Zero-sum Exchanges versus the Creation of Wealth

[BigBallinStalin]

Again, another copy-paste:

Kessler: The U.S. Needs More i-Side Economics
The misallocation of capital is one reason the recovery is stuck between lack and luster.

By ANDY KESSLER



No jobs? No wonder, given what passes for economic thought these days.

In his acceptance speech at the Democratic convention in Charlotte, N.C., this month, President Obama said, "We believe that when a CEO pays his auto workers enough to buy the cars that they build, the whole company does better."

And last month in Leesburg, Va., the president said, "When we've got new teachers doing great work with our kids, then you know what, they go to a restaurant and spend that money. And so suddenly businesses are doing well, the economy is doing well, and we get into a virtuous cycle. And we go up."

This myth—that you can just give money to the middle class and good things happen—is widely shared and is at the basis of a lot of government policy. And it is why the recovery is stuck between lack and luster.

Let's go back. Henry Ford is popularly credited with inventing the middle class by doubling his workers' salaries to $5 per day in 1914. A multiplier for the economy, right? Wrong.

The year before, Ford revolutionized manufacturing with the moving assembly line, slashing automobile build times to just 90 minutes from 14 hours. That's productivity. It allowed Ford to reduce the price over time of his Model T to $290 from $950. Demand took off because it was far cheaper than the cars made by his 88 competitors.

Enlarge Image
image
image
Corbis

By 1927, 15 million Model Ts were sold to people (most of whom did not work for Ford) and businesses that retired their horses and used these new automobiles productively to lower their own costs, fueling a boom. Raising wages was a byproduct, not a cause. From Ford Motor's corporate website about the wage increase: "While Henry's primary objective was to reduce worker attrition—labor turnover from monotonous assembly line work was high—newspapers from all over the world reported the story as an extraordinary gesture of goodwill."

But 98 years later, the Obama administration still doesn't get it. According to an Aug. 15 article by Paul Tough in the New York Times Magazine, the administration's economic team during the financial crisis—Lawrence Summers, Tim Geithner, Jason Furman—"was carrying around this list of multipliers" from Mark Zandi of Moody's Analytics. A dollar spent to cut corporate taxes would grow the economy 30 cents; make the Bush tax cuts permanent, 29 cents; extend unemployment benefits, $1.64; food stamps, $1.73. "And food stamps was always at the top. That had the largest multiplier." This is economic malpractice.

Food-stamps recipients are up 70% in four years, to 46.7 million. But, surprise, we haven't seen that "virtuous cycle." Jobs build the middle class, not handouts or pay diktats.

There is a huge misunderstanding between spending and investment. Sure, it makes sense that the less well-off will spend whatever they are given, but unfortunately, not on the things to spur a hiring binge.

In a famous exchange, Austrian economist Friedrich Hayek was asked, "Is it your view that if I went out tomorrow [with a government subsidy] and bought a new overcoat, that would increase unemployment?" "Yes," answered Hayek, "but it would take a very long mathematical argument to explain why."

Minus the math, Hayek's argument was that money would be removed from the productive economy, and capital would be wrongly allocated to overcoats based on this false demand. Substitute Chevy Volts and you get the picture.

Yes, the wealthy, most of whom got rich by risking capital and delivering something productive to the economy, tend to save more. But they don't shove it under the mattress, they invest it in the productive fabric of the economy. The president's rhetoric harps on the notion that millionaires and billionaires don't "need" the money from a tax cut. But think of it this way: They, like Henry Ford, have proven that they can invest the money productively—better than any government program—whether directly into companies or into stocks, private equity or venture capital that create long lasting jobs and expand the middle class.

Some would call this supply-side economics. President Obama on the campaign trail calls it "trickle-down snake oil," even "fairy dust." I like the term i-side economics—for investment and innovation and individual incentive—rather than g-side economics, as in "what has the government given me lately?"

Perversely, class warfare hurts the group it is alleged to help. For every dollar of stimulus or government spending paid for by the half of the population that pays taxes, you take away a dollar that might have been invested in creating higher-paying jobs. That's just dumb. Misallocating capital is a formula—a negative multiplier—for stagnation, not growth.

Investor Peter Thiel put $500,000 into Facebook in August 2004, a company now worth $50 billion based on its prospects for transforming the media industry. What multiplier would you put on his investment? This month, after investing billions over the years on R&D, Apple released the iPhone 5. The company is worth $666 billion based on prospects that hundreds of millions of users will lower their cost of doing business with the latest iPhone and iPad mini and whatever else is coming. What is that multiplier?

President Obama says that "rebuilding a strong economy begins with rebuilding our middle class." He's got it backward. You can't grow an economy by paying teachers to eat at Denny's or overpaying workers on federal projects via the Davis-Bacon Act.

As in Henry Ford's day, it is workers' productivity that drives long-term wage gains, not workers' wages that drive growth. And almost always by selling something—a Model T or a Samsung Galaxy—cheaper than the current way of doing things.

With the right investment-side rather than handout policy, the economy will act like a coiled spring or a super ball—the rebound will be a huge bounce.

Meanwhile, we wait.

Mr. Kessler, a former hedge-fund manager, is the author most recently of "Eat People" (Portfolio, 2011).

http://online.wsj.com/article_email/SB1 ... left_email

[thegreekdog]

I like this article.

[bedub1]

I like this article.

I thought it was stupid.

It doesn't talk about zero-sum exchanges versus the creation of wealth at all. All it does is re-hash the same old shit about how republicans think you need to give money to the wealthy 1% so they spend/invest it and that it will trickle down to the other 99%. This hasn't worked for over 200 years and isn't going to work. It's a failed idea because the wealthy just hoard their money when things get bad, which makes it get even worse.

I thought it was going to be an article talking about the money-multiplier that banks use and the flow of currency through the global economy. I thought it was going to talk about inflation/deflation. How money enters and exists the economy.

Basically it was a stupid article and nobody should waste their time reading it as it adds nothing intelligent and useful to any conversation.

[BigBallinStalin]

I like this article.

I thought it was stupid.

It doesn't talk about zero-sum exchanges versus the creation of wealth at all. All it does is re-hash the same old shit about how republicans think you need to give money to the wealthy 1% so they spend/invest it and that it will trickle down to the other 99%. This hasn't worked for over 200 years and isn't going to work. It's a failed idea because the wealthy just hoard their money when things get bad, which makes it get even worse.

I thought it was going to be an article talking about the money-multiplier that banks use and the flow of currency through the global economy. I thought it was going to talk about inflation/deflation. How money enters and exists the economy.

Basically it was a stupid article and nobody should waste their time reading it as it adds nothing intelligent and useful to any conversation.

A zero-sum exchange involves one party which gains while the other loses. That is what happens with tax revenues which are used to transfer wealth from one group of people and into another group of people. What is lost? The opportunity cost. That money could've been spent elsewhere, instead it's spent somewhere else. No new wealth is created if the analysis includes both costs and benefits.

People ignore this fundamental point. It's called the broken window fallacy. You can't create wealth by involuntarily taking it from other people.

Hence,

But 98 years later, the Obama administration still doesn't get it. According to an Aug. 15 article by Paul Tough in the New York Times Magazine, the administration's economic team during the financial crisis—Lawrence Summers, Tim Geithner, Jason Furman—"was carrying around this list of multipliers" from Mark Zandi of Moody's Analytics. A dollar spent to cut corporate taxes would grow the economy 30 cents; make the Bush tax cuts permanent, 29 cents; extend unemployment benefits, $1.64; food stamps, $1.73. "And food stamps was always at the top. That had the largest multiplier." This is economic malpractice.

Food-stamps recipients are up 70% in four years, to 46.7 million. But, surprise, we haven't seen that "virtuous cycle." Jobs build the middle class, not handouts or pay diktats.

The article is about increases in labor productivity and investment, which are the sources of increased wealth.

President Obama says that "rebuilding a strong economy begins with rebuilding our middle class." He's got it backward. You can't grow an economy by paying teachers to eat at Denny's or overpaying workers on federal projects via the Davis-Bacon Act.

As in Henry Ford's day, it is workers' productivity that drives long-term wage gains, not workers' wages that drive growth. And almost always by selling something—a Model T or a Samsung Galaxy—cheaper than the current way of doing things.

But you offer nothing to refute this except some tired old rhetoric used to pidgeon-hole the article. That may work in some circles, but it shouldn't fool intellectually honest people.

[thegreekdog]

I like this article.

I thought it was stupid.

It doesn't talk about zero-sum exchanges versus the creation of wealth at all. All it does is re-hash the same old shit about how republicans think you need to give money to the wealthy 1% so they spend/invest it and that it will trickle down to the other 99%. This hasn't worked for over 200 years and isn't going to work. It's a failed idea because the wealthy just hoard their money when things get bad, which makes it get even worse.

I thought it was going to be an article talking about the money-multiplier that banks use and the flow of currency through the global economy. I thought it was going to talk about inflation/deflation. How money enters and exists the economy.

Basically it was a stupid article and nobody should waste their time reading it as it adds nothing intelligent and useful to any conversation.

So you didn't read the article?

[PLAYER57832]

Again, another copy-paste:

Kessler: The U.S. Needs More i-Side Economics
The misallocation of capital is one reason the recovery is stuck between lack and luster.

By ANDY KESSLER



No jobs? No wonder, given what passes for economic thought these days.

In his acceptance speech at the Democratic convention in Charlotte, N.C., this month, President Obama said, "We believe that when a CEO pays his auto workers enough to buy the cars that they build, the whole company does better."

And last month in Leesburg, Va., the president said, "When we've got new teachers doing great work with our kids, then you know what, they go to a restaurant and spend that money. And so suddenly businesses are doing well, the economy is doing well, and we get into a virtuous cycle. And we go up."

This myth—that you can just give money to the middle class and good things happen—is widely shared and is at the basis of a lot of government policy. And it is why the recovery is stuck between lack and luster.

Let's go back. Henry Ford is popularly credited with inventing the middle class by doubling his workers' salaries to $5 per day in 1914. A multiplier for the economy, right? Wrong.

The year before, Ford revolutionized manufacturing with the moving assembly line, slashing automobile build times to just 90 minutes from 14 hours. That's productivity. It allowed Ford to reduce the price over time of his Model T to $290 from $950. Demand took off because it was far cheaper than the cars made by his 88 competitors.

Enlarge Image
image
image
Corbis

By 1927, 15 million Model Ts were sold to people (most of whom did not work for Ford) and businesses that retired their horses and used these new automobiles productively to lower their own costs, fueling a boom. Raising wages was a byproduct, not a cause. From Ford Motor's corporate website about the wage increase: "While Henry's primary objective was to reduce worker attrition—labor turnover from monotonous assembly line work was high—newspapers from all over the world reported the story as an extraordinary gesture of goodwill."

But 98 years later, the Obama administration still doesn't get it. According to an Aug. 15 article by Paul Tough in the New York Times Magazine, the administration's economic team during the financial crisis—Lawrence Summers, Tim Geithner, Jason Furman—"was carrying around this list of multipliers" from Mark Zandi of Moody's Analytics. A dollar spent to cut corporate taxes would grow the economy 30 cents; make the Bush tax cuts permanent, 29 cents; extend unemployment benefits, $1.64; food stamps, $1.73. "And food stamps was always at the top. That had the largest multiplier." This is economic malpractice.

Food-stamps recipients are up 70% in four years, to 46.7 million. But, surprise, we haven't seen that "virtuous cycle." Jobs build the middle class, not handouts or pay diktats.

There is a huge misunderstanding between spending and investment. Sure, it makes sense that the less well-off will spend whatever they are given, but unfortunately, not on the things to spur a hiring binge.

In a famous exchange, Austrian economist Friedrich Hayek was asked, "Is it your view that if I went out tomorrow [with a government subsidy] and bought a new overcoat, that would increase unemployment?" "Yes," answered Hayek, "but it would take a very long mathematical argument to explain why."

Minus the math, Hayek's argument was that money would be removed from the productive economy, and capital would be wrongly allocated to overcoats based on this false demand. Substitute Chevy Volts and you get the picture.

Yes, the wealthy, most of whom got rich by risking capital and delivering something productive to the economy, tend to save more. But they don't shove it under the mattress, they invest it in the productive fabric of the economy. The president's rhetoric harps on the notion that millionaires and billionaires don't "need" the money from a tax cut. But think of it this way: They, like Henry Ford, have proven that they can invest the money productively—better than any government program—whether directly into companies or into stocks, private equity or venture capital that create long lasting jobs and expand the middle class.

Some would call this supply-side economics. President Obama on the campaign trail calls it "trickle-down snake oil," even "fairy dust." I like the term i-side economics—for investment and innovation and individual incentive—rather than g-side economics, as in "what has the government given me lately?"

Perversely, class warfare hurts the group it is alleged to help. For every dollar of stimulus or government spending paid for by the half of the population that pays taxes, you take away a dollar that might have been invested in creating higher-paying jobs. That's just dumb. Misallocating capital is a formula—a negative multiplier—for stagnation, not growth.

Investor Peter Thiel put $500,000 into Facebook in August 2004, a company now worth $50 billion based on its prospects for transforming the media industry. What multiplier would you put on his investment? This month, after investing billions over the years on R&D, Apple released the iPhone 5. The company is worth $666 billion based on prospects that hundreds of millions of users will lower their cost of doing business with the latest iPhone and iPad mini and whatever else is coming. What is that multiplier?

President Obama says that "rebuilding a strong economy begins with rebuilding our middle class." He's got it backward. You can't grow an economy by paying teachers to eat at Denny's or overpaying workers on federal projects via the Davis-Bacon Act.

As in Henry Ford's day, it is workers' productivity that drives long-term wage gains, not workers' wages that drive growth. And almost always by selling something—a Model T or a Samsung Galaxy—cheaper than the current way of doing things.

With the right investment-side rather than handout policy, the economy will act like a coiled spring or a super ball—the rebound will be a huge bounce.

Meanwhile, we wait.

Mr. Kessler, a former hedge-fund manager, is the author most recently of "Eat People" (Portfolio, 2011).

http://online.wsj.com/article_email/SB1 ... left_email

The key missing factor here is education and research.

THAT is where the investment should lie, where the most benefits are realized..and that IS what is being cut.

Beyond that we do need to protect the environment, maintain enough living museums aka parks that we can hope to learn and preserve enough to understand what is needed before its gone. We need to make sure kids are fed, because if they are not, then they don't grow up to be healthy and productive citizens.

The dependence cycle of how many welfare programs are run, other issues no more mean that the basic idea of providing those things is bad than the failures and corruption of so many banks and bankers mean that the entire idea of banking is just wrong.

We need to change how banking is done in this country to some extent, but not utterly do away with banks. We need to focus and modify some aid programs.. but that doesn't mean we can do without aid or that the basic idea of aid is, itself, wrong.

but hey, how many factory workers and delis servers actually read this stuff. the target is not information, its consolidation of people who already share those beliefs.

[HapSmo19]

Fucking A. Drugs much?

[bedub1]

I did read the article, it's stupid. It's like arguing which came first, the chicken or the egg. Do you give the 1% all the money, to distribute to the 99%? Or do you give the 99% money, to spend, so the 1% can collect it? There is no "start". It's a circle. The entire argument is incorrect because they don't understand how money and the economy work. They are selfish and only look at what is best for themselves, and not what is best for everybody.

[thegreekdog]

I did read the article, it's stupid. It's like arguing which came first, the chicken or the egg. Do you give the 1% all the money, to distribute to the 99%? Or do you give the 99% money, to spend, so the 1% can collect it? There is no "start". It's a circle. The entire argument is incorrect because they don't understand how money and the economy work. They are selfish and only look at what is best for themselves, and not what is best for everybody.

No one is giving the 1% all the money to distribute to the 99%. Where did you get that idea?

[PLAYER57832]

The REAL myth is that this is the real thinking.

Ironic... those claiming that "taking and giving" is "wrong" are the very ones who consider it absolutely correct for them to take profits generated by their workforce, and never mind if they have enough to life upon or not. THAT is the real "taking", and a minimum wage, rules mandating reasonable working conditions, etc all made sure those things happened.

The good guys don't need regulating, but regulations are needed so the "bad guys" don't outcompete the "good guys" by not paying workers reasonably, not providing safe working conditions, etc.

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

[PLAYER57832]

Again, another copy-paste:

Kessler: The U.S. Needs More i-Side Economics
The misallocation of capital is one reason the recovery is stuck between lack and luster.

By ANDY KESSLER



No jobs? No wonder, given what passes for economic thought these days.

In his acceptance speech at the Democratic convention in Charlotte, N.C., this month, President Obama said, "We believe that when a CEO pays his auto workers enough to buy the cars that they build, the whole company does better."

And last month in Leesburg, Va., the president said, "When we've got new teachers doing great work with our kids, then you know what, they go to a restaurant and spend that money. And so suddenly businesses are doing well, the economy is doing well, and we get into a virtuous cycle. And we go up."

This myth—that you can just give money to the middle class and good things happen—is widely shared and is at the basis of a lot of government policy. And it is why the recovery is stuck between lack and luster.

Let's go back. Henry Ford is popularly credited with inventing the middle class by doubling his workers' salaries to $5 per day in 1914. A multiplier for the economy, right? Wrong.

The year before, Ford revolutionized manufacturing with the moving assembly line, slashing automobile build times to just 90 minutes from 14 hours. That's productivity. It allowed Ford to reduce the price over time of his Model T to $290 from $950. Demand took off because it was far cheaper than the cars made by his 88 competitors.

Enlarge Image
image
image
Corbis

By 1927, 15 million Model Ts were sold to people (most of whom did not work for Ford) and businesses that retired their horses and used these new automobiles productively to lower their own costs, fueling a boom. Raising wages was a byproduct, not a cause. From Ford Motor's corporate website about the wage increase: "While Henry's primary objective was to reduce worker attrition—labor turnover from monotonous assembly line work was high—newspapers from all over the world reported the story as an extraordinary gesture of goodwill."

But 98 years later, the Obama administration still doesn't get it. According to an Aug. 15 article by Paul Tough in the New York Times Magazine, the administration's economic team during the financial crisis—Lawrence Summers, Tim Geithner, Jason Furman—"was carrying around this list of multipliers" from Mark Zandi of Moody's Analytics. A dollar spent to cut corporate taxes would grow the economy 30 cents; make the Bush tax cuts permanent, 29 cents; extend unemployment benefits, $1.64; food stamps, $1.73. "And food stamps was always at the top. That had the largest multiplier." This is economic malpractice.

Food-stamps recipients are up 70% in four years, to 46.7 million. But, surprise, we haven't seen that "virtuous cycle." Jobs build the middle class, not handouts or pay diktats.

There is a huge misunderstanding between spending and investment. Sure, it makes sense that the less well-off will spend whatever they are given, but unfortunately, not on the things to spur a hiring binge.

In a famous exchange, Austrian economist Friedrich Hayek was asked, "Is it your view that if I went out tomorrow [with a government subsidy] and bought a new overcoat, that would increase unemployment?" "Yes," answered Hayek, "but it would take a very long mathematical argument to explain why."

Minus the math, Hayek's argument was that money would be removed from the productive economy, and capital would be wrongly allocated to overcoats based on this false demand. Substitute Chevy Volts and you get the picture.

Yes, the wealthy, most of whom got rich by risking capital and delivering something productive to the economy, tend to save more. But they don't shove it under the mattress, they invest it in the productive fabric of the economy. The president's rhetoric harps on the notion that millionaires and billionaires don't "need" the money from a tax cut. But think of it this way: They, like Henry Ford, have proven that they can invest the money productively—better than any government program—whether directly into companies or into stocks, private equity or venture capital that create long lasting jobs and expand the middle class.

Some would call this supply-side economics. President Obama on the campaign trail calls it "trickle-down snake oil," even "fairy dust." I like the term i-side economics—for investment and innovation and individual incentive—rather than g-side economics, as in "what has the government given me lately?"

Perversely, class warfare hurts the group it is alleged to help. For every dollar of stimulus or government spending paid for by the half of the population that pays taxes, you take away a dollar that might have been invested in creating higher-paying jobs. That's just dumb. Misallocating capital is a formula—a negative multiplier—for stagnation, not growth.

Investor Peter Thiel put $500,000 into Facebook in August 2004, a company now worth $50 billion based on its prospects for transforming the media industry. What multiplier would you put on his investment? This month, after investing billions over the years on R&D, Apple released the iPhone 5. The company is worth $666 billion based on prospects that hundreds of millions of users will lower their cost of doing business with the latest iPhone and iPad mini and whatever else is coming. What is that multiplier?

President Obama says that "rebuilding a strong economy begins with rebuilding our middle class." He's got it backward. You can't grow an economy by paying teachers to eat at Denny's or overpaying workers on federal projects via the Davis-Bacon Act.

As in Henry Ford's day, it is workers' productivity that drives long-term wage gains, not workers' wages that drive growth. And almost always by selling something—a Model T or a Samsung Galaxy—cheaper than the current way of doing things.

With the right investment-side rather than handout policy, the economy will act like a coiled spring or a super ball—the rebound will be a huge bounce.

Meanwhile, we wait.

Mr. Kessler, a former hedge-fund manager, is the author most recently of "Eat People" (Portfolio, 2011).

http://online.wsj.com/article_email/SB1 ... left_email

Except, the real sum zero bit is when the majority of real wealth is created by trading stocks and holding loans for interest, not selling products or generating real services outside of the financial industry supports. (watering plants in GE offices is a gain... accounting for stockbrockers, not).

[BigBallinStalin]

There's mutually beneficial trade, and then there's zero-sum exchanges.

There's not "fake" v. "real" zero-sum exchanges, so you're not making a lot of sense to me.

Of course, some portion of corporate actions don't all benefits the shareholders, but that's not really relevant here. The article is about phony multiplier effects, the nirvana fallacy, and a fundamental misunderstanding on the generation of wealth.

[BigBallinStalin]

The REAL myth is that this is the real thinking.

Ironic... those claiming that "taking and giving" is "wrong" are the very ones who consider it absolutely correct for them to take profits generated by their workforce, and never mind if they have enough to life upon or not. THAT is the real "taking", and a minimum wage, rules mandating reasonable working conditions, etc all made sure those things happened.

The good guys don't need regulating, but regulations are needed so the "bad guys" don't outcompete the "good guys" by not paying workers reasonably, not providing safe working conditions, etc.

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

Can you summarize the article in 200 words?

What's the main point of this article?

What is the article responding to?

What is the "real thinking"? What exactly constitutes as "taking and giving"? Do you understand what voluntary trade is? How about a labor contract? How is the article related to terms and conditions on labor? It's about wealth transfers on certain government programs, ffs. What's the article's position on labor market law? For real?

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

Who's calling what greedy?

What the hell is going on in your mind?

[thegreekdog]

BBS, you just don't understand the REAL issues. If we don't ensure that we have clean water, none of this zero-sum exchange stuff is going to mean anything.

[PLAYER57832]

BBS, you just don't understand the REAL issues. If we don't ensure that we have clean water, none of this zero-sum exchange stuff is going to mean anything.

Actually, that is very true. Too bad you consider it sarcasm.

[PLAYER57832]

The REAL myth is that this is the real thinking.

Ironic... those claiming that "taking and giving" is "wrong" are the very ones who consider it absolutely correct for them to take profits generated by their workforce, and never mind if they have enough to life upon or not. THAT is the real "taking", and a minimum wage, rules mandating reasonable working conditions, etc all made sure those things happened.

The good guys don't need regulating, but regulations are needed so the "bad guys" don't outcompete the "good guys" by not paying workers reasonably, not providing safe working conditions, etc.

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

Can you summarize the article in 200 words?

Basically a reworking of the old "trickle down" ideas, except twisted to say that passing the doe around won't really trickle up and out the way it ought, in the opinion of the author.

What's the main point of this article?

Ostentiably to create work, not government supports. However, the details really get into "support the corporations", rather than the average people.

What is the "real thinking"? What exactly constitutes as "taking and giving"? Do you understand what voluntary trade is? How about a labor contract? How is the article related to terms and conditions on labor? It's about wealth transfers on certain government programs, ffs. What's the article's position on labor market law? For real?

Those things are all irrelevant. The article is focusing on esoteric ideas, rather than things that really matter. Government subsidies are not causing our economy to fail. Our economy is failing because the fundamental basis upon which all too many business models are based today work only in the short term and utterly ignore the long term. Well... we are now reaping those ignored long term costs. Ignoring them further won't magically create a good economy.

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

Who's calling what greedy?

Harkening to some recent political debates.

[BigBallinStalin]

The REAL myth is that this is the real thinking.

Ironic... those claiming that "taking and giving" is "wrong" are the very ones who consider it absolutely correct for them to take profits generated by their workforce, and never mind if they have enough to life upon or not. THAT is the real "taking", and a minimum wage, rules mandating reasonable working conditions, etc all made sure those things happened.

The good guys don't need regulating, but regulations are needed so the "bad guys" don't outcompete the "good guys" by not paying workers reasonably, not providing safe working conditions, etc.

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

Can you summarize the article in 200 words?

Basically a reworking of the old "trickle down" ideas, except twisted to say that passing the doe around won't really trickle up and out the way it ought, in the opinion of the author.

What's the main point of this article?

Ostentiably to create work, not government supports. However, the details really get into "support the corporations", rather than the average people.

What is the "real thinking"? What exactly constitutes as "taking and giving"? Do you understand what voluntary trade is? How about a labor contract? How is the article related to terms and conditions on labor? It's about wealth transfers on certain government programs, ffs. What's the article's position on labor market law? For real?

Those things are all irrelevant. The article is focusing on esoteric ideas, rather than things that really matter. Government subsidies are not causing our economy to fail. Our economy is failing because the fundamental basis upon which all too many business models are based today work only in the short term and utterly ignore the long term. Well... we are now reaping those ignored long term costs. Ignoring them further won't magically create a good economy.

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

Who's calling what greedy?

Harkening to some recent political debates.

Do you know the difference between "trickle down" economics (the rhetoric) and actual microeconomic theory? You seem to spout a lot of knowledge which indicates that you presume to know!

Yeah, wealth creation, increases in standard of living, a higher capacity to solve environmental problems (from being a developed nation), these are simply esoteric ideas!

Nice dodge on the greedy-blah blah blah claim.

[BigBallinStalin]

BBS, you just don't understand the REAL issues. If we don't ensure that we have clean water, none of this zero-sum exchange stuff is going to mean anything.

Actually, that is very true. Too bad you consider it sarcasm.

She's right. If we had a GDP per capita of $100, surely, we could have water as clean as the water of a country with a per-capita GDP of $50,000. We would also experience the same life expectancies, standards in health, education, etc.

[bedub1]

The REAL myth is that this is the real thinking.

Ironic... those claiming that "taking and giving" is "wrong" are the very ones who consider it absolutely correct for them to take profits generated by their workforce, and never mind if they have enough to life upon or not. THAT is the real "taking", and a minimum wage, rules mandating reasonable working conditions, etc all made sure those things happened.

The good guys don't need regulating, but regulations are needed so the "bad guys" don't outcompete the "good guys" by not paying workers reasonably, not providing safe working conditions, etc.

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

Can you summarize the article in 200 words?

Basically a reworking of the old "trickle down" ideas, except twisted to say that passing the doe around won't really trickle up and out the way it ought, in the opinion of the author.

What's the main point of this article?

Ostentiably to create work, not government supports. However, the details really get into "support the corporations", rather than the average people.

What is the "real thinking"? What exactly constitutes as "taking and giving"? Do you understand what voluntary trade is? How about a labor contract? How is the article related to terms and conditions on labor? It's about wealth transfers on certain government programs, ffs. What's the article's position on labor market law? For real?

Those things are all irrelevant. The article is focusing on esoteric ideas, rather than things that really matter. Government subsidies are not causing our economy to fail. Our economy is failing because the fundamental basis upon which all too many business models are based today work only in the short term and utterly ignore the long term. Well... we are now reaping those ignored long term costs. Ignoring them further won't magically create a good economy.

Behind all this rhetoric is the reality that MOST people go to work, punch a clock and want little more than to come home safely to a modest, but decent home they are buying, decent food on the table and good education for their kids. Calling that scenario greedy is a bit like the fire blaming the kettle for being black.

Who's calling what greedy?

Harkening to some recent political debates.

You are on the right track. It seems to me people think the government takes their money, and burns it.

[BigBallinStalin]

You are on the right track. It seems to me people think the government takes their money, and burns it.

Yeah, that's our stance. Your phenomenal ability to rip past the strawman arguments and logically pierce at the heart of the matter has left everyone in the forum completely stunned. All hail bedub, for being the most intellectually honest, the most open to listening, and the most open to revision--FOREVER!!!

[Iliad]

Hai guys, this is the marginal propensity to consume checking in here, how you guys going?

Also, whats about the multiplier effect?

BBS, were all glas youre taking economics 101 but i prefer you rehashed basic neoclassical economics elsewhere, and not try and portray yourself as some free thinking god while again rehashing introduction to neoclassical economics.


That whole article is bunk anyway, no-one atrribuutes Ford's success to the wages given at his factories, its widely accepted that the Fordist model of production was simply more productive. Nevertheless this new Fordist model of production, with its massive strict division of labour did produce a great demand for middle class labour. The article doesnt even come close to seriously challenging the idea of the multiplier effect or the marginal propensity to consume. Just letting the owners of major firms keep more of their capital doesnt magically create more jobs, no matter how much Reagan said so, its opportunity to invest and demand that drives job growth. And technology too, not covered at all by the article, the fordist model had as much to do with new technology as some apparent brilliance on Ford's part.


Shitty article based on shitty Austrian school economics, the Hayek quote was particularly characteristic of its school: "No i can't prove it, please trust me anyway.". I award you no points BBS.

[PLAYER57832]

BBS, you just don't understand the REAL issues. If we don't ensure that we have clean water, none of this zero-sum exchange stuff is going to mean anything.

Actually, that is very true. Too bad you consider it sarcasm.

She's right. If we had a GDP per capita of $100, surely, we could have water as clean as the water of a country with a per-capita GDP of $50,000. We would also experience the same life expectancies, standards in health, education, etc.

Nice big miss.
Ignoring the cost associated with NOT having clean, cheap, water is a far bigger part of the problem (both symptom and cause) than government subsidies ever were.

[BigBallinStalin]

BBS, you just don't understand the REAL issues. If we don't ensure that we have clean water, none of this zero-sum exchange stuff is going to mean anything.

Actually, that is very true. Too bad you consider it sarcasm.

She's right. If we had a GDP per capita of $100, surely, we could have water as clean as the water of a country with a per-capita GDP of $50,000. We would also experience the same life expectancies, standards in health, education, etc.

Nice big miss.
Ignoring the cost associated with NOT having clean, cheap, water is a far bigger part of the problem (both symptom and cause) than government subsidies ever were.

No, you're right, player. Zero-sum exchange stuff doesn't mean anything. Who cares about productivity!

[BigBallinStalin]

Hai guys, this is the marginal propensity to consume checking in here, how you guys going?

Also, whats about the multiplier effect?

BBS, were all glas youre taking economics 101 but i prefer you rehashed basic neoclassical economics elsewhere, and not try and portray yourself as some free thinking god while again rehashing introduction to neoclassical economics.

That whole article is bunk anyway, no-one atrribuutes Ford's success to the wages given at his factories, its widely accepted that the Fordist model of production was simply more productive. Nevertheless this new Fordist model of production, with its massive strict division of labour did produce a great demand for middle class labour. The article doesnt even come close to seriously challenging the idea of the multiplier effect or the marginal propensity to consume. Just letting the owners of major firms keep more of their capital doesnt magically create more jobs, no matter how much Reagan said so, its opportunity to invest and demand that drives job growth. And technology too, not covered at all by the article, the fordist model had as much to do with new technology as some apparent brilliance on Ford's part.


Shitty article based on shitty Austrian school economics, the Hayek quote was particularly characteristic of its school: "No i can't prove it, please trust me anyway.". I award you no points BBS.

You are not open to criticism of your core beliefs. It is like your religion, and whenever it becomes threatened, you irrationally scream and kick the logical away.

Let's go back. Henry Ford is popularly credited with inventing the middle class by doubling his workers' salaries to $5 per day in 1914. A multiplier for the economy, right? Wrong.

The year before, Ford revolutionized manufacturing with the moving assembly line, slashing automobile build times to just 90 minutes from 14 hours. That's productivity. It allowed Ford to reduce the price over time of his Model T to $290 from $950. Demand took off because it was far cheaper than the cars made by his 88 competitors.

By 1927, 15 million Model Ts were sold to people (most of whom did not work for Ford) and businesses that retired their horses and used these new automobiles productively to lower their own costs, fueling a boom. Raising wages was a byproduct, not a cause. From Ford Motor's corporate website about the wage increase: "While Henry's primary objective was to reduce worker attrition—labor turnover from monotonous assembly line work was high—newspapers from all over the world reported the story as an extraordinary gesture of goodwill."

The point is that you don't create wealth by simply transferring wealth from one group of people to another. Models for the multiplier effect state otherwise. If you experience windfalls in labor productivity, you can justify the increase in people's wages. Simply depositing money from their account through involuntary exchanges or from essentially printing the money doesn't result in the creation of wealth, and the means for doing so simply lead to further distortions in the price mechanism, thus the economy--but of course, Keynesian models fail to see this because their models simply don't consider it.

Take the multiplier effect to its logical conclusion. If the government spent $4 trillion on tricycles, the economy's GDP would increase by over $4 trillion.

If you don't wish to make your stance look absurd, then consider what the monetary and fiscal policy of the past 4-5 years has been. According to their models, we should be booming right now, but we're not. Gee, "we didn't do enough; yeah, that must be the only possibility." Of course, without any standard of comparison, they'll never know, so they can continue engaging in the same irrational behavior of doing practically the same thing while expecting different results.


If you dump money into people's hands, then hey! that should get the economy going. Stimulate aggregate demand and investment would increase, and people would have more money to spend and... oh wait, that shit hardly happened. Why do you think the Federal Reserve is so opaque about its actual reports that inform the head guys on what to do? Because they would be a laughing stock if people could see how far off their predictions were. And there's been a pleasant mountain of $1.6 trillion of excess reserves sitting at the fed's bank accounts while people are shifting to investments in riskier financial assets. Yes, but please go on about the marginal propensity to consume and the multiplier effect! The economy has been booming from the insights of that school of economics.


Yes, Iliad, your last statement was definitely not a strawman argument. Well defended. Do you even understand what you are criticizing? Apparently not, because all you can provide is a strawman fallacy.

I'll give you the benefit of the doubt if you can answer the following:

What is Austrian Economics? What is the Austrian Business Cycle Theory? What are Hayek's main contributions to economics? And what are Mises' main contributions to economics?


Good luck.

[PLAYER57832]

BBS, you just don't understand the REAL issues. If we don't ensure that we have clean water, none of this zero-sum exchange stuff is going to mean anything.

Actually, that is very true. Too bad you consider it sarcasm.

She's right. If we had a GDP per capita of $100, surely, we could have water as clean as the water of a country with a per-capita GDP of $50,000. We would also experience the same life expectancies, standards in health, education, etc.

Nice big miss.
Ignoring the cost associated with NOT having clean, cheap, water is a far bigger part of the problem (both symptom and cause) than government subsidies ever were.

No, you're right, player. Zero-sum exchange stuff doesn't mean anything. Who cares about productivity!

If the "productivity" is actually causing a deficit.. either becuase the "production" is not real or because the damages caused are ignored, then yes.. and that is pretty well what that article did.

Despite the title, it was just another reworking of old disproven ideas.