How should an economy be structured?

[Cutlass]

"Liberals" were long sold out to the wealthy and engaged in increasing inequality, with benefits accruing to themselves and their families of course. Bill Clinton was an america liberal, was he not? Tony Blair was a british liberal, was he not? Holland was a french liberal, was he not? Schroeder was a german liberal, was he not?

Cutlass, fewer and fewer people are voting for liberals because those liberals earned a well-deserved fame of liars and phonies. If they must have liars and phonies they'll vote for the "honest" ones. Your liberals are a lost cause.

They are not liberals. The problem you are referring to is not that liberals have sold out, but rather that liberals have died out, and been replaced by moderate-conservatives. This is the reason that the economy is now doing so poorly for so much of the population. Conservatives are never right on economics. But now they are the only game in town.

This isn't inevitable, but there are reasons we went down this road. And we can go back to what works, although the politics is definitely against it.

 

[hobbsyoyo]

I'm not so sure that inherited wealth is such a big problem. (Apart from monarchies.)

The number of multi-generational fortunes that exist isn't very large. (I think).

After two or three generations, those inheriting vast wealth will tend to have frittered it all away. Maybe?

(I seem, as usual, to have misplaced all the relevant statistics, at the moment. I think I may have a large whole in my coat pocket.)

I don't think inheriting a lot of wealth is conducive to either a sound work ethic or healthy ambitions. I mean, how could it be?

I just don't see how we wound up with a system wherein 1% own 49% of everything (or whatever the relevant statistic is) without inheritance being a large part of that problem.

And putting inheritance aside, there is a massive amount of wage suppression going on. The fact that full-time Wal Mart employees are forced to go onto the welfare roles while the shareholders and executives rake in billions is criminal in my mind.

 

[inthesomeday]

Inheritance isn't the problem, property is the problem. As technology (the means of appropriation) expands, alongside the scope of association (size of firms, national populations), so does the ability of a group to generate a huge amount of wealth. When that group's productivity is allowed to concentrate in the hands of few or one because of some arbitrary claim to authority over the group, like property-- or divine right, or whatever other excuses autocrats have used throughout history-- the acceleration of production through improving technology and expanding associations will always yield wider inequality.

And property can exist only through violence, so we find ourselves always at square one-- a coercive and autocratic society-- in property-based social orders.

 

[hobbsyoyo]

How is an economy without property structured? Like it's one thing to say property is bad and should be abolished but I don't know how you make things work without it.

 

[inthesomeday]

Like it worked for the hundreds of thousands of years before property. In today's (or more realistically tomorrow's) world that means democratic management of the means of production, freedom of association and work, and a focus on both mechanization and efficiency, especially agricultural, and a reduction of overproduction.

 

[hobbsyoyo]

Pointing to pre-history doesn't enlighten the conversation. I'm not being condescending, I just do not see how the economics of the caveman pre-state has any relevance to today.


Apparently the 'central planner calculation problem' is a named thing, which is relieving to me because I've never come across it but it's always seemed to me to be an obvious issue with central planning. Until I saw @Cutlass 's post I just assumed it was something I must be imagining that had some obvious solution I wasn't in on.

 

[Hrothbern]

Inheritance isn't the problem, property is the problem. As technology (the means of appropriation) expands, alongside the scope of association (size of firms, national populations), so does the ability of a group to generate a huge amount of wealth. When that group's productivity is allowed to concentrate in the hands of few or one because of some arbitrary claim to authority over the group, like property-- or divine right, or whatever other excuses autocrats have used throughout history-- the acceleration of production through improving technology and expanding associations will always yield wider inequality.

And property can exist only through violence, so we find ourselves always at square one-- a coercive and autocratic society-- in property-based social orders.

I would add that at least in the past 10k-20k years a higher level of Techs made your group/tribe/people also more competitive towards groups/tribes/peoples, in effect eliminating them by war and taking over their properties.

Which makes the MAD geopolitical situation a new era where classic war diminishes in importance, the UN there as well.
Another basic factor driving inequality, the population growth in many underdeveloped countries, has almost come to an end. There are only a few countries left that grow , and BTW grow much faster than their GDP, their food production, etc, etc. Kind of stupid those countries do not get more attention from the UN and some rich countries to tackle that (the population growth). By now our understanding of socio-psychological factors is good enough to help out.

Property is ofc still there and in the possession of the powerful.
But also there the end of the two main pillars of that is coming within sight. The pillars Knowledge and Techs are still heading steady for a post scarcity level.

As of today, in my country, if the current prosperity level would be considered as "good enough", we only need to work 50% of our life. After further AI this could be down to less than 25% in 2100.
Meaning also that we, the people, can decide to get rid of further fast track growth of the economy, can get rid of the oligarchical powers, and develop slower, with some technical ineffeciencies, but on our own terms.

The real issue I see there is that the oligarchical powers will not like that (for me inevitable) development, and will get access or even possession to domestic violence, control the police, through influence on the "democratic" politicians,
or more likely and more worse.... buy or manufacture themselves AI Robot units to keep "us" under control.

Perhaps all in all just another 50-100 years to go before we get into that situation

EDIT
one of the nice things about the strong hierchical character of (oliogarchical) companies, is that you only need to chop off the head, to get control over the whole body, that does useful things.
Same advantage you can see all over history, that when you defeat the army of an dictator, with an oiled administration below him to rule, you normally gain control over everything.
Alexander the Great and Persia as nice example.

 

[Borachio]

I just don't see how we wound up with a system wherein 1% own 49% of everything (or whatever the relevant statistic is) without inheritance being a large part of that problem.
.

I think it's a matter of how fast someone can get really really rich.

Once you've made $10 million, say, I think you're pretty much unstoppable.

But your children, and grandchildren, aren't necessarily going to have either your skills or ambition.

 

[hobbsyoyo]

Right but getting to that first $10 million is very difficult. I tend to think that even if most people are not simply gifted the money outright via inheritance, they are given all sorts of helping hands by family on the way up. Like Trump's 'very small' $10 m loan, which launched his empire.

 

[inthesomeday]

The real issue I see there is that the oligarchical powers will not like that (for me inevitable) development, and will get access or even possession to domestic violence, control the police, through influence on the "democratic" politicians,
or more likely and more worse.... buy or manufacture themselves AI Robot units to keep "us" under control.

This is pretty much the problem. With the current oligarchy in place there is first the danger that they'll obstruct the natural development of post-scarcity economics, and second the fact that they are likely to sicken it for profit as they've arguably already done.

 

[warpus]

The problem in the U.S. (and in Canada to a degree) is a lack of socio-economic mobility. Once you're poor, you're likely going to stay poor.. As a result less and less people control more and more. If you want to address these issues, improve socio-economic mobility. But that's not very American, so..

 

[Hrothbern]

I just don't see how we wound up with a system wherein 1% own 49% of everything (or whatever the relevant statistic is) without inheritance being a large part of that problem.

And putting inheritance aside, there is a massive amount of wage suppression going on. The fact that full-time Wal Mart employees are forced to go onto the welfare roles while the shareholders and executives rake in billions is criminal in my mind.

the problem is that if you attack property with inheritance laws, for the rich people constructions and networks will come into being to put family members and "friends" on fast tracks to acquire money.
Attacking inheritance is attacking the symptom, not the cause.
And there is no set of regulations and laws that will not have her loopholes.
The only thing that happens is that you have another army of FBI like civil servants, under pressure of being bribed.

It is also unnatural to the human nature that you want to give your children all you can do for them within reason.
(My mother saved up a tiny amount of money, and that amount is for her that A. she does not causes expenses for her children for her funeral and B. she closes her life with a positive balance to her children: immaterial and material)
Why would we take away such a good human feeling, just because of abuse by the very rich ?

Going after inheritance is only distracting for tackling the root causes.

 

[civvver]

It should be a mixed economy, a free market but with strong consumer and labor protection laws and regulations. It's pretty close to what we had in the past, but the protections have been slowly eroded over time, and have failed to adapt to the increases in technology and globalization that create for extremely concentrated wealth.

First I think it's important to make some distinctions here. The ideas that health care, shelter and happiness among others are rights is just ludicrous. Those are outcomes, but not rights. Your rights are to life and liberty which allowing you to pursue happiness and acquire employment or a business that can provide those other things. What we are seeing in the US today is large corporations controlled by a few individuals stomping on the other individuals' liberty and the result is it's harder to afford things like education and housing, but those are outcomes, not rights. What you have a right to is not to have your wages suppressed by some backdoor deals lobbyists make with congress. That undermines your liberty to fairly negotiate your wage. That's why we need labor protection laws and the like. Everyone should have health care, housing, education etc, but not because those are rights, but because you as a person are so productive in this day and age the only way you shouldn't be paid enough to afford that stuff is if someone else is artificially limiting your compensation and encroaching on your rights.

Now sure it's very possible and practical to say hey we as a country have a lot of excess and it's desirable that everyone has some minimum standard of living. As technology continues to automate everything and remove humans from the labor equation, and raises the standard of living even more, we should address that. Throughout history typically companies had to pay employees to purchase their products. For example, employees through some advances are able to produce 10% more widgets, but those widgets go unsold because the employees haven't been paid extra for their increased productivity. So to sell more widgets the company has to pay employees more or drop prices on the widgets. Usually it's a mix. The cost of goods goes down and the wages go up and the company makes more money as it moves more product. But as automation comes it messes up that equation because now you can eliminate labor entirely and you can sell the goods overseas or for really expensive prices only to the well off. So eventually we'll have to address it, though for the time being there should be some sort of equilibrium.

But if you want to examine why wages have stagnated over the last 3-4 decades it's due to policy changes. One major one was in the early 90s when tax laws changed to disallow companies to deduct executive salaries over a million dollars. This led to work-arounds where executives were awarded stock options and other compensation instead. Now an executive is not necessarily paid for company performance, but instead is paid based on how much the stock goes up. This is an important distinction cus the stock price is not always related to a healthy company. It's often very short sight based on recent profits, thus suppressing costs which usually means suppressing labor costs/wages, becomes a huge priority for executives. In fact it's basically incentive. If I pay you less then my profits go up which raises the stock which nets me a gigantic bonus. In essence executives must pay employees less to make more money themselves.

Then in the 80s unions started disappearing. A lot of the protections for unions were done away with. Reagan dismantled the air transit unions when they went on strike which sent a huge message to the rest of the country. Free trade agreements undermined a lot of the manufacturing unions so they had to give in tons of concessions or face companies simply relocating and the government didn't bat an eye. They let all these companies screw over the labor or flee. There ought to be protections against that.

That's just a tiny snapshot of many of the issues we have, but ultimately we just need better protections and trade agreements so we stop artificially devaluing labor in the US. And we need to stop using tax dollars to bail out big finance industries and instead bail out consumers.

Of course it's easy to go to far the other direction like in France where the employment regulations have been overly burdensome in the past and the economy hasn't done so well. They're starting to turn it around now.

 

[Hrothbern]

Of course it's easy to go to far the other direction like in France where the employment regulations have been overly burdensome in the past and the economy hasn't done so well. They're starting to turn it around now.

IF GDP growth is the measure of good and wrong you are right.
But what if the overall culture of the French people is just further ahead than most western countries in balancing human values against the speed of GDP growth ?
The same applies to other South European countries.
If the high developed EU countries have typical 2-3 % of their labor force working in agricultural producing 2-3 % of their GDP,
and in Greece about 10% of the labor force is working in agricultural for "only" 2-3% GDP
Is that backward, because the agricultural sector has not been taken over by the super high capital intensive farming industry ?
Or is that where we are in one-two centuries from now in many more areas in Europe ?

 

[hobbsyoyo]

I guess if you just remove, via taxes, all wealth above a certain level then that would fix both inheritance and the symptoms of wealth concentration that are exacerbated by inheritance. But then, where do we draw that line? How do we continue to incentivize productivity and innovation?

Of course if we took all the personal money and assets over $100 m in this country, we could easily achieve a post-scarcity society for everyone. We're that rich, it's just that all the resources are in the hands of a few.


And then you would still have obscene amounts of corporate wealth. And getting at that could very well be counterproductive. Just to go with an example I'm familiar with, it took SpaceX $2-10 billion dollars to become the leading innovator and most productive rocket company in history. At some point you actually do need massive wealth concentration because not all industries are equal - some are absurdly capital intensive.

 

[Timsup2nothin]

Of course if we took all the personal money and assets over $100 m in this country, we could easily achieve a post-scarcity society for everyone. We're that rich, it's just that all the resources are in the hands of a few.

I've proposed a solution to this part of the problem. Anybody have a better idea than eating them?

 

[inthesomeday]

The ideas that health care, shelter and happiness among others are rights is just ludicrous.

Your rights are to life and liberty

Pick one

 

[Perfection]

Like it is now, except I have more money

 

[Timsup2nothin]

Pick one

They actually aren't incompatible. "Right to life" can easily be broken down as including "right to food," and shelter and health care aren't a lot harder to see as fitting in there. "Happiness" and "liberty" are both a bit nebulous, so that's not as easy, but can be done.

 

[hobbsyoyo]

The thing is that other than civver's extremist stance on that one tidbit, I agree with most of his assessment.