I work with people with learning disabilities (intellectual disability for the international audience) no amount of effort, risk taking, positive mental attitude etc is going to make them CEOs in the Fortune 500 or able to run a business.
But.
They ought to be able, when working full time, be able to live with dignity on their wages.
Not everyone has the skills to be an entrepreneur, that’s not a moral failing and it doesn’t mean you deserve to be exploited.
If this does not in practice happen that shows that economic theories based on the ideal free market are not good models for the economy, and that political positions that laud the ideal free market are likewise flawed positions.
If flawless economic theories are a prerequisite for acceptable political positions, we're all pretty much shit out of luck.
Flawless economic theories seem to be a prerequisite for acceptable socialist political positions. It's only apparently right-wing and libertarian political positions that get a pass.
Well I don't think a flawless economic theory should be considered such a prerequisite - it appeared to be a criterion you were attempting to apply. But now you seem to say that it's unfair to hold socialism to this standard, so I guess at this point you're abandoning this point of your original criticism of free market political positions (or maybe just downgrading it to a complaint that their holders argue unfairly.)
This seems to me disingenuous of you.
It was you who first applied the word 'flawless' to economic theories. I merely stipulated that the economic model underlying the economic theory should just be a good model, one that at least roughly describes what happens.
Political positions were "likewise flawed", you said. Disingenuous indeed.
Also, appeal to economic necessity or the ideal wisdom of the market does not play the same central role in most left-wing thought as it does in centrist/centre-right thought. Centrist and centre-right politics depends on the virtues of the free market and on the actual existence of a free market that sufficiently closely approximates to the model. Socialist thought is not so dependent.
Ah yes, that socialist thought which is famously not dependent on economic theory.
I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Entire industries are based around people being willing to put money on horses or dogs or spins of the roulette wheel where the expected payoff is less than zero. So it is not in fact actually obvious that nobody would ever invest at a risk where the overall payoff is the same as a risk-free investment.
You phrase that ("not in fact actually obvious") as though it's a direct contradiction of something I said - but it's not.
I think 'nobody would ever invest' is within the acceptable range of overstatement for the proposition for which 'you're not going to get a lot of investment' is an understatement.
Well, at this point I think I'll leave you and your strawman to work that out between yourselves.
I work with people with learning disabilities (intellectual disability for the international audience) no amount of effort, risk taking, positive mental attitude etc is going to make them CEOs in the Fortune 500 or able to run a business.
But.
They ought to be able, when working full time, be able to live with dignity on their wages.
Not everyone has the skills to be an entrepreneur, that’s not a moral failing and it doesn’t mean you deserve to be exploited.
Well yes, and this applies also to people who may not have the difficulties that these people have to deal with but who wouldn't have the aptitude nor inclination to run a business or become CEOs.
I know plenty of academically or intellectually able people - if we want to put it that way - who couldn't run a business to save their lives. That's no reflection on them, not everyone is geared that way just as not everyone is going to be an athlete, a musician, an artist, actor, TV presenter, inventor, doctor, teacher, nurse, police officer, engineer, plumber, shopkeeper, hairdresser...
I've heard dreadful stories of vulnerable people forced to take up door to door cold calling sales jobs under threat of losing their benefit payments when they are clearly not cut out for work of that kind. I'm sure you have plenty more horror stories like that.
Something I have noticed is that large corporations are destroying regional markets and even neighborhood stores. The best example I can give is Amazon. As they have grown larger, local stores are going. This last year, though, Amazon did not pay any American Federal Taxes. When local stores are forced to close, local communities lose that tax base.
Warren, I think, has called for the break up of Amazon, but I would hope a socialistic administration would help to curb its power and give local businesses a chance to compete.
They ought to be able, when working full time, be able to live with dignity on their wages.
Absolutely. We have a minimum hourly wage, which is too low. We should also have a minimum weekly income for those on zero-hours or similar contracts (whch are not all bad) - so a person knows that they have a minimum of x a week coming in.
And, maybe most crucially, our welfare system actually seeks to HELP PEOPLE, not just get them out of the system. So people are not pushed into jobs at minimum wage and few hours. Because that is where Tesco and the like exploit the taxpayer.
I wonder if there is space for a publicly owned online shopping portal, perhaps an international collaboration between the still extant public postal services. It seems like, logistically, integrating warehouse and delivery ought to be quite efficient.
I wonder if there is space for a publicly owned online shopping portal, perhaps an international collaboration between the still extant public postal services. It seems like, logistically, integrating warehouse and delivery ought to be quite efficient.
Amazon is actually a more complex case than it seems. Their tax-avoiding and anti-competitive practices are hugely problematic. However Amazon Marketplace helps multiple small and medium size enterprises get to market in a way that would not be possible otherwise. In fact, Marketplace sales exceed direct sales from Amazon both in quantity and value... I know anecdotally of businesses that can only exist because Amazon provides them with a means of accessing their market that would no one else can.
That inevitably begs the question; overall is Amazon hurting business or helping? I have no idea what the answer to that question is, nor whether one can justify the other. I certain do not think their tax strategy is morally acceptable though, of course, it is 100% legal.
And this is one of the major problems with where we are at; If companies only duty is to maximise profit within the law then finding creative things to do with tax is what they must do. There are two separate but related issues here; firstly the idea that maximising profit is the only duty of directors is problematic - I loved the example above of a family-run logging company: good income that supports all the employees and makes the company work for a comfortable return but never compromises the long-term viability of the forest itself. I think we can all see how this is better. Moreover, the lobbying power of big-business is so huge that they get to influence and even effectively write tax-policy. Thus, over time, the tax laws come to suit big business such that they can avoid paying their fair share very easily and yet they can defend it by looking after our shareholders whilst following the law...
Socialists like me have no problem with profits. What we hate is profits being made through hidden subsidies.
The company that underpays its workers because the state will fill the income gap are benefiting from a hidden subsidy.
The huge corporation that avoids its fair tax burden is benefiting from a hidden subsidy that pays for the security of the nation they operate in, the criminal justice system that enforces the laws that protect said corporation, the education of its staff, the infrastructure that allows its customers to get to it and allows it to get its products to market... is benefiting from a hidden subsidy.
The logging company who comes in and strips a forest bare is benefiting from a hidden subsidy; in this case from the environment. The same applies to companies who make a hugely polluting product but have no liability for the cost of that pollution. This is the bill that will all going to have to pay over the next 50-100 years.
I wonder if there is space for a publicly owned online shopping portal, perhaps an international collaboration between the still extant public postal services. It seems like, logistically, integrating warehouse and delivery ought to be quite efficient.
Amazon is actually a more complex case than it seems. Their tax-avoiding and anti-competitive practices are hugely problematic. However Amazon Marketplace helps multiple small and medium size enterprises get to market in a way that would not be possible otherwise. In fact, Marketplace sales exceed direct sales from Amazon both in quantity and value... I know anecdotally of businesses that can only exist because Amazon provides them with a means of accessing their market that would no one else can.
A side issue is that Amazon has a history of using the business intelligence it gained from providing the market platform to move into markets it felt were lucrative. Currently practices around co-mingling of stock mean that many small businesses are feeling the pain of dealing with fraud occurring elsewhere in Amazon's supply chain.
I wonder if there is space for a publicly owned online shopping portal, perhaps an international collaboration between the still extant public postal services. It seems like, logistically, integrating warehouse and delivery ought to be quite efficient.
Amazon is actually a more complex case than it seems. Their tax-avoiding and anti-competitive practices are hugely problematic. However Amazon Marketplace helps multiple small and medium size enterprises get to market in a way that would not be possible otherwise. In fact, Marketplace sales exceed direct sales from Amazon both in quantity and value... I know anecdotally of businesses that can only exist because Amazon provides them with a means of accessing their market that would no one else can.
This is partly why I was floating the idea of a public platform. That sort of one-stop-shop, like the covered markets that are slowly dying out in the UK, is very useful for small businesses but the markups charged by Amazon (and eBay these days) are pretty large. What I'm wondering is whether we can extract the socially useful functions of Amazon and make them a public service while excising the more predatory elements.
Well, at this point I think I'll leave you and your strawman to work that out between yourselves.
How about you offer some grounds from which one can work out what your opinion actually is?
My opinion is that people make risky investments expecting that, on average, the returns will be greater than for risk-free investments. So if the expected value of risky investments were nothing, or nothing more than the return on a government bond, investors would probably decide that there's no reason to take on the risk in the first place, and so there would be a lot less investment.
I don't think the existence of the gaming industry is a strong challenge to this view, since I don't think most investments are inspired by a desire for entertainment, a compulsive addiction, or an inability to do math.
Capitalism is by definition based on exploitation. The profit made by a capitalist is the fruits of that exploitation.
That’s what I understand to be the socialist position. Perhaps socialists who say they have no problem with profits per se might be better described as social democrats.
Capitalism is by definition based on exploitation. The profit made by a capitalist is the fruits of that exploitation.
That's more of a slogan than an understanding, and it isn't actually true at all.
Socialism does not mean government owns everything nor that everything capitalistic and for profit is exploitive. @Dave W is more correct in terms of how things actually operate in the real world. There's no purity in models of economics and social involvement in societies. An example:
I live in the Canadian province of Saskatchewan, where public services have not been privatised (electric, water, natural gas, telephones) and where the decision was made for the province to run cable TV, internet, automobile damage and personal injury insurance, cellular networks for cell phones. Successive right wing conservative governments have floated ideas of selling public services, and backed away. The largest grocery chain is member co-operative which gangs together via Federated Co-ops. The oil refinery (currently on strike) is also co-op. Sounds socialist I think. But the largest employer is small business. There's always pressure to bend to the nonsense that private does things better and is leaner, more efficient. But it isn't true.
The largest employer here is small business. Thus, I'd arge that small, for profit, business is completely compatible with socialism/social democracy. We run into difficulty with large, eastern-based (mostly Ontario) companies. Currently re the FCL (Federated Cooperatives Limited) oil refinery strike, the eastern based union Unifor is not doing itself any favours by importing extremely confrontational tactics, which isn't how we operate here. Culture is important as well. When we're interdependent small businesses and don't defer to big city methods because our kids may play on the same soccer team, or I know your cousin's father etc.
My opinion is that people make risky investments expecting that, on average, the returns will be greater than for risk-free investments. So if the expected value of risky investments were nothing, or nothing more than the return on a government bond, investors would probably decide that there's no reason to take on the risk in the first place, and so there would be a lot less investment.
I don't think the existence of the gaming industry is a strong challenge to this view, since I don't think most investments are inspired by a desire for entertainment, a compulsive addiction, or an inability to do math.
My opinion is that the difference between people who gamble (bad, unable to do maths), and people who invest (good, able to do maths) is by no means as hard and fast as you are making out.
As I tried to argue in the earlier post, if we use the model of economically rational agents upon which modern mainstream economic theory is based - that is neoclassical or neoliberal economics - , the expected return on risky investments will converge to the expected return of non-risky investments as a result of the laws of supply and demand. At that point, the choice between risky and risk-free investment will depend entirely upon personal temperament and not upon the expected payoff. Your personal temperament may be fairly risk-averse; that doesn't mean that only people who suffer from an inability to do maths are happier taking risks than you are.
I think that would be the economically mainstream argument, at least if mainstream economists are consistent in applying their model.
Now let's grant that the model is going wrong and ask why.
Let's start on the assumption that most people are more risk-averse than our model predicts.
The argument that I think best rescues mainstream neoclassical economics might be that the utility of money is not constant. If I only have a hundred pounds that hundred pounds is worth much more to me in utility than if I have twenty thousand. As a result, money that I might lose is worth more to me than money that I might gain. So I'd need a bigger payoff for a bet to be fair. But that would assume that the investment market is largely driven by people operating at a level where the money they stand to lose is economically significant to them, and I think most money is owned, and most money invested, by people who have more wealth than that.
The further possibility is that people are more risk-averse than the neoclassical model considers rational. That is, even if you take utility into account, people prefer a certain sum to a greater expected payoff accompanied by risk. That is the distinguishing feature of Keynesian economics. That investors give risk inherent weight, above and beyond expected payout, is how Keynesian economics explains the failure of the market to operate at full capacity without government stimulus.
Keynes was I think reluctant to call himself a socialist but any politician advocating Keynesian economic policies these days would certainly be described as socialist.
(I'll note that as I understand it Keynes did not see his economic arguments as providing reasons to adopt certain policies, so much as demolishing bad reasons not to adopt those policies. Although Keynes was prepared to take on scientific economists at their own game, he thought that people's economic preferences could not be mathematically modelled in a way that would allow economics to be a science.
I'll note also that Keynes thought and hoped that advanced economies were evolving to a state in which the profit motive would be secondary to professionalism and the desire to do a good job. That's one of the things that the right-wing turn in the late seventies put a stop to.)
Just a note, both general and specific. Economics is at best data-based as a second consideration. The first consideration with economics is ideological: much of the theorising with economics is based on conjecture, untested theory, belief. We suffer from the same problems with politics and lawyers: they often speak well, glad hand those in power, and invent ideas about human beings not based on data. They have the skills of persuasion seen in advertising and evangelical religion.
Just a note, both general and specific. Economics is at best data-based as a second consideration. The first consideration with economics is ideological: much of the theorising with economics is based on conjecture, untested theory, belief.
Is that actually the case? It can certainly be argued that a certain subset of self-identified economists are actually pushing a political agenda and refusing to mark their ideas to market, but I'm not sure that's accurate of the field as a whole.
Capitalism is by definition based on exploitation. The profit made by a capitalist is the fruits of that exploitation.
@Caissa do you think capitalism is a belief, an ideology or an economic system in its own right rather than just a bundle of approaches people adopt to make money that socialists don't like?
I'd also query whether 'by definition' capitalism is based on exploitation. It isn't in the typical dictionary definitions. Even if one concludes that it often has that effect, that's a consequence rather than 'by definition'.
I'm saying this because in much the same way as there are religious unbelievers, I'm a political unbeliever. I'd actually go further and say that my being a religious believer significantly contributes to my political unbelief.
Capitalism relies on the accumulation of "surplus value" by the capitalist. That value can only be appropriated from the labour of others. Whether that is always exploitative is a matter for debate.
Just a note, both general and specific. Economics is at best data-based as a second consideration. The first consideration with economics is ideological: much of the theorising with economics is based on conjecture, untested theory, belief.
Is that actually the case? It can certainly be argued that a certain subset of self-identified economists are actually pushing a political agenda and refusing to mark their ideas to market, but I'm not sure that's accurate of the field as a whole.
I suppose you could say more gently that we're continually subjected to their experiments. Which are ideologically based. In my lifetime, resumption of trickle down theory to which they added "free trade" (in other words having less powerful nations' economies serve the more powerful and richer), decisions to externalize human welfare (cf, the increase in obesity, addictions in developing countries, promotion of cash crops versus food growing), externalizing the physical environment in all forms of pollution, using taxation to bail out bankrupting and corrupt large companies, use of house construction of stimulate employment and forgiving taxes for the same reason of stimulation.
I'm reminded of health remedies with no data, like vitamin C for colds.
It can certainly be argued that a certain subset of self-identified economists are actually pushing a political agenda and refusing to mark their ideas to market, but I'm not sure that's accurate of the field as a whole.
It depends on which economists you ask whether economics is mostly a science driven by an objective assessment of data, or whether it's one of the humanities in which the data is bound up with political interpretation.
Generally speaking: neoliberal economics opts strongly for science, as does Marxist economics. Keynesian economics goes for humanities. Austrian school economics - that is right libertarian - goes entirely for humanities.
... Generally speaking: neoliberal economics opts strongly for science, as does Marxist economics. Keynesian economics goes for humanities. Austrian school economics - that is right libertarian - goes entirely for humanities.
I think I'd quite like them to go in for a bit of maths - possibly some ethics too.
Numbers aren't enough. You can look at the end results of a programme of economic policy and see that the richest 0.1% have more than 50% of the world's wealth and the other 99.9% of the population has the rest. That's all data. Then whether that's good or bad is humanities.
Numbers doesn't make something science. Data isn't science. These are the tools of science.
If science compares to sex, then numbers, data and statistics compare to pornography. The analogy breaks down though, because economics actually f**ks people in real.
That's all data. Then whether that's good or bad is humanities.
It goes further. The choice of what to measure is humanities. Do you include unpaid work, for example, caring for children or housework, in your definition of economic production or not? Environmental damage?
One of the temptations of the scientific approach is that one assumes that being easily quantifiable and being important are equivalent.
Then of course there's a question of what economics is about. For example, Adam Smith was famously interested in how people made pins; neoclassical economists generally don't consider how goods are manufactured or otherwise get onto the market. Veblen was interested in what luxuries wealthy people spend their money on and why (ie conspicuous consumption); neoclassical economics doesn't care.
It can certainly be argued that a certain subset of self-identified economists are actually pushing a political agenda and refusing to mark their ideas to market, but I'm not sure that's accurate of the field as a whole.
It depends on which economists you ask whether economics is mostly a science driven by an objective assessment of data, or whether it's one of the humanities in which the data is bound up with political interpretation.
Generally speaking: neoliberal economics opts strongly for science, as does Marxist economics. Keynesian economics goes for humanities. Austrian school economics - that is right libertarian - goes entirely for humanities.
Pretty sure Austrian school comes under arts - it's a form of fiction, is it not?
My opinion is that people make risky investments expecting that, on average, the returns will be greater than for risk-free investments. So if the expected value of risky investments were nothing, or nothing more than the return on a government bond, investors would probably decide that there's no reason to take on the risk in the first place, and so there would be a lot less investment.
I don't think the existence of the gaming industry is a strong challenge to this view, since I don't think most investments are inspired by a desire for entertainment, a compulsive addiction, or an inability to do math.
My opinion is that the difference between people who gamble (bad, unable to do maths), and people who invest (good, able to do maths) is by no means as hard and fast as you are making out.
I did not characterize two groups of people, one "bad" and one "good" - I'll thank you not to put words in my mouth.
I suppose we'll just have to disagree about whether people who are (e.g.) investing for retirement would be indifferent between two investments that offered the same expected return for two different levels of risk.
My opinion is that the difference between people who gamble (bad, unable to do maths), and people who invest (good, able to do maths) is by no means as hard and fast as you are making out.
I did not characterize two groups of people, one "bad" and one "good" - I'll thank you not to put words in my mouth.
I apologise. But addiction and inability to do maths are both traits stereotypically assigned to poor people by people who want to think poverty is deserved.
I suppose we'll just have to disagree about whether people who are (e.g.) investing for retirement would be indifferent between two investments that offered the same expected return for two different levels of risk.
I don't see which point on my argument that disagrees with. I said some investors will be temperamentally more risk averse than others. I just argued that that won't result in a difference in relative payout.
Besides: People investing for retirement typically do so via a pension fund. Most pension funds do not put all their eggs in one basket. As a result the risk evens out across investments: the fund manager will be expecting to lose money on some of the investments and will be looking at the overall expected payout instead.
Just a note, both general and specific. Economics is at best data-based as a second consideration.
This is just nonsense.
I am not an economist but have read a lot over the past decade because of the huge import for public policy. I would highly recommend the books written by Joseph Stiglitz, Mark Blyth, Paul Krugman and Simon Wren-Lewis. They all provide texts that are easily accessible to the non-economist. Moreover they all, constantly refer to what the data shows. Constantly.
The most powerful economists (arguably) are those that work for central banks. They all use Keynesian (or rather neo-Kenesian) models to guide their decision-making. Data, data, data.
The biggest criticisms I would make of economists over the past 20-30 years is that there has been a fetish for too much data. What I mean by that is that the holy-grail in macro-economic thinking is to have a mathematical model that is based on microeconomic principals but describes the real macro-economy accurately. There are lots of models out there that are sound mathematically and indeed have good micro- foundations but which do not fit the real world at all. The data is beautiful but it's wrong.... A couple of simple examples of this would be Ricardian Equivalence and the Laffer Curve These are good examples because both are hypotheticals that produce testable hypotheses. In both cases they have been studied and the data shows something profoundly different to what is often claimed about them; Rircardian equivalence is untrue in the real world and the Laffer curve is overly simplistic. However, interestingly, there is some data that it is true but the advocates of it totally misrepresent what it means. Laffer asserts that there is an optimal tax-rate for revenue-maximisation and thus above a certain level, increasing taxation will reduce revenue. As I said, this is probably true but the key is what is that level? Proponents will argue that it's really low... i.e. marginal tax-rates of 40% are way tooo high... But that's not what the data shows; the data shows that in the real world, the number is over 70%.
What each of the economists I listed above has in common is that they have criticised that approach. They also have in common that they are all academics who have produced the exact opposite of what you describe - data first and following the data to the logical conclusion.
I don't think anyone here would claim that economics is a natural science but the tantalising fact is that on the macro level; the countless interactions between all of us that makes up a modern economy do start to form patterns on a macro-level that behave like physical laws. Are the models perfect? Certainly not. Good enough? Well yes I think so. Why? Because one other thing they all have in common is that they predicted based on extensive data what the effect of austerity would be in the US and the UK and the real-world data from the last decade shows that their models were correct.
It seems to me that the economics debate in the public sphere (much like debates about medical issues, of which I know much more) are so often seriously detached from the work of the discipline itself. I think there are a lot of economists quietly doing good work that is studiously ignored by policy-makers and media pundits who find the evidence does not suit their agenda. That is the real problem.
There are on-going debates within economics (but that's true of all disciplines). There are problems with capture by ideology that is a particular vulnerability of economics because of the close relationship between economic policy and political decision-making but that does not make the entire discipline invalid. And when you look closely (as I have), what you see is a lot of good and useful work going on that is an important part of human knowledge and to dismiss it out-of-hand is just silly.
I understand exactly where @NOprophet_NØprofit is coming from. You pick your preferred economic model, then you pick the data that fits it.
Which is why trickle-down, free-market laissez-faire capitalism still has its supporters, despite it being cruel, heartless, leaves millions in poverty and the rest in indentured servitude, all the while shovelling wealth relentlessly upwards.
I understand exactly where @NOprophet_NØprofit is coming from. You pick your preferred economic model, then you pick the data that fits it.
Which is why trickle-down, free-market laissez-faire capitalism still has its supporters, despite it being cruel, heartless, leaves millions in poverty and the rest in indentured servitude, all the while shovelling wealth relentlessly upwards.
It's true, trickle-down laissez-faire capitalism remains popular among right wing zealots but with a few notable exceptions it has zero credibility with academic economists. And it is because of that academic work that we can show the neo-liberal economic policies don't work.
Just a note, both general and specific. Economics is at best data-based as a second consideration.
I would highly recommend the books written by Joseph Stiglitz, Mark Blyth, Paul Krugman and Simon Wren-Lewis. They all provide texts that are easily accessible to the non-economist. Moreover they all, constantly refer to what the data shows.
My understanding of whether Keynesians think of economics as a science or as one of the humanities is derived from Stiglitz' book on Keynes.
That's not to say that Keynesians think data doesn't matter, but that data doesn't interpret itself.
I understand exactly where @NOprophet_NØprofit is coming from. You pick your preferred economic model, then you pick the data that fits it.
Which is why trickle-down, free-market laissez-faire capitalism still has its supporters, despite it being cruel, heartless, leaves millions in poverty and the rest in indentured servitude, all the while shovelling wealth relentlessly upwards.
For its supporters those are features, not bugs. As people keep saying with regard to the current US regime, "the cruelty is the point".
It can certainly be argued that a certain subset of self-identified economists are actually pushing a political agenda and refusing to mark their ideas to market, but I'm not sure that's accurate of the field as a whole.
It depends on which economists you ask whether economics is mostly a science driven by an objective assessment of data, or whether it's one of the humanities in which the data is bound up with political interpretation.
Generally speaking: neoliberal economics opts strongly for science, as does Marxist economics. Keynesian economics goes for humanities. Austrian school economics - that is right libertarian - goes entirely for humanities.
Pretty sure Austrian school comes under arts - it's a form of fiction, is it not?
FWIW Hayek had an almost explicitly mystical approach to economics.
It can certainly be argued that a certain subset of self-identified economists are actually pushing a political agenda and refusing to mark their ideas to market, but I'm not sure that's accurate of the field as a whole.
It depends on which economists you ask whether economics is mostly a science driven by an objective assessment of data, or whether it's one of the humanities in which the data is bound up with political interpretation.
Generally speaking: neoliberal economics opts strongly for science, as does Marxist economics. Keynesian economics goes for humanities. Austrian school economics - that is right libertarian - goes entirely for humanities.
Pretty sure Austrian school comes under arts - it's a form of fiction, is it not?
FWIW Hayek had an almost explicitly mystical approach to economics.
I understand exactly where @NOprophet_NØprofit is coming from. You pick your preferred economic model, then you pick the data that fits it.
Which is why trickle-down, free-market laissez-faire capitalism still has its supporters, despite it being cruel, heartless, leaves millions in poverty and the rest in indentured servitude, all the while shovelling wealth relentlessly upwards.
It's true, trickle-down laissez-faire capitalism remains popular among right wing zealots but with a few notable exceptions it has zero credibility with academic economists. And it is because of that academic work that we can show the neo-liberal economic policies don't work.
AFZ
The academics aren't running countries. The true believers in falsehood continually deny science: they even deny climate change and evolution. They're running things despite data.
My opinion is that the difference between people who gamble (bad, unable to do maths), and people who invest (good, able to do maths) is by no means as hard and fast as you are making out.
I did not characterize two groups of people, one "bad" and one "good" - I'll thank you not to put words in my mouth.
I apologise.
Thank you.
But
Uh oh...
addiction and inability to do maths are both traits stereotypically assigned to poor people by people who want to think poverty is deserved.
Jesus Christ. Where the hell does this come from?
We were talking about people who gamble, not poor people. I suggested three reasons why people gamble: entertainment, addiction, poor math skills. I suspect the first and last account for a large proportion of gambling customers - some people find it enjoyable, and a lot of people have a hard time with probabilities - and I've read that problem gamblers account for a disturbingly large share of all gambling revenue. But none of this necessarily implies poverty; and even if addiction and poor math skills may contribute to poverty in some cases, that certainly wouldn't force the conclusion that poor people deserve to be poor.
I'm baffled as to why you would ascribe such an odious position to me; I don't think it's a reasonable extrapolation from anything I've written. I'm not particularly interested in continuing this discussion in Hell, so I'm just going to stop here.
I understand exactly where @NOprophet_NØprofit is coming from. You pick your preferred economic model, then you pick the data that fits it.
Which is why trickle-down, free-market laissez-faire capitalism still has its supporters, despite it being cruel, heartless, leaves millions in poverty and the rest in indentured servitude, all the while shovelling wealth relentlessly upwards.
It's true, trickle-down laissez-faire capitalism remains popular among right wing zealots but with a few notable exceptions it has zero credibility with academic economists. And it is because of that academic work that we can show the neo-liberal economic policies don't work.
AFZ
The academics aren't running countries. The true believers in falsehood continually deny science: they even deny climate change and evolution. They're running things despite data.
Indeed. But you're sweeping statement wrote off the entire economics profession because politicians and policymakers do the opposite of what they advise...
By that logic, one could have written that Climate Science is all about an ideology of protecting oil companies...
Do we have any actual evidence that people who lose money gambling are not good at maths. To be frank that is, to me a load of rubbish. My dad followed form and spent an hour or so most nights going through his books. The element of competition, horse against horse, dog against dog, you against the bookies, is a major part of it. Bookies make most money from fixed odds machines. Lots of people who put a bet on are pretty average at maths. The laws of Chance are only part in of gambling. There are elements that you cannot take into account that have a big influence on he results
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But.
They ought to be able, when working full time, be able to live with dignity on their wages.
Not everyone has the skills to be an entrepreneur, that’s not a moral failing and it doesn’t mean you deserve to be exploited.
Well yes, and this applies also to people who may not have the difficulties that these people have to deal with but who wouldn't have the aptitude nor inclination to run a business or become CEOs.
I know plenty of academically or intellectually able people - if we want to put it that way - who couldn't run a business to save their lives. That's no reflection on them, not everyone is geared that way just as not everyone is going to be an athlete, a musician, an artist, actor, TV presenter, inventor, doctor, teacher, nurse, police officer, engineer, plumber, shopkeeper, hairdresser...
I've heard dreadful stories of vulnerable people forced to take up door to door cold calling sales jobs under threat of losing their benefit payments when they are clearly not cut out for work of that kind. I'm sure you have plenty more horror stories like that.
This.
Warren, I think, has called for the break up of Amazon, but I would hope a socialistic administration would help to curb its power and give local businesses a chance to compete.
Absolutely. We have a minimum hourly wage, which is too low. We should also have a minimum weekly income for those on zero-hours or similar contracts (whch are not all bad) - so a person knows that they have a minimum of x a week coming in.
And, maybe most crucially, our welfare system actually seeks to HELP PEOPLE, not just get them out of the system. So people are not pushed into jobs at minimum wage and few hours. Because that is where Tesco and the like exploit the taxpayer.
Does the economy exist to serve the people or do people exist to serve the economy?
AFZ
Amazon is actually a more complex case than it seems. Their tax-avoiding and anti-competitive practices are hugely problematic. However Amazon Marketplace helps multiple small and medium size enterprises get to market in a way that would not be possible otherwise. In fact, Marketplace sales exceed direct sales from Amazon both in quantity and value... I know anecdotally of businesses that can only exist because Amazon provides them with a means of accessing their market that would no one else can.
That inevitably begs the question; overall is Amazon hurting business or helping? I have no idea what the answer to that question is, nor whether one can justify the other. I certain do not think their tax strategy is morally acceptable though, of course, it is 100% legal.
And this is one of the major problems with where we are at; If companies only duty is to maximise profit within the law then finding creative things to do with tax is what they must do. There are two separate but related issues here; firstly the idea that maximising profit is the only duty of directors is problematic - I loved the example above of a family-run logging company: good income that supports all the employees and makes the company work for a comfortable return but never compromises the long-term viability of the forest itself. I think we can all see how this is better. Moreover, the lobbying power of big-business is so huge that they get to influence and even effectively write tax-policy. Thus, over time, the tax laws come to suit big business such that they can avoid paying their fair share very easily and yet they can defend it by looking after our shareholders whilst following the law...
Socialists like me have no problem with profits. What we hate is profits being made through hidden subsidies.
The company that underpays its workers because the state will fill the income gap are benefiting from a hidden subsidy.
The huge corporation that avoids its fair tax burden is benefiting from a hidden subsidy that pays for the security of the nation they operate in, the criminal justice system that enforces the laws that protect said corporation, the education of its staff, the infrastructure that allows its customers to get to it and allows it to get its products to market... is benefiting from a hidden subsidy.
The logging company who comes in and strips a forest bare is benefiting from a hidden subsidy; in this case from the environment. The same applies to companies who make a hugely polluting product but have no liability for the cost of that pollution. This is the bill that will all going to have to pay over the next 50-100 years.
Hidden subsidies are the real issue here.
AFZ
A side issue is that Amazon has a history of using the business intelligence it gained from providing the market platform to move into markets it felt were lucrative. Currently practices around co-mingling of stock mean that many small businesses are feeling the pain of dealing with fraud occurring elsewhere in Amazon's supply chain.
But no, tell me again how it's socialism that's the problem.
Yep, and there are no hidden subsidies in banking at all.... none. Especially not in 2009...
This is partly why I was floating the idea of a public platform. That sort of one-stop-shop, like the covered markets that are slowly dying out in the UK, is very useful for small businesses but the markups charged by Amazon (and eBay these days) are pretty large. What I'm wondering is whether we can extract the socially useful functions of Amazon and make them a public service while excising the more predatory elements.
A proposition doesn't automatically become false merely because you say it with sarcasm.
I am rather unable to
How about you offer some grounds from which one can work out what your opinion actually is?
I don't think the existence of the gaming industry is a strong challenge to this view, since I don't think most investments are inspired by a desire for entertainment, a compulsive addiction, or an inability to do math.
That's more of a slogan than an understanding, and it isn't actually true at all.
Socialism does not mean government owns everything nor that everything capitalistic and for profit is exploitive. @Dave W is more correct in terms of how things actually operate in the real world. There's no purity in models of economics and social involvement in societies. An example:
I live in the Canadian province of Saskatchewan, where public services have not been privatised (electric, water, natural gas, telephones) and where the decision was made for the province to run cable TV, internet, automobile damage and personal injury insurance, cellular networks for cell phones. Successive right wing conservative governments have floated ideas of selling public services, and backed away. The largest grocery chain is member co-operative which gangs together via Federated Co-ops. The oil refinery (currently on strike) is also co-op. Sounds socialist I think. But the largest employer is small business. There's always pressure to bend to the nonsense that private does things better and is leaner, more efficient. But it isn't true.
The largest employer here is small business. Thus, I'd arge that small, for profit, business is completely compatible with socialism/social democracy. We run into difficulty with large, eastern-based (mostly Ontario) companies. Currently re the FCL (Federated Cooperatives Limited) oil refinery strike, the eastern based union Unifor is not doing itself any favours by importing extremely confrontational tactics, which isn't how we operate here. Culture is important as well. When we're interdependent small businesses and don't defer to big city methods because our kids may play on the same soccer team, or I know your cousin's father etc.
As I tried to argue in the earlier post, if we use the model of economically rational agents upon which modern mainstream economic theory is based - that is neoclassical or neoliberal economics - , the expected return on risky investments will converge to the expected return of non-risky investments as a result of the laws of supply and demand. At that point, the choice between risky and risk-free investment will depend entirely upon personal temperament and not upon the expected payoff. Your personal temperament may be fairly risk-averse; that doesn't mean that only people who suffer from an inability to do maths are happier taking risks than you are.
I think that would be the economically mainstream argument, at least if mainstream economists are consistent in applying their model.
Now let's grant that the model is going wrong and ask why.
Let's start on the assumption that most people are more risk-averse than our model predicts.
The argument that I think best rescues mainstream neoclassical economics might be that the utility of money is not constant. If I only have a hundred pounds that hundred pounds is worth much more to me in utility than if I have twenty thousand. As a result, money that I might lose is worth more to me than money that I might gain. So I'd need a bigger payoff for a bet to be fair. But that would assume that the investment market is largely driven by people operating at a level where the money they stand to lose is economically significant to them, and I think most money is owned, and most money invested, by people who have more wealth than that.
The further possibility is that people are more risk-averse than the neoclassical model considers rational. That is, even if you take utility into account, people prefer a certain sum to a greater expected payoff accompanied by risk. That is the distinguishing feature of Keynesian economics. That investors give risk inherent weight, above and beyond expected payout, is how Keynesian economics explains the failure of the market to operate at full capacity without government stimulus.
Keynes was I think reluctant to call himself a socialist but any politician advocating Keynesian economic policies these days would certainly be described as socialist.
(I'll note that as I understand it Keynes did not see his economic arguments as providing reasons to adopt certain policies, so much as demolishing bad reasons not to adopt those policies. Although Keynes was prepared to take on scientific economists at their own game, he thought that people's economic preferences could not be mathematically modelled in a way that would allow economics to be a science.
I'll note also that Keynes thought and hoped that advanced economies were evolving to a state in which the profit motive would be secondary to professionalism and the desire to do a good job. That's one of the things that the right-wing turn in the late seventies put a stop to.)
Is that actually the case? It can certainly be argued that a certain subset of self-identified economists are actually pushing a political agenda and refusing to mark their ideas to market, but I'm not sure that's accurate of the field as a whole.
I'd also query whether 'by definition' capitalism is based on exploitation. It isn't in the typical dictionary definitions. Even if one concludes that it often has that effect, that's a consequence rather than 'by definition'.
I'm saying this because in much the same way as there are religious unbelievers, I'm a political unbeliever. I'd actually go further and say that my being a religious believer significantly contributes to my political unbelief.
I suppose you could say more gently that we're continually subjected to their experiments. Which are ideologically based. In my lifetime, resumption of trickle down theory to which they added "free trade" (in other words having less powerful nations' economies serve the more powerful and richer), decisions to externalize human welfare (cf, the increase in obesity, addictions in developing countries, promotion of cash crops versus food growing), externalizing the physical environment in all forms of pollution, using taxation to bail out bankrupting and corrupt large companies, use of house construction of stimulate employment and forgiving taxes for the same reason of stimulation.
I'm reminded of health remedies with no data, like vitamin C for colds.
Generally speaking: neoliberal economics opts strongly for science, as does Marxist economics. Keynesian economics goes for humanities. Austrian school economics - that is right libertarian - goes entirely for humanities.
If science compares to sex, then numbers, data and statistics compare to pornography. The analogy breaks down though, because economics actually f**ks people in real.
One of the temptations of the scientific approach is that one assumes that being easily quantifiable and being important are equivalent.
Then of course there's a question of what economics is about. For example, Adam Smith was famously interested in how people made pins; neoclassical economists generally don't consider how goods are manufactured or otherwise get onto the market. Veblen was interested in what luxuries wealthy people spend their money on and why (ie conspicuous consumption); neoclassical economics doesn't care.
Pretty sure Austrian school comes under arts - it's a form of fiction, is it not?
I suppose we'll just have to disagree about whether people who are (e.g.) investing for retirement would be indifferent between two investments that offered the same expected return for two different levels of risk.
I don't see which point on my argument that disagrees with. I said some investors will be temperamentally more risk averse than others. I just argued that that won't result in a difference in relative payout.
Besides: People investing for retirement typically do so via a pension fund. Most pension funds do not put all their eggs in one basket. As a result the risk evens out across investments: the fund manager will be expecting to lose money on some of the investments and will be looking at the overall expected payout instead.
This is just nonsense.
I am not an economist but have read a lot over the past decade because of the huge import for public policy. I would highly recommend the books written by Joseph Stiglitz, Mark Blyth, Paul Krugman and Simon Wren-Lewis. They all provide texts that are easily accessible to the non-economist. Moreover they all, constantly refer to what the data shows. Constantly.
The most powerful economists (arguably) are those that work for central banks. They all use Keynesian (or rather neo-Kenesian) models to guide their decision-making. Data, data, data.
The biggest criticisms I would make of economists over the past 20-30 years is that there has been a fetish for too much data. What I mean by that is that the holy-grail in macro-economic thinking is to have a mathematical model that is based on microeconomic principals but describes the real macro-economy accurately. There are lots of models out there that are sound mathematically and indeed have good micro- foundations but which do not fit the real world at all. The data is beautiful but it's wrong.... A couple of simple examples of this would be Ricardian Equivalence and the Laffer Curve These are good examples because both are hypotheticals that produce testable hypotheses. In both cases they have been studied and the data shows something profoundly different to what is often claimed about them; Rircardian equivalence is untrue in the real world and the Laffer curve is overly simplistic. However, interestingly, there is some data that it is true but the advocates of it totally misrepresent what it means. Laffer asserts that there is an optimal tax-rate for revenue-maximisation and thus above a certain level, increasing taxation will reduce revenue. As I said, this is probably true but the key is what is that level? Proponents will argue that it's really low... i.e. marginal tax-rates of 40% are way tooo high... But that's not what the data shows; the data shows that in the real world, the number is over 70%.
What each of the economists I listed above has in common is that they have criticised that approach. They also have in common that they are all academics who have produced the exact opposite of what you describe - data first and following the data to the logical conclusion.
I don't think anyone here would claim that economics is a natural science but the tantalising fact is that on the macro level; the countless interactions between all of us that makes up a modern economy do start to form patterns on a macro-level that behave like physical laws. Are the models perfect? Certainly not. Good enough? Well yes I think so. Why? Because one other thing they all have in common is that they predicted based on extensive data what the effect of austerity would be in the US and the UK and the real-world data from the last decade shows that their models were correct.
It seems to me that the economics debate in the public sphere (much like debates about medical issues, of which I know much more) are so often seriously detached from the work of the discipline itself. I think there are a lot of economists quietly doing good work that is studiously ignored by policy-makers and media pundits who find the evidence does not suit their agenda. That is the real problem.
There are on-going debates within economics (but that's true of all disciplines). There are problems with capture by ideology that is a particular vulnerability of economics because of the close relationship between economic policy and political decision-making but that does not make the entire discipline invalid. And when you look closely (as I have), what you see is a lot of good and useful work going on that is an important part of human knowledge and to dismiss it out-of-hand is just silly.
AFZ
Which is why trickle-down, free-market laissez-faire capitalism still has its supporters, despite it being cruel, heartless, leaves millions in poverty and the rest in indentured servitude, all the while shovelling wealth relentlessly upwards.
It's true, trickle-down laissez-faire capitalism remains popular among right wing zealots but with a few notable exceptions it has zero credibility with academic economists. And it is because of that academic work that we can show the neo-liberal economic policies don't work.
AFZ
That's not to say that Keynesians think data doesn't matter, but that data doesn't interpret itself.
For its supporters those are features, not bugs. As people keep saying with regard to the current US regime, "the cruelty is the point".
Granted, but obfuscation with cherry picked data may go some way to explain why some poor people also support it.
So does being willing to get shat on so long as those people get shat on as much or more.
FWIW Hayek had an almost explicitly mystical approach to economics.
All that and economic philosophy? Damn...
We were talking about people who gamble, not poor people. I suggested three reasons why people gamble: entertainment, addiction, poor math skills. I suspect the first and last account for a large proportion of gambling customers - some people find it enjoyable, and a lot of people have a hard time with probabilities - and I've read that problem gamblers account for a disturbingly large share of all gambling revenue. But none of this necessarily implies poverty; and even if addiction and poor math skills may contribute to poverty in some cases, that certainly wouldn't force the conclusion that poor people deserve to be poor.
I'm baffled as to why you would ascribe such an odious position to me; I don't think it's a reasonable extrapolation from anything I've written. I'm not particularly interested in continuing this discussion in Hell, so I'm just going to stop here.
Indeed. But you're sweeping statement wrote off the entire economics profession because politicians and policymakers do the opposite of what they advise...
By that logic, one could have written that Climate Science is all about an ideology of protecting oil companies...