Lukey
Senator
Hahahaha! As if a "free world" would be one that outlawed the accumulation of wealth. I don't think "free" means what you think it does...
What Was Lost When Political Economy Became Economics?
- Thread starter georgephillip
- Start date
georgephillip
Senator
Actually, I was thinking it wouldn't be necessary to pass any laws outlawing excessive wealth. I was just speculating about how US GDP would jump if war profit was taxed into extinction and debt-based money went the way of chattel slavery?
Lukey
Senator
Perhaps, but there'd still be wealth. Just not as much undeserved wealth.
It would also jump if we'd just start paring back excessive government and its unnecessary functionality. THAT would be real freedom...
georgephillip
Senator
If GDP = C+I+G+(net exports) reducing G or at least redistributing what government spends would have to increase Consumption and Investment considerably. If private sector capitalists can't or won't make the necessary Investment, maybe the Pentagon will?
http://www.phibetaiota.net/2014/03/winslow-wheeler-pentagons-1-trillion-a-year-budget-we-do-not-make-this-stuff-up/
Lukey
Senator
That's the problem with using GDP as the be all and end all economic measure - it includes government expenditure in the same class as private consumption and/or investment when, in fact, it is (every last dollar of it) taken from the other two components. Nothing government does creates wealth - only private sector production (a result of investment) and private sector consumption (again, derived from production which is derived from investment) drives that creation of wealth. Government consumes private wealth and it consumes private income. Even when it borrows, it is just deferring the taxation required to pay off the debt, and (in the process) increases the (private) income it appropriates to pay the interest. This is the fundamental fallacy that is the heart and soul of the Keynesian economic school of thought - that when consumers and investors retrench it is an indication of "inadequate demand" which, in their infinite wisdom, the Keynesians see as a situation that must be replaced with Government investment and consumption, lest GDP fall back to a lower level inconsistent with "full employment." But, as it isn't real and not sustainable (without a continuing siphoning off of private sector income and wealth), if becomes a self fulfilling negative economic feedback loop of ever growing borrowing and spending, in order to maintain the illusion of economic growth.
That creates an incredible (and false) bias in support of ever bigger government, as it adds to a GDP measure that we use to determine the "success" of our economy. But any rise in GDP that results from government spending is not only illusory, it is ultimately unsustainable, as it requires a continued confiscation from the private sector commensurate with the "grown" federal budget (either taxes of borrowing, which is simply deferred taxation). Capitalism requires creative destruction to survive, and this is precisely what periodic recessions do - give the markets a chance to reset production and employment to ultimately (organically) sustainable levels from which (organic) growth can begin to occur again. Keynesianism thwarts this process, especially the particularly destructive brand that suggests full scale central economic planning is needed to "fix" what is "wrong" with the capitalist system. And this is precisely where we find ourselves today, serially kicking the can down the road to avoid the downtrurn we so desperately need to cleanse the economy of decades of mal-investment and artificially induced consumption, to the point where it will need to be a really big and very bad recession to clear out all the impediments to organic growth. And that means GDP must come down to a more (private sector) sustainable level which is maybe 15 or 20% below the current level. And politicians of all stripes are loathe to put their name behind such a politically suicidal proposal. If there is one who will speak this truth, it's likely to be Rand Paul who is the only guy out there right now who gets this and will actually mention these truths in public (as has his dad for the past 30 years).
georgephillip
Senator
When you write, "(n)othing government does creates wealth," non-libertarians might point out how government uses its monopoly of violence to ensure the sanctity of private property without which private investment becomes much riskier. I'm also a little confused about why you believe "...only...private sector consumption...drives that creation of wealth." If active duty military or police and probation officers or public school teachers spend their money at private businesses, shouldn't their consumption count as much as that of private Wall Street bankers?
Lukey
Senator
In some instances that may be slightly true, but in most cases (see middle east for reference) that sort of activity does more harm than good. Libertarians would rather use international trade than gunboat diplomacy to further economic goals.
And yes, it counts, but they are being paid with other people's money, so at best it's a redistribution of consumption and wealth, not creation. You can make an argument that some of that kind of activity (police & military) is essential for a functioning society, and that is certainly true - but that doesn't change the fundamental economic aspect of these activities, and it isn't wealth creation. Only private sector production creates wealth.
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georgephillip
Senator
Yet the private sector cooperates with government to produce wealth; during those times when private enterprise can't or won't spend enough to produce full employment, government spending puts idle resources to work. If it's true my spending is your income, and your spending is my income, what happens when we both cut spending?
http://krugman.blogs.nytimes.com/2013/04/27/the-ignoramus-strategy/?_r=0
georgephillip
Senator
Thank you very much for introducing me Rudolph Steiner; I'm starting with the Wiki version, but I will move on to the primary source.
"Steiner held it to be socially destructive when one of the three spheres attempts to dominate the others; for example, theocracy means a cultural impulse dominates economy and politics; unregulated capitalism allows economic interests to dominate politics, culture and media; and state socialism means political agendas dominate culture and economic life.
"A more specific example: Arthur Salter, 1st Baron Salter suggests governments frequently fail when they begin to give 'discretionary, particularly preferential privileges to competitive industry.'[2] The goal is for this independence to arise in such a way that those three realms can provide mutual balance."
http://en.wikipedia.org/wiki/Social_threefolding
fairsheet
Senator
Uh-oh....a Trojan's helmet is a problem but....at least it's not a Duck's hat.
georgephillip
Senator
Queen Titania
Senator
I posted it simply as a btw in this interesting and civilized thread, well done to those who kept it civilized
quite a feat around these parts.I know little of economics but what I do know is that our countries economies are in the hands of self serving, incompetent, amateurs, which is my description of a Politician.
Steiner didn't write books, rather he gave lectures, because he didn't want his thinking written in stone but to evolve as we do --- he is hard going but worth the effort.
Anyway it was just as a btw I didn't mean to interrupt --- 'as you were'
georgephillip
Senator
I'm also new to Economics so I depend on radical interpretations like Steiner's to cut through the Neoclassical dogma. CH Douglas's Social Credit movement began nearly a century ago by asking a radical question: what is the purpose of an economy?
"Douglas claimed there were three possible policy alternatives with respect to the economic system:
"1. The first of these is that it is a disguised Government, of which the primary, though admittedly not the only, object is to impose upon the world a system of thought and action.
"2. The second alternative has a certain similarity to the first, but is simpler. It assumes that the primary objective of the industrial system is the provision of employment.
"3. And the third, which is essentially simpler still, in fact, so simple that it appears entirely unintelligible to the majority, is that the object of the industrial system is merely to provide goods and services.[12]
"Douglas believed that it was the third policy alternative upon which an economic system should be based, but confusion of thought has allowed the industrial system to be governed by the first two objectives."
http://en.wikipedia.org/wiki/Social_credit#Purpose_of_an_economy
Lukey
Senator
The economy adjusts to a lower level of production and income until the dislocation between supply and demand that created the retrenchment is worked off and production organically begins to grow again. What you are suggesting here is that it is somehow desirable for the government to distort the supply/demand function in an effort to achieve some desired level of employment, but how does the government know what level of employment is ideal, let alone how to do it in a way that is sustainable? And once it starts down that road, how does an economy ever return to a market based sustainable level of employment? Of course, it does not, in fact cannot, because once we start down that road the government quickly realizes that it is ultimately a dead end and it attempts to continue the illusion that it has taken a viable path, so the interventions can only grow over time until the whole thing inevitably collapses. Which, of course, illustrates that the Keynesians are the ones who are, in fact, pursuing "the ignoramus strategy."
georgephillip
Senator
Government knows the equilibrium point where aggregate demand equals aggregate supply, where economic output is at its highest potential.
It's a mistake to assume markets are not political constructs; government, for all its current failings, is the only institution that offers consumers and producers the possibility of democratic control over how market makers operate.
Lukey
Senator
Maybe it does, but that doesn't make it sustainable - especially if we allow "democratic control over how market makers operate." Lets face it, if Keynesian central planning worked, we wouldn't have to maintain zero percent interest rates indefinitely, the labor force participation rate wouldn't be declining and wages would be rising - and wealth inequality wouldn't be getting worse. It certainly appears as if the central planners have made a mess of the economy.Government knows the equilibrium point where aggregate demand equals aggregate supply, where economic output is at its highest potential.
It's a mistake to assume markets are not political constructs; government, for all its current failings, is the only institution that offers consumers and producers the possibility of democratic control over how market makers operate.
The Sage of Main Street
Governor
You're behind the times. If someone doesn't want the rich to do what they want to him, the new scare story is that he's an Islamic terrorist trying to establish sharia law.
Communism is state capitalism; the Communist Party owns the workers' production, just like Wall Street does in the formerly United States.
Capitalism is communism for the rich. No wonder, because Marx, Engels, and Lenin were all born in your precious class. Just like the preppy Right Wingers, they had a "Born to Rule" attitude. So you pet parrots of plutocratic pirates have only your own masters to blame for Communism taking over democratic movements.
The Sage of Main Street
Governor
Far more important, because discussion of it is suppressed, is that no one has a right to get any advantage from his father's wealth. If the former heirs are subjected to the same bullying tactics that the rest of us are, then the ruling class will have to change the way they treat the rest of us.
One key example of birth-class bias that is never talked about is that if the preppies are forced to work their way through college, they will drop out for the same reason everybody else does. If they get drafted at age 18 to risk their lives in their fathers' lucrative wars, there won't be any wars fought strictly to make the defense industries richer.
The most socially destructive point is that the millionaires are allowed to set their children up halfway to the finish line. In that scenario, we must break the HeirHeads legs before the competition starts and force them to crawl the rest of the way. Marx, a rich kid himself, ignores this point, so the bootlicking red-baiters are just trying to distract from the main issue.
Birth privileges are the well-hidden cancer that destroys all civilization. Imagine if pro athletes had the right to pass on their positions to their sons. Sports would soon become an unwatchable joke and have to be disbanded.
Lukey
Senator
LOL! I get a big kick out of your efforts to out-commie Marx. These posts of yours are intended to amuse, are they not?
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