Akka
Moody old mage.
Thing is, it's not just about what everyone get in absolute, but also the perceived fairness. I think people can accept more easily a lower amount if it's more equally distributed, and in the end it's better for society.
The raw power of the United States
- Thread starter El_Machinae
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This is true of many people. But I think you missed my other point. Which is that a system which has inequality, but in which that inequality has not gotten too extreme, will have more wealth to fight over in the first place. The changes to the system in the US which have resulted in the great expansion in inequality have also resulted in the reduction in total wealth creation.
You really can have your cake and eat it too. That's what liberal economics makes possible.
yes
There is considerable room for higher equality while still increasing the total pancake. You can call that zone liberal economics
Whereby noted that the positive effect will saturate at relatively higher levels. I think that is where social economics start.
Assuming a country has big enough domestic scale size, like the US:
The issue is I think that this way of looking at it only works in a purely domestic setting or a trade setting where only essentials are traded (missing resources like oil) and further trading is mainly with peers based on and enabling no more than bigger economical scale size for certain specialties. Symetrical trading.
The rich aiming for higher profits with their corporate and financial power.... the many aiming for more equality with democratic power.
At the moment that trade is all over the place, competitiveness starts to kick in strongly. Which can be aggrevated by differences in labor cost, humanitarian-environmental-health regulations, etc.
When that international competitiveness causes a full race to the bottom, social economics and even liberal economics come under additional pressure (on top of the normal big money pressure to maximise profits of the owners).
I do think that the IMF has recognised these detrimental effects on the growth of the size of the total pancake, have recognised that you need a stable and happy workforce to grow sustainable and at low risk of discontinuities.... and have therefore introduced the inclusive GDP growth.
It is however a coin with two sides. Because quantifying social stability is A. not the same as social equality and B. it not only shows countries that have a growth potential from increasing equality, but also shows countries that have too much social equality. In the eyes of the IMF.
Which is completely ruled by materialistic economical thinking, entangled with the financial global superstructure and attributes imo to social features no other value than that as a tool for her materialistic economical goals.
Lexicus
Deity
Yeah, I don't agree. The closer to absolutely equal everyone is the better markets work. Unfortunately absolute equality is basically impossible.
Gori the Grey
The Poster
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This strikes me as a good premise on which to found just about any kind of system!
The point to this is that the liberal international trade order has resulted in the smallest percentage of the global population living in absolute poverty which has ever happened. Billions of people are still poor. But the portion of poor that stand a fairly strong chance of not eating on any given day is lower than ever. Trade does that.
That said, trade does displace people in developed countries. What it does not do is make people in developed countries poorer. Not as a whole. While there are always some winners, and some losers, when the losers are really losing the most, it is not the trade which is doing it, it is the other policies of their own governments that are doing it. It is not an accident that the US and UK are where the greatest growth in inequality are taking place, and that other nations facing the same trade patterns are not having the same results.
The results aren't coming from the trade policy. The results are coming from the domestic war on labor.
Lexicus
Deity
Don't you think this is better attributed to improvements in agricultural science and technique as well as greater ease of transportation than to "trade"?
Trade policy can and often is part of the domestic war on labor. Forms of managed trade meant to benefit elites at the expense of ordinary people are part of the global assault on labor.
warpus
Sommerswerd asked me to change this
All the events you mentioned did weaken the American middle class (and lower). But the country as a whole has a lot of resources to draw from, so you can continue funding your 17 aircraft carriers or whatever you guys are up to now.
stinkubus
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This is slightly OT, but the description of the 08-09 recession as the worst since the Great Depression is incredibly misleading. This narrative was propagated through US media to head off any public resistance to TARP.
There is no formal definition of a recession, so they begin and end whenever the National Bureau of Economic Research says they do. Past practice had been to wait for at least two consecutive quarters of negative economic growth before declaring a recession had begun. In 08 the recession was called while the economy was still experiencing (admittedly sluggish and decelerating) growth!
The NBER declared two separate recessions in 1980 and 1981-1982 which covered over half of the three year period and saw peak unemployment HIGHER than the 08 recession. The US also experienced a nasty recession in 73-75 during the oil embargo.
When Wall St is going to the federal government, hat in hand, looking for a bailout it would behoove the public to take any media narratives regarding the economy with a grain of salt.
Lexicus
Deity
The magnitude of the financial crisis in '08 really was the largest since the Depression, and the only reason it had peak unemployment lower than the other recessions you mention is because of TARP and the stimulus.
I've consistently maintained that the government should have bailed out the homeowners and used the opportunity to rein in Wall Street, rather than doing what it actually did, of course.
This is why:
Fundamentally a recession is a process of debt-deflation where firms cannot remain solvent because the value of their liabilities increases in proportion to the amount of income they can come up with.
See those recessions you were talking about, and how little they are? The 2008 financial crisis was huge...and part of the reason it was so huge was the unhealthy growth of the finance sector over the preceding decades, starting in the Reagan administration or even earlier.
Lexicus
Deity
As a follow-up, everyone can take comfort from this:
https://tradingeconomics.com/united-states/private-debt-to-gdp/forecast
Looks like we're going back up, and the only question is how far up, because that's exactly how far we'll fall back down. And of course some of us will fall further than others, just as happened in the last crisis...
https://tradingeconomics.com/united-states/private-debt-to-gdp/forecast
Looks like we're going back up, and the only question is how far up, because that's exactly how far we'll fall back down. And of course some of us will fall further than others, just as happened in the last crisis...
I've recently been reading up on how the Norman kings of England screwed up their country's/countries' economy with their campaigns because they simply redirected all available funds (mostly minted silver) into the Crusades or wars against the Scots, Irish, French, rebellious English barons, etc. so there were repeated instances of deflation. Did anything of the sort happen after Dubya started his unnecessary overseas wars in the US? These days, money doesn't depend so much on how fast you can dig gold and silver out of the ground as it did 900 years ago, but still, it's a thought.
Lexicus
Deity
No, money isn't a limited resource. The wars in Iraq and Afghanistan certainly helped to inflate the false growth of the 2000s.
Lexicus
Deity
Modern war has typically been associated with inflation because starting in the 17th century financial institutions grew up basically to allow governments to prosecute wars that had become staggeringly expensive. Military technology has made war more and more and more expensive in real, rather than financial, terms.
When the Normans conquered France "money" was specie, so as you note the supply of money was fairly rigidly constrained by the king's and lords' ability to get hold of precious metals. But most economic activity wasn't dependent on cash, but rather was carried on the basis of an interlocking network of informal credit, which was largely destroyed and replaced with predatory war-making finance over the course of the 16-19th centuries.
Alexander Hamilton's politics represent a particularly obvious example of this process. He wanted to turn the federal government into a collection agency for the creditors, mostly his cronies, to whom he wanted to sell debt in order to finance the powerful army and navy that would be required to give the government its muscles. The farmers in the hinterland of the colonies had monetized whiskey, and the Whisky Rebellion was in response to the Federalists' imposition of a tax on the whiskey that had to be paid in the government's money.
Then in Act II after the farmers revolt:
Perhaps fortunately Jefferson was elected in 1800 and the political ethos of self-sufficient farmer households triumphed over Hamilton's dreams of aristocracy and autocracy. At least, for a while. Ultimately the forces that Hamilton represented have triumphed in that fight.
When the Normans conquered France "money" was specie, so as you note the supply of money was fairly rigidly constrained by the king's and lords' ability to get hold of precious metals. But most economic activity wasn't dependent on cash, but rather was carried on the basis of an interlocking network of informal credit, which was largely destroyed and replaced with predatory war-making finance over the course of the 16-19th centuries.
Alexander Hamilton's politics represent a particularly obvious example of this process. He wanted to turn the federal government into a collection agency for the creditors, mostly his cronies, to whom he wanted to sell debt in order to finance the powerful army and navy that would be required to give the government its muscles. The farmers in the hinterland of the colonies had monetized whiskey, and the Whisky Rebellion was in response to the Federalists' imposition of a tax on the whiskey that had to be paid in the government's money.
Then in Act II after the farmers revolt:
Perhaps fortunately Jefferson was elected in 1800 and the political ethos of self-sufficient farmer households triumphed over Hamilton's dreams of aristocracy and autocracy. At least, for a while. Ultimately the forces that Hamilton represented have triumphed in that fight.
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stinkubus
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All commodity based money schemes are doomed to suffer from severe boom bust cycles. The government (in whatever form it may take) cannot exercise any sort of control over the quantity of money in circulation, so each society is at the mercy of forces beyond their control when it comes to inflation or deflation. For example, when you use a commodity based currency (like gold) primary resource exporters often end up "importing" inflation when their benefactor economies are also experiencing a rising general price level. Even events as simple and random as a large and proximate discovery of gold could, ironically, lead to economic calamity. The subject is far too in depth to cover in a forum post, but any good primer on monetary economics should do the trick.
This wasn't really tamed (for the most developed nations of the west, at least) until Nixon finally took the world off the gold standard in 1971.
One of the great untold stories of the history of the United States is the frequency with which financial panics and severe economic contractions have occurred. Everyone knows about the Great Depression, but almost no one will teach you that it was only great because of its duration. Contractions of similar magnitude happened at least one a generation, and often once a decade, from 1795 to 1945.
Lexicus
Deity
Depression occurred roughly every twenty years through the long 19th century, and the last one was of course the Great Depression.
New money chased assets that ended up being net-destructive. So the net supply of products didn't go up nearly as fast as the money in the system did. So people thought they were richer than they actually were.
