Poverty, Equality, and Capitalism

That actually is meaningless as, for example, poverty is a relative concept

 

This is a logical fallacy. It has a simplified conception of the economy. The fact that it does not take all the nuances of labor and capital investment into consideration does not mean it does not raise a valid point. There have been plenty of economists who have analysed the potential effects of a land value tax.

"In my opinion, the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago."
─ Milton Friedman

 

Love to see you quote Friedman, given his monetarism was a spectacular disaster and his attempts at tax solution only furthered the egalitarianism cause (by accident of course). Georgism became irrelevant yonks ago. There is merely deliberate obsession with land tax because of a complete failure to understand capitalism and all economic agents involved. Should we use land taxes? Certainly. But Georgism is just another internet cult.

 

Making life fair:

When my wife was a liberal, she complained that libertarian reasoning is coldhearted. Since markets produce winners and losers -- and many losers did nothing wrong -- market competition is cruel. It must seem so. President Obama used the word "fair" in his last State of the Union address nine times.

We are imprinted to prefer a world that is "fair." Our close relatives the chimpanzees freak out when one chimp gets more than his fair share, so zookeepers are careful about food portions. Chimps are hardwired to get angry when they think they've been cheated -- and so are we.

Filmmaker Michael Moore took this notion about fairness to its intuitive conclusion during an interview with Laura Flanders of GRITtv, saying of rich people's fortunes: "That's not theirs! That's a national resource! That's ours!" As is typical, Moore was confused or disingenuous. In our corporatist economy, some fortunes are indeed made illegitimately though political means. The privileges that produce those fortunes should be abolished. But contrary to Moore, incomes are not "national resources." If he's concerned with illegitimate fortunes, he should favor freeing markets.

Fairness is related to justice, the recognition of people's rights to their own lives.

A free market will create big differences in wealth. That wealth disparity is simply a byproduct of freedom -- vastly diverse individuals competing to serve consumers will arrive at vastly diverse outcomes.

That disparity is not unfair -- if it results from free exchange.

The free market (which, sadly, America doesn't have) is fair. It also produces better outcomes. Even "losers" do pretty well.

A more astute observer than Moore might show how unfair government intervention is. Licenses, taxes, regulations and corporate subsidies make it harder for the average worker to start his own business, to go from being a "little guy" to being an independent owner of means of production. Most new businesses fail, but running your own business is the best route to prosperity and -- surveys suggest -- happiness, too.

I once opened a dinky business called "The Stossel Store" in Delaware, hawking hats, books and other goodies on the street. It was hard to open this store. I chose Delaware because it's supposedly the state that makes that easiest -- but "easiest" didn't mean "easy." I still required help from Fox's lawyers to get the permits, and the process took more than a week. In my hometown, New York City, it would have taken much longer.

By contrast, in Hong Kong, I started a business in one day. Hong Kong's limited government makes it easy for people to try things, and that has allowed poor people to prosper. Regular people benefit most from economic freedom.

What makes it hard for people to embrace markets is that anti-market zealots, with their talk of Americans pulling together to take care of one another, remind us of the coziness of village life. Instinct tells us that's where we'll find trust -- and fairness.

But our intuition fools us when it leads us to think that government models that institutionalize what resembles village life must be good. Assuming that government can foster togetherness better than our own voluntary associations, businesses and private charities leads to coziness of the bad kind: back-room dealings between the well-connected and government.

If we're going to have a large-scale, modern society, we need relatively simple rules that respect individual rights and that can be applied to all sorts of new situations without having to put global commerce on hold until the hypothetical village elders come up with a plan.

Since most human beings still lived as farmers two centuries ago, the idea of stranger-filled cosmopolitan life outside the small, close-knit village is still novel. It was only around the 18th and 19th centuries that the ideas we now think of as classical liberalism, libertarianism, anarchism and laissez faire began to be articulated. As Westerners became accustomed to living without the rule of kings, aristocrats and village elders, they began, for the first time since the dawn of writing, to imagine living ungoverned lives.

Sure, it's scary, but surrendering your fate to politicians and bureaucrats is a lot scarier.

Source

 

She should have said "are you really a libertarian, or just a conservative who doesn't know any economics?"

 

What's your point?

 

Thought it was rather obvious. The tag libertarian is misapplied and the analysis used (such as a failure to understand the coercion inherent in capitalism, with vocab such as 'the market' used inappropriately) is low brow conservatism.

 

You mean like the federal government. If you want a real disaster try having the government run a business profitably.

 

Profit? Most of the time you wouldn't want the government running a business 'profitably', reflecting the reality that such profit is often economic rent and therefore market failure

 

Like the Post Office and the State run liquor stores, the government still must make more money than it pays out, which is profit that adds to the taxes collected.
But the PO is $4 billion loss right now.

What is happening is the Unions are making privatization look cheaper, such as Charter Schools are doing as they eliminate the problem that allowed Unionization of Teachers.


The economic problem today however has to do with the failure of economists to understand eonomics, such that they are unable to fix the present economic down turn because they do not know what is wrong.
This failure is creating an unstable political condition which could result in tremendous upheavals all unnecessary and sure to make things more painful, even causing a power grab as people general revolt againt authority without really understanding what needs be done.

 

Making a profit from the post? Given the positive externalities involved in subsidising provision I'd suggest that would be an irrational policy. Sounds like, before you judge economists, you need to catch up on some basic economics

 

You are right.

The solution to the present economic down turn is to simply raise the Minimum Wage to double immediately, and then increase it again by double over the next four years in steps.

The reason the economy is doing poorly is that consumers are not spending.

Those consumers who are working are cautious and/or believe prices of many things (like houses and cars and major appliance) are actually going down.
They put off buying and can wait to spend if they think this way.

The would be consumers who are making entrance level min wages can hardly make ends meet.
Young people just out of school and entering the labor market are offered $7/hour which will not even allow them to leave home on their own, and never give them hope of mating and raiing a family.
This suggestion of raising that wage twice, first to $14/hour and in the near future, to $28/hour will change the whole society, especially in regard to marriages and the end of illegitimacy and abortion.

The homeowners who lost their homes or are trying to keep paying on mortgaged houses that are under water are sitting it out.
So are the major corporations like Apple which is just banking and saving billions in profits, not investing or expanding nor paying out dividends.

Raising the min wage will at first eliminate some border line jobs.
But the spending of fresh new cash by unskilled labor, people who have not seen their wage keep place with the general doubling of prices every decade will jump start consumer spending and turn the economy on full force.
That will make new jobs available to those who at first, were bumped out of the job because of the raise in wages.

But the real effect of this doubling of the min wage, two times, will be inflation.
Prices will rise, and real eatate will start looking cheap at present prices.
Mortgages will remain fixed at the monthly payments now agreed to, but the general rasie in all salaries will make those mortgages appear small by comparison with the increases in wages across the board.

This is something that the government CAN do.
It is in fact, one of the few things that government has control over.
A close look at the min wage record bears out that this raise was actually due and the government has lagged behind in making the min wage 4 times higher.




Look closely at the facts.

In 1940 the min wage was $.25, but rose to $.50 in 1950.
In 1960 the min wage rose to
Every ten years the Minimum wage was doublin $1.00, or double again.

But in 1960, with the increase of women working the wage did not double to $2/hour as it ought.
From then on, long platuaes are seen when wages remained stagnat for unskilled workers.

If one doubles the min wage on this chart every ten years, it becomes clear the present min wage ought be around $28/hour.



Doubling salaries, not just for those earning minimum wages, but in effect, forcing all business to double everyone's wage as an incentive to upper level wage earners is what will jump start and correct the present down turn.

But, in 1960, women flooded into the unskilled labor markets, doubling the Labor Pool and thereby making labor cheaper by half.

Check every ten year period,... see that after 1970 the raises no longer doubled each decade.

 

Yeah.
I agree with you on both counts.
I am catching up, and I do not think politicians can run businesses profitably.
My point was that when they do, it is really just another form of Taxing the public, and worse, adding more government workers to the public payroll.

Now that Public workers have unionized, there will be no end to benefits granted by the politicians vying for their vote as they grant more benefits using our taxes.

 

You can't make that evaluation. Whilst I'm in favour of allocation by the market (and the benefits generated through the invisible hand), government interventionism is a crucial part of capitalism. Personally I'd refer to the tendency towards crisis and therefore the stabilisation role offered by government (such that the costs from mass unemployment are controlled). However, here we've referred to how capitalism tends to inflame externalities (which can be seen as a 'tax' on everyone which cannot be avoided) and how government control can minimise these problems. You're not comparing all benefits and costs, ensuring that you are referring to an inappropriate measure of profit

 

I am a Conservative. The author is a self-proclaimed Libertarian.

 

Right wingers will often delude themselves and use the term inappropriately. They become simply conservatives that think saying supply and demand a lot makes them somehow special

 

You're veering off course.

 

Nope. Always dead on for enlightenment central

 

Look, that's basicly a recipe for inflation -- if you double wages, the prices for goods will increase to keep pace with that. I think ideally, we should do away with price floors, including minimum wages so that the economy goes to working sustainably. When the government gets involved it distorts the economy in really bad ways. For example, minimum wage and welfare both keep prices from falling -- because if people can no longer afford something that the government says you need, it raises the wage and increases welfare payments to whatever the market says it is. What that means is that prices will go up, soak up those dollars and nothing has changed except that what was once a $0.50 item is now a $5 item while the wages have increased 10x to cover the cost. (actually, since wages lag behind inflation, in most cases, you end up with less). In a negotiated wages situation, there is no floor, but prices would rather quickly adjust themselves to whatever is actually going on in the economy. If people cannot afford to pay $5 for bread, bread makers find ways to make cheaper bread and lower the cost to what a person can pay. Or the people go and get better skills and then negotiate for better wages thus increasing their output to get the stuff they need. But either way, the economy doesn't end up with mismatches between work and pay and price. If people won't spend more than an hour working to make enough to buy a meal, then the price of a meal will never be higher than what the average person makes in an hour.

 

No one is entitled to anything including a decent standard of living. That is why people have to earn their living. However, I would agree that the market should not be skewed towards the investors and the elite class. It is obvious that the market itself is not based on economics, but rather political alliances and the spoils system.

 

If no one is entitled to anything, does that include inheritances?

 

A rather uncunning idea! One has to factor in the numerous market failures associated with the labour market. We only need, for example, to refer to job search frictions to realise that monopsony (in terms of a dynamic analysis into how firms face an upward sloping labour curve and therefore have wage making power) is the norm and the minimum wage will therefore increase both wages and employment.

The empirical evidence shows that the minimum wage has no significant impact on prices. There's no point in pretending otherwise as the evidence is rather extensive

 

Nobody is entitled to an inheritance from their family. It is up to the family to put who will get their money after their death in a will.

 

Wages are prices. The minimum wage is a price floor on the price of labor. Other prices will be affected, although if the supply and demand of money is constant, and people are spending/saving in the same proportions, the general "price level" will remain the constant as well. But that is not quite the same as saying prices are not impacted in any significant way. Are you referring to prices or the price level?

 

Actually you can't treat wages as a basic price. Minimum wages, for example, have been found to increase productivity. A wage rise then doesn't necassily translate into an increase in unit labour costs.