So socialism

[Hygro]

Financial "savings" do not shift it in time, do not magically expand it.

You main economic point is very good and I caution anyone unclear on it to understand it before even considering my counterargument.

However the existence of financial savings is pent up demand waiting for basically "something better" to induce spending. As such, the existence of those financial savings inherently incentivizes change. Individuals liberated to decide how to induce this spending are more creative than bureaucracies.

For a moment, imagine a system of perfect insurance and support that also magically knew how to keep people best motivated and happy while productive for some perfect admixture of an aggregate of societal goals, short and long, with individual ones and whatever medium goals fit in between. In such an environment, financial savings as we know them might serve no purpose at all, they could be represented by current accounts only.

But in maximizing employment and welfare at any given slice of time there's no assurance you're maximizing welfare in the future. Private investment decisions, private spending decisions is simply more democratic than only centralized investment and allocation.

With the entirety of uncertainties, not wasting resources on things that aren't good enough in the present moment, and whatever incentives we want for people to work extra hard early for the rest of us to capitalize upon, and rewarding that person with the option of leisure or greater responsibilities, it is not unreasonable to maintain a system of private savings.

 

[Birdjaguar]

You have perhaps missed my answer, that was also addressed to this. It may be worth repeating. Financial savings are an accounting fiction, that cannot shift any real resource into the future.

The pool of available resources at a given moment: food, housing, infrastructure, human labour, raw materials, is what it is. Financial "savings" do not shift it in time, do not magically expand it. If people save money (or any other form of financial asset) and then all decide to spend savings on resources, the resource pool remains the same. All you get is inflation, and those savings being show as an illusion. And when talking about a social security scheme, how it's sustainable, it's the macro level that is being discussed. This was what I addressed originally. "Capitalization" for social security is a financial scam.

Because, and pardon me laboring more on this, in terms of real resource use a social security system must always balance on the present.

Personal savings may work for you individually if and only if you save more than the others. In that you will later outspend those others in bidding for limited recurses. But collectively - this is a social security system we were discussing - it's a zero-sum game. Look at you example:



You talk about retirees consuming resources. To meet their need for resources, the people in active labour pool must produce those resources at the same time they're consumed. The system must balance. Whether the laborers are "taxed" and those taxes "pay" for the pensions, or the retirees spend "savings" and but resources in the market, the end result would be the same: a fraction of the resources gets spent on retirees. It's just two different ways to organize the transfer of real resources from laborers to retirees going on in the present. Because the vacations you didn't consume 20 years ago are not frozen in time waiting for you in retirement: the workers of your younger age who would have served you have also aged and are also retirees now.

Thus pay-as-you-go versus capitalization is a matter of formal organization about the transfer or resources in the present from laborers to retirees.

What I am arguing is that pay-as-you go is superior for two main, very important, reasons:
1. It more accurately represents reality, preventing fallacious presentations like saving for the future. All transfers of resources happen in the present and are a choice that present society must make. This is always true, it's a material reality. A system that more plainly shows that is superior.
2. Capitalization provides more opportunities to useless rentiers to peddle complex financial structures and siphon off a share of the "financial flows" for their own luxury consumption. Seize a share of the resources for themselves as "necessary specialized service providers" of finance by pretending they're providing supposedly necessary "financial services". Which are always much more bureaucratic and obfuscated than the pay-as-you-go state administered systems.

Capitalization is a system exploited by a parasite class. That is why banksters keep pushing capitalization and trying to cancel pay-as-you-go. A more obfuscated system gives them opportunities to present themselves as necessary middlemen and organizers. They're not - they're social parasites.

This is what I had asked you about previously:

Collectivism seems to ignore the variety of human needs, especially at later stages of life. State mandated "production" (of services and products) is not able to meet the variety of demand humans desire. Your system will always curtail peoples' wants to those planned by the State. Person A will want to retire to a quiet life in the country after 40 years in the city; Person B will want to take 2 $10,000 vacations a year in distant places. Person C will want to move to be with grandchildren. Now multiply that by a few million other options. The state has a record of being able to meet collective needs (keep the trains running on time) but fails miserably at meeting individual needs. It is those individual needs that increase the happiness of people and families.

Personal savings are similar to corporate investments but just happen on a different scale. by not consuming now I hope to put off that consumption until later when I can better enjoy it or will need it. Should delaying such consumption earn a saver any reward? (interest) Is there a risk to the saver's delay? (inflation) Is there a cost to the saver? (penalty) Does your system allow private companies? If so, can they save for some future need? Scaled up from personal savers. Where do such savings sit? Do I keep the $10 not spent under my mattress? Does the state just not give it to me? Where does a company keep its money not spent?

Maybe your system does away with money altogether. I don't know. You talk a lot at the macro level, but people don't live at the macro level. They live at the micro level where each transaction is important to them. Can you describe how your collectivism works at the individual level? I work in some factory or service run by the state. How do I plan and pay for the 300 person wedding in Cancun for my daughter? How many different kinds of cars will be available for me to buy? Do I get a benefit from consuming less than average? I could go on. Your socialism is like a big puzzle that you have put all the pieces together, but when that is done, there is no picture. It's blank. The pieces all fit but....

The macro level is theoretical and rarely, if ever, fits what actually happens to the individuals involved and it is those people to whom you are saying you are offering great benefits. I still haven't seen any examples of your macro system at work at scale nor heard how your system would actually be implemented. Arguing macro economic planning is just philosophical BS unless you can translate it into the lives of the people who will be affected. Supply/Demand curves work well on paper in Econ classes, but the reality is a very different thing. Unless you can translate your economic philosophy into the real world, it is useless beyond an intellectual exercise. Can you do that? Can you describe how your system would actually work in a world of real people and companies that have to produce goods and services?

Here is your Socialism using macro economics to build a bridge to a workers Utopian future:

 

[Lexicus]

I still haven't seen any examples of your macro system at work at scale nor heard how your system would actually be implemented.

Innonimatu is describing how the system currently works. This is not a theory that might be implemented some time in the future. It is a material fact that resources produced now are consumed now.

Arguing macro economic planning is just philosophical BS unless you can translate it into the lives of the people who will be affected. Supply/Demand curves work well on paper in Econ classes, but the reality is a very different thing.

Supply and demand curves are a microeconomics concept.

Can you describe how your system would actually work in a world of real people and companies that have to produce goods and services?

This year, there will be so many goods and services created in the US. The spending to pay for those goods and services is happening as they are being provided to the people who pay for them. Allowing for the fact that some goods are more durable than others, good produced today are consumed today. Services provided are provided today. They are not "saved."
And, to repeat what I said above, this is not a theory to be implemented. This is reality, today, all around you.

Here is your Socialism using macro economics to build a bridge to a workers Utopian future:

The Tacoma Narrows bridge failure has given us invaluable information ... It has shown [that] every new structure [that] projects into new fields of magnitude involves new problems for the solution of which neither theory nor practical experience furnish an adequate guide. It is then that we must rely largely on judgment and if, as a result, errors, or failures occur, we must accept them as a price for human progress.[42]

 

[Lexicus]

Private investment decisions, private spending decisions is simply more democratic than only centralized investment and allocation.

This is conceptually confused. Centralized vs decentralized has nothing really to do with private vs public.

it is not unreasonable to maintain a system of private savings.

I don't disagree at all, but the private savings tail can't be allowed to wag the present consumption and investment dog. Especially not when we need to be supercharging investment in climate change stuff.

 

[Yeekim]

But collectively - this is a social security system we were discussing - it's a zero-sum game

This is true only on a global scale.
Not on a scale of single country.

 

[Lexicus]

This is true only on a global scale.
Not on a scale of single country.

It's true for whatever scale you choose to imagine.

 

[Yeekim]

It's true for whatever scale you choose to imagine.

My point is that a "society" - at least on a country level - is not a closed system. People of that country can collectively save for retirement without it being a zero-sum game, since a lot of goods and services they'll be needing can be imported from other countries.

 

[El_Machinae]

My point is that a "society" - at least on a country level - is not a closed system. People of that country can collectively save for retirement without it being a zero-sum game, since a lot of goods and services they'll be needing can be imported from other countries.

Any item that can retain its value over time can be saved. In the case that you're describing, foreign property rights are defended. Ideally by the governing country of those assets, rather than by gun boats from the "owning country".

And if a group can have savings that are offered and protected by outside entities, then if that group has a superior economic model when it comes to gaining those savings, they will outperform those that don't. Norway isn't a good example, because so much of their wealth comes from oil.

Switzerland isn't a bad example, but of course we can complain about some of the initial illegitimate investment. But even that's weird, because if they received gold and we all know that gold is basically useless as anything other than a financial instrument, then they were able to create a system where there are massive foreign savings and only needed an initial boost of paper assets to get there.

But there is a deeper point, that future consumption has to be met with future production. After that, it's just whether the production exists and who has a claim on it by what mechanism. Anybody with a pension or a claim on future social security has "savings". After that, it's just accounting.

 

[Lexicus]

My point is that a "society" - at least on a country level - is not a closed system. People of that country can collectively save for retirement without it being a zero-sum game, since a lot of goods and services they'll be needing can be imported from other countries.

Except that any goods and services imported from another country are goods and services the people of that country will produce, and not get to consume. This is not a rebuttal to any point made here.

 

[El_Machinae]

The idea that private spending is more democratic depends on monopolistic forces, and aggregate Game Theory.

It's an old parable, but if professional hockey players are allowed to individually decide whether to wear helmets or not, they will each choose to not wear helmets in order to gain or maintain a Competitive Edge. But if given the opportunity to vote on whether everybody has to wear helmets, they will vote that way.

Spending causes production, so sometimes spending will capture implicit preferences in a way that just cannot be captured using democratic systems. And when it works, you don't want to lose the beneficial effects.

And sometimes things are at cross purposes. We individually choose to subsidize industrial farming by over consuming meat. And yeah, spending drives the production. But we also quite dislike the official subsidies, and I would bet that if there was proper democratic representation instead of lobbyist capture, we would vote for less subsidy.

 

[Hygro]

This is conceptually confused. Centralized vs decentralized has nothing really to do with private vs public.

What is your example of decentralized public spending?

 

[Lexicus]

What is your example of decentralized public spending?

Local government in the US. Conversely, large corporations with a top-down structure are an example of centralized private spending. The distribution of wealth being more unequal also tends to centralize private spending, particularly private spending on investment.

It's also useful to remember that it's typically the austerity and balanced-budget freaks who demand the "centralization" of public spending because they also tend to be the most concerned that spending does not go to "undeserving" or "wasteful" recipients. So if you like decentralization adopting functional finance is actually the better option.

I don't actually think decentralization is better a priori, what matters more to me is systems of accountability, and it's clear to me that, again generally speaking, in functioning democracies the public authorities are more accountable to more people than any private entity could be.

 

[El_Machinae]

Wouldn't 'no strings stimulus cheques' be the ultimate example of decentralized public spending? And then from there: social security cheques, welfare cheques, medicare insurance, etc?

 

[Lexicus]

Wouldn't 'no strings stimulus cheques' be the ultimate example of decentralized public spending? And then from there: social security cheques, welfare cheques, medicare insurance, etc?

Something like that. Unconditional payments are less centralized, probably. It depends on the actual reporting/approval processes in place.

 

[Hygro]

I guess that’s my point, there’s centralized and decentralized private spending but public spending can only decentralize to smaller centrals. At some point to extend the public all the way it must necessarily become private, as in imagine a public that votes every year the income of the individuals.

For that, I highlight the part of private spending that can be decentralized, and the whole of public spending that must be more or less centralized. To the extent a township among townships is an example of decentralization, it’s in context of being less centralized than maximally. And in context of a private monopoly of a critical factor of production being centralized, it obviously is, but in the context of being more centralized than its private default.

The two axes are in all practice intertwined, where both private can end up highly centralized and the public as low as somewhat decentralized, but still centralized.

You main economic point is very good and I caution anyone unclear on it to understand it before even considering my counterargument.

The main point being that a social security system is always a transfer of existing resources as savings don’t exist as an exhaustible scarce resource we need or even physically can ration into the future.

Financial savings in their rarest form are simply some other entity’s debt or the unemployment of people/resources, which is a disinvestment relative to potential.

We don’t know all the extent to what keeps people keeping on, and private savings is something that has value in organizing, motivating, resting, etc people. But it’s on some level an economic disaster.

 

[Hygro]

Like in theory the maximum growth rate is spending maximally and saving minimally at times, perfectly. Savings in a perfect otherwise economy is only bad.

But lots of things, most of microeconomics and all of fraudulent macroeconomics is predicated on a perfect economy with both maximal and optimal use of resources. And it’s not descriptive.

In reality for example maximum output required keeping a lot of resources on standby to handle unforeseen circumstances to avoid sudden bottlenecks. We witnessed this during the pandemic.

On a smaller scale, a redundant-most-of-the time worker is a more productive asset than making that worker always productive on something less important. Preventing bottlenecks in fundamental things matters more than the right-now productivity of every resource.

Financial savings can manage this, so can lines of credit, as well as insurance. So can public spending if it’s fast enough and precise enough.

Now the pandemic showed that as a system, public and private, we can respond fairly fast, about 1 year delays in correct pricing.

Should be noted the government acted big and bluntly and effectively within weeks while private companies took a year to re-price accordingly. But the public spending was deeply imprecise and the private re-pricing has been pretty “correct”.

 

[El_Machinae]

I want to play into this idea that savings aren't an exhaustible resource.

I mean, obviously it isn't. A country putting domestic dollars into a savings account doesn't mean that there will be more output later. But 'savings' are a claim on the future, and so obviously only a certain percentage of tomorrow's output can show up as 'owed' (or 'savings') on someone's books today (at most, 100%). So, the legitimate fiat claim is exhaustible, and we'd like governments to please not create these claims.

If you have claim on a future output, you have present-day savings in a financialized format. In an ideal world, you got this claim by diverting some of your claims on consumption into claims on investment. Importantly, these are also 'savings'. So, in this way, a country *can* have savings. After that, it's just accounting. If the country budgets and spends as if their future income (/spending power) is higher than what it turns out to be, it means they miscalculated their future income (/spending power). They weren't as rich as they thought. Or, the savings they promised weren't achievable, so there's only so much you can actually promise.

It's a legal fiction that the American Social Security fund has 2.8 Trillion dollars in it, and that these saved dollars created the future output retirees will eat. But the SS fund represents savings in a very mainstream way from the perspective of the recipients (and the people from whom SS is collected). Destroying these savings wouldn't help the economy, and any reframing of a social security net can just be rejigged as 'savings' in the chequebook of anybody who understands finance.

 

[Yeekim]

Except that any goods and services imported from another country are goods and services the people of that country will produce, and not get to consume. This is not a rebuttal to any point made here.

"One person can't consume goods that another has already consumed" is a trivial truism. No idea why you think it is relevant.
Inno said:

Personal savings may work for you individually if and only if you save more than the others. In that you will later outspend those others in bidding for limited recurses. But collectively - this is a social security system we were discussing - it's a zero-sum game.

I am saying savings can also work for a society as a whole if they save more than other societies. Existing social security systems are country-based, not global.

 

[citizenofdoom]

I do not understand why and how people fascinate socialism so much; the current capitalistic method is already a generalized version of socialism. Socialism can exist within a capitalistic environment, simply by making funds, sharing, and some more corporate power structures; however, capitalism cannot exist within a regime that forbids private ownership of major industrial tools. If someone wants socialism, please make it a reality; make a fund/shared company, start a campaign for the love and virtue of sharing; and make some innovations that greatly incentivize people to share, instead of practicing political manipulations forcing everyone to cut their own right on property management, letting faulty hands mismanage everything present-day humans and our homo sapiens ancestors worked so hard for. If socialism lovers believe socialism is scalable, they can do it now, and make a scalable company for humane purposes.

I have some ideas:
- A company that provides contracts in form of providing healthcare, education for children, and even shelter if that child is in miserable places in exchange for a small percentage of future income(energy equivalent in case fiat is somehow exhausted); all of the profit is invested into other future children.
- A company that provides healthcare-based contracts that can only be bought since you are born for freedom from diseases and provision of daily diets. Daily diets are automatically synthesized from some data-driven approach as well as are a part of the healthcare-based contract because you want people to live healthily; all of the profit is invested into improving the service and the fund is carefully hedged.
- A scalable servant network that connects the homeless people, and educates them to be some sort of workers; a part of the income that those workers generated are forcefully taken into a collective fund for shelter, food provision, future investment as well as their children, written in labour contract (people are not so unlucky or randomly becoming a homeless one).

That's it. If someone wants to make it real, make it with their own money/capital, not the taxpayers' (consisting of people wanting to make it a reality and people not wanting that at all). Seriously, many ones including the capitalist scums will greatly appreciate anyone making those things a reality, efficiently making a mini-socialism within a crazy capitalistic world.

The difference between capitalism and socialism is too big; one is O(logC) and one is O(logN) for the height of the social tree, C is a constant, and N is number of human lungs; indicating one is scalable and one is not. When we finally have some cool crazy telecommunication-based/data-manipulation techs to achieve socialism, the population rises to fill the vacuum left by that technological advancement. Mass surveillance will likely to fail soon, I sincerely hope so, maybe half a century later.

 

[Hygro]

O(logN) is a time complexity of an extremely scalable algorithm.

O(logC) is the same as O(C) which is O(1)

What in capitalism is the “constant” such that is costs the same in absolute terms regardless of scale? Why is socialism a tree of people and capitalism not? Why is it scaling with a log?

What are these algorithms you have in your head? What are they doing/ solving?