Abstractly I know the fruits of the last few decades have gone into rewards for the rich, but still I'm sitting here looking at my smart phone and I am very, very glad I'm not living in the 1970s. So things have improved, even if they've not improved as much as they could have in terms of gini coefficient.
I generally agree with this. And most of you should too. Problem is, we have a system of economics that is ultimately unsustainable, unstable, and incompatible with the way we, as people want to live. But we're stuck, in the mud arguing about how much "blood to let", paralysed by ideological subjectivity both in practise and analysis.Originally Posted by TheManFromDelmonte
Props for actually replying seriously, but I think you misunderstand me. I don't advocate "pure free market capitalism" - I'm much closer to it than most folks here, of course, but I'm no Rand fanboy. I advocate publicly funded welfare, healthcare, and education, to name the most obvious divergence.Herschel - the reason the others are reacting to you so badly is not because of "FHC's well known liberal bias" (though in Barth's case he would react badly (and lengthily) to anyone right of gandhi regardless of the strength of their arguments). The reason everyone is going :Herschelfacepalm: in this thread is answers like the above.
If you genuinely don't understand what is so mind blowingly fucking stupid about your above post, just this once and solely for your benefit, I'm going to break it down for you.
1) pure free market capitalism is supportable as an ideology if you fundamentally believe that, all else being equal, economic wealth generation = prosperity for all, or almost all, or at the very least the majority.
2) the graphs posted on the previous page, together with others earlier in the thread, show that the massive, unprecedented growth in the US economy in the last few decades has had a negligible effect on the average person's real income, if not a downright negative effect due to inflation.
3) In the same period, the very richest have become immeasurably richer.
4) What this tells us is that the wealth generated by big business over the last few decades primarily has gone to a small elite of capital-owning investors. Average Joe has not benefitted, at all.
5) Business-friendly political policy, which has always been argued for on the basis that its good for everyone, is therefore in fact only really good for a tiny minority of mega-wealthy.
Now onto your post and why its so indescribably dumb:
You claim that in fact the above argument is wrong because although people have not had an increase in nominal income, healthcare costs have gone up to such a degree that the health insurance element of their benefits package has grown in line with overall economic growth. And (and this is the derpiest bit) that means that the system HAS actually benefited the average worker.
Do I really need to go into this in more detail for you to get it? You are claiming that people are better off than before, because they are being ripped off even more for healthcare that is FREE in every other civilised country in the world, and having their wages discounted to pay for it? Really? REALLLY?
2) Firstly, those graphs are adjusted for inflation(hence the "real" in all the titles). Secondly, the reason why I criticize them isn't that I think they're inaccurate or that poor people deserve to stagnate, it's that I think they measure the wrong thing, and that a more complete measurement produces results that are much more in line with what we would both prefer to see.
3) It depends on what you mean by "very richest", I guess. Yeah, ARod makes a lot more than Babe Ruth, but that has to do with the fact that he's doing the same thing for a vastly larger audience, and an entertainer's pay is mostly a function of the audience size. Similarly, Microsoft sold products to a lot more people than Carnegie Steel ever could, and Warren Buffet can move more capital than JP Morgan could. When you get down out of the stratosphere, though, it hasn't been egregious - lawyers and doctors aren't exactly making three times what they were in 1980. Most of the difference there comes from them making a similar percentage gain in income that a Chrysler factory worker has, but the same absolute dollar figure being taken off to fund healthcare cost increases, which yields a higher percentage wage increase fort he same compensation increase.
4) The bulk of the capital in the market is owned by pension funds, mutual funds, and insurance companies - very "average joe" investment vehicles. Yeah, the average Wal-Mart employee is on the sidelines, but more people have skin in that game than you think.
5) So the US has been the single best nation at weathering this crisis, because of their high corporate tax rate?
Health) I don't actually like the US healthcare system. It's expensive, it's painfully unequal, and it's run in very silly fashion. I think Obamacare will make it worse by exacerbating most of those problems, but that should not be taken as an endorsement of the status quo. However, for the people who actually get good coverage, it is most definitely the best system in the world, and I don't object to counting access to that as being comparable to wages. Also, even if you think that American health insurance is a rip-off(and I won't argue otherwise), that's a problem on the spending side, not on the compensation side. It's like saying that Europeans making more money doesn't count because it just goes to gas taxes - yes, that eats up the money, but the employees are still getting paid more.
Between the 1996-97 tax year and 2004-05, the income of the richest 1% grew at an annual rate of 3.1%, compared to 2.3% for the population as a whole
Is that supposed to inspire horror? Sure doesn't sound like stagnation to me.
This, tbh.
"Make no mistake, Communism lost a big argument - one we know today as the 20th century."
Sorry, but I don't think my analysis is wrong. For one you're looking at a comparison of absolute numbers, and not at relative numbers or a more historical picture. Also I think it all depends on what you look at as the focus of the service industry. Service industry, after all, is a very broad term. To give an intuitive example. Transportation of production goods is a service industry. It doesn't produce anything of its own. But so does finance. Now, not to diminish the importance of finance to industry, but clearly transport is far more closely linked to industry than finance in general is. So without taking this into account, what do those ratios really tell us? Not all that much really I think.They absolutely did, and your analysis is totally wrong: every rich western country is primarily a service economy. Even Germany, well known as a leading world manufacturer, is about 70% service / 30% industry. Japan is about 75/25 and the US is about 80/20.
In fact among developed countries, only the United States (~$3 trillion), Japan (~$1.5 trillion), and Germany (~1 trillion) even have a significant manufacturing presence in the world. China (~3 trillion) is the only country in the world that is on par with US manufacturing. The US and China each account for roughly 15% of the world's total industrial output. All other European countries and other large developing nations have about 250-500 billion or less in industrial output: Brazil, Russia, India, France, UK, Mexico, South Korea, Canada, Indonesia, etc.
There is kind of this sensationalized “fall of the US empire” story in the media which leads people to believe that the US is rapidly going bankrupt and has also shed all of it's industrial capacity to China to which it is now in debt. While the job picture remains terrible for a lot of people, the US economy as a whole remains strong and the entire budget deficit could be easily solved by relatively modest cuts in defense & healthcare spending (and increased taxes of course!). China's $1 trillion holding of US treasuries is simply indicative of keeping it's currency undervalued which is eventually unsustainable for China in the long-run.
Even though there are fewer and fewer actual manufacturing jobs (thanks to increasing automation) the United State's industrial output remains very high, and the US has kept most of it's high-end manufacturing, while low-end stuff like textiles, smelting & simple assembly has been sent overseas.
As an example, Intel does almost all of it's semiconductor manufacturing within the United States. Chip fabrication is one of the most complex and sensitive manufacturing processes in the world, and it is also one of the most heavily automated. These fabs cost many billions of dollars to build, and the latest sub-30nm facilities cost upwards of 10 billion and generate huge profit margins, but they don't employ very many workers.
On the other hand, we do know that 'Wall Street', i.e., finance, makes a much larger contribution to the US economy than finance does to Germany. You're right, every rich western country is primarily a service economy, and has, in fact, been that way for decades now (if not longer). But what is that service industry focussed on? In Germany, for example, it is my belief that it is primarily focussed on servicing production industries. In the US that focus has turn lately more towards finance and finance related 'industries' (not saying there aren't production focussed service industries mind you, just in relative terms). And the same as for Germany can be said for Japan, Korea, China (even), India, France, and quite a number of other (production) countries. The strength of the service side of the economy is build upon the strength of the production industry. Not so with the US, and (perhaps?) the UK in some way follows the US model to some extend.
And why is this important? Because it determines what drives growth. My hypothesis is that in the US (and to a lesser degree the UK), the growth in the economy is driven and dependent on the financial sector (which has clearly shown its instability, which I think is inherent, and which has a number of other drawbacks as well, like the amount of people it employs). In Germany, China, Japan, Korea, and other 'production' countries, it is driven by production industries. And where can you mostly clearly see that? Trade-surpluses and trade-deficits. And it is undeniable that the US went from a massive trade-surplus in the decades after WW2 to what is now a relatively massive trade-deficit.
So this isn't some sensationalised 'fall of the US empire' story. There are some real and worrying underpinnings beneath it. You may not agree with the effects of some of them, or some of the projections I make because of them, but you can hardly say I'm alone in being worried about the possible effects of this, or where these projections point towards. Even if I have to share that platform with Schiff, who's political ideas (and answers to the problems) I basically reject.
I really don't think the US is in a strong economical situation, not least because so much supposed strength of the US economy depends on the unstable, elusive, largely unregulated financial sector (where a large part of the 'wealth' is perhaps 'fictional'). And this isn't just about the US government's budget deficit. That could be solved through increased taxation (as I mentioned), and proper cuts for example in defence spending, or getting a proper (non-extortionist) health care system in place. Ofcourse (as I mentioned) political that seems well near impossible right now.
So really, the point is not that the US economy isn't big. It is. It is not to say that in absolute terms the production output is small. It isn't. But it is the picture in relative terms that is so worrying. For an economy as big as the US economy, given where it came from, it is not giving nearly enough attention to its production industries, their massive trade-deficit and what it should tell them, and it isn't investing nearly enough, relative to the investments made in production in other countries, proportionally, to make sure it either keeps or re-establishes its production edge in technological terms (depending on whether you agree that the US has lost it or not, which can be topical).
In short, what I'm saying is that the US has lost a lot of ground in production to countries that have invested heavily in strengthening theirs. In relative terms, the US has lost massive ground. It is no use pointing at absolute numbers, it is important to keep the relative numbers in mind, as well as where all those countries came from. And my question is: why isn't this an issue? Why is so little attention paid to these issues? Why is so relatively little done to address these issues by the government? Why does the financial system get billions in bailouts, trillions in tax-payer backed money for free from the Fed, while if for example the auto-industry, which employs far more people, both directly and indirectly, this is a massive outcry and a crime against humanity (if you believe some)? It isn't that the government is doing nothing. It is that in relation to what other countries do, and in relation to the size of the US economy (fictional or not), so little is actually done or possible politically.
And a comparison with China, though sensationalist, is instructive here. Look at the manufacturing base of the US, say, two or three decades ago, and that of China. Now look at the relative manufacturing bases of the US and China now. A lot of shrinkage on the US side, and a lot of growth in China. The same picture with the ratio of money spend on technological innovation in relationship to production. The US still spending lots of money in absolute terms, but in relationship to the actual size of the US economy, not compared to what China is spending. In short: China is investing heavily in production and innovation. It has already caught up with the US, and it is projected to keep expanding on that. The US is either at a standstill, or losing ground, if not in absolute terms, then in relative terms. And this in a situation where already the US has to look abroad for a sizeable proportion of its manufactured products. As so this trade-deficit is likely to grow, not just with China, but with the rest of the production countries in the world as well. As it has.
Seriously, this bound to come to a head at one point. For one, where will the US (people) find the money to pay for all these imported goods? All the rich 'master's of the universe' are making a bundle on Wall Street shuffling paper money around. It is clear they will be able to afford all of this. But what of the other 90, or 95, or 99.99%? Are they all going to be working in service industries servicing the finance sector? That can't be possible, surely. And they won't be earning money in a production industry that is losing ground relatively globally as well. What if the next fail-safe scheme of the Wall Street Wizards blows up in their face again? And this time round there isn't a tax-payer's bailout to safe their bacon again? Frankly I don't see how it can be avoided. And postponing the fallout of the previous fuck-up I don't think can last forever either. And what of the massive 'correction' the market will be going through then? The pendulum swings both ways you know. Just consider the massive fallout this is going to have for the 90, 95, or 99.99% of the US citizens, predominantly focussed on servicing this collapsing financial sector.
That's the thing, in relative terms, the US is more and more putting all their eggs into one basket. Just to keep the finance industry happy, and well lubricated with money. Simply by being overly generous to the financial sector while ignoring the production sector. But this is a high risk strategy that has already shown to be rather unstable. Meanwhile the 'safe bet', which came through for the US for so long, that at least has the potential to bring greater prosperity for all in the US, is being, relatively again, neglected.
And please, don't use the semiconductor manufacturing in the US as somehow representative for the whole of the US production industry. It just isn't. For many reasons which for length of this post already I won't go into here right now. And besides, even there chip manufacturers in Asia have made large inroads in at least the manufacturing of more common integrated circuits used in day-to-day appliances. And this is set to grow as well.
In a global situation where developed countries, like the US, Europe, and others, can't possibly compete with low-wage countries, it must focus and create jobs in the high-end, high-tech production and manufacturing industries. This is where they can compete. Many countries have been doing, or at least, trying to do this, for example by investing relatively large sums of money in incentives for bringing this about. The US hasn't. Its production capability shrunk, and so did its relative investment into new technologies compared to what other countries are investing (proportionally). It is just not where the focus of attention was (and is) in the US. And over time the US turned a massive trade-surplus into a massive trade-deficit not least because of this. Instead it handed the steering wheel over to the financial sector, or worse, so some idea fix of a 'free market' that will sort everything out for them and that the government doesn't have to do anything about it. And I'm saying: the US has got the wrong people at the steering wheel, and this is going to bite it in its arse.
(Just to be clear about one thing: I think a similar thing happened in the UK, but just not to the same extend, and so I think this can still be dealt with. I think so also because the political environment is more conductive to finding answers to these problems. It isn't complete in thrall to the city. And lets not forget, while this was happening the UK still put relatively large sums of money into education and research for the eventual benefit of the production industry (in biotech for example). Although I still think that the City gets far too much attention for the benefit it does to the whole country, or that is justified for the amount of tax revenue it generates for the UK. But at least that attention is questioned by the populace and the politics in the UK.)
This. It is always the same. You read some parable from the Republican Gospel. Some poor unsuspecting guy refutes all of that nonsense for the umpteenth time. You backpedal or obfuscate things some. Only so that in the next post you can read the same lame parable from the Republican Gospel again. We've all been on that lunatic merry-go-round now several times, and we're really no longer interested in doing so yet one more time. Under these circumstances any attempt at discussion is just pointless. So we're giving you back the same amount of respect as you have for actual facts, reason, or sanity. Which is to say: none ...Usually, when people post shit like this, http://news.bbc.co.uk/1/hi/business/7193904.stm , you ignore it only to regurgitate the same shit in another post. Whats the point? You hold no value to official statistics, happy distort arguments to form insane conclusions, and ironically look down at many with disdain, when they refuse to participate in this sort of circle jerking.
The US imports about four billion barrels a year of oil net, and the trade deficit was $500 billion in 2010. Oil averaged $70/bbl or so, which means $280B of that $500B was oil. The "plastic shit from China" category added more to it back in the boom years(when the deficit peaked at $750B), but today it's literally majority-oil. It's not a surprise that the US trade deficit has piled up some since the days when it was the world's largest oil exporter.
Also, the people who complained about auto bailouts generally complained about finance bailouts too. I know of a few exceptions, but they're almost invariably in the finance industry.
"Make no mistake, Communism lost a big argument - one we know today as the 20th century."
Bartholomeus "Citation Needed" Crane
Let me just use some big ol' numbers to compare a few of the "productive" developed countries you cited compared to the unproductive United States:
United States Industrial Output: $3.23 trillion
Total population of the United States: 313 million
Combined Industrial Output of Japan, Germany, France and South Korea: $3.15 trillion
Total population of Japan, Germany, France and South Korea: 323 million
(https://www.cia.gov/library/publicat...elds/2012.html)
As a side note we've also turned in to a very very large exporter of materials that come from refined oil. Such as Gasoline, which is exported to places like Canada, Mexico, Europe, China, etc etc. I'm just pointing this out because such simplistic examples of why we have a trade deficit because we take in a lot of crude oil is a touch to simplistic these days. Although is does speak to the extreme value of things like gasoline these days if it makes sense to ship it ~1/4 the way across the globe and back again it's by definition inefficient, but it happens. While I know it's cool and all to focus on oil these days but the simple fact behind our trade deficit is the fact that we have a more expensive work force, more worker (civil) rights, higher environmental standards, and the unwillingness to compromise these rights. Unless you're a hard core republican of course, in which case fuck the well being of the people of this nation, and while we're at it lets ok environmentally unsound ideas and either eliminate or cut the budget of agencies that would be there to try to ensure these terrible ideas don't fuck over the environment.
Regardless, due how much it costs us to make things it shoves the U.S. out of competition for making a massive selection of consumer goods and thus we get a trade deficit. Which is actually not as large a problem as people would like us to believe, however it makes a great talking point when trying avoid actually fixing our governments spending problem. We can't tax cut our way out of it because even under a republican government the things they would love to eliminate or lower funding to wouldn't do shit to the deficit, anything that they could cut that would make an impact is taboo. Top that off with their firm confusing attitude that they can cut taxes more and more and more and eventually the budget will magically increase and be balanced. Well.... Magic doesn't exist, sorry GOP worshiping the shrine of Reagan will not change that.
Gonna end my splurge there, otherwise I would have to look over what I typed edit, reorganize, eliminate sentences expand on others. That's just not how I work on FHC.
I just used the Wikipedia production and consumption charts, and I doubt that refining and re-exporting oil counts as consumption. You're right that it's somewhat oversimplified, but I think that it's at least close enough to truth to be useful. (Also, it should be pointed out that there are other nations which are net oil importers that don't have trade deficits, so it's not like this is a law of economics. Still, when complaining about the decline since WW2, it's a useful number to keep in mind.)
"Make no mistake, Communism lost a big argument - one we know today as the 20th century."
"Quality. In a comparison with five other countries, the Commonwealth Fund ranked the United States first in providing the “right care” for a given condition as defined by standard clinical guidelines and gave it especially high marks for preventive care, like Pap smears and mammograms to detect early-stage cancers, and blood tests and cholesterol checks for hypertensive patients. But we scored poorly in coordinating the care of chronically ill patients, in protecting the safety of patients, and in meeting their needs and preferences, which drove our overall quality rating down to last place. American doctors and hospitals kill patients through surgical and medical mistakes more often than their counterparts in other industrialized nations.
Life and death. In a comparison of five countries, the United States had the best survival rate for breast cancer, second best for cervical cancer and childhood leukemia, worst for kidney transplants, and almost-worst for liver transplants and colorectal cancer. In an eight-country comparison, the United States ranked last in years of potential life lost to circulatory diseases, respiratory diseases and diabetes and had the second highest death rate from bronchitis, asthma and emphysema. Although several factors can affect these results, it seems likely that the quality of care delivered was a significant contributor."
- http://www.nytimes.com/2007/08/12/op...pagewanted=all
More data:
- http://www.commonwealthfund.org/~/me...l_brief_v2.pdf
- http://www.rwjf.org/files/research/q...ikeaug2009.pdf
I love how Herpel claims to be Mr. Crunchingnumbers Hardfacts on the last page, then gets smacked around stat-wise on this page while making up his own calculations based off wikipedia estimates.
Just gold. Don't stop believing
Gerome: The stats I've seen in past mostly boil down to "It's good for people who have coverage and awful for everyone else", and yours sound a lot like they fit that pattern. The medical mistakes bit I hadn't heard before, though.Interesting. I'll look into those stat sheets more later.
Fat: Unless you have reason to believe the stats are wrong, what's wrong with Wikipedia as a source? This is still an internet debate, not an academic paper.
"Make no mistake, Communism lost a big argument - one we know today as the 20th century."
A bubble is also perfectly stable until it bursts ...Something is only grotesquely overvalued if (/when!) someone else isn't willing to pay cash for it!
The interesting thing about our present economic order being, that while both borrower and lender have incentives to maintain the bubble as long as it's expanding, the cost of cleaning up the mess is almost invariably on the borrower.
This has been received truth pretty much since New York went broke in the late 1970's.
What that means in practice is that a process of accumulation by dispossession takes place every time a financial bubble pops.
Last edited by Sykes; February 27 2012 at 05:44:12 AM.
Let's try a single piece of inductive logic and see where we go with itOkay, you guys are starting to genuinely confuse me. I mean, I know Barth is too busy writing to be capable of reading, lord knows he's proven that often enough, but Malc and Sacul have generally seemed to be better than that. Do you not notice all the time I spend making fun of Republican stupidity? All the times I agree with you on things? The fact that I'm the only one here who actually crunches data to make points once in a while instead of just copying graphs over? The fact that I seem to be one of the few who actually addresses points other people make without use ofor
?
But no, because I think that Marx is worse than Romney, I'm "in the bubble" and incapable of critical thought. Right.
You assert that the 1% are actually paying 'enough' tax (despite Warren Buffet et al pointing out that their real tax rate is far lower than that the middle class who call themselves "the 99%" pay). Yet the observed and indisputable reality is that middle class real income has been stagnant for a generation whilst that of the 1% has comparitively skyrocketed.
Warren Buffet is full of shit. Yes, he personally pays a fairly low tax rate because of how his income is structured. That does not generalize - the rich pay a far higher rate than the middle class in the aggregate. He is arguing anecdote, which is politically effective, but the data puts the lie to what he's saying. Also, Buffett isn't even accurate with the numbers he uses about himself and his secretary - he provides numbers that look like they're based on imputing payroll taxes paid by Berkshire to her tax rate, but not imputing corporate income taxes paid by Berkshire to his tax rate. If he does that, then his tax rate is higher than hers.
If you want actual data, look at the first chart on this page(it seems to be a rightish think-tank, but I assume their numbers are accurate). For the relevant stat, let's look at average federal tax rates in 2009:
Top 1%: 24.01%
1-5%: 16.40%
5-10%: 11.40%
10-25%: 8.23%
25-50%: 5.58%
Bottom 50%: 1.85%
Sure looks progressive to me. And I checked, AGI is the right stat for this comparison - it includes cap gains, dividend income, and all that fun stuff, the only meaningful deductions are costs of doing business for a sole proprietorship and IRA contributions.
"Make no mistake, Communism lost a big argument - one we know today as the 20th century."
nvm, waste of time. Forget it.
You are aware that a company is a distinct legal entity compared to its owner, right?
And that if you take the tax burden on the company into account when looking at one person's taxes you should do it for everyone else associated with it as well, to make it a fair comparison?
You are aware that a company is a distinct legal entity compared to its owner, right?
And that if you take the tax burden on the company into account when looking at one person's taxes you should do it for everyone else associated with it as well, to make it a fair comparison?
I imagine you're not familiar with US tax law. In Berkshire's case, the reason Herschel is recalculating the percentages (please correct me if I'm wrong here Herschel, but this is important info nonetheless when looking at investment income) is because investment income (Dividends in particular, but I'm not sure if/what other investment vehicles are included) is subject to double taxation. A dividend is just corporate profits distributed to shareholders, but as we all know, corporate profits are already taxed, so you get into scenarios often mentioned in the investing community, in which the tax structure gives a def acto advantage to growth-type stocks over their dividend paying peers.
In civilised countries, we frank that shit! http://en.wikipedia.org/wiki/Franking_credit
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