP is now only about a quarter of the U.S. level, five years of 7 percent growth -- with the U.S. growing at 2 percent -- would leave China at less than a third of America's standard of living by the time it slows down.
That almost certainly seems too conservative. We need to take into account the effects of economic agglomeration. Agglomeration means that companies invest where there are large markets, and workers move to where they have job opportunities. This snowball effect, once started, is hard to stop. China's poor property rights will probably hold it back -- as will its large size and resource limitations -- but 30 percent of U.S. per-capita GDP is overly pessimistic. I'd look for China to do at least as well as Malaysia, which now is at about 45 percent of U.S. GDP.
That would mean China has more than a decade of 7 percent growth left, once it recovers from its recession.
That said, there are already signs that China's institutions are beginning to hold it back. In the wake of the country's dramatic stock market crash and the slow deflation of its real estate bubble, zombie companies are starting to appear across the landscape. Zombie is the term for companies that are not really profitable, but that survive on a continuous stream of cheap loans from banks that can't afford to let the companies fail. Banks do this because if the companies fail, the banks fail, and the banks are both systemically important and politically well-connected. The government provides the final link in the chain, by bailing out banks, by keeping interest rates low, and by providing subsidies to some of the zombies.
This kind of trap ensnared the Japanese economy after its own bubble burst in the early 1990s. It took more than a decade before the administration of Prime Minister Junichiro Koizumi finally forced the big banks to cut most of their zombies loose.
But when Japan was attacked by zombies, it was at a much higher level of income (relative to the U.S.) than China enjoys today. In other words, China is hitting Japan-type institutional problems at a much earlier development level than Japan.
That is an early indicator that DeLong and other economists are probably right about China. The system of political-party-based property rights is better than nothing, but it isn't going to make China rich. China is still so poor that it isn't done growing for a while, but when it stops, it's probably not going to be a rich country.
https://www.bloomberg.com/view/articles/2015-09-04/china-may-never-get-rich (https://www.bloomberg.com/view/articles/2015-09-04/china-may-never-get-rich)
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Wall Street Journal
The Wealthy in Florence Today Are the Same Families as 600 Years Ago
New research from a pair of Italian economists documents an extraordinary fact: The wealthiest families in Florence today are descended from the wealthiest families of Florence nearly 600 years ago.
The two economists — Guglielmo Barone and Sauro Mocetti of the Bank of Italy — compared data on Florentine taxpayers in 1427 against tax data in 2011. Because Italian surnames are highly regional and distinctive, they could compare the income of families with a certain surname today, to those with the same surname in 1427. They found that the occupations, income and wealth of those distant ancestors with the same surname can help predict the occupation, income and wealth of their descendants today.
As they wrote for the economics commentary website VoxEU, “The top earners among the current taxpayers were found to have already been at the top of the socioeconomic ladder six centuries ago.”
Their research was made possible by a fiscal crisis. In 1427, Florence was near bankrupt from an ongoing war with Milan and so the Priors of the Republic conducted a tax census of about 10,000 citizens. They took stock of the name and surname of the head of household, their occupation and their wealth.
About 900 of those surnames are still present in Florence, with about 52,000 taxpayers having those names. The authors note that Italian surnames are especially good for this effort, because they are highly regional. While not every person with a certain surname in Florence today will be a descendant of the people with that name in 1427, it’s a good bet that most are. To see how these “families” had fared over the intervening six centuries, they compared the surnames against Florence’s 2011 tax records. (As a condition of access to this data, the authors did not publish the surnames.)
They find strong evidence that socioeconomic status is incredibly persistent. The wealthiest surnames in Florence today belong to families that, in 1429, were members of the shoemakers’ guild — at the 97th percentile of income. Descendants of members of the silk guild and descendants of attorneys — both at the 93rd percentile in 1427 — are among the wealthiest families today.
http://blogs.wsj.com/economics/2016/05/19/the-wealthy-in-florence-today-are-the-same-families-as-600-years-ago/ (http://blogs.wsj.com/economics/2016/05/19/the-wealthy-in-florence-today-are-the-same-families-as-600-years-ago/)
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i'm pretty sure they did raise the base rate a few months back by a 1/4 percent but that still only puts it at 0.5%, which is the same as base rate has been in UK for nearly a decade.
bank of england has also been "indicating" they are going to raise interest rates for past 6 or 7 years but it's still not happened. raising interest rates by any significant margin when there is no real inflation would be a disaster.
The Fed are now indicating they might raises rates in June again...
Maybe not but this constant speculation hurts emerging market currencies.
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(http://www.gannett-cdn.com/usatoday/editorial/graphics/2016/05/042316-Company-Cash.jpg)