What do you mean by "social goal"? How does this differ from personal goals?
Who thinks consuming more means a higher quality of life? Who buys 100s of paper cups a month rather than reusing a mug (assuming its not a sanitation issue)?
Consumerism only works because people implicitly know that their money loses value over time. Fix this. Make it so that saving lets you buy the same thing for cheaper later, and you have fixed everything you are talking about. It has nothing to do with the virtues of capitalism and everything to do with central banking.
It's due to the fractional reserve system. When you take out a loan (thus owing principle plus interest) the bank creates the principle as a multiple of their reserves. The money did not exist before loaning it out to you (they do not subtract anything from their reserves). You now owe the bank back both the money they gave you plus interest. That interest was never created.
Well the fed monetized however many trillions in debt, which is like injecting cash into the banks. What in the stimulus did you disagree with though? It appears to have gone to a bunch of government programs:
That makes sense, however, historically most of those assets eventually become obsolete and large organizations are often least willing to adapt to a changing market so they fall back on lobbying the government, etc rather than choosing to innovate. In the long run it should work out that wealth is redistributed to those willing to take risk on new ideas.
How is that theory any more speculative than marx's?
Take the TV example. A company invents/invests in a new way of doing things, their competitors do not. The company can now produce the same number of tvs in half the time. I assume this means at half the cost (the video ignores all expenses besides labor)?
So that company keeps selling the tvs at the current market rate. Why do people still buy them for that price? Because that is how much a TV is worth to them. Once the market for tvs is saturated, a new (second) tv is worth less to people, so the price is forced to drop.
What if the government and the "monsters" are the same people... now you just gave them permission to lock you in a cage if you don't cooperate with their plans.
Many people misuse the term "deregulation". It is most often (probably always) actually a change to an idiotic mix of regulations.
The other day I watched that Enron movie, and the narrative about the California power crisis didn't make sense so I looked into it. Sure enough, the government had "deregulated" part of the market but was price setting for another part.
The main claim is that government often creates more problems than it solves, then gets stuck in a loop of never ending quick fixes each generating more unintended consequences.
The idea is that over time, as assets accumulate, when you invest in new and improved production, you're spending a relatively larger proportion on assets like machinery, infrastructure, and so on, and a smaller proportion on labor.
Why is "asset accumulation" rather than increasingly productive technology seen as the cause for less money spent on labor? It takes ten man hours up front to build the machine then you only have to pay one man to run it long term. What about when new technology comes along making all the old assets irrelevant?
But labor is the part that actually creates new wealth, and is the real source of profit; so the profit margin tends to decline.
You just jumped into this point. I don't follow at all. What role does using resources in novel ways play in creating new wealth?
But the upshot is, one way to resolve an economic crisis is to destroy lots and lots of assets; then not only is there plenty of business to be had producing more productive assets, but the ratio of productive assets to labor has gone down, so the profit margin increases.
Why exactly does profit margin increase? (this is related to your earlier point)
So I tend to think of modern capitalism as being largely based upon the fallacy of the broken window. Replacing broken windows is an opportunity cost for the community as a whole, but it still looks like a good deal for the glazier, and we've got a society run by glaziers.
I'm sure this occurs, not so ready to jump to the conclusion it is a driving factor behind "modern capitalism" (by which I assume you mean corporatism)
It might if the people running things had perfect information and only good intentions. Anyway, so it seems your problem with keynes is that monetary cycles have been more volatile. Either way, I am still unsure what the historian in the OP was talking about.
I have gathered that point, however there is more than one way to get rid of debt.
I think that is kind of tangential to what I was asking though. Keynes advocated "counter-cyclical" spending, correct? Inflate during recession and deflate during boom times (yes, people and businesses will default because of this policy). What we have instead is constant inflation.
Correct me if I'm wrong, but didn't Keynes suggest government deficit spending during depressions and recessions... then pay it off when times are good?
I've never actually read his work so I don't know. This would make more sense than that an economist would recommend what is going on though.
Slashdot Mirror
What do you mean by "social goal"? How does this differ from personal goals?
Who thinks consuming more means a higher quality of life? Who buys 100s of paper cups a month rather than reusing a mug (assuming its not a sanitation issue)?
Consumerism only works because people implicitly know that their money loses value over time. Fix this. Make it so that saving lets you buy the same thing for cheaper later, and you have fixed everything you are talking about. It has nothing to do with the virtues of capitalism and everything to do with central banking.
Right, but patents are a problem as well. If you want companies to do basic research I think a business model like that may be the way to go.
Haha, I share your opinion. Would you pay a yearly fee (like be a "member") to a pharmaceutical company to get discounts on future drugs, etc?
P P+I
It's due to the fractional reserve system. When you take out a loan (thus owing principle plus interest) the bank creates the principle as a multiple of their reserves. The money did not exist before loaning it out to you (they do not subtract anything from their reserves). You now owe the bank back both the money they gave you plus interest. That interest was never created.
What causes (research, etc) would you voluntarily donate those dollars towards?
Well the fed monetized however many trillions in debt, which is like injecting cash into the banks. What in the stimulus did you disagree with though? It appears to have gone to a bunch of government programs:
http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009
Is that what has been happening?
That makes sense, however, historically most of those assets eventually become obsolete and large organizations are often least willing to adapt to a changing market so they fall back on lobbying the government, etc rather than choosing to innovate. In the long run it should work out that wealth is redistributed to those willing to take risk on new ideas.
How is that theory any more speculative than marx's?
Your wife forces you to eat her crappy cacciatore? Does she also send you to the store to buy the ingredients?
So, what is your definition of depression?
Take the TV example. A company invents/invests in a new way of doing things, their competitors do not. The company can now produce the same number of tvs in half the time. I assume this means at half the cost (the video ignores all expenses besides labor)?
So that company keeps selling the tvs at the current market rate. Why do people still buy them for that price? Because that is how much a TV is worth to them. Once the market for tvs is saturated, a new (second) tv is worth less to people, so the price is forced to drop.
That just sounds like a convoluted way to explain the obvious point that value is subjective.
What if the government and the "monsters" are the same people... now you just gave them permission to lock you in a cage if you don't cooperate with their plans.
Many people misuse the term "deregulation". It is most often (probably always) actually a change to an idiotic mix of regulations.
The other day I watched that Enron movie, and the narrative about the California power crisis didn't make sense so I looked into it. Sure enough, the government had "deregulated" part of the market but was price setting for another part.
The main claim is that government often creates more problems than it solves, then gets stuck in a loop of never ending quick fixes each generating more unintended consequences.
Why is "asset accumulation" rather than increasingly productive technology seen as the cause for less money spent on labor? It takes ten man hours up front to build the machine then you only have to pay one man to run it long term. What about when new technology comes along making all the old assets irrelevant?
You just jumped into this point. I don't follow at all. What role does using resources in novel ways play in creating new wealth?
Why exactly does profit margin increase? (this is related to your earlier point)
I'm sure this occurs, not so ready to jump to the conclusion it is a driving factor behind "modern capitalism" (by which I assume you mean corporatism)
Are you sure you explained that properly?
Really?? Before Keynes no country ever survived a depression?
The economics nobel prize is pretty strange. It is actually the "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel".
I think reality is more complicated than that.
It was brought up because there is a historian randomly praising Keynesian policy.
It might if the people running things had perfect information and only good intentions. Anyway, so it seems your problem with keynes is that monetary cycles have been more volatile. Either way, I am still unsure what the historian in the OP was talking about.
I have gathered that point, however there is more than one way to get rid of debt.
I think that is kind of tangential to what I was asking though. Keynes advocated "counter-cyclical" spending, correct? Inflate during recession and deflate during boom times (yes, people and businesses will default because of this policy). What we have instead is constant inflation.
It's impossible to say what would have happened without the war.
Correct me if I'm wrong, but didn't Keynes suggest government deficit spending during depressions and recessions... then pay it off when times are good?
I've never actually read his work so I don't know. This would make more sense than that an economist would recommend what is going on though.