You've rather missed the point. You CAN compete, with your costs as a whole, so long as your exchange rate is appropriate. And if you close your economy just where is your government going to borrow from anyway? You might as well stop borrowing from abroad whilst leaving your economy open. It's simply not possible for an economy to export all its jobs or anything similar - it ultimately has to pay for its imports somehow. The idea is to start making that happen rather than continuing to drive a wedge between imports and exports by providing other sources of foreign exchange.
And closing your economy wouldn't be automatic or smooth. It'd involve a massive massive drop in living standards, especially to begin with as a huge amount of investment would be required to duplicate the infrastructure in other countries on which you rely.
No, that's not the only way. Another (just as one example) is to apply a tariff to goods that enter the USA. If it costs, on average, $100 to import item A from a foreign manufacturer, but $150 to purchase that item from the manufacturer in the USA, then add $50 cost at import time, bingo, the playing field is leveled, and the tariffs from any imports can go towards education, social programs, or space stations -- whatever. In the meantime, we have companies of our own who are working on televisions and steel manufacture and cars again, and both pay scales and benefits are in the rage that *our* society wants them to be, instead of "cup of rice and if you're good, no beatings." Repeat as required all across the import spectrum.
You're missing out a part of the system you're analyzing - the exchange market.
Let's suppose the foreign exporter ultimately wants Y1000 for its goods and the domestic maker $150. Let's suppose the buyers pay in the manufacturer's currency (but I don't think it's fundamentally different if this is not the case, it just passes part of the process/cost from buyer to seller). Let's ignore foreign exchange costs, suppose that there are no tariffs and ignore the costs of import and transport. Let's also talk about the long-term equilibrium position for now - sales of domestic assets abroad and increasing borrowing from foreigners can't continue infinitely so they're not part of that equilibrium.
You, the buyer, have a choice. Buy abroad or buy domestically. If you want to buy domestically you swap your $150 for the goods. If you want to buy abroad you must first find someone with Y1000 who wants $s and swap with him. With no international trade in assets or loans (yet) the only person who wants to do such a thing is someone who wants $x to buy domestically produced goods to send abroad. ie, there must be someone in your country exporting. Because, in this simple scenario, every Yy swapped for $x to pay for your exports is $x swapped for Yy to pay for your imports exports and imports must balance by value. If your country sells little the foreigners want then there'll be very few Ys available from people wanting $s and so you'll need to offer many $s to get them....and your import will cost a lot of money, more than the domestic $150. If there are many exporters the opposite may be true.
Add a tariff on imports. There are fewer imports (because they substitute with domestic goods). Corresponding, there are fewer exports, too, and to foreigners they cost more because it's now harder for the foreigners to get $s. A tax on your imports is effectively a tax on your own exports, too.
Tariffs are still justified sometimes, though - for all sorts of reasons - because real life is more complicated. Tariffs on high-carbon goods entering a country which has a carbon tax from countries without would be a good example. Just don't expect them to be an easy solution to uncompetitive exporters.
Go back to nedlohs's point. Take the simple scenario but have your government borrow money from foreigners. Now it's not only exporters who have $s to swap for Ys, it's the government (or its lender), too. Your country no longer has to match its imports with exports - it can export less - and the exchange rate doesn't fall to bring it back in to balance. And so you have a trade deficit and it can appear to you that all the jobs are being 'exported' and domestic workers can't compete. Of course, the government not borrowing is only one answer - having the government borrow domestically (like the Japanese) also works. But IIRC at one point George Bush had the US spend 21% of GDP and raise 16% of GDP in taxes at a time when domestic saving was 0.5%. It could only come from foreigners.
Stop borrowing from the Chinese and they'll buy your assets instead, of course, but you'll make like more difficult for their currency manipulation and easier for your exporters.
The only way to compete with China on cost of labor is to match their labor practices - i.e. lack of any protections, essentially wage slavery. This would mean turning the clock back all the way to Gilded Age.
No. Arguably the only way to compete with someone on cost of labour with just as good a business environment and in the same currency area as you is to match their labour practices. I say 'arguably' because there are bound to be other ways I haven't thought of. This is one reason why the euro area is so fucked - they even still have rather different inflation rates in different countries, probably partly because of different labour market practices.
It's perfectly possible for a country to produce less of everything from the same resources than another and still profitably trade with it, most especially if there is a difference in the cost ratio between different inputs. What most definitely can't happen, not long term, is for all of the production in the first country to be moved to the second. How would they pay for their imports? There are only so many assets they can sell and only so many loans they can raise.
I know perfectly well how exponential functions work. You've utterly failed to answer any of my questions. In particular, you don't appear to have noticed that economic output is measure by value, not size. It's quite possible to have ever increasing output without increasing inputs at all....you simply make better products from the same materials.
That's rather the point. Any economic theory that a sufficient number of people accept as true is wrong. As soon as people (especially people in power) accept an economic theory, they will start acting differently and invalidating some of the axioms behind said theory. For a theory to make accurate predictions, then it must cover the case when everyone else is using that theory to determine their actions. It must therefore be more complicated than itself.
Why would people necessarily start acting differently because of the model? If everyone were rational and the model was based on the outcome of everyone acting rationally in their best interests why would the existence of the model cause people to act any differently? The actions modeled are still those which are the rationally best for each individual, even in the context of the outcome of the model.
Here's another reason. One technique (which I think is common, but I don't work as an economist) is used when an economic model depends on the expectations of those it is modeling. If you have, say, inflationary expectations as a parameter then you run your model, take the inflation rate it produces and then feed it back in to a second run of your model as the expected inflation rate. You keep on going until it converges. If everyone believes your model then the inflationary expectations they have will be the same as the ones predicted by your model, which in turn will be the ones taken as an input to your model. So the fact that people believe the model doesn't change their behaviour so as to invalidate it.
Most people are rational enough for most of the time; if you have enough of them the individual irrationalities are just noise.
Only if they're random. However, humans have systematic biases or non-rational behaviour, such as a continuing belief that 'house prices are going up and are therefore a good investment' even once they've clearly risen far beyond the fundamental value implied by rents. A whole area of economics is springing up to look at this, although I'm not so sure anyone any good yet at really incorporating it in to models of whole economies.
Most economic models will continue to be wrong because they are predicated on the lie that an economy can continue to grow exponentially, forever.
In what way do they do that? How is it even possible to build an economic model that assumes that? By writing an assumed growth rate in to it, maybe...but that would be rather silly if GDP is one of the things you wish to predict.
Also, in what way is suggesting that the economy can continue to grow exponential forever a lie (other than in the 'eventually there will be the heat-death of the universe' sense)?
It's not just the models that are wrong - Since it's hard to find any information relating to business and the economy that does not promote continuous growth as being the number one metric of a successful economy, this tenet of free-market capitalism is engrained in the minds of most people.
Amongst typically general-audience media output you're certainly right. The purpose of an economy is not to produce output in as large a quantity as possible, but to maximize the welfare of its citizens given the resources it has. That means not working too much as well as not working too little, it means not degrading the environment in which people live without sufficient offsetting benefits to justify it, and it means creating the right outputs and allocating to the right people (and not, say, making 2m right shoes and no left shoes, or similar less silly examples). It's not at all obvious that economies are correct in choosing the working hours that result.
And yet, it is demonstrable using very simple arithmetic, that it is impossible to achieve.
We're collectively fucked unless that belief can be reversed.
Perhaps you should have considered including the arithmetic in your post if it's so simple. When you do, please do not neglect to consider the difference between value of output and its physical size, the possibility of new energy sources, the existence of resource recycling and the possibility of substituting less available raw materials for more available ones.
A relationship between money and debt is inevitable. Imagine there is no money. Suppose I do something for you in exchange for a promise of reciprocation. You are now in debt to me, in the traditional sense. There's no numeric accounting, but this notion of debt is firmly buried in human psychology and is part of the reason humans are able to build economic systems. Then you do something for me and we're even. Now formalize it: imagine, when I do this something for you, that you create out of thin air (in a ledger, in our heads, in the location of special shells which which mutually agree will represent it) a numeric representation of that debt. Then, when you reciprocate, this accounting is reversed and both debt and proto-money disappear. Or, alternatively, I could instead pass these tokens on to another person in exchange for a promise that/he/ will receive the return of your debt instead. And thus the money begins to circulate, and in effect you are the central bank.
Money IS debt. It's a transferable formalization and extension of one persons social obligation to return a favour to another. Replace it with a 'resource based economy' (I presume you mean replace token money with something like gold) and things won't be much different. People will expect that receiving gold from you entitles them to be given useful products or services in exchange for it. They will be just as unhappy if that is not the case - they'll fell just as much as if a social obligation has been broken - if that doesn't happen and they're left with gold as they would if they were left with tokens.
It's quite easy to predict every collapse by permanently setting your prediction to 'collapse'. It doesn't make it useful.
An awful lot of people predicted the housing market price collapse simply by looking at price/rent and price/income ratios. Hell, in many places there were rents which were less than the interest rates, which is an obvious giveaway.
What happened with increased automation is that lower income moved to middle class. The trend may be reversing now, but that has more to do with resources running out.
The trend is not reversing, it's more complicated than that - IIRC, global income inequality is falling but within country inequality is rising in most countries. And it isn't because of resources running out. In developing countries it's because of a new emerging middle class which the better educated and luckier are entering, including those doing work previously done in developed countries. In developed countries it's more down to the reduction in GDP share of labour compared to profits (which could plausibly be partly caused by automation, asset price inflation, and/or offshoring, but I haven't seen any specific evidence of any of that).
Resources running out will still be important. Developed countries get the benefit of a large proportion of natural resources because we're very efficient at turning them in to stuff we can exchange for them. As less developed countries get better at it we'll have more competition in that exchange. Developed country prices will rise and terms of trade worsen (and, presumably, exchange rates will fall as a component of that). But that'll be a symptom of reducing global inequality and only a second-order cause of it.
This is true - though it's not actually stuff people want, exactly, it's the quality of their lives that's important, and that's affected by many things such as how much leisure time they have, their social position (including in employment) and the quality of the environment around them.
In an idealized alternative universe how/what things are made and who gets to consume them can be determined separately and there's no problem. The big problem in the real world is that these are tied together, and that systems in which the link is broken too much don't work very well because incentives and information flows are disrupted. Just think of command economies producing too many things nobody wants, too few things people do, delivering them to the wrong people and failing to develop new products.
Unfortunately, the work required isn't necessarily something that can be split in to ever smaller chunks and distributed among the potential workers - either because splitting it is very costly, because labour market conventions on hours of work are no longer appropriate, or because only a few people are appropriately skilled. There will never be a shortage of things worth doing, but there could easily be huge inequality because many of those will be of small impact compared to others....the gardener or nanny vs the robot designer
The free market would correctly price and maximize the speed at which research is done.
What's a 'free market'? Why would it correctly price the research? Why would it maximize its speed? How do you know that maximizing speed and correctly pricing are consistent, presuming that maximizing speed reduces quality and increases cost? Are you thinking, perhaps, of the first theorem of welfare economics, which does indeed show that competitive markets (not 'free') correctly price everything under certain conditions?
It has been proven by history and is under attack by the modern socialist hippie culture.
Which history? When has research been produced by a 'free market'?
There is nothing MORE capitalist then a exclusive monopoly. The entire concept of capitalism is that CAPITAL is in control. Therefore capital should buy all other capital to get even more power (aka exclusive monopoly).
Umm, no. The concept of capitalism is that the providers of capital control the organization to which the capital was provided. There's nothing inherent in capitalism to imply that providers of capital should control anything beyond that - and the more competitive the markets in which they operate the less power they have. I'm sure that owners of capital (which almost certainly includes you to a small extent) would like to have further political and economic influence, may try to acquire it and may actually have it - but that doesn't make it part of the 'concept of capitalism'.
The English league will now lose some of the monetary advantage it had because Sky will have to compete with cheapo-European networks.
Or, rather, because it will have to sell to other networks at the same prices per viewer (or somesuch, I don't know how such contracts work) and have lost their ability to price-discriminate between markets with different price sensitivities. Sky would then no longer be competing with cheapo European broadcasters because they'd become similarly expensive European broadcasters....but that reduces the total money taken for customers because, one presumes, Greek viewers are more price sensitive in this market and so the optimal price in Greece is lower than the UK.
I suspect that the result will be that UK prices fall very little, European prices rise to almost match it (people will pay a little more to have it in English, I suppose), fewer Europeans will watch English football and less money will be taken overall.
There is nothing remotely competitive about this. It is a complete undermining of contract law and the very essence of the competitive market.
No, it isn't, because there was never a competitive market to begin with. It isn't possible for football to be a competitive market, and this extends to broadcasts for as long as clubs or their leagues have rights to restrict unauthorized broadcasts of games. It's not possible for it to be competitive because a Liverpool FC fan can't just switch to Everton if he things the prices are too high or the service too poor because they're not substitutes: being an Everton fan comes with a completely different group identity and so forth. A competitive market means that no buyer or seller has any significant power over prices and that simply isn't the case either for football clubs/leagues selling rights, broadcasters buying them or broadcasters selling them on to consumers.
What matters is not how much time anyone has to save but the proportion of people working vs those not working. If that proportion stays the same (barring a big change in productivity which can compensate) then everything is fine. The financial system is just a control system for a physical system: the real economy. There's a fundamental physical problem that everyone taken together, retired or otherwise, is consuming what is produced by those working right now. (Literal saving - tins of beans in the cupboard, barrels of oil in the ground, is possible but it's difficult to build a retirement out of it). And, of course, if the physical system can't do it no amount of saving up of cash or tinkering or reasoning about its control system will ever make it happen.
If my generation continues to work they in effect, prevent a new generation from having opportunities to get hired.
No, it doesn't. There's no shortage of things people would like done and there are plenty of unemployed people who would like to do them in exchange for things they themselves would like done. It's one giant coordination problem, not a fundamental result of too many older people working,
If you have £100,000.. and keep it in a bank for 50 years.. with 3% interest you'd have £657,585.90. Which is enough for a monthly allowance of £1000 per month.
Which might, however, be worth very little. You'll need a 3% real interest rate rather than a nominal one to do what you're hoping for. Also, the inflation rate will depend on things like other people's retirement decisions and the interest rate will depend on how many other people are trying to do the same.
Does this not show that people will start betting against their demise? Give a company all their money in return for a monthly salary till the day they die.
Presumably you haven't thought about your own pension yet, then. That's exactly what people DO do when they retire. It's called a retirement annuity. You don't have to buy one with a pension, either, you could buy one right now if you wanted to (although the tax treatment will be different, at least in the UK).
At least over here in NL, the supposed requirement to work longer because of increased life expectancy is a sham. One perpetuated (with great success) with the goal of making Gen X and down pay for the 'boomers. The largest part of the increase in life expectancy in the past 40 years is due to a reduction in infant mortality rates. The life expectancy of a person 65 years of age (which is what matters for pension schemes) has increased perhaps by 1 year in that period. An increase that can easily be covered by a slight increase in pension premiums.
Actually, this doesn't appear to be the case for the OECD as a whole: according to the OECD
At least over here in NL, the supposed requirement to work longer because of increased life expectancy is a sham. One perpetuated (with great success) with the goal of making Gen X and down pay for the 'boomers. The largest part of the increase in life expectancy in the past 40 years is due to a reduction in infant mortality rates. The life expectancy of a person 65 years of age (which is what matters for pension schemes) has increased perhaps by 1 year in that period. An increase that can easily be covered by a slight increase in pension premiums.
(Of course, the actual situation is a bit more complex than "the boomers living off the subsequent generations". The situation here is that in case of our state-provided pension, the 'boomers simply haven't paid their fair share into it. Private pensions currently are in trouble partly by sucky returns on investments, and not just because of the crisis. In this case, the 'boomers were simply lucky to enjoy excellent ROIs in the 80s, with subsequently lower premiums to pay).
I think you may be right (except that I doubt that it's coordinate and deliberate) - although, of course, the number of people retired doesn't just depend on life expectancy, it also depends on the number of people born in to that generation. I doubt, however, that this problem could have been fixed by increased saving. I think it needs a change in retirement age (and that, if anything, the argument is that this isn't happening fast enough) - or, possibly, the education and import of younger people from poorer nations to countries where the better business environment allows them to produce much more.
There are times when it's important to think separately about the real economy (the physical acts of production and consumption) and financial flows (like saving, pension schemes, investments and investment returns). This is one of them.
Physically, current workers do all the work and current works, children, the unemployed, students and retirees consume what they produce. If I put £100 under my mattress this year and spend it next year then I consume less output this year and more next. This act does not move output from this year to next. If I save £100 it's a little different: either 1. a loan is made and my foregone £100 of consumption this year becomes someone else's increased £100 of consumption this year, with my increased with interest (say) £105 of consumption next year coming from the borrowers reduced consumption; or 2. my reduced consumption frees some resources to be put in to investment (building factories, writing software, etc.) which results in increased output next year and this increased output is the source of my additional consumption.
Boomers paying their fair share now or in the recent past doesn't increase the amount they can consume during retirement by magic. Either it could shift consumption from young to old, for example through asset price inflation, or their reduced consumption through their increased saving might increase investment and thus future output. (Another alternative is that the first case might be attempted and failed, eg their increased saving might have been lent to young house buyers buying overpriced houses who then failed to pay the loans back followed by depreciation of the retirees assets after the bursting of a bubble). Investment opportunities are not unlimited - there are only so many good new innovations and the system only has a limited capacity to direct investment to the correct places. Hence sucky investment returns.
Or, to put it another way, financial manipulation alone - savings, pensions, state benefits, etc. - couldn't solve a fundamental problem of the proportion of people of working age falling.
I'm hoping that things in the DSM are included or not included because having the condition is harmful to your self or others.
Except that it's a little more complicated. Something like homosexuality can be harmful to an individual if he's within a social context which will result in him being ostracized or harmed (or imprisoned) as a result. But the DSM and existence of treatment is itself part of the social context and might encourage the harm. Given that homosexuality has no effective 'treatment', putting it in the DSM may have been purely harmful itself even in circumstance in which it fits your definition.
But so is atheism. The difference is that psychopathy is harmful to the individual and others, whereas homosexuality and atheism are not (within societies such as mine, the UK - atheism is socially harmful to an individual in many other places, including the US). The question is 'can studying/diagnosing/treating x make life better?' not 'is x considered normal in society y?'. Personally, I think there's a problem not in the idea of identifying psychological differences or 'disorders' (especially the minor ones people might argue aren't illnesses) and the individuals affected but, instead, in the perception and reuse of terms like 'illness', 'diagnose' and 'treat' from the non-psychological medical world. If a trait and action which can improve and individual's or society's life can be identified, it's unfortunate that people feel they have to use words like 'illness' and 'diagnose' to legitimize doing it.
I think it's unlikely the majority of corporations pay 0%. The vast majority are small. Even among the big ones I doubt its zero.
But it's still possible that altering the rate might help people. Taxes affect decisions - and sometimes the outcome of those decisions is that little tax is paid. Taxes on profits distort investment decisions and choice of funding sources (most especially the preferring of debt over equity, thus increasing the risk of bankruptcy for no fundamental reason), and there's probably a lot of effort and distortion of economic activity involved in running complex tax avoidance schemes. All taxes do that sort of thing, it's a question of choosing between evils.
I'm not really a fan of taxes on corporate profits. They mostly exist for political reasons - people feel as though a tax on corporations is not a tax on them. All taxes eventually fall on individuals because, ultimately, it's only individuals that can benefit from economic output - employees, customers or shareholders pay in the end. Why not abolish corporate taxes, abolish taxes on employment and then raise the lost revenue through plain income tax? Multiple tax types mean multiplication of work, and differences in rates between classifications of income means loopholes and avoidance tricks and complicated rules to counteract them. It isn't fair, either. A surgeon earning $500k in salary pays a different rate to a small businessman earning $500k through whatever scheme he devises who pays a different rate to an author who receives $500k in royalties. The big losers would be those who mostly earn money on loans or bank balances - but I don't see why loans should be so privileged and encouraged over dividends and salaries, especially when the income tax system is already graduated.
There's a distinction between private property which is a private place, private property which is a public place and public property. There are things you can legally do in private places which you can't in public places regardless of your ownership (such as drive a car whilst drunk), and things you can't prohibit even on private land (such as access to public rights of way). It isn't remotely unreasonable to impose additional restrictions on what owners can prohibit in places which function as public spaces. Build something which is an extension of the public streets then expect it to become a bit like one. (And even when you do have the right to make the rules it doesn't stop everyone else ridiculing you in the media for doing the wrong thing and being an arsehole).
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You've rather missed the point. You CAN compete, with your costs as a whole, so long as your exchange rate is appropriate. And if you close your economy just where is your government going to borrow from anyway? You might as well stop borrowing from abroad whilst leaving your economy open. It's simply not possible for an economy to export all its jobs or anything similar - it ultimately has to pay for its imports somehow. The idea is to start making that happen rather than continuing to drive a wedge between imports and exports by providing other sources of foreign exchange.
And closing your economy wouldn't be automatic or smooth. It'd involve a massive massive drop in living standards, especially to begin with as a huge amount of investment would be required to duplicate the infrastructure in other countries on which you rely.
No, that's not the only way. Another (just as one example) is to apply a tariff to goods that enter the USA. If it costs, on average, $100 to import item A from a foreign manufacturer, but $150 to purchase that item from the manufacturer in the USA, then add $50 cost at import time, bingo, the playing field is leveled, and the tariffs from any imports can go towards education, social programs, or space stations -- whatever. In the meantime, we have companies of our own who are working on televisions and steel manufacture and cars again, and both pay scales and benefits are in the rage that *our* society wants them to be, instead of "cup of rice and if you're good, no beatings." Repeat as required all across the import spectrum.
You're missing out a part of the system you're analyzing - the exchange market.
Let's suppose the foreign exporter ultimately wants Y1000 for its goods and the domestic maker $150. Let's suppose the buyers pay in the manufacturer's currency (but I don't think it's fundamentally different if this is not the case, it just passes part of the process/cost from buyer to seller). Let's ignore foreign exchange costs, suppose that there are no tariffs and ignore the costs of import and transport. Let's also talk about the long-term equilibrium position for now - sales of domestic assets abroad and increasing borrowing from foreigners can't continue infinitely so they're not part of that equilibrium.
You, the buyer, have a choice. Buy abroad or buy domestically. If you want to buy domestically you swap your $150 for the goods. If you want to buy abroad you must first find someone with Y1000 who wants $s and swap with him. With no international trade in assets or loans (yet) the only person who wants to do such a thing is someone who wants $x to buy domestically produced goods to send abroad. ie, there must be someone in your country exporting. Because, in this simple scenario, every Yy swapped for $x to pay for your exports is $x swapped for Yy to pay for your imports exports and imports must balance by value. If your country sells little the foreigners want then there'll be very few Ys available from people wanting $s and so you'll need to offer many $s to get them....and your import will cost a lot of money, more than the domestic $150. If there are many exporters the opposite may be true.
Add a tariff on imports. There are fewer imports (because they substitute with domestic goods). Corresponding, there are fewer exports, too, and to foreigners they cost more because it's now harder for the foreigners to get $s. A tax on your imports is effectively a tax on your own exports, too.
Tariffs are still justified sometimes, though - for all sorts of reasons - because real life is more complicated. Tariffs on high-carbon goods entering a country which has a carbon tax from countries without would be a good example. Just don't expect them to be an easy solution to uncompetitive exporters.
Go back to nedlohs's point. Take the simple scenario but have your government borrow money from foreigners. Now it's not only exporters who have $s to swap for Ys, it's the government (or its lender), too. Your country no longer has to match its imports with exports - it can export less - and the exchange rate doesn't fall to bring it back in to balance. And so you have a trade deficit and it can appear to you that all the jobs are being 'exported' and domestic workers can't compete. Of course, the government not borrowing is only one answer - having the government borrow domestically (like the Japanese) also works. But IIRC at one point George Bush had the US spend 21% of GDP and raise 16% of GDP in taxes at a time when domestic saving was 0.5%. It could only come from foreigners.
Stop borrowing from the Chinese and they'll buy your assets instead, of course, but you'll make like more difficult for their currency manipulation and easier for your exporters.
The only way to compete with China on cost of labor is to match their labor practices - i.e. lack of any protections, essentially wage slavery. This would mean turning the clock back all the way to Gilded Age.
No. Arguably the only way to compete with someone on cost of labour with just as good a business environment and in the same currency area as you is to match their labour practices. I say 'arguably' because there are bound to be other ways I haven't thought of. This is one reason why the euro area is so fucked - they even still have rather different inflation rates in different countries, probably partly because of different labour market practices.
It's perfectly possible for a country to produce less of everything from the same resources than another and still profitably trade with it, most especially if there is a difference in the cost ratio between different inputs. What most definitely can't happen, not long term, is for all of the production in the first country to be moved to the second. How would they pay for their imports? There are only so many assets they can sell and only so many loans they can raise.
I know perfectly well how exponential functions work. You've utterly failed to answer any of my questions. In particular, you don't appear to have noticed that economic output is measure by value, not size. It's quite possible to have ever increasing output without increasing inputs at all....you simply make better products from the same materials.
That's rather the point. Any economic theory that a sufficient number of people accept as true is wrong. As soon as people (especially people in power) accept an economic theory, they will start acting differently and invalidating some of the axioms behind said theory. For a theory to make accurate predictions, then it must cover the case when everyone else is using that theory to determine their actions. It must therefore be more complicated than itself.
Why would people necessarily start acting differently because of the model? If everyone were rational and the model was based on the outcome of everyone acting rationally in their best interests why would the existence of the model cause people to act any differently? The actions modeled are still those which are the rationally best for each individual, even in the context of the outcome of the model.
Here's another reason. One technique (which I think is common, but I don't work as an economist) is used when an economic model depends on the expectations of those it is modeling. If you have, say, inflationary expectations as a parameter then you run your model, take the inflation rate it produces and then feed it back in to a second run of your model as the expected inflation rate. You keep on going until it converges. If everyone believes your model then the inflationary expectations they have will be the same as the ones predicted by your model, which in turn will be the ones taken as an input to your model. So the fact that people believe the model doesn't change their behaviour so as to invalidate it.
Most people are rational enough for most of the time; if you have enough of them the individual irrationalities are just noise.
Only if they're random. However, humans have systematic biases or non-rational behaviour, such as a continuing belief that 'house prices are going up and are therefore a good investment' even once they've clearly risen far beyond the fundamental value implied by rents. A whole area of economics is springing up to look at this, although I'm not so sure anyone any good yet at really incorporating it in to models of whole economies.
Most economic models will continue to be wrong because they are predicated on the lie that an economy can continue to grow exponentially, forever.
In what way do they do that? How is it even possible to build an economic model that assumes that? By writing an assumed growth rate in to it, maybe...but that would be rather silly if GDP is one of the things you wish to predict.
Also, in what way is suggesting that the economy can continue to grow exponential forever a lie (other than in the 'eventually there will be the heat-death of the universe' sense)?
It's not just the models that are wrong - Since it's hard to find any information relating to business and the economy that does not promote continuous growth as being the number one metric of a successful economy, this tenet of free-market capitalism is engrained in the minds of most people.
Amongst typically general-audience media output you're certainly right. The purpose of an economy is not to produce output in as large a quantity as possible, but to maximize the welfare of its citizens given the resources it has. That means not working too much as well as not working too little, it means not degrading the environment in which people live without sufficient offsetting benefits to justify it, and it means creating the right outputs and allocating to the right people (and not, say, making 2m right shoes and no left shoes, or similar less silly examples). It's not at all obvious that economies are correct in choosing the working hours that result.
And yet, it is demonstrable using very simple arithmetic, that it is impossible to achieve.
We're collectively fucked unless that belief can be reversed.
Perhaps you should have considered including the arithmetic in your post if it's so simple. When you do, please do not neglect to consider the difference between value of output and its physical size, the possibility of new energy sources, the existence of resource recycling and the possibility of substituting less available raw materials for more available ones.
A relationship between money and debt is inevitable. Imagine there is no money. Suppose I do something for you in exchange for a promise of reciprocation. You are now in debt to me, in the traditional sense. There's no numeric accounting, but this notion of debt is firmly buried in human psychology and is part of the reason humans are able to build economic systems. Then you do something for me and we're even. Now formalize it: imagine, when I do this something for you, that you create out of thin air (in a ledger, in our heads, in the location of special shells which which mutually agree will represent it) a numeric representation of that debt. Then, when you reciprocate, this accounting is reversed and both debt and proto-money disappear. Or, alternatively, I could instead pass these tokens on to another person in exchange for a promise that /he/ will receive the return of your debt instead. And thus the money begins to circulate, and in effect you are the central bank.
Money IS debt. It's a transferable formalization and extension of one persons social obligation to return a favour to another. Replace it with a 'resource based economy' (I presume you mean replace token money with something like gold) and things won't be much different. People will expect that receiving gold from you entitles them to be given useful products or services in exchange for it. They will be just as unhappy if that is not the case - they'll fell just as much as if a social obligation has been broken - if that doesn't happen and they're left with gold as they would if they were left with tokens.
It's quite easy to predict every collapse by permanently setting your prediction to 'collapse'. It doesn't make it useful.
An awful lot of people predicted the housing market price collapse simply by looking at price/rent and price/income ratios. Hell, in many places there were rents which were less than the interest rates, which is an obvious giveaway.
What happened with increased automation is that lower income moved to middle class. The trend may be reversing now, but that has more to do with resources running out.
The trend is not reversing, it's more complicated than that - IIRC, global income inequality is falling but within country inequality is rising in most countries. And it isn't because of resources running out. In developing countries it's because of a new emerging middle class which the better educated and luckier are entering, including those doing work previously done in developed countries. In developed countries it's more down to the reduction in GDP share of labour compared to profits (which could plausibly be partly caused by automation, asset price inflation, and/or offshoring, but I haven't seen any specific evidence of any of that).
Resources running out will still be important. Developed countries get the benefit of a large proportion of natural resources because we're very efficient at turning them in to stuff we can exchange for them. As less developed countries get better at it we'll have more competition in that exchange. Developed country prices will rise and terms of trade worsen (and, presumably, exchange rates will fall as a component of that). But that'll be a symptom of reducing global inequality and only a second-order cause of it.
This is true - though it's not actually stuff people want, exactly, it's the quality of their lives that's important, and that's affected by many things such as how much leisure time they have, their social position (including in employment) and the quality of the environment around them.
In an idealized alternative universe how/what things are made and who gets to consume them can be determined separately and there's no problem. The big problem in the real world is that these are tied together, and that systems in which the link is broken too much don't work very well because incentives and information flows are disrupted. Just think of command economies producing too many things nobody wants, too few things people do, delivering them to the wrong people and failing to develop new products.
Unfortunately, the work required isn't necessarily something that can be split in to ever smaller chunks and distributed among the potential workers - either because splitting it is very costly, because labour market conventions on hours of work are no longer appropriate, or because only a few people are appropriately skilled. There will never be a shortage of things worth doing, but there could easily be huge inequality because many of those will be of small impact compared to others....the gardener or nanny vs the robot designer
The free market would correctly price and maximize the speed at which research is done.
What's a 'free market'? Why would it correctly price the research? Why would it maximize its speed? How do you know that maximizing speed and correctly pricing are consistent, presuming that maximizing speed reduces quality and increases cost? Are you thinking, perhaps, of the first theorem of welfare economics, which does indeed show that competitive markets (not 'free') correctly price everything under certain conditions?
It has been proven by history and is under attack by the modern socialist hippie culture.
Which history? When has research been produced by a 'free market'?
There is nothing MORE capitalist then a exclusive monopoly. The entire concept of capitalism is that CAPITAL is in control. Therefore capital should buy all other capital to get even more power (aka exclusive monopoly).
Umm, no. The concept of capitalism is that the providers of capital control the organization to which the capital was provided. There's nothing inherent in capitalism to imply that providers of capital should control anything beyond that - and the more competitive the markets in which they operate the less power they have. I'm sure that owners of capital (which almost certainly includes you to a small extent) would like to have further political and economic influence, may try to acquire it and may actually have it - but that doesn't make it part of the 'concept of capitalism'.
The English league will now lose some of the monetary advantage it had because Sky will have to compete with cheapo-European networks.
Or, rather, because it will have to sell to other networks at the same prices per viewer (or somesuch, I don't know how such contracts work) and have lost their ability to price-discriminate between markets with different price sensitivities. Sky would then no longer be competing with cheapo European broadcasters because they'd become similarly expensive European broadcasters....but that reduces the total money taken for customers because, one presumes, Greek viewers are more price sensitive in this market and so the optimal price in Greece is lower than the UK.
I suspect that the result will be that UK prices fall very little, European prices rise to almost match it (people will pay a little more to have it in English, I suppose), fewer Europeans will watch English football and less money will be taken overall.
There is nothing remotely competitive about this. It is a complete undermining of contract law and the very essence of the competitive market.
No, it isn't, because there was never a competitive market to begin with. It isn't possible for football to be a competitive market, and this extends to broadcasts for as long as clubs or their leagues have rights to restrict unauthorized broadcasts of games. It's not possible for it to be competitive because a Liverpool FC fan can't just switch to Everton if he things the prices are too high or the service too poor because they're not substitutes: being an Everton fan comes with a completely different group identity and so forth. A competitive market means that no buyer or seller has any significant power over prices and that simply isn't the case either for football clubs/leagues selling rights, broadcasters buying them or broadcasters selling them on to consumers.
What matters is not how much time anyone has to save but the proportion of people working vs those not working. If that proportion stays the same (barring a big change in productivity which can compensate) then everything is fine. The financial system is just a control system for a physical system: the real economy. There's a fundamental physical problem that everyone taken together, retired or otherwise, is consuming what is produced by those working right now. (Literal saving - tins of beans in the cupboard, barrels of oil in the ground, is possible but it's difficult to build a retirement out of it). And, of course, if the physical system can't do it no amount of saving up of cash or tinkering or reasoning about its control system will ever make it happen.
If my generation continues to work they in effect, prevent a new generation from having opportunities to get hired.
No, it doesn't. There's no shortage of things people would like done and there are plenty of unemployed people who would like to do them in exchange for things they themselves would like done. It's one giant coordination problem, not a fundamental result of too many older people working,
If you have £100,000.. and keep it in a bank for 50 years.. with 3% interest you'd have £657,585.90. Which is enough for a monthly allowance of £1000 per month.
Which might, however, be worth very little. You'll need a 3% real interest rate rather than a nominal one to do what you're hoping for. Also, the inflation rate will depend on things like other people's retirement decisions and the interest rate will depend on how many other people are trying to do the same.
Does this not show that people will start betting against their demise? Give a company all their money in return for a monthly salary till the day they die.
Presumably you haven't thought about your own pension yet, then. That's exactly what people DO do when they retire. It's called a retirement annuity. You don't have to buy one with a pension, either, you could buy one right now if you wanted to (although the tax treatment will be different, at least in the UK).
Try becoming an atheist president or boy scout, for example.
At least over here in NL, the supposed requirement to work longer because of increased life expectancy is a sham. One perpetuated (with great success) with the goal of making Gen X and down pay for the 'boomers. The largest part of the increase in life expectancy in the past 40 years is due to a reduction in infant mortality rates. The life expectancy of a person 65 years of age (which is what matters for pension schemes) has increased perhaps by 1 year in that period. An increase that can easily be covered by a slight increase in pension premiums.
Actually, this doesn't appear to be the case for the OECD as a whole: according to the OECD
At least over here in NL, the supposed requirement to work longer because of increased life expectancy is a sham. One perpetuated (with great success) with the goal of making Gen X and down pay for the 'boomers. The largest part of the increase in life expectancy in the past 40 years is due to a reduction in infant mortality rates. The life expectancy of a person 65 years of age (which is what matters for pension schemes) has increased perhaps by 1 year in that period. An increase that can easily be covered by a slight increase in pension premiums.
(Of course, the actual situation is a bit more complex than "the boomers living off the subsequent generations". The situation here is that in case of our state-provided pension, the 'boomers simply haven't paid their fair share into it. Private pensions currently are in trouble partly by sucky returns on investments, and not just because of the crisis. In this case, the 'boomers were simply lucky to enjoy excellent ROIs in the 80s, with subsequently lower premiums to pay).
I think you may be right (except that I doubt that it's coordinate and deliberate) - although, of course, the number of people retired doesn't just depend on life expectancy, it also depends on the number of people born in to that generation. I doubt, however, that this problem could have been fixed by increased saving. I think it needs a change in retirement age (and that, if anything, the argument is that this isn't happening fast enough) - or, possibly, the education and import of younger people from poorer nations to countries where the better business environment allows them to produce much more.
There are times when it's important to think separately about the real economy (the physical acts of production and consumption) and financial flows (like saving, pension schemes, investments and investment returns). This is one of them.
Physically, current workers do all the work and current works, children, the unemployed, students and retirees consume what they produce. If I put £100 under my mattress this year and spend it next year then I consume less output this year and more next. This act does not move output from this year to next. If I save £100 it's a little different: either 1. a loan is made and my foregone £100 of consumption this year becomes someone else's increased £100 of consumption this year, with my increased with interest (say) £105 of consumption next year coming from the borrowers reduced consumption; or 2. my reduced consumption frees some resources to be put in to investment (building factories, writing software, etc.) which results in increased output next year and this increased output is the source of my additional consumption.
Boomers paying their fair share now or in the recent past doesn't increase the amount they can consume during retirement by magic. Either it could shift consumption from young to old, for example through asset price inflation, or their reduced consumption through their increased saving might increase investment and thus future output. (Another alternative is that the first case might be attempted and failed, eg their increased saving might have been lent to young house buyers buying overpriced houses who then failed to pay the loans back followed by depreciation of the retirees assets after the bursting of a bubble). Investment opportunities are not unlimited - there are only so many good new innovations and the system only has a limited capacity to direct investment to the correct places. Hence sucky investment returns.
Or, to put it another way, financial manipulation alone - savings, pensions, state benefits, etc. - couldn't solve a fundamental problem of the proportion of people of working age falling.
I'm hoping that things in the DSM are included or not included because having the condition is harmful to your self or others.
Except that it's a little more complicated. Something like homosexuality can be harmful to an individual if he's within a social context which will result in him being ostracized or harmed (or imprisoned) as a result. But the DSM and existence of treatment is itself part of the social context and might encourage the harm. Given that homosexuality has no effective 'treatment', putting it in the DSM may have been purely harmful itself even in circumstance in which it fits your definition.
But so is atheism. The difference is that psychopathy is harmful to the individual and others, whereas homosexuality and atheism are not (within societies such as mine, the UK - atheism is socially harmful to an individual in many other places, including the US). The question is 'can studying/diagnosing/treating x make life better?' not 'is x considered normal in society y?'. Personally, I think there's a problem not in the idea of identifying psychological differences or 'disorders' (especially the minor ones people might argue aren't illnesses) and the individuals affected but, instead, in the perception and reuse of terms like 'illness', 'diagnose' and 'treat' from the non-psychological medical world. If a trait and action which can improve and individual's or society's life can be identified, it's unfortunate that people feel they have to use words like 'illness' and 'diagnose' to legitimize doing it.
I think it's unlikely the majority of corporations pay 0%. The vast majority are small. Even among the big ones I doubt its zero.
But it's still possible that altering the rate might help people. Taxes affect decisions - and sometimes the outcome of those decisions is that little tax is paid. Taxes on profits distort investment decisions and choice of funding sources (most especially the preferring of debt over equity, thus increasing the risk of bankruptcy for no fundamental reason), and there's probably a lot of effort and distortion of economic activity involved in running complex tax avoidance schemes. All taxes do that sort of thing, it's a question of choosing between evils.
I'm not really a fan of taxes on corporate profits. They mostly exist for political reasons - people feel as though a tax on corporations is not a tax on them. All taxes eventually fall on individuals because, ultimately, it's only individuals that can benefit from economic output - employees, customers or shareholders pay in the end. Why not abolish corporate taxes, abolish taxes on employment and then raise the lost revenue through plain income tax? Multiple tax types mean multiplication of work, and differences in rates between classifications of income means loopholes and avoidance tricks and complicated rules to counteract them. It isn't fair, either. A surgeon earning $500k in salary pays a different rate to a small businessman earning $500k through whatever scheme he devises who pays a different rate to an author who receives $500k in royalties. The big losers would be those who mostly earn money on loans or bank balances - but I don't see why loans should be so privileged and encouraged over dividends and salaries, especially when the income tax system is already graduated.
There's a distinction between private property which is a private place, private property which is a public place and public property. There are things you can legally do in private places which you can't in public places regardless of your ownership (such as drive a car whilst drunk), and things you can't prohibit even on private land (such as access to public rights of way). It isn't remotely unreasonable to impose additional restrictions on what owners can prohibit in places which function as public spaces. Build something which is an extension of the public streets then expect it to become a bit like one. (And even when you do have the right to make the rules it doesn't stop everyone else ridiculing you in the media for doing the wrong thing and being an arsehole).