## Carleas - Is ILP capitalist-philanthropic or socialist?

This is the place to shave off that long white beard and stop being philosophical; a forum for members to just talk like normal human beings.

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

Serendipper wrote:The blue team is called blue even though it's wearing red.

I agree this happens, often, for socialism. But I see a lot of your descriptions of capitalism in the same way. Are there self-identified capitalists out there saying we need wage-slavery? No, at least no more than there are socialists saying we need to the state to seize the means of production. You also describe as capitalistic a system where "on paper [companies] are private, but secretly in the control of totalitarian entities" -- what capitalist is advocating for this?

Serendipper wrote:Outside of employment and usury, capital accumulation would be difficult.

Are non-human primates capitalist? Many non-human primates have highly unequal societies, where elites reap a very high proportion of the available resources through a form of social capital. Similarly in humans, status hierarchies are often very unequal without employment or usury (e.g. high school). And given the late development of usury and the historical prevalence of exploitation and elite resource concentration, it seems incorrect to say that usury is causally necessary.

I haven't read your topic discussing this more fully, I'll take a look.

Serendipper wrote:If everyone were reliant only upon what they themselves could produce, then it would be very difficult to produce twice as much as any other average human with the same motivation.

If everyone were reliant only upon what they themselves could produce, everyone would starve... Which on reflection seems to me a point so obvious that I must be misunderstanding you. Does total self-reliance exclude mutually beneficial exchanges? What do you mean when you say "capitalization on the labors of others"? If I need someone to sit at a desk for eight hours, occasionally answering the phone, and they are willing to sit at a desk for eight hours and occasionally answer a phone in exchange for money, am I capitalizing on the labor of others? Is that person relying on what they themselves can produce?

Serendipper wrote:All wage and salaried labor is exploitation (unless the wage/salary is higher than their productivity, which it sometimes is, typically in management).

But there are two sides to an exchange, so the wage can be less than the productivity from the perspective of the employer, and greater than the productivity from the perspective of the employee. It's not just that I can't sell my time and effort for more money elsewhere, I can't use my time and effort to improve my life more than I can by selling my time and effort in exchange for money that I can spend to improve my life.

That isn't true for everyone, but it is true for almost everyone, and it can be true for everyone. The goal should be to fix the places where it isn't true, rather than to destroy the places where it is true.

Serendipper wrote:Government involvement works best for society when it's in competition with the private sector, not when it takes over the private sector. Government is the governor that restrains the machine from destroying itself, like the spinning things you see on top of steam engines.

I agree that this is a good vision for the role of government. Another that I like is that government is the lattice on which the vines of society grow -- Government structures society to let humans' innate tendencies work together and let society grow.

Serendipper wrote:Oh crap, I never knew you posted in that thread. Sorry about that. I'm usually pretty thorough about replying, but that post must have slipped through the cracks on the page transition.

No worries, I was late to the party and not responsive to where the conversation was at the time.

Serendipper wrote:Still though, no matter how the numbers are sliced n diced, the prevailing trend suggests the more private expenditure, the more the economy is in turmoil.

I think this is true, with the caveat that the data provided is private consumption. It is often said that money is an IOU, and in that framing it makes sense that cashing in a bunch of IOUs can put a country in a worse position (because fewer IOUs means less ability to take risks and weather volatility). Where expenditure is on investment rather than consumption, one is generally left better off. Indeed, it seems we should expect consumption to be the worst indicator for economic health of the four included in GDP, increasing in response to disaster, instability, inflation (as you noted), etc.

Serendipper wrote:So even if the government numbers are horribly inaccurate, the tolerance band is still falls within the capitalistic/anti-socialistic category.

This seems in tension with your claim that "government involvement is evidence of nothing".

Serendipper wrote:I'm not sure who is powerful enough to manipulate exchange rates.

A national bank should be. But it can also be manipulated by regulating prices at which goods can be sold. Shortages are the result of artificially lowering the price of goods. Apparently Venezuela does it by regulating the price of imports and foreign currency exchange.

Serendipper wrote:[E]ven if $33 is correct,$33 per month isn't a minimum wage.

I apologize, I somehow missed that it was $9.50 per month, probably because it is inconceivably low. I do think it's worth noting that this interacts with inflation and currency manipulation; the actual minimum wage is set in sovereign bolivars, and the$9.50 amount is at the black market exchange rate. There have been 25 minimum wage increases since 2013, during most of which the official exchange rate was very very low relative to the black market rate:

Wages here could be both chasing and driving inflation, like a rabbit with a carrot on a stick tied to its head (though it's unlikely that wages are the sole driver of inflation).

In any case, I agree that currently appears so low as to be meaningless.

Serendipper wrote:But Venezuela is sitting on the world's largest oil reserve; that's not enough collateral? And Japan is?!? So 20% of GDP for Venezuela is expensive, but 200% of GDP for Japan is cheap?

Yes, and that should be the expected result. Venezuela's oil is worth less today that it was several years ago, as new oil sources have been developed and the price of oil has fallen. The manipulated official exchange rate makes it even harder to exploit, as do weak institutions, instability, and weak protections on personal property. Those latter factors mean investing time and money in developing a business buying and selling in Venezuela is risky. And that means investing in Venezuelan sovereign debt is risky. The value of anything is a function of risk.

By comparison, Japan isn't vulnerable to the price fluctuations of a single commodity. It has strong, stable institutions, and predictable protections for private property and business. Building a business there has fewer unknowns, and the sovereign debt is thus reliable. Even the aging population, which will absolutely be a problem, is a pretty predictable problem that will unfold gradually and predictably. There could be a coup in Venezuela tomorrow, but there's no risk of everyone over 70 in Japan dying at once.

If Venezuela has a coup, its bonds are probably worth zero. Even if there isn't a coup, there's a non-zero chance that they will default on their bonds. They have a face value that is only their actual value if they don't default.

(Your link on bond values shows almost no trading volume for the past year, so I don't think that price is particularly indicative of actual value. I think it's more likely that the floor is preventing them from falling, rather than rising. I agree they should be allowed to track their actual market value.)

Serendipper wrote:the underlying mechanism is supply and demand where the demand is coming from irrational fear of a deflating currency

Given the chart above, it does not seem that the fear is irrational. (I assume you meant inflating currency; a deflating currency would be increasing in value)

Serendipper wrote:Idk, the US has 1.4 billion pounds of cheese in storage from trying to keep the price high.

This is the same point in the opposite direction: artificially high prices lead to overproduction and waste.

Serendipper wrote:from within the video we learn that Venezuelans themselves say there is no socialism there.

Highly meaningful, since political philosophy education in Venezuela is universal and high quality, and the definition of socialism is objective and not at all subject to disagreement :)

I would say that, as a prior, we should assume that the average Venezuelan is about as well-informed about what it means to be socialist as the average American (the latter best summed up by the demand to "keep your government hands off their Medicare").

Serendipper wrote:Suppose I appear in court saying "I have video evidence, but I left it at home since I didn't want to bore anyone and figured it would portray me as unacademic, so if you'll just take my word for it, that would be great!"

"I have video evidence of the truth of utilitarianism" seems a less compelling claim! Discussions on ILP aren't court cases, they are almost never subject to resolution by video evidence. A court is deciding whether and how a single event happened. Philosophy is abstracted as far away from single occurrences as one can get. Video evidence can refute claims like "X has never happened", or "there are exactly zero functioning shopping malls in Venezuela". That doesn't advance very many conversations.

Even videos of Chomsky speeches are really just links to more words. A transcript of the video would do just as well to make the point that a guy who knows what he's talking about said XYZ.

Serendipper wrote:And there is a lot of philosophical insight to be gleaned from cartoonish videos.

Sort of. Art contains much truth, but little rigor. It is also not very information dense. It can be very rhetorically persuasive, and can point the way to truths, but it doesn't do a very good job of nailing them down or firmly establishing them.

I would argue that most of the philosophical insight to be gleaned from art is brought by the consumer of art, rather than conveyed by the art itself. In the light of a philosophical mind, almost anything bears insight.
User Control Panel > Board preference > Edit display options > Display signatures: No.
Carleas
Magister Ludi

Posts: 6049
Joined: Wed Feb 02, 2005 8:10 pm
Location: Washington DC, USA

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

Carleas wrote:
Serendipper wrote:The blue team is called blue even though it's wearing red.

I agree this happens, often, for socialism. But I see a lot of your descriptions of capitalism in the same way. Are there self-identified capitalists out there saying we need wage-slavery? No, at least no more than there are socialists saying we need to the state to seize the means of production. You also describe as capitalistic a system where "on paper [companies] are private, but secretly in the control of totalitarian entities" -- what capitalist is advocating for this?

Well, the most fundamental attribute of capitalism is the accumulation of capital; the freedom to be as rich as possible by just about any means and without interference from anyone. The spirit of the age: gain wealth, forgetting all but self. Greed is good. That's capitalism.

So then, anywhere we can identify a division of wealth, it is taken as evidence that capitalism has occurred, because how else would it be that way?

So when I say "on paper [companies] are private, but secretly in the control of totalitarian entities" are capitalists, I'm not meaning that someone who considers himself a capitalist would advocate that, I'm saying that capitalism happened: ie someone capitalized on someone else. People who call themselves capitalists aren't even sure what capitalism is; they could think it's americanism or who knows what.

The essence of economics is answering the question of how wealth should be allocated to citizens and the various mechanisms for achieving it.

But there are only two ways of arranging money: either spread it around (by whatever mechanism) or condense it into few hands (by whatever mechanism).

President Franklin D. Roosevelt
July 2, 1932

There are two ways of viewing the Government's duty in matters affecting economic and social life. The first sees to it that a favored few are helped and hopes that some of their prosperity will leak through, sift through, to labor, to the farmer, to the small business man. That theory belongs to the party of Toryism, and I had hoped that most of the Tories left this country in 1776.

The way FDR tells it, the trickle-down folks were the RedCoats, which makes Reagan a treasonous infiltrate along with the entire gop.

You see, the division of wealth is zerosum, like the stock market: no one can get rich unless someone gets poor. If we had a gold standard, that fact would be perfectly clear since if someone is amassing quantities of gold, then the gold is obviously coming from everyone else. What's not as clear is the fact that printed fiat money created to enrich the rich also siphons wealth from the poor by diluting the money supply (ie inflation). If the Fed gives new money to Goldman Sachs, then your money is worth less and overnight wealth has been taken from you. So therefore every rich person is representative of a group of poor people; every rich city is representative of a poor city; every rich state represents a poor state and every rich country needs a poor county donating its productivity to the cause. The US is rich because mexico and china are poor. The Hamptons exist because Detroit exists. Look at Detroit and the Hamptons in 1950 and compare to today and it should be obvious like pushing down on one side of a waterbed makes the other side rise. How it became that way is what I'm calling capitalism: someone capitalized, somehow, on someone else, and that capitalization resulted in wealth disparity.

So the identification of capitalism is quite easy: just look for poor people. "Ah, mexico is poor, must be capitalism!" It can't be socialism because there is no mechanism to run out of money by spreading money around to people; where's it gonna go? Mars?

Ironic that "running out of other people's money" only applies to capitalism: when the poor finally have no more money to pay the interest and profits to the rich, the economy crashes. In 2000, after everyone and their brother finally bought stocks, there was no one left to buy, so it crashed. In 2007, there was no one left to buy a house and after the inflation of $4 gas set in, people couldn't afford to pay the interest on their loans and the stack of cards fell. I don't know what's holding up the economy now since the banks are tightening up with higher interest rates and the fed is draining money out. Maybe it's the EU, BOJ and SNB. But the reason periodic crashes plague capitalism is because of the transference of wealth from the poor to the rich where the poor inevitably run out of money, sparking a cascade of defaults. Serendipper wrote:Outside of employment and usury, capital accumulation would be difficult. Are non-human primates capitalist? Many non-human primates have highly unequal societies, where elites reap a very high proportion of the available resources through a form of social capital. Similarly in humans, status hierarchies are often very unequal without employment or usury (e.g. high school). And given the late development of usury and the historical prevalence of exploitation and elite resource concentration, it seems incorrect to say that usury is causally necessary. I haven't read your topic discussing this more fully, I'll take a look. It may be humorous to discover that I credit the existence of humans as intelligent creatures to the capitalization on animals. We use animals to process vegetation to extract B12, K2, and A which is evidenced by our small guts and inability, or reduced ability, to assimilate those nutrients ourselves. Animals have been our slaves for a long long time, and not just pulling plows. Likewise human slaves have served a purpose by doing the hard work which allowed others to concentrate on science and art, which was ultimately good for the species. I'm not necessarily condemning slavery, but merely, first of all, suggesting that we should recognize that's what's going on and furthermore, the reason said slavery is still existent is to provide billionaires with a few more billion.... and I don't see that as a good reason to continue to have slavery, especially in the age of mechanized slaves. All that continued suffering for no purpose is just dragging society down... to the point of reviving antiquated diseases. Also, there is a good argument to be made about the ancient Egyptians having steam engine technology, but not pursuing it because human labor was too cheap. So therefore, if a government increases the costs of humans, it drives discovery of innovative ways around utilizing humans. And really, only a government could accomplish that.,, as evidenced by the Egyptians having steam technology but merely viewing it as a toy. I'm sure published research exists in these areas if you wish to pursue them (how social rights drive innovation and how animals were responsible for the development of our big brains). But I see it as an axiom. Serendipper wrote:If everyone were reliant only upon what they themselves could produce, then it would be very difficult to produce twice as much as any other average human with the same motivation. If everyone were reliant only upon what they themselves could produce, everyone would starve... Which on reflection seems to me a point so obvious that I must be misunderstanding you. Does total self-reliance exclude mutually beneficial exchanges? What do you mean when you say "capitalization on the labors of others"? If I need someone to sit at a desk for eight hours, occasionally answering the phone, and they are willing to sit at a desk for eight hours and occasionally answer a phone in exchange for money, am I capitalizing on the labor of others? Is that person relying on what they themselves can produce? No no, I'm not suggesting everyone should go into the hills and fend for themselves, but for instance if I found a way to produce$50/hr and I hire someone for $10/hr to do it, then becoming rich is just a function of adding more employees paying me$40/hr. If I do it alone, I'm only making $50/hr. But with 1000 employees, I'm making$40,000/hr.... plus my $50/hr. I don't know how huge lawfirms work, but I'm supposing all the lawyers are working FOR the guy at the top and his compensation depends on how many lawyers he has under him. A secretary I could see as a luxury, in which case it's philanthropic, unless they were vital to the business, in which case it could be exploitative depending on the compensation in comparison to the value added. I don't know much about secretaries, but I'm guessing that many of them are probably paid more than what they actually contribute. Serendipper wrote:All wage and salaried labor is exploitation (unless the wage/salary is higher than their productivity, which it sometimes is, typically in management). But there are two sides to an exchange, so the wage can be less than the productivity from the perspective of the employer, and greater than the productivity from the perspective of the employee. It's not just that I can't sell my time and effort for more money elsewhere, I can't use my time and effort to improve my life more than I can by selling my time and effort in exchange for money that I can spend to improve my life. That isn't true for everyone, but it is true for almost everyone, and it can be true for everyone. The goal should be to fix the places where it isn't true, rather than to destroy the places where it is true. No the productivity is the amount of revenue the employee generates. In my case is was roughly$50/hr. So I'd hire a guy for $10 and it was his job to bring$50 in revenue per hour. There is no productivity from his point of view.

Serendipper wrote:Still though, no matter how the numbers are sliced n diced, the prevailing trend suggests the more private expenditure, the more the economy is in turmoil.

I think this is true, with the caveat that the data provided is private consumption. It is often said that money is an IOU, and in that framing it makes sense that cashing in a bunch of IOUs can put a country in a worse position (because fewer IOUs means less ability to take risks and weather volatility). Where expenditure is on investment rather than consumption, one is generally left better off. Indeed, it seems we should expect consumption to be the worst indicator for economic health of the four included in GDP, increasing in response to disaster, instability, inflation (as you noted), etc.

Yes all money is loaned into existence in our modern banking system. The easiest way to picture that is lending me $20 then I issue you an IOU which is worth$20 to anyone considering my credit good enough, which is effectively the creation of $20 from nothing. Then you could trade the IOU to KT for$20 and if I ever pay KT the $20, then the money supply is reduced by$20. So all bank loans, government borrowings, car loans, student loans, stocks purchased on margin, etc are creating money (and why defaults snowball quickly out of control as the money supply is reduced making it progressively harder not to default).

You might get a kick out of this: First National Bank of Montgomery v. Daly

Serendipper wrote:So even if the government numbers are horribly inaccurate, the tolerance band is still falls within the capitalistic/anti-socialistic category.

This seems in tension with your claim that "government involvement is evidence of nothing".

Government involvement is different from government spending. I don't know what government involvement means, but I do know what government spending means (it means regular people are getting money).

Serendipper wrote:I'm not sure who is powerful enough to manipulate exchange rates.

A national bank should be. But it can also be manipulated by regulating prices at which goods can be sold. Shortages are the result of artificially lowering the price of goods. Apparently Venezuela does it by regulating the price of imports and foreign currency exchange.

Yeah I guess so. But wouldn't there also be a shortage if the price were too high? Not a shortage of product, but a shortage of ability to purchase the product, which is the same thing in the end. If the gov holds the price of milk down so cheap that shelves are empty, then I can't buy milk. If the gov lets the price rise above my means to buy milk, then I can't buy milk even if the shelves are full. This actually happens to me all the time: the local dollar store will sell milk so cheap that the shelves are usually empty. I'd rather pay an extra 50 cents and have milk.

Serendipper wrote:[E]ven if $33 is correct,$33 per month isn't a minimum wage.

I apologize, I somehow missed that it was $9.50 per month, probably because it is inconceivably low. But notice how the NYT guy used that as a point to substantiate socialism in venezuela. One has to wonder what incentive he has to lie. Is he just being patriotic to his team? Why is it so important that venezuela be regarded as socialism? I do think it's worth noting that this interacts with inflation and currency manipulation; the actual minimum wage is set in sovereign bolivars, and the$9.50 amount is at the black market exchange rate. There have been 25 minimum wage increases since 2013, during most of which the official exchange rate was very very low relative to the black market rate:
Wages here could be both chasing and driving inflation, like a rabbit with a carrot on a stick tied to its head (though it's unlikely that wages are the sole driver of inflation).

Yes, min wage in the US would be something like $1200/mo depending on hours worked.$9.50 is off by a factor of 126!

I've given this a good deal of thought throughout the years wondering why currencies inflate and I can only find a couple mechanisms: people have more money or they are scared.

Serendipper wrote:But Venezuela is sitting on the world's largest oil reserve; that's not enough collateral? And Japan is?!? So 20% of GDP for Venezuela is expensive, but 200% of GDP for Japan is cheap?

Yes, and that should be the expected result. Venezuela's oil is worth less today that it was several years ago, as new oil sources have been developed and the price of oil has fallen.

Yes I watched the oil price fall at the end of 2014 and it was due to fracking, but mainly Janet Yellen et al cheerleading the USD higher by threatening to raise rates every chance they got, along with the treasury selling foreign reserves (ie buying USD back) and along with Japan launching QQE on Halloween. Not just venezuela, but lots of emerging markets took it on the chin.

The manipulated official exchange rate makes it even harder to exploit, as do weak institutions, instability, and weak protections on personal property. Those latter factors mean investing time and money in developing a business buying and selling in Venezuela is risky. And that means investing in Venezuelan sovereign debt is risky. The value of anything is a function of risk.

So if manipulation is to blame, then what about china? China already is, and has been, the way everyone is trying to portray venezuela, including currency manipulation, price controls, you name it.

By comparison, Japan isn't vulnerable to the price fluctuations of a single commodity. It has strong, stable institutions, and predictable protections for private property and business. Building a business there has fewer unknowns, and the sovereign debt is thus reliable. Even the aging population, which will absolutely be a problem, is a pretty predictable problem that will unfold gradually and predictably. There could be a coup in Venezuela tomorrow, but there's no risk of everyone over 70 in Japan dying at once.

If Venezuela has a coup, its bonds are probably worth zero. Even if there isn't a coup, there's a non-zero chance that they will default on their bonds. They have a face value that is only their actual value if they don't default.

(Your link on bond values shows almost no trading volume for the past year, so I don't think that price is particularly indicative of actual value. I think it's more likely that the floor is preventing them from falling, rather than rising. I agree they should be allowed to track their actual market value.)

But the thing is Japan is monetizing its own debt, meaning it's lending itself money to provide social services, and yet there are no catastrophic effects from the dreaded "socialism" monster.

Japan, by far the most over-indebted country in the world in relationship to its economy, has decided that there will be no debt crisis. A debt crisis would force Japan to brutally cut its budget for social services and raise taxes by large amounts to make ends meet. Japan has decided that it would never come to that. Instead, there may be a currency crisis or an inflation crisis, or both, which would spread the pain more evenly.

Japan can weather this type of crisis better than other countries because it has a large trade surplus and a large pile of foreign exchange reserves, though it would whittle down the wealth and purchasing power of the people. So this type of crisis will be kicked down the road for as long as possible. And that could be quite a while.

What Japan will never have is a debt crisis since the government bond market is in total control of the BOJ. Given the extent of its control over the market, the BOJ can now ease up on buying these JGBs. But market forces will never be allowed mess with that market.
https://wolfstreet.com/2018/10/08/banko ... bt-crisis/

Serendipper wrote:the underlying mechanism is supply and demand where the demand is coming from irrational fear of a deflating currency

Given the chart above, it does not seem that the fear is irrational. (I assume you meant inflating currency; a deflating currency would be increasing in value)

Yeah the bolivar is deflating and the USD is inflating along with the price of goods. The people are scared their money is becoming worthless, so they're in a hurry to get rid of it before it loses more value. There is an idea floating around that the Fed wants to keep inflation at 2% so that people will not delay purchases for fear the price will be higher next year, which could be true, but that isn't the reason they aspire for 2%. That number is just what they decided indicates healthy wage growth; if goods are inflating 2%, then people are making more than before, and that's good. On the other hand, if prices are falling, it indicates people are making less.

Serendipper wrote:Idk, the US has 1.4 billion pounds of cheese in storage from trying to keep the price high.

This is the same point in the opposite direction: artificially high prices lead to overproduction and waste.

Well, they don't want the small farmers to go under. Is that socialism?

Serendipper wrote:from within the video we learn that Venezuelans themselves say there is no socialism there.

Highly meaningful, since political philosophy education in Venezuela is universal and high quality, and the definition of socialism is objective and not at all subject to disagreement

I would say that, as a prior, we should assume that the average Venezuelan is about as well-informed about what it means to be socialist as the average American (the latter best summed up by the demand to "keep your government hands off their Medicare").

Particularly that guy sitting at the table motioning with his hand and head to drive home the most emphatic "No" possible. Communism? No. Dictator? No. Humanitarian crisis? A little bit.

Serendipper wrote:Suppose I appear in court saying "I have video evidence, but I left it at home since I didn't want to bore anyone and figured it would portray me as unacademic, so if you'll just take my word for it, that would be great!"

"I have video evidence of the truth of utilitarianism" seems a less compelling claim! Discussions on ILP aren't court cases, they are almost never subject to resolution by video evidence. A court is deciding whether and how a single event happened. Philosophy is abstracted as far away from single occurrences as one can get. Video evidence can refute claims like "X has never happened", or "there are exactly zero functioning shopping malls in Venezuela". That doesn't advance very many conversations.

Even videos of Chomsky speeches are really just links to more words. A transcript of the video would do just as well to make the point that a guy who knows what he's talking about said XYZ.

If I could quote chomsky ad hoc without referencing the source then that would be much easier on me, I just figured I needed to prove he said the words.

And if text were sufficient, then why have professors giving lectures? Just issue books and tests. Part of the conveyance is the elaboration in the lecture in addition to what's in the textbook, so that's the job of pictures and video on a forum.

Serendipper wrote:And there is a lot of philosophical insight to be gleaned from cartoonish videos.

Sort of. Art contains much truth, but little rigor. It is also not very information dense. It can be very rhetorically persuasive, and can point the way to truths, but it doesn't do a very good job of nailing them down or firmly establishing them.

Sometimes it helps. You may think Noah's Ark sounds ridiculous, but seeing the scenario animated definitely removes all suspicion of plausibility.

I would argue that most of the philosophical insight to be gleaned from art is brought by the consumer of art, rather than conveyed by the art itself.

Yes I've said something like that myself: that more can be learned from the person's reaction to art than about the artist by observing the art.
Serendipper
Philosopher

Posts: 2180
Joined: Sun Aug 13, 2017 7:30 pm

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

But the reason periodic crashes plague capitalism is because of the transference of wealth from the poor to the rich where the poor inevitably run out of money, sparking a cascade of defaults.

hey yo dip, you heard my economic rap before? this is some weak ass shit i did before i was gangsta, but it's for educational purposes so i ain't tryin' to shake niggas up. now i ain't got no degree in economics, but i got a good grasp on the basic problems, see. so im'a put it down in a song that can reach the peoples, na mean?

it's in response to this absolutely brilliant video: https://www.youtube.com/watch?v=d0nERTFo-Sk

https://vocaroo.com/i/s1WgBAjgkg2T

my progression runs like this:

non-monetary bartering system works for a while
problem of the 'double coincidence of wants' forces the invention of money
mercantile system develops based on commodity backed money... works for a while
invention of fiat money and central banks
concentration of wealth results in periodic financial crisis and market crash
promethean75
Philosopher

Posts: 2615
Joined: Thu Jan 31, 2019 7:10 pm

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

promethean75 wrote:
But the reason periodic crashes plague capitalism is because of the transference of wealth from the poor to the rich where the poor inevitably run out of money, sparking a cascade of defaults.

Cool video!

Regardless of ethics, here are the mechanics of the situation:

redistribution.jpg (137.16 KiB) Viewed 3041 times

The regular Joe only has one source of income: his wage. But wages are a mechanism to transfer wealth up, not down.

Richard Wolff, professor of economics. https://en.wikipedia.org/wiki/Richard_D._Wolff

Alma mater
Harvard University (BA)
Stanford University (MA)
Yale University (MA, 1966; MA, 1967; PhD)

Transcript starting at 39:00

So to keep the game going he has to replace the tools and equipment and he has to pay the workers, but he has to pay the workers... here we go folks: less than the value added by the workers when they work. Or to use the technical term economists like: he has to rip the workers off. He has to steal from them part of what their labor added.

You know what the lesson here is? For those of you who imagined that when you graduate from here you will get a job, in fact the only job you will accept is one that pays you what you're worth. Uh.. never gonna happen! The condition of your employment is that you produce more by your labor than you get paid. Welcome to the capitalist system!

The best way to describe your work in a capitalist enterprise is not that the employer gives you a job, it's that YOU give your employer the surplus! The giver and getter are in reverse order from what the language suggests.

That is why wealth always trickles up in a capitalist system, and the system crashes when the wealth is exhausted on the bottom and consequently can no longer trickle up.

To prevent wealth exhaustion, the economy is required to continuously grow in order to provide new jobs to keep the consumer capitalized. That's why recessions are big deals and stagnation isn't an option.

Fundamentally, ALL money is loaned into existence and has an interest that must be repaid, but the interest doesn't exist, so yet more money has to be created to pay the interest on the old money, which itself requires yet more money to pay that interest and so on forever, so the economy must keep growing and growing or it crashes.... and that's just from the interest-perspective, which ignores the fact that the rich are getting richer and competing for the same exhausted wealth that could otherwise be steered towards interest payments.

The two mechanisms sucking wealth upwards are interest and profit. If that is not balanced by redistributive taxation, then consumers must undertake their own debt until their credit worthiness runs out: mortgages, helocs, credit cards, auto loans, student loans.... how much more can the consumer bear just for the purpose of making the rich richer?

The State of the American Debt Slaves
Serendipper
Philosopher

Posts: 2180
Joined: Sun Aug 13, 2017 7:30 pm

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

Serendipper wrote:Well, the most fundamental attribute of capitalism is the accumulation of capital; the freedom to be as rich as possible by just about any means and without interference from anyone.

Accumulation is a byproduct, the defining feature is the private ownership of the means of production and its operation for profit. It also bakes in the concept of voluntary exchange, which significantly restricts the means through which one can earn profits.

Serendipper wrote:So then, anywhere we can identify a division of wealth, it is taken as evidence that capitalism has occurred, because how else would it be that way?

So when I say "on paper [companies] are private, but secretly in the control of totalitarian entities" are capitalists, I'm not meaning that someone who considers himself a capitalist would advocate that, I'm saying that capitalism happened: ie someone capitalized on someone else.

If you and I own land of roughly equal value, and a meteor strikes my land and irradiates it to the point of no longer having any value, have you exploited me? We certainly have a difference in wealth, but you haven't done anything to me, I had a run of bad luck and it cost me the value of my land.

Serendipper wrote:the division of wealth is zerosum, like the stock market: no one can get rich unless someone gets poor.

This is false. Take a simplified stock market in a world with two companies and a virulent plague with no know cure. Each company is made of one person, and they are phrama startups trying to cure the virulent plague. Company L is lazy and stupid. Company M is motivated and brilliant. It isn't zero sum which company people invest in, because if people invest in Company L, their money is likely to be wasted and society made no better off; if people invest in Company M, their money is likely to lead to a cure for the disease. There is a positive externality in the form of a cure for the plague.

This also shows that people can get rich without others getting poor. For this, we only need to look at global per capita GDP, which has been rising rapidly. People are materially better off all over the world, without some group being sufficiently materially worse off to offset the staggering gains.

Serendipper wrote:It may be humorous to discover that I credit the existence of humans as intelligent creatures to the capitalization on animals.

This just seems like an unnecessary equivocation on the term "capital". The predator-prey relationship is not a market transaction.

Serendipper wrote:No the productivity is the amount of revenue the employee generates.

Take an employee on an assembly line, whose job is to take a washer from a box of washers and place it on a bolt as the widgets pass by. That employee sitting in a field, picking out washers and placing them on bolts, is not doing anything of value. That employee sitting on an assembly line and doing exactly the same thing is doing something quite valuable. There is no fixed value to the labor.

Similarly, say person A has a bike with one wheel and a car tire, and person B has a car with three wheels and a bike tire. They exchange the wheel for the tire, and both people are bad better off, even though neither has made anything. Value has been produced without anybody making anything.

Serendipper wrote:You might get a kick out of [First National Bank of Montgomery v. Daly]

It just seems like Daly is being disingenuous and bamboozling a jury full of bumpkins. Not surprisingly, he also seems to have believed that taxes are theft.

Serendipper wrote:[W]ouldn't there also be a shortage if the price were too high? Not a shortage of product, but a shortage of ability to purchase the product, which is the same thing in the end.

My intuition is that such a situation could not last, unless the price were not permitted to fall. If the price can move, then a rational seller should lower the price as the demand falls.

Note that an example of somewhere that the price may not be permitted to fall is with the minimum wage, and some studies have found a relationship between unemployment and increases in the minimum wage (though other studies contradict these findings).

Serendipper wrote:So if manipulation is to blame, then what about china?

It's not only currency manipulation, although Chinese currency manipulation has been mostly to keep Chinese currency weak against the dollar to boost exports.

China has a fairly stable government, a diversified economy, and though its private property protections aren't good (especially for non-Chinese), the business climate has improved significantly, and their economy has come along with it. They also have the benefit of an enormous market, which means that the investment in figuring out how to navigate their laws is more likely to pay off when you can open up access to that many more buyers for your goods.

Serendipper wrote:Well, they don't want the small farmers to go under. Is that socialism?

I would say yes, but my go-to definition of socialism is not the definition you are using.

Serendipper wrote:And if text were sufficient, then why have professors giving lectures? Just issue books and tests. Part of the conveyance is the elaboration in the lecture in addition to what's in the textbook, so that's the job of pictures and video on a forum.

Probably lecturing is a holdover from a time when printing was much more expensive. Now, there's some argument to keep it where it can be somewhat interactive, but there's also a move towards more effective media for education. I'm pretty sure that the most effective way to learn is actually via testing, either aural or written, with quick feedback and spaced repetition. I don't have a cite for that.
User Control Panel > Board preference > Edit display options > Display signatures: No.
Carleas
Magister Ludi

Posts: 6049
Joined: Wed Feb 02, 2005 8:10 pm
Location: Washington DC, USA

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

Carleas wrote:
Serendipper wrote:Well, the most fundamental attribute of capitalism is the accumulation of capital; the freedom to be as rich as possible by just about any means and without interference from anyone.

Accumulation is a byproduct, the defining feature is the private ownership of the means of production and its operation for profit. It also bakes in the concept of voluntary exchange, which significantly restricts the means through which one can earn profits.

Private ownership can't be the defining element because a co-op is a private enterprise endeavoring to maximize profits. The defining element of capitalism comes into play when the co-op is replaced by wage-labor in order to capitalize on the worker.

If profits are increased in a co-op, then everyone gets a cut.

If profits are increased in a capitalistic workplace, no one gets a raise because wages are determined by supply of and demand for workers.

The fundamental idea of the capitalistic workplace is to consolidate wealth and the fundamental idea of the co-op is to disperse wealth.

Serendipper wrote:So then, anywhere we can identify a division of wealth, it is taken as evidence that capitalism has occurred, because how else would it be that way?

So when I say "on paper [companies] are private, but secretly in the control of totalitarian entities" are capitalists, I'm not meaning that someone who considers himself a capitalist would advocate that, I'm saying that capitalism happened: ie someone capitalized on someone else.

If you and I own land of roughly equal value, and a meteor strikes my land and irradiates it to the point of no longer having any value, have you exploited me? We certainly have a difference in wealth, but you haven't done anything to me, I had a run of bad luck and it cost me the value of my land.

Good point. But I'm talking in terms of large societies trending over large periods of time where it's evident that bad luck is not to blame for the wealth disparity. No, the way to make lots of poor people and maintain their poverty for long periods of time is to have a capitalistic system that consolidates wealth into few hands. In fact, that's the only way.

Serendipper wrote:the division of wealth is zerosum, like the stock market: no one can get rich unless someone gets poor.

This is false. Take a simplified stock market in a world with two companies and a virulent plague with no know cure. Each company is made of one person, and they are phrama startups trying to cure the virulent plague. Company L is lazy and stupid. Company M is motivated and brilliant. It isn't zero sum which company people invest in, because if people invest in Company L, their money is likely to be wasted and society made no better off; if people invest in Company M, their money is likely to lead to a cure for the disease. There is a positive externality in the form of a cure for the plague.

No it's definitely zero sum. Money is not created in the stock market as there is no mechanism for it except the leverage which is undone when the trade is closed and gain/loss realized, but that leverage is actually an interest loan that siphons some of the gain making it less than zero sum: negative sum.

Now, everyone can get rich on paper, in equity, but if everyone tried to sell and realize their gains, then only the first ones out would receive any money; the last ones are called "bagholders".

This also shows that people can get rich without others getting poor. For this, we only need to look at global per capita GDP, which has been rising rapidly.

GDP is not a measure of wealth. If a tornado blows through a town, we spend existing money to repair the damage, it raises GDP, but we haven't advanced at all.

Check out candidate Andrew Yang https://www.yang2020.com/policies/human-capitalism/

As President, I will…
Change the way we measure the economy, from GDP and the stock market to a more inclusive set of measurements that ensures humans are thriving, not barely making it by. New measurements like Median Income and Standard of Living, Health-adjusted Life Expectancy, Mental Health, Childhood Success Rates, Social and Economic Mobility, Absence of Substance Abuse, and other measurements will give us a much clearer and more powerful sense of how we are doing both individually and as a society.

Noam Chomsky argues that mothers perform the most valuable service to humanity and therefore should be the highest compensated, but we have it backward: the stock broker who does nothing is compensated most while the mothers struggle.

GDP really doesn't mean much of anything and is mostly a red herring for people to fixate to keep them from researching more meaningful measures.

People are materially better off all over the world, without some group being sufficiently materially worse off to offset the staggering gains.

Thanks to the machines replacing the human slaves, but the global people have not realized an equal gain of the fruits that the machines freely gave, but were hoarded into few hands.

Serendipper wrote:
Are non-human primates capitalist?
It may be humorous to discover that I credit the existence of humans as intelligent creatures to the capitalization on animals.

This just seems like an unnecessary equivocation on the term "capital". The predator-prey relationship is not a market transaction.

Then why did you bring it up?

Capitalism is slavery. Actually, chattel-slavery was preferable to wage-slavery because it was argued, by George Fitzhugh, that owners of slaves would take better care of them than renters of slaves.

Before you get too married to growth justifying capitalism, check out how Noam Made this guy feel (the comments are fairly brutal):

Serendipper wrote:No the productivity is the amount of revenue the employee generates.

Take an employee on an assembly line, whose job is to take a washer from a box of washers and place it on a bolt as the widgets pass by. That employee sitting in a field, picking out washers and placing them on bolts, is not doing anything of value. That employee sitting on an assembly line and doing exactly the same thing is doing something quite valuable. There is no fixed value to the labor.

Yes there is: it's called a % profit. If he's sitting in a field picking washers, then the profit is zero and his wage is zero, but if he's sitting in a factory, then his wage is his contribution to the collective goal of making a product and could be measured in terms of a % of the profit made from that product. Maybe he's the most unnecessary link in the chain, but he's still a link.

Similarly, say person A has a bike with one wheel and a car tire, and person B has a car with three wheels and a bike tire. They exchange the wheel for the tire, and both people are bad better off, even though neither has made anything. Value has been produced without anybody making anything.

Value is just relative to whim. What if I'd prefer a car with a bike tire? Value is not anything that could be objectively measured. If someone pays $50 for a pack of McDonalds ketchup, does that mean it's worth$50? It's worth whatever anyone arbitrarily values it.

Serendipper wrote:You might get a kick out of [First National Bank of Montgomery v. Daly]

It just seems like Daly is being disingenuous and bamboozling a jury full of bumpkins. Not surprisingly, he also seems to have believed that taxes are theft.

But he was right about nothing of value being exchanged for the house, but instead money was conjured from thin air.

Serendipper wrote:[W]ouldn't there also be a shortage if the price were too high? Not a shortage of product, but a shortage of ability to purchase the product, which is the same thing in the end.

My intuition is that such a situation could not last, unless the price were not permitted to fall. If the price can move, then a rational seller should lower the price as the demand falls.

Note that an example of somewhere that the price may not be permitted to fall is with the minimum wage, and some studies have found a relationship between unemployment and increases in the minimum wage (though other studies contradict these findings).

It's hard to argue against 23 min wage hikes over 80 years as being detrimental, though some still do. My retort is if MW hikes destroy jobs, then good; that's what we want. Why do we want to create more work for people to do? But there is no evidence that jobs are destroyed.

youthemployment2.jpg (85.95 KiB) Viewed 3019 times

The destruction of youth employment starting in the 80s came as college education became increasingly a requirement for employment.

But people STILL argue that "well, maybe there would have been even more jobs if not for the MW."

Then they would have been crap jobs.

Franklin Roosevelt's Statement on the National Industrial Recovery Act
June 16, 1933

In my Inaugural I laid down the simple proposition that nobody is going to starve in this country. It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By "business" I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.

If a business is reliant upon low wages to exist as a profitable business, then it's a poor business model in need of revamping.

Serendipper wrote:So if manipulation is to blame, then what about china?

It's not only currency manipulation, although Chinese currency manipulation has been mostly to keep Chinese currency weak against the dollar to boost exports.

China has sold a lot of foreign reserves in a struggle to keep the yuan strong. https://tradingeconomics.com/china/fore ... e-reserves

Serendipper wrote:Well, they don't want the small farmers to go under. Is that socialism?

I would say yes, but my go-to definition of socialism is not the definition you are using.

What definition did you have in mind?

Serendipper wrote:And if text were sufficient, then why have professors giving lectures? Just issue books and tests. Part of the conveyance is the elaboration in the lecture in addition to what's in the textbook, so that's the job of pictures and video on a forum.

Probably lecturing is a holdover from a time when printing was much more expensive. Now, there's some argument to keep it where it can be somewhat interactive, but there's also a move towards more effective media for education. I'm pretty sure that the most effective way to learn is actually via testing, either aural or written, with quick feedback and spaced repetition. I don't have a cite for that.

Professors mainly just rehash what's in the book, and yet people still can't get it. Probably the best teacher I ever had was History in High School, which was unfortunate for me because I had zero interest in it at the time, but on the first day of class he said the state requires he issue books and instructed us to put them under our beds for the duration of the year so that we would not lose them. He said he didn't need a book to teach us history. Man, the note-taking was frantic!
Serendipper
Philosopher

Posts: 2180
Joined: Sun Aug 13, 2017 7:30 pm

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

promethean75 wrote:hey yo dip, you heard my economic rap before?

Finally got a chance to listen to this. I'd seen the Hayek/Keynes video before, and I like your rap, although I disagree with your history. My understanding is that money arose naturally out of commodity trading, i.e. precious metals were themselves a commodity that never spoil and had consistent demand, so they became a de facto currency in a barter economy; coins were uniform amounts with a seal that testifies to purity. Banking arose to solve the problem of dealing with protecting and transporting large amounts of precious metals, and also allowed for fractional reserve lending. Badda bing badda boom, fiat money.

(though admittedly that's mostly taken from Niall Ferguson's The Ascent of Money, not exactly a politically neutral source)

Serendipper wrote:Private ownership can't be the defining element because a co-op is a private enterprise endeavoring to maximize profits. The defining element of capitalism comes into play when the co-op is replaced by wage-labor in order to capitalize on the worker.

If profits are increased in a co-op, then everyone gets a cut.

If profits are increased in a capitalistic workplace, no one gets a raise because wages are determined by supply of and demand for workers.

The fundamental idea of the capitalistic workplace is to consolidate wealth and the fundamental idea of the co-op is to disperse wealth.

How exactly does a co-op work? Are co-ops competing with each other? Can one co-op hire another to perform some service? Is everyone that a co-op hires made a part of the co-op? If so, how can there be more than one co-op? If not, how are they different from a corporation like e.g. Uber, that on paper hires a fleet of independent contractors?

Suppose I get some partners and we're all equal shareholders in our 'co-op', and we hire some people to do some work for our co-op -- I'm just describing a capitalist partnership, right? If not, what's different?

Serendipper wrote:I'm talking in terms of large societies trending over large periods of time where it's evident that bad luck is not to blame for the wealth disparity.

By this point in history, some parts of the world are better for human life than others. Modern developed cities have better infrastructure than rural villages in developing countries. People born in the developing world are super unlucky.

There are ways we could restructure the world to erase that luck-based wealth disparity, but there is a lot of luck-based wealth disparity, even in terms of large society trending over large periods of time.

Serendipper wrote:Money is not created in the stock market ...

True, but value is created. Even with a fixed money supply, different allocations of that money within the stock market will mean different outcomes in terms of value. It's not just about who can sell for what, it's that, under one allocation, there is no cure for the plague, and under another there is. The same money is worth more in the world where one possible use of money is to buy the cure for the plague.

Serendipper wrote:Check out candidate Andrew Yang

I am a huge fan of Andrew Yang! I registered as a Democrat so I can vote for him in the primary. As I mentioned in the other thread, a basic income is my favored solution to a lot of the problems we're discussing. It gives workers a real choice, and forces employers to make value propositions to their workers that are fair and rational. It also gives everyone buy-in to the economy, which makes pro-growth arguments much more compelling.

I don't agree with all his policies, but I respect the hell out of the fact that he has so many explicit positions and attempts to make a case for them. Even on UBI, I get why he does uses $1000/month and describes a VAT as a 'tech tax' that sells, but ideally I'd prefer a floating basic income tied to a fixed rate VAT and land value tax. I think that's justifiable as a social dividend in the way Yang describes it, and it automatically adjusts as society gets richer (and also prevents inflation from effectively eliminating it). That said, I'm also comfortable with a much smaller basic income.$3500/year is the median global income, it would make a meaningful difference to a lot of people in the US, and it's an easier lift.

Serendipper wrote:GDP is not a measure of wealth.

So use other indicators. Look at dollar a day poverty, population living in slums, or life expectancy at birth. They all show a trend that can't be explained if the economy is zero sum. They all show significant, positive sums.

Serendipper wrote:Actually, chattel-slavery was preferable to wage-slavery because it was argued, by George Fitzhugh, that owners of slaves would take better care of them than renters of slaves.

This argument depends on completely discounting the perspective of the slave. Given the option between chattel slavery and wage "slavery", people choose to work for a living every time.

I think Chomsky's counterargument makes the same mistake. Slave societies got richer, but the number of slaves also increased. It isn't at all clear that they were richer once you factor in each slave as having zero wealth and enormous suffering. If you treat slaves as participants in the economy, they must represent a significant negative balance.

As for the points about the Soviet Union, Chomsky doesn't cite sources, but Wiki says Bolsehvism was a recognized failure, which was quickly replaced with more market-based systems, i.e. state capitalism, and that despite embracing a freer market, their economy still underperformed.

Serendipper wrote:Maybe he's the most unnecessary link in the chain, but he's still a link.

So the labor of every link in the chain has the same price? The ball player and the bat boy are paid at the same hourly rate?

Serendipper wrote:If someone pays $50 for a pack of McDonalds ketchup, does that mean it's worth$50? It's worth whatever anyone arbitrarily values it.

Yes. That seems absurd only because we are making the absurd assumption that anyone would pay $50 for a pack of ketchup, and absurd conclusions follow from absurd assumptions. And the idea that the labor of the person who designs factories and the person who mops their floors are equal in value is similarly absurd, no one thinks that, but that seems to be a premise built into the co-op model. Serendipper wrote:But [Daly] was right about nothing of value being exchanged for the house, but instead money was conjured from thin air. No he wasn't. First, we know that the money given was valuable, because it was exchanged for a house. Second, the bank can't keep creating money indefinitely, so they must be expending a resource to create it. Third, things "conjured from thin air" are regularly recognized as valuable. Contracts are made all the time where two parties exchange promises. Those promises have a dollar value, and damages for breach of those contracts can be recovered. And yet the promises come "from thin air". Serendipper wrote:But there is no evidence that jobs are destroyed [by minimum wage hikes]. There is nothing conclusive, because the question is super complicated, but there is absolutely evidence that increasing the minimum wage increases unemployment. I agree that unemployment isn't bad in itself, it's only bad because we tie not-starving to having a job (#yanggang), but we need to be honest about what a minimum wage will do. Serendipper wrote:What definition [of socialism] did you have in mind? It is close to what I think you would call state socialism, something like state intervention in the economy to make prices what the state thinks they should be instead of what they are. User Control Panel > Board preference > Edit display options > Display signatures: No. Carleas Magister Ludi Posts: 6049 Joined: Wed Feb 02, 2005 8:10 pm Location: Washington DC, USA ### Re: Carleas - Is ILP capitalist-philanthropic or socialist? and I like your rap that's understandable, 'cause i'm the illest of the Mcees. yeah the money you speak of is called commodity money... but the money i speak of in the rap, which is called representative money, was invented as a medium of exchange to resolve the dilemma of the double coincidence of wants. in the verse 'if a man has a horse and for rent he might trade... but if the landlord doesn't want it then the tenant can't pay it', is an example of how the conflict of wants might emerge. say the landlord needs a wagon, but the wagon maker doesn't need a horse, so the landlord can't use the horse for trading and it's therefore useless to him. representative money was invented to eliminate this problem in the bartering system. promethean75 Philosopher Posts: 2615 Joined: Thu Jan 31, 2019 7:10 pm ### Re: Carleas - Is ILP capitalist-philanthropic or socialist? No no, Carleas is right, liquidity was never invented. It just sort of arose, as it became useful and yes largely due to precious metals which were useful for this, or elsewhere cacao beans. the wagon horse problem is an old one, and there was never a moment where someone went "ah, it was like this but now it shall be like this." It just... "will you take the horse?" "Nah, I can't do anything with that horse..." "Damn... well um... How about this here pound of grain? Will that do ya?" "Wel... I guess..." Elsewhere it was square meters of cultivated rice fields. Pedro I Rengel Philosopher Posts: 4291 Joined: Mon Feb 05, 2018 2:55 pm ### Re: Carleas - Is ILP capitalist-philanthropic or socialist? Carleas wrote: Serendipper wrote:Private ownership can't be the defining element because a co-op is a private enterprise endeavoring to maximize profits. The defining element of capitalism comes into play when the co-op is replaced by wage-labor in order to capitalize on the worker. If profits are increased in a co-op, then everyone gets a cut. If profits are increased in a capitalistic workplace, no one gets a raise because wages are determined by supply of and demand for workers. The fundamental idea of the capitalistic workplace is to consolidate wealth and the fundamental idea of the co-op is to disperse wealth. How exactly does a co-op work? Identical to how companies work now with the exception of profit-sharing in place of wage-labor. And the employees hire and fire managers instead of the other way around (because employees own a larger share of the company than any single person). Are co-ops competing with each other? Yes Can one co-op hire another to perform some service? Yes Is everyone that a co-op hires made a part of the co-op? Yes, although I'm sure they could sub-contract. If so, how can there be more than one co-op? I don't see how the existence of one co-op precludes the existence of others. The idea is for them to be small so the worker has some say in his own environment. If not, how are they different from a corporation like e.g. Uber, that on paper hires a fleet of independent contractors? If Uber were a co-op, then drivers would be paid in a share of the profit and have a controlling interest in the company. Suppose I get some partners and we're all equal shareholders in our 'co-op', and we hire some people to do some work for our co-op -- I'm just describing a capitalist partnership, right? If not, what's different? I'm actually not an expert in co-ops, but the way I understand it, you'd simply be taking on more partners and haggling for slices of the pie. Because I'm not a big fan of partnerships, I'm also not a giant fan of co-ops; I just bring them up for the purpose of demonstrating the exploitation of wage-slavery and refuting the anti-competition claims of those wishing to demonize industrial democracy. What Is a Worker Cooperative? Worker Cooperatives Are More Productive Than Normal Companies Getting Rid of Bosses: Can a company succeed if no one is in charge? More U.S. businesses are becoming worker co-ops: Here’s why Someone commented if co-ops are so great, why aren't there more of them? The answer seems obvious to me: someone wants to hog all the profits and is willing to sacrifice productivity to accomplish that. Serendipper wrote:I'm talking in terms of large societies trending over large periods of time where it's evident that bad luck is not to blame for the wealth disparity. By this point in history, some parts of the world are better for human life than others. Modern developed cities have better infrastructure than rural villages in developing countries. People born in the developing world are super unlucky. There are ways we could restructure the world to erase that luck-based wealth disparity, but there is a lot of luck-based wealth disparity, even in terms of large society trending over large periods of time. There is plenty of luck-based wealth disparity, but venezuela is being targeted for disruption in order to capitalize on all the oil, as are other regions with oil or abundant natural resources. There is no good excuse for anyone living in poverty except the fact that the resources that would otherwise go to the poor are diverted to the rich in the name of capitalism. Serendipper wrote:Money is not created in the stock market ... True, but value is created. "Value" is an arbitrary whimsical notion with no anchor to reality and impossible to quantify. Tesla is "valued" at$50 billion, but burns millions per day and has no tangible value other than what little assets it owns. The stock value is speculation about future outcomes and an artifact of cheap money.

Even with a fixed money supply, different allocations of that money within the stock market will mean different outcomes in terms of value. It's not just about who can sell for what, it's that, under one allocation, there is no cure for the plague, and under another there is. The same money is worth more in the world where one possible use of money is to buy the cure for the plague.

Amazon went 16 years without making a single dime in profit, yet Bezos was a billionaire nonetheless. So instead of curing the plague, we could give Bezos billions in reward for a profitless company in order to invest in a space tourism. Who cares about the people? They'll die of the plague anyway or else suicide themselves with opioids or be put in prison or perhaps they'll shoot each other. The people be damned, what's important is consolidating wealth into few hands because capitalism.

Serendipper wrote:Check out candidate Andrew Yang

I am a huge fan of Andrew Yang! I registered as a Democrat so I can vote for him in the primary.

Wow! I'm surprised, but pleasantly so. I like him, but I don't think he has a chance though https://www.realclearpolitics.com/epoll ... -6730.html

I think Bernie is the best shot and first baby step to UBI... if we can get creepy uncle Joe Biden out of the way.

I don't agree with all his policies, but I respect the hell out of the fact that he has so many explicit positions and attempts to make a case for them.

Yes I like that too: he's an intelligent candidate who takes an engineering approach. But he strikes me as just a wee bit authoritarian, like China.

Even on UBI, I get why he does uses $1000/month and describes a VAT as a 'tech tax' that sells, but ideally I'd prefer a floating basic income tied to a fixed rate VAT and land value tax. I think that's justifiable as a social dividend in the way Yang describes it, and it automatically adjusts as society gets richer (and also prevents inflation from effectively eliminating it). VAT is a flat tax, so the UBI would be funded by the poor, like in France the social programs are funded by recipients of the social programs. All flat taxes are counterproductive. UBI should be a mode of regulation determined by cost of living like social security issuance, then wages will fall in line behind the amount of UBI via free market mechanism, and the funding for the UBI would be from progressive income taxes and government debt issuance. The poor shouldn't have to pay any taxes whatsoever, so no sales tax, gas tax, VAT, or tariffs. If you're trying to arrange it so that the free market will regulate itself, it's futile. The regulation of the free market can only come by way of something that is not the free market (ie a government). So the gov should determine the UBI and not the market itself or you'll have the foxes guarding the henhouse. That said, I'm also comfortable with a much smaller basic income.$3500/year is the median global income, it would make a meaningful difference to a lot of people in the US, and it's an easier lift.

If it's too small, then it won't work and people will say "See!?!? Just like public education, the post office, and other underfunded social programs... blah blah yada yada."

Serendipper wrote:GDP is not a measure of wealth.

So use other indicators. Look at dollar a day poverty, population living in slums, or life expectancy at birth. They all show a trend that can't be explained if the economy is zero sum. They all show significant, positive sums.

How is it not zerosum? A pie is a pie.

Something like 85 people have more wealth than half the global population. Sure, there is less poverty, but the advances in alleviation of poverty has not kept up with the enrichment of the rich. So as prosperity grew, the rich claimed a larger and larger proportion of it while still allowing the nominal amount of prosperity of the poor to expand.

the-trickle-down-theory.jpg (115.55 KiB) Viewed 2958 times

If the rich get 90% of the pie and the pie is worth $1000, then the poor get$100. If the pie grows to $10,000 and the rich claim 95%, then the poor get$500. It looks like the poor are doing well. Yay capitalism

Now if we can get it up to $1000000000000000000000 and 99.99999999999999%, then we'll really be helping the poor! Serendipper wrote:Actually, chattel-slavery was preferable to wage-slavery because it was argued, by George Fitzhugh, that owners of slaves would take better care of them than renters of slaves. This argument depends on completely discounting the perspective of the slave. Given the option between chattel slavery and wage "slavery", people choose to work for a living every time. The purpose of the thought experiment is to put in perspective the "rental of people" and to recognize that it was once considered (by at least someone) to be worse than outright ownership of people. I think Chomsky's counterargument makes the same mistake. Slave societies got richer, but the number of slaves also increased. It isn't at all clear that they were richer once you factor in each slave as having zero wealth and enormous suffering. If you treat slaves as participants in the economy, they must represent a significant negative balance. I think a lot of the "suffering of slaves" is hype. Do slave animals suffer or do they have a better life than wild animals? I see lots of fat cows eating lush grass without worry of predators. There is probably lots of propaganda out there regarding the treatment of slaves. But we still have slaves now and the robotic slaves don't seem to be dragging the economy down much; they are an expense that pays more than they cost and the same is true with human or animal slaves or rental slaves (employees). Every added employee means more profit and a growing economy, so the same should be true with chattel slavery. As for the points about the Soviet Union, Chomsky doesn't cite sources, Chomsky is a source. but Wiki says Bolsehvism was a recognized failure, which was quickly replaced with more market-based systems, i.e. state capitalism, and that despite embracing a freer market, their economy still underperformed. Here's the transcript: In fact you could give that argument for Stalinism: there was a very substantial economic growth in Soviet Union. It was, until 1989, it was the second world, not the third world. Now it's back in the third world because it's undergoing capitalist reforms, something you're not allowed to say, incidentally, but if you read, you'll notice they've had ten years of capitalist reforms which have driven them right back into the third world where they came from, okay. But if you just look at it in terms of economic growth, it was reasonably successful. That's exactly what bothered Western leaders and if you read the documentary record right up to the 1960s, where it sort of runs dry at the moment, you find that the great concern was that the second the Soviet Union was presenting itself as a model for modernization within a single generation and that was raising all sorts of trouble, not only in a third world, but even in the rich countries. They didn't care about Russian aggression, or you know, Stalin's terror or anything. In fact Truman admired Stalin, you know, thought he's an honest man, you know, could deal with him and so on, but didn't care what happens in Russia, you know, and so on, but the same with Churchill, incidentally, who's defending Stalin at cabinet meetings as a great man, and so on, and so forth. They could kill as many people's they want; that's irrelevant. The problem was then they never expected them to be attacking anybody, you know, but what they were afraid of was the economic growth which was, especially in the third world, considered quite impressive. The Soviet Union: GDP growth What if we consider the USSR starting with Stalin (1928). Then we find that from 1928-1970, the USSR was the fastest growing economy except for Japan! And even compared to the Third World, its performance was remarkable. The USSR was the third fastest growing economy in the world in the 1928-1970 period (Including countries for which we have 1928 data). Chomsky's arguments, delivered in 1997, seem accurate to me. Serendipper wrote:Maybe he's the most unnecessary link in the chain, but he's still a link. So the labor of every link in the chain has the same price? The ball player and the bat boy are paid at the same hourly rate? No I don't think I implied that. Serendipper wrote:If someone pays$50 for a pack of McDonalds ketchup, does that mean it's worth $50? It's worth whatever anyone arbitrarily values it. Yes. That seems absurd only because we are making the absurd assumption that anyone would pay$50 for a pack of ketchup, and absurd conclusions follow from absurd assumptions.

And the idea that the labor of the person who designs factories and the person who mops their floors are equal in value is similarly absurd, no one thinks that, but that seems to be a premise built into the co-op model.

No the co-op model simply compensates people in terms of a percentage of the profits, so a floor-mopper would receive less % than the engineers.

In the capitalist model, the janitor doesn't get a pay increase if the company makes more profit. Under the co-op model he would.

Under the co-op model, the tax cuts Trump gave corps would not have been used to buy back stock in order to inflate pay packages for ceos who do essentially nothing, but the extra corporate profits would have been shared with everyone in the company according to the percentage they agreed upon.

Serendipper wrote:But [Daly] was right about nothing of value being exchanged for the house, but instead money was conjured from thin air.

No he wasn't.
First, we know that the money given was valuable, because it was exchanged for a house.
Second, the bank can't keep creating money indefinitely, so they must be expending a resource to create it.
Third, things "conjured from thin air" are regularly recognized as valuable. Contracts are made all the time where two parties exchange promises. Those promises have a dollar value, and damages for breach of those contracts can be recovered. And yet the promises come "from thin air".

His argument was that if money can come from thin air, then it is infinitely replicatable and therefore has no value. The bank didn't go out and earn the money through labor, but simply created it with a ledger entry. On a gold standard, the bank would have loaned him something of value, ie gold, which it could not pull from thin air and it's that scarcity that confers value.

The only thing restraining a bank from lending is the amount of reserve they have on hand, which must be 10% of the amount lent out. But since the money they lend will invariably return as a deposit, the money supply can grow indefinitely. Not only can it grow indefinitely, but it must or the system breaks down because the amount of interest required to repay all the loans doesn't yet exist.

Serendipper wrote:But there is no evidence that jobs are destroyed [by minimum wage hikes].

There is nothing conclusive, because the question is super complicated, but there is absolutely evidence that increasing the minimum wage increases unemployment. I agree that unemployment isn't bad in itself, it's only bad because we tie not-starving to having a job (#yanggang), but we need to be honest about what a minimum wage will do.

Did I forget to post this last time?

youthemployment2.jpg (85.95 KiB) Viewed 2958 times

The min wage was raised 10 times over 25 years and I see no loss of employment in the youth who are cited as most vulnerable to min wage increases. In fact, the number of youth employed doubled over that period! There is even less evidence on the broader market because there we have 23 min wage increases and no drop in employment over 80 years.

Anyone arguing that min wage hikes kill jobs seems to me very much like a flat-earther making a total fool of himself in the face of mountains of empirical evidence.

Peer reviewed research on the matter just seems like a more concrete way to cement one's foolishness forever and ever, as if google newspapers didn't already fill that role.

mw2.jpg (227.86 KiB) Viewed 2958 times

I'll concede, out of kindness and openmindedness, that min wage hikes could theoretically kill jobs, but the evidence is strongly opposed to that theory.

Serendipper wrote:What definition [of socialism] did you have in mind?

It is close to what I think you would call state socialism, something like state intervention in the economy to make prices what the state thinks they should be instead of what they are.

So socialism = authoritarianism?

ALL authoritarianism is right wing.

Authoritarianism: tough attitude towards violations of social rules, norms and laws;[14]
Conservatism: favoring obedient and respectful support for societal authorities;[14]

There are certainly extremists across the political spectrum, but most psychologists now believe that authoritarianism is a predominantly right-wing phenomenon.[22]
https://en.wikipedia.org/wiki/Right-win ... itarianism

So if socialism, communism, fascism, capitalism are all on the right, then what is on the left? I put socialism on the left and everything else on the right. Dispersal of wealth on the left and accretion of wealth on the right. Democracy on the left and republics on the right. Freedom on the left and exploitation on the right.
Serendipper
Philosopher

Posts: 2180
Joined: Sun Aug 13, 2017 7:30 pm

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

Serendipper wrote:Someone commented if co-ops are so great, why aren't there more of them? The answer seems obvious to me: someone wants to hog all the profits and is willing to sacrifice productivity to accomplish that.

I don't think this explanation works. If co-op A is more productive than corporation B, i.e. can do more with the same inputs, then A should be able to out-compete B, and so the fact that B's CEO wants to hog all the profits shouldn't matter. The fact that co-ops don't out-compete corporations (or rather, haven't) says that there's some other bottle-neck: they may be harder to form (because they require more trust), harder to scale (because once you have too many co-owners you lose efficiencies or speed), or just less suited to most industries. Statistics showing greater productivity may be subject to survivor bias (do they have a higher failure rate?), or might not take into account that workers spend more time working at co-ops (I don't know which way that cuts, working more is bad, but working more because you like working seems like a good trade off). And the places where they're successful often subsidize them, so I'm not sure we can get a level comparison (in the US, I would not be surprised if co-ops face tax penalties relative to equally sized corporations).

I suppose I have nothing specific against co-ops, I don't really get the point and I don't want them enforced on society, but if it works, great. Arguably many start-ups are effectively co-ops, since they're run by small teams with significant equity.

Serendipper wrote:In the capitalist model, the janitor doesn't get a pay increase if the company makes more profit. Under the co-op model he would.

I find this weird. In the building where I work, my company rents an office space, and the building provides the janitors. Should the janitors' pay fluctuate as different co-ops move into and out of the building? Their labor doesn't change, the replacement cost of their labor doesn't, I don't see why they should (or would even want to) have their compensation tied to whether or not my company is profitable.

Serendipper wrote:"Value" is an arbitrary whimsical notion with no anchor to reality and impossible to quantify.

It is a bit arbitrary, in the sense that some people like green and some like blue and there's no reason to prefer one to the other but people just do. But the anchor to reality is that if I like blue and you like green, and I've got a green good and you've got a blue one, we can exchange them and both be happier. The fact that I will trade a green one for a blue one provides us with the empirical fact that B>G for person C at time T. Combine enough of those, and you get the quantification of value in the form of money: if I will pay $5 for the blue good and only$3 for the green, then we can quantify that difference in value at $2. Re Amazon, the company hasn't 'made a profit', but only because it's reinvested relentlessly. It's expanded into new areas and innovated consistently. Where Apple and Google are sitting on piles of cash they don't seem to know what to do with, Amazon has kept changing and diversifying. Its revenue, its capital, its workforce, its reach have all grown like crazy. 'No profit' is a funny soundbite, but it's misleading. Serendipper wrote:I like [Yang], but I don't think he has a chance though I'm not sure about his chances, but it's early yet. And anyway, he's very honest about it. He's said he doesn't care if he wins, as long as whoever does win makes UBI a part of their platform. I think getting him on the debate stage will make UBI a permanent part of the political conversation. So he doesn't need to win to have a large positive effect on society. For UBI, I think VAT makes sense as a funding source. If the money is collected solely to pay for the UBI, it's net progressive: even though the poor will pay more as a percentage of their income, the VAT is effectively a tax on consumption, and since the poor are well below average on their consumption, they will end up with more money on net. And a VAT is a very efficient form of taxation, it encourages thrift and long term investment and discourages frivolous and wasteful consumption. Similar reasoning supports a carbon tax, which, despite being a higher burden as a percent of income, is again a net benefit for the poor if goes directly into a UBI, and it lets people improve their take further by changing their behavior. But a land value tax is the real progressive move. The incidence is distributionally fair, falling in particular on people who own land and who collect economic rents rather than produce value. It's extremely efficient, and encourages turnover where land is being misused or allowed to sit idle. It also recoups NIMBY restrictions, and taxes foreign nationals' hiding money in US real estate. It's pretty close to a perfect tax. And again, piped directly to UBI, most poor land owners would probably get a net benefit. Serendipper wrote:How is it not zerosum? Because the net utility increases. I agree the distribution is unfair, but that doesn't change that everyone's quality of life has increased. Serendipper wrote:Every added employee means more profit and a growing economy, so the same should be true with chattel slavery. The opportunity cost is significant, which isn't the case with animals or robots. But this does a question similar to the one raised by Ursula LeGuin's The Ones Who Walk Away From Omelas: what if everyone today is materially better off as a result of the vast suffering imposed by slavery? That seems like a pretty strong criticism of utilitarianism, and relates to Silouette's question in the other thread. Personally, I reject the premise, but that's partly an act of faith in revulsion to the alternative. But the answer isn't trivial. Serendipper wrote:His argument was that if money can come from thin air, then it is infinitely replicatable and therefore has no value. So if they aren't infinitely replicatable, then they don't come from thin air (modus tollens). And, as with promises, while there's nothing stopping me from making an infinite number of promises, people will stop accepting my promises once it becomes clear that I have over-committed. Similarly, the bank is able to give money on the value of its name, but it can't do it infinitely; it is careful not to give too much and only to give where it has the reasonable expectation of being repaid. Serendipper wrote:The min wage was raised 10 times over 25 years and I see no loss of employment in the youth who are cited as most vulnerable to min wage increases. This isn't a particularly scientific way of evaluating the question. For one thing, most of the minimum wage 'increases' your counting fall into a period where inflation effectively eliminated them; the real minimum wage peaked in 1968, and has fallen in inflation adjusted terms. Peer reviewed studies try to tie minimum wages directly to their effects, by exploiting changes in behavior before and after the change in policy, or comparing jurisdictions where a policy applies to adjacent or comparable ones where it doesn't. It's a complicated question, and just looking at a graph overlaying two lines that use different scales, without inflation adjustments, and without controls, doesn't tell us very much. Serendipper wrote:So socialism = authoritarianism? It shades into that, yes. Socialism is colloquially basically benevolent authoritarianism. But as I mentioned above, the difference in definition between speakers is great enough that I don't think it's that meaningful anymore; it seems we both agree that even benevolent authoritarianism is bad. User Control Panel > Board preference > Edit display options > Display signatures: No. Carleas Magister Ludi Posts: 6049 Joined: Wed Feb 02, 2005 8:10 pm Location: Washington DC, USA ### Re: Carleas - Is ILP capitalist-philanthropic or socialist? Carleas wrote: Serendipper wrote:Someone commented if co-ops are so great, why aren't there more of them? The answer seems obvious to me: someone wants to hog all the profits and is willing to sacrifice productivity to accomplish that. I don't think this explanation works. If co-op A is more productive than corporation B, i.e. can do more with the same inputs, then A should be able to out-compete B, and so the fact that B's CEO wants to hog all the profits shouldn't matter. Co-op A earns$1000, the boss gets 50% ($500) and the employees get 50% ($500).

Corp B earns $800, the boss gets 75% ($600) and the employees get 25% ($200). It's in the interest of the boss to be less productive and maintain exploitation. I could have been more productive by paying in piece-work instead of hourly which would give the employee control over his own income: if he wants to work fast and make lots of money, then the sky is the limit, but the reality of the matter is nobody does it that way for a reason, which is exploitation pays much better. Like I said, every employee paid me$40/hr to work. Why would I give that up? I did that for a decade and if there were a better way of doing it, I would have found it.

The fact that co-ops don't out-compete corporations (or rather, haven't) says that there's some other bottle-neck: they may be harder to form (because they require more trust), harder to scale (because once you have too many co-owners you lose efficiencies or speed), or just less suited to most industries. Statistics showing greater productivity may be subject to survivor bias (do they have a higher failure rate?), or might not take into account that workers spend more time working at co-ops (I don't know which way that cuts, working more is bad, but working more because you like working seems like a good trade off). And the places where they're successful often subsidize them, so I'm not sure we can get a level comparison (in the US, I would not be surprised if co-ops face tax penalties relative to equally sized corporations).

Yes all that may apply as well. Who knows. All I know is the reason they aren't implemented is the fact that the boss doesn't want to take a paycut.

I suppose I have nothing specific against co-ops, I don't really get the point and I don't want them enforced on society, but if it works, great. Arguably many start-ups are effectively co-ops, since they're run by small teams with significant equity.

If the law forced me to form a co-op, I would have quit and went to work for someone else who was running a co-op rather than deal with the headaches for less pay. I'd rather had even less pay, but zero headaches. So instead of $50/hr, I'd make maybe$20/hr and not have a care in the world.

Serendipper wrote:In the capitalist model, the janitor doesn't get a pay increase if the company makes more profit. Under the co-op model he would.

I find this weird. In the building where I work, my company rents an office space, and the building provides the janitors. Should the janitors' pay fluctuate as different co-ops move into and out of the building? Their labor doesn't change, the replacement cost of their labor doesn't, I don't see why they should (or would even want to) have their compensation tied to whether or not my company is profitable.

Now you're being silly lol. No I'm only talking about people who are members of the co-op. I was assuming the janitor was a co-op member in this example. Like if McDonalds were a co-op, then each burger flipper would get a pay raise as a result of Trump's taxcut because everyone would be paid as a % of the profits. If profits go up, burger flippers get a raise. If profits go down, they get a cut. If management is doing a crappy job, the employees could throw him out. I think one of the main tenets of a co-op is that management works for the employees.

Serendipper wrote:"Value" is an arbitrary whimsical notion with no anchor to reality and impossible to quantify.

It is a bit arbitrary, in the sense that some people like green and some like blue and there's no reason to prefer one to the other but people just do. But the anchor to reality is that if I like blue and you like green, and I've got a green good and you've got a blue one, we can exchange them and both be happier. The fact that I will trade a green one for a blue one provides us with the empirical fact that B>G for person C at time T. Combine enough of those, and you get the quantification of value in the form of money: if I will pay $5 for the blue good and only$3 for the green, then we can quantify that difference in value at $2. It's more like if you had a house with a pond and some fancy landscaping and you call an appraiser, he will not assign any value to a pond because it's not quantifiable and some people just don't care about ponds. Only the house and buildings are valued according to specific rules. So it's like that: arbitrary and whimsical value that varies greatly between people vs something quantifiable and tangible that's more or less written in stone. Re Amazon, the company hasn't 'made a profit', but only because it's reinvested relentlessly. It's expanded into new areas and innovated consistently. Where Apple and Google are sitting on piles of cash they don't seem to know what to do with, Amazon has kept changing and diversifying. Its revenue, its capital, its workforce, its reach have all grown like crazy. 'No profit' is a funny soundbite, but it's misleading. Lots of fund managers were leery of amazon because they said that one day Bezos may decide never to generate a profit and then they'd be stuck holding the bag. Bezos could decide to be a philanthropist after suckering all the investors in for the funds to build the company, then he may decide to slash prices to cost and never make a profit. He could find god. Anything could happen. It's a crazy gamble to buy shares in a company that may never return value to shareholders. Back in the 60's, this sort of thing would be unheard of. If a company didn't make a profit, it would have been a penny stock and delisted from the exchange. Serendipper wrote:I like [Yang], but I don't think he has a chance though I'm not sure about his chances, but it's early yet. And anyway, he's very honest about it. He's said he doesn't care if he wins, as long as whoever does win makes UBI a part of their platform. I think getting him on the debate stage will make UBI a permanent part of the political conversation. So he doesn't need to win to have a large positive effect on society. Just try not to throw your vote away on a guaranteed loser I'm backing Bernie come hell or high water. Then at least I won't have to worry about friends n family with medical costs and he's starting some sort of daycare pre-school thing too so mothers have a place to take their kids while they go to work for the new$15 min wage. It's a good start. Oh and the drug war will finally end. And cash bail.

For UBI, I think VAT makes sense as a funding source. If the money is collected solely to pay for the UBI, it's net progressive: even though the poor will pay more as a percentage of their income, the VAT is effectively a tax on consumption, and since the poor are well below average on their consumption, they will end up with more money on net. And a VAT is a very efficient form of taxation, it encourages thrift and long term investment and discourages frivolous and wasteful consumption. Similar reasoning supports a carbon tax, which, despite being a higher burden as a percent of income, is again a net benefit for the poor if goes directly into a UBI, and it lets people improve their take further by changing their behavior.

What? No, all flat taxes are regressive. Actually, the "progressive" taxes we have now are regressive as evidenced by the growing wealth divide, so how much more would a flat tax be regressive?

Buffett and Gates argue that taxes are already too flat:

The poor spend 150% of their income on consumption and already have untold amounts of flat taxes financed at 30% apr. The VAT and sales tax is one of the things I'm most passionately against. They were conservative ideas to begin with:

Sales Tax Charges in the 1948 Campaign

The probable need of additional federal revenue for national defense and military aid to foreign countries has led Democratic spokesmen to charge in the 1948 campaign that the Republicans will impose a general sales tax if given control of the national government in the November election. This charge appears to be based on inferences drawn from a statement, Aug. 11, 1948, by Rep. Knutson (R., Minn.), present chairman of the House Ways and Means Committee, which originates tax measures. Referring to proposals for repeal of all except a few of the federal excise taxes, Knutson said:

"Our federal internal revenue system must be based on a well balanced tax system. It should not be confined to the income tax, or to the income tax and excise taxes on liquor, tobacco, or beer alone. To do so will seriously cripple the federal revenues and throw the entire burden of supporting the activities of the federal government upon a few, chiefly those paying the income tax."

Chairman McGrath of the Democratic National Committee asserted, Aug. 22, that the “broad excise tax base” which Knutson advocated was in reality a sales tax. In the Democratic Digest, November 1948, McGrath declared: “The powerful forces of reaction and privilege have already presented an advance invoice on the Republican party,” including “Item: Ballyhoo an income tax reduction, but, if necessary, saddle the nation with a federal sales tax to make up the inevitable deficit.”

So it's a scheme to put the tax burden on the poor while allowing the rich to resume generating wealth disparity.

The purpose of taxation is redistribution of wealth and the VAT is a regressive redistribution distributing from the poor to the rich. The most innocent scenario is the wealth is not redistributed in either direction which fixes no problem and could be ammunition against the UBI from the conservatives appealing to out of control deficits and federal debt. Why tax the poor at all? That makes no sense. Yang is advocating this?!? If UBI isn't implemented correctly the first time, it will be a long time before it returns because it will be yet another example of the failure of socialism.

There should be just an income tax and that's it. Negative tax on the bottom, zero in the middle, and high on top. All the other taxes are just ways of finagling money from the poor, in the name of "fairness" or whatever emotional appeal, all too often for the purpose of socializing the costs of corporations while the gains are privatized (ie the gas tax).

Just say no to flat taxes.

But a land value tax is the real progressive move. The incidence is distributionally fair, falling in particular on people who own land and who collect economic rents rather than produce value. It's extremely efficient, and encourages turnover where land is being misused or allowed to sit idle. It also recoups NIMBY restrictions, and taxes foreign nationals' hiding money in US real estate. It's pretty close to a perfect tax. And again, piped directly to UBI, most poor land owners would probably get a net benefit.

A property tax is borderline. Property isn't associated with wealth as much as it used to be and it could be the case that poor farmers are saddled with the burden. I'm ok with property taxes being collected for local uses by local governments, but probably not a good idea on a national scale.

Serendipper wrote:How is it not zerosum?

Because the net utility increases.

The size of the pie doesn't change the fact that a pie is a pie. 100% = 100% = zerosum. It's not like we could remove a slice of the pie and still have a pie.... that would be eating your cake and having it too.

I agree the distribution is unfair, but that doesn't change that everyone's quality of life has increased.

That's an irrelevant distinction. What if everyone's quality of life hadn't improved? Oh well? What's at issue is the equitable distribution of the improvements and not justification for the pacification of the exploited in order to sustain the opulence of the elite and then pat ourselves on the back for having such a great system which gave a few more crumbs to the poor. Capitalism works because a guy upgraded his grass hut while someone else bought a 7th yacht?

Serendipper wrote:Every added employee means more profit and a growing economy, so the same should be true with chattel slavery.

The opportunity cost is significant, which isn't the case with animals or robots.

But this does a question similar to the one raised by Ursula LeGuin's The Ones Who Walk Away From Omelas: what if everyone today is materially better off as a result of the vast suffering imposed by slavery? That seems like a pretty strong criticism of utilitarianism, and relates to Silouette's question in the other thread. Personally, I reject the premise, but that's partly an act of faith in revulsion to the alternative. But the answer isn't trivial.

We wouldn't be where we are today without slavery. I have no doubts about that.

Serendipper wrote:His argument was that if money can come from thin air, then it is infinitely replicatable and therefore has no value.

So if they aren't infinitely replicatable, then they don't come from thin air (modus tollens). And, as with promises, while there's nothing stopping me from making an infinite number of promises, people will stop accepting my promises once it becomes clear that I have over-committed. Similarly, the bank is able to give money on the value of its name, but it can't do it infinitely; it is careful not to give too much and only to give where it has the reasonable expectation of being repaid.

Well my point of all that was to illustrate that all money is loaned into existence and not really to get mired in the differences of money and contracts. The main takeaway is that the interest to repay those loans does not exist.

Serendipper wrote:The min wage was raised 10 times over 25 years and I see no loss of employment in the youth who are cited as most vulnerable to min wage increases.

This isn't a particularly scientific way of evaluating the question. For one thing, most of the minimum wage 'increases' your counting fall into a period where inflation effectively eliminated them; the real minimum wage peaked in 1968, and has fallen in inflation adjusted terms.

Why does it matter if inflation effectively eliminated the increase in the wage? The argument was that the MW hikes would cause loss of jobs, which didn't happen. One could argue that maybe there would have been more jobs if not for the minimum wage, but a doubling in the number of employed youth coincidental to 10 MW increases is not good enough??? If there would have been even more jobs created in absence of MW, then they would have been crap jobs.

Inflation is an arbitrary basket of goods that changes year to year and, contrary to popular belief, the gov is working hard to overstate inflation by increasing the weighting placed on inflating goods (ie rent) and decreasing the weighting on deflating goods (ie oil). I don't put a lot of stock into metrics that change arbitrarily at the whim of whomever, which is especially concerning when comparing one decade to another. If you want a more accurate picture, you'll have to compute the hours of work required to purchase a specific commodity. Luckily, I've already done that:

hrs-worked.jpg (58.27 KiB) Viewed 2939 times

hrs-worked-min.jpg (61.13 KiB) Viewed 2939 times

Even in terms of min wage one is required to work less hours to buy a commodity as time goes on.

Peer reviewed studies try to tie minimum wages directly to their effects, by exploiting changes in behavior before and after the change in policy, or comparing jurisdictions where a policy applies to adjacent or comparable ones where it doesn't.

It's a complicated question, and just looking at a graph overlaying two lines that use different scales, without inflation adjustments, and without controls, doesn't tell us very much.

I've studied the states and found median income, education, property values to be higher in states with higher min wages while crime, poverty, and SNAP usage were lower. On average there was a 10% increase in gas prices, but wages were 30% higher in states with higher min wages.
Serendipper
Philosopher

Posts: 2180
Joined: Sun Aug 13, 2017 7:30 pm

### Re: Carleas - Is ILP capitalist-philanthropic or socialist?

Serendipper wrote:Co-op A earns $1000, the boss gets 50% ($500) and the employees get 50% ($500). Corp B earns$800, the boss gets 75% ($600) and the employees get 25% ($200). It's in the interest of the boss to be less productive and maintain exploitation.

Ah, I see what you're saying now, I misunderstood before. Still, I'm not sure this works.

My first thought is that some bosses would choose to take the lower pay. Some people come from money, so they don't need the extra pay. Some people are committed socialist martyrs, and get more value from running a co-op than they do from the extra pay. Those people should create co-ops, and those co-ops should out-compete non-co-op firms in the same industry.

Then I thought, maybe the co-ops can't out-compete because 1) managers matter, and 2) because they pay more, corporations can attract better managers at the margins, so even though co-ops are more productive, corporations get the best managerial talent.

But then I realized, of course co-ops are more productive on that model. They pay workers more, so they attract the best talent, and they underpay their managers. If we hold the quality of the manager fixed, the co-op is just extracting more value from its manager, i.e. If Co-op A and Corp B have managers who provide the same value, Co-op A is getting an immediate $100 productivity boost by paying its manager less. Another, unrelated point is, what does this picture say about the prospects for co-ops more generally? If every manager will always choose a less productive model when it's personally enriching, what hope is there for some alternative without state intervention to enforce it? Maybe another way to ask this is, why don't workers create co-ops and hire managers? Is there something in the structure of the current economy that makes that impossible? I think the answer to the latter question could well be yes, but I don't know enough about e.g. business taxation to know what specifically. I'd also support removing whatever creates that imbalance, and letting the market decide (but then I'm weakly oppose business taxes generally, so this is no great concession from me). Serendipper wrote:If profits go up, burger flippers get a raise. If profits go down, they get a cut. I think a lot of workers would not like this. Take, for example, Amazon. While they get a lot of shit for their business practices, they are staple employers in a lot of places, and provided well above median pay for the local economy. Would their employees take zero pay in return for Amazon stock? I'm not so sure. And maybe the answer is that a company like Amazon shouldn't exist, but Amazon has a lot to recommend it over Google and Apple, which don't pay dividends either, but also don't do a good job of reinvesting. Amazon creates a ton of consumer surplus, it makes it possible for millions of people to access goods they didn't even have the option to buy before, and at prices that are barely above cost. That's good for consumers, most of whom are also workers. Serendipper wrote:So it's like that: arbitrary and whimsical value that varies greatly between people vs something quantifiable and tangible that's more or less written in stone. Except the appraise is essentially making a prediction: you could sell your house at$X. And there are some values of X that are almost certainly wrong, and we can know that in advance. And there's a test for the prediction: you can sell the house, open it up to bids and close a sale and find out if the appraiser was right or wrong. It's true that people's valuations of the house differ, but the appraiser is talking about a whole bunch of people; individually, there is great variation and X is hard to predict for a particular person, but collectively there is order and behavior is largely predictable.

I think part of it is that 'value' means different things. When the appraiser says "your house is worth $X", he's really saying that you'd be likely to get$X if you sold your house. When I say that someone could value your house at more or less than $X, I mean that they would consider themselves better/worse off if they were to trade$X for your house. Market prices then are something like a statement that,

$$\exists i: V(i,g) \geq X$$

Where:
i is an individual
g is a good
V(i,g) is the value of g to i
\$X is the highest price for which the statement is true.

This is too simple (it ignores transaction/search costs) but I think it clarifies my assertion that there is an objective market price.

Serendipper wrote:It's a crazy gamble to buy shares in a company that may never return value to shareholders. Back in the 60's, this sort of thing would be unheard of. If a company didn't make a profit, it would have been a penny stock and delisted from the exchange.

My understanding is that this is a more general change than just Amazon. As I understand it, dividends used to be much more common, as companies shared profits with shareholders, but the tech revolution made reinvestment of profits so important as an indicator of continuing innovation that many companies prefer to sit on funds rather than to distribute them as dividends. Dividends send a signal that they can no longer innovate, which in a rapidly changing technological landscape is taken as an early sign of death.

Serendipper wrote:Just try not to throw your vote away on a guaranteed loser

I've voted for Johnson the past two elections, so no promises! I started to vote more strategically a few years ago, and I will probably do the same this cycle. In practice, your vote rarely makes a difference, so it can be more useful to spend it on a losing candidate. In 2012, I voted for Johnson from Illinois, where Obama was basically guaranteed to win, as a way to support a third party and signal dissatisfaction with the two party system. In 2016, I voted for Johnson from DC, where I expected Hillary to get 85% of the vote (she ended up getting 90%), but Johnson had a non-zero chance of reaching the threshold to get federal campaign funding (5% of the popular vote).

In the upcoming election, I'll probably vote Yang in the primary to raise the profile of UBI, and third party in the general because DC will go strongly Democrat anyway.

Serendipper wrote:all flat taxes are regressive.

I don't dispute this. But a flat tax on consumption that pays directly into a flat per capita UBI is progressive in combination. Even though the tax would tend to take disproportionately much from the poor, the combination of the two would redistribute money from rich to poor.

Serendipper wrote:Why tax the poor at all? That makes no sense.

Because means-testing is expensive and gameable. And the VAT is a very efficient tax, it doesn't distort markets, it's hard to avoid and cheap to enforce. Trying to exempt the poor loses those qualities, and isn't necessary when the revenues are going directly into a UBI. Without tying it to a UBI or similar you are right that it is regressive.

VAT is also part of Yang's pitch that we're taxing automation: if employers cut jobs and replace them with machines, they benefit at the expense of employees. If the UBI gets funded with a cut of any additional profit, that makes automation not so bad.

Serendipper wrote:There should be just an income tax and that's it.

An income tax is inherently regressive. The idle rich pay very little, and the working poor who make it out of poverty pay just as much as the upper middle classes, despite that their effective safety net is very different. And the working poor are often sharing their income with their families in poverty, while the upper middle classes are being subsidized by their families.

The best case scenario is when the rates are progressive enough to track wealth, but then why not just tax wealth? And 'income' is a theory laden concept, as demonstrated by the distinction in US tax law between salary and capital gains.

Serendipper wrote:A property tax is borderline. Property isn't associated with wealth as much as it used to be and it could be the case that poor farmers are saddled with the burden.

LVT is importantly distinct from property tax, in that it taxes the value of the land and not the value of any improvements to the land. That means that poor farmers probably won't owe very much, because most of the value of their land is in the crops, not the land itself. (Also, the poor small farmer is effectively a unicorn at this point, most farming is done by mega corporations; even if there are some poor small farmers who will be hurt, they are very very few relative to the number of people benefited).

Serendipper wrote:The size of the pie doesn't change the fact that a pie is a pie. 100% = 100% = zerosum.

This is a weird use of 'zero sum'. Percentages are scalar, they don't mean anything by themselves. 100% of a world without a cure for the plague != 100% of a world with a cure of the plague. If we're talking about calories, then yes, we could remove a slice of a larger pie and still have the same number of calories left as the smaller pie.

Serendipper wrote:What if everyone's quality of life hadn't improved?

The point I'm making is that everyone's quality of life improved because of the same economic system that produced an unfair distribution of gains. The 7th yacht isn't the goal, it's a bad side effect of a system that benefits almost everyone.

Serendipper wrote:We wouldn't be where we are today without slavery. I have no doubts about that.

If you mean economically, I'm not so sure. A lot of human capital was lost in slavery. Africa was permanently set back by two hundred years and is only now beginning to claw its way into modernity. China is doing a lot of good in Africa by investing and taking advantage of their markets, and it doesn't require slavery (it's exploitative, but it's still voluntary and mutually beneficial exchange of the sort that has brought so much of Asia out of similarly desparate poverty). I'm not sure what a non-slavery trading relationship with Africa would have looked like, but I think there are good arguments that it would have produced more net social welfare than slavery did.

Serendipper wrote:Why does it matter if inflation effectively eliminated the increase in the wage? The argument was that the MW hikes would cause loss of jobs, which didn't happen.

But if inflation effectively eliminated the increase in the minimum wage, then it wouldn't be expected to cause job losses. The graph of hours worked per item based on median income shows that the standard of living has been increasing. The graph of hours worked per item based on minimum wage seems to show that the minimum wage has been roughly flat for at least the past 50 years. No change in minimum wage relative to goods means no change to increase the unemployment effects of the minimum wage.

Serendipper wrote:I've studied the states and found median income, education, property values to be higher in states with higher min wages while crime, poverty, and SNAP usage were lower. On average there was a 10% increase in gas prices, but wages were 30% higher in states with higher min wages.

But are those connections causal? Income, education, and property values could be reasonably expected to lead to the kind of politics that favors raising the minimum wage.

Also, aggregate measures hide differences within the population. Net employment could remain steady, and the effect would still be bad if low skilled workers lose jobs relative to better-off workers, e.g. if poor adults lose jobs in favor of wealthy highschool students.

I think the empirical case either way has been mostly inconclusive: there have been good studies that found an effect and good studies that haven't. But I think the fight is not that important, any effect in either direction is small (including any possible net benefit), and the number of people affected is small. For me, the intuitive case wins it, and I'd prefer a UBI to a minimum wage if only for its elegance.
User Control Panel > Board preference > Edit display options > Display signatures: No.
Carleas
Magister Ludi

Posts: 6049
Joined: Wed Feb 02, 2005 8:10 pm
Location: Washington DC, USA

Previous