Hint: the answer is democracy.
May 20, 2012 3:43 AM Subscribe
The Costs of Capitalism's Crisis: Who Will Pay? Economics professor Richard Wolff gives some context to the latest economic crisis and suggests a solution to prevent this from happening again.
Democracy is the mother spider that gives life and nourishment to the Capitalist baby spiders, which in-turn feed upon the mother until she is a dead, hollowed-out husk.
posted by Thorzdad at 5:52 AM on May 20, 2012 [9 favorites]
posted by Thorzdad at 5:52 AM on May 20, 2012 [9 favorites]
Democracy is the mother spider
THANK YOU FOR THE NEW RECURRING NIGHTMARES I WILL HAVE
posted by potsmokinghippieoverlord at 6:27 AM on May 20, 2012 [2 favorites]
THANK YOU FOR THE NEW RECURRING NIGHTMARES I WILL HAVE
posted by potsmokinghippieoverlord at 6:27 AM on May 20, 2012 [2 favorites]
His polemic style grates upon me a bit (I'm half an hour in), and I keep having "but you're simplifying and what about this and that' heckles, but good story-teller so far. I'll watch some more. There's certainly some meat on the bone of his contentions.
posted by panaceanot at 6:31 AM on May 20, 2012
posted by panaceanot at 6:31 AM on May 20, 2012
I think this is an excellent primer, and he's an engaging speaker for the most part. But since this is an hour and a half, here's a brief-ish summary:
For 150 years, American wages went up due to labor shortages. This was to induce European workers to move here and take advantage of fertile farmland, slave labor, and easily navigable coasts, and then raised again to keep them from moving West. In the 1970s, wages became flat as productivity increases from computerization and the offshoring of labor became standard business practices, and as more people (women, minorities, Latin American immigrants) became available to the labor market.
However, consumers didn't stop spending. With the invention of credit cards in the 70s, consumer debt rose and has largely kept rising. And since their wages didn't rise, American workers began to put in more hours instead, and we are now one of the most (if not the most) overworked populations in the modern world.
During the 80s, as business balance sheets bulged from flat wages and rising productivity, the executive class started paying themselves vast sums of money, which has raised the average CEO pay from 30-50x their average employe to 350x. Even more ingeniously, all of the money that they should have been paying to their employees was instead borrowed by those employees, creating huge stacks of debt. Hedge funds emerged as a way for the executive class, who literally had so much money that they didn't know what to do with it, began to invest. However, those hedge funds began to make riskier and riskier bets backed with that debt in order to compete for investor dollars. (Editor's note: this was largely made possible by the deregulation of the 90s and the destruction of the firewalls established by Glass-Steagall.)
In 2007, it all fell apart. The working class ran out of credit and couldn't physically work any more hours. Lending completely stopped, even between banks, because every major financial institution was essentially bankrupt. All of the consumer debt assets were worthless. And since this was important, "unlike national health care policy which requires years of careful debate," governments handed over trillions of dollars to float financial institutions through the crisis.
The only problem is that any institution that has actual money has seen world government spending skyrocket, and they are concerned about the government's ability to repay. "Not because the politicians wouldn't pay, because they own the politicians, but concerned that the citizens of the country wouldn't allow it."
So, there are three ways for governments to raise money if they can't borrow it: to print it, which can lead to inflation; to tax it across the board, which loses elections; and the third option is by cutting government spending. (Editor's note: cutting spending is just another form of a tax increase, since those services are probably still a necessity, and the money will now come out of your pocket instead out of the taxes you're already paying.) Governments have chosen the last option.
Now, for a country like America, we're still able to borrow money because our economy is so enormous. But for smaller countries like Greece, who mostly borrowed from foreign banks, they are being forced into austerity by their lenders and by others in the Eurozone. The problem with austerity is that it again is punting the costs further down the road, but instead of just costing paper money, there is a very real chance that foundational damage to the economy will occur. This is because austerity damages infrastructure that is expensive to replace, not only for things like roads and bridges and electrical grids, but for education and social services that create the quality of labor that is required for dynamic and successful economies.
In a nutshell, the power structures in our societies are trying to lay 30 or 40 years of economic planning mistakes squarely on the shoulders of the working class, and it's too much, even according to billionaires like Soros and Buffett.
He then goes on to list what happened in response to the Great Depression: Social Security was created, unemployment compensation was created, and between 1934 and 1941 FDR hired 12 million people since the private sector was unable to do so. And the rest, of course, received employment during the war.
Where did Roosevelt get the money to accomplish all of this? He raised taxes. During his presidency, for every dollar collected in taxes from private citizens, $1.50 was collected in taxes from corporations. Today, every dollar of individual taxes is matched by twenty five cents from corporations. The highest income tax bracket became 94%. (Editor's note: today, effective tax rates for the very wealthy are between 15-20%.)
After Roosevelt was gone, the business community decided to take back what they had given away, and that's pretty much the story since the end of the war.
That gets you to about the hour mark. I recommend watching the rest, if you can't watch the whole thing.
posted by deanklear at 7:04 AM on May 20, 2012 [82 favorites]
For 150 years, American wages went up due to labor shortages. This was to induce European workers to move here and take advantage of fertile farmland, slave labor, and easily navigable coasts, and then raised again to keep them from moving West. In the 1970s, wages became flat as productivity increases from computerization and the offshoring of labor became standard business practices, and as more people (women, minorities, Latin American immigrants) became available to the labor market.
However, consumers didn't stop spending. With the invention of credit cards in the 70s, consumer debt rose and has largely kept rising. And since their wages didn't rise, American workers began to put in more hours instead, and we are now one of the most (if not the most) overworked populations in the modern world.
During the 80s, as business balance sheets bulged from flat wages and rising productivity, the executive class started paying themselves vast sums of money, which has raised the average CEO pay from 30-50x their average employe to 350x. Even more ingeniously, all of the money that they should have been paying to their employees was instead borrowed by those employees, creating huge stacks of debt. Hedge funds emerged as a way for the executive class, who literally had so much money that they didn't know what to do with it, began to invest. However, those hedge funds began to make riskier and riskier bets backed with that debt in order to compete for investor dollars. (Editor's note: this was largely made possible by the deregulation of the 90s and the destruction of the firewalls established by Glass-Steagall.)
In 2007, it all fell apart. The working class ran out of credit and couldn't physically work any more hours. Lending completely stopped, even between banks, because every major financial institution was essentially bankrupt. All of the consumer debt assets were worthless. And since this was important, "unlike national health care policy which requires years of careful debate," governments handed over trillions of dollars to float financial institutions through the crisis.
The only problem is that any institution that has actual money has seen world government spending skyrocket, and they are concerned about the government's ability to repay. "Not because the politicians wouldn't pay, because they own the politicians, but concerned that the citizens of the country wouldn't allow it."
So, there are three ways for governments to raise money if they can't borrow it: to print it, which can lead to inflation; to tax it across the board, which loses elections; and the third option is by cutting government spending. (Editor's note: cutting spending is just another form of a tax increase, since those services are probably still a necessity, and the money will now come out of your pocket instead out of the taxes you're already paying.) Governments have chosen the last option.
Now, for a country like America, we're still able to borrow money because our economy is so enormous. But for smaller countries like Greece, who mostly borrowed from foreign banks, they are being forced into austerity by their lenders and by others in the Eurozone. The problem with austerity is that it again is punting the costs further down the road, but instead of just costing paper money, there is a very real chance that foundational damage to the economy will occur. This is because austerity damages infrastructure that is expensive to replace, not only for things like roads and bridges and electrical grids, but for education and social services that create the quality of labor that is required for dynamic and successful economies.
In a nutshell, the power structures in our societies are trying to lay 30 or 40 years of economic planning mistakes squarely on the shoulders of the working class, and it's too much, even according to billionaires like Soros and Buffett.
He then goes on to list what happened in response to the Great Depression: Social Security was created, unemployment compensation was created, and between 1934 and 1941 FDR hired 12 million people since the private sector was unable to do so. And the rest, of course, received employment during the war.
Where did Roosevelt get the money to accomplish all of this? He raised taxes. During his presidency, for every dollar collected in taxes from private citizens, $1.50 was collected in taxes from corporations. Today, every dollar of individual taxes is matched by twenty five cents from corporations. The highest income tax bracket became 94%. (Editor's note: today, effective tax rates for the very wealthy are between 15-20%.)
After Roosevelt was gone, the business community decided to take back what they had given away, and that's pretty much the story since the end of the war.
That gets you to about the hour mark. I recommend watching the rest, if you can't watch the whole thing.
posted by deanklear at 7:04 AM on May 20, 2012 [82 favorites]
(feel free to correct any mistakes... it was from memory, so there are probably a few)
posted by deanklear at 7:05 AM on May 20, 2012
posted by deanklear at 7:05 AM on May 20, 2012
Thanks for the outline, deanklear.
posted by methinks at 7:17 AM on May 20, 2012 [1 favorite]
posted by methinks at 7:17 AM on May 20, 2012 [1 favorite]
after the hour mark:
over the last 40 years the New Deal has been rolled back through tax and spending cuts and finally in1999 Clinton repealed Glass-Steagull: regular depositers banks could take risks and reap the benefits. Eight years later the banks fail.
Corporations have concentrated decision-making into a tiny number of wealthy shareholders, they have bought the political system.
Workers have no say in this decision structure, all decisions that effect them are made by others, they vote in elections but it doesnt matter, both sides have to fill their campaign coffers with corporate money.
Occupy has brought this unbroadcastable state of affairs into a public conversation, their open about the real culprit: the entire economic system where they actually have no meaningful say.
posted by dongolier at 7:23 AM on May 20, 2012 [12 favorites]
over the last 40 years the New Deal has been rolled back through tax and spending cuts and finally in1999 Clinton repealed Glass-Steagull: regular depositers banks could take risks and reap the benefits. Eight years later the banks fail.
Corporations have concentrated decision-making into a tiny number of wealthy shareholders, they have bought the political system.
Workers have no say in this decision structure, all decisions that effect them are made by others, they vote in elections but it doesnt matter, both sides have to fill their campaign coffers with corporate money.
Occupy has brought this unbroadcastable state of affairs into a public conversation, their open about the real culprit: the entire economic system where they actually have no meaningful say.
posted by dongolier at 7:23 AM on May 20, 2012 [12 favorites]
and finally:
"America Can Do Better than Capitalism"
posted by dongolier at 7:25 AM on May 20, 2012 [2 favorites]
"America Can Do Better than Capitalism"
posted by dongolier at 7:25 AM on May 20, 2012 [2 favorites]
Good video.
I'm new to this guy, and find it quite exciting how he's a Marxist who looks like Dick Cheney.
posted by colie at 8:11 AM on May 20, 2012 [4 favorites]
I'm new to this guy, and find it quite exciting how he's a Marxist who looks like Dick Cheney.
posted by colie at 8:11 AM on May 20, 2012 [4 favorites]
Superb. Really superb. Well worth spending the time to watch.
As to his polemics - he covers the course of modern American economics/economical politics in 90 minutes, so of course it's not incredibly detailed. Personally, I think he covers the bases well, but YMMV.
posted by Benny Andajetz at 8:27 AM on May 20, 2012 [1 favorite]
As to his polemics - he covers the course of modern American economics/economical politics in 90 minutes, so of course it's not incredibly detailed. Personally, I think he covers the bases well, but YMMV.
posted by Benny Andajetz at 8:27 AM on May 20, 2012 [1 favorite]
However, consumers didn't stop spending. With the invention of credit cards in the 70s, consumer debt rose and has largely kept rising.
Hence, the reinvention of the company store (to which I owe my soul).
posted by Mental Wimp at 8:31 AM on May 20, 2012 [1 favorite]
Hence, the reinvention of the company store (to which I owe my soul).
posted by Mental Wimp at 8:31 AM on May 20, 2012 [1 favorite]
We just need to figure out what the other choice would be that puts worker-run co-ops in the category of "more attractive choice" and then work to push that other choice until business accepts the alternative out of self-preservation.
Perhaps this is a new model for unions. Instead of negotiating with management for better pay, buy the owners out.
posted by Mental Wimp at 8:32 AM on May 20, 2012 [2 favorites]
Perhaps this is a new model for unions. Instead of negotiating with management for better pay, buy the owners out.
posted by Mental Wimp at 8:32 AM on May 20, 2012 [2 favorites]
One of his last points is particularly cogent (and obvious to some): if workers had a say in their livelihood, they wouldn't make decisions that worked against their self-interest. No plant closings. No moving production overseas. Etc.
Politics obfuscate and lead many people to vote against their own interests. A big reason that business is opposed to unions is that unions are good at educating workers that business and political decisions are primarily economic questions. The last thing business leaders want is an electorate voting their pocketbooks.
posted by Benny Andajetz at 8:41 AM on May 20, 2012 [2 favorites]
Politics obfuscate and lead many people to vote against their own interests. A big reason that business is opposed to unions is that unions are good at educating workers that business and political decisions are primarily economic questions. The last thing business leaders want is an electorate voting their pocketbooks.
posted by Benny Andajetz at 8:41 AM on May 20, 2012 [2 favorites]
So the final point in this video is toward worker-run businesses.
he actually leaves it open for debate: historically there are many reasons why worker-run firms run themselves into the ground without any meddling from the outside.
i think he is actually calling for us to recognize that unbridled capitalism runs all of us into the ground, and thus we need really tough regulation to protect the good things about free markets (innovation, efficiency, freedom to choose) from the bad things (political corruption, monopolies, misrepresentation of risk).
posted by dongolier at 9:09 AM on May 20, 2012
he actually leaves it open for debate: historically there are many reasons why worker-run firms run themselves into the ground without any meddling from the outside.
i think he is actually calling for us to recognize that unbridled capitalism runs all of us into the ground, and thus we need really tough regulation to protect the good things about free markets (innovation, efficiency, freedom to choose) from the bad things (political corruption, monopolies, misrepresentation of risk).
posted by dongolier at 9:09 AM on May 20, 2012
One solution which doesn't seem to be much discussed is curbs on credit. The financial mess we're in came about as a result of too much unsustainable debt.
What if you raised the minimum downpayment on house purchases to say, 30 or 40%? What if you put caps on how much people can put on credit cards?
posted by storybored at 9:17 AM on May 20, 2012
What if you raised the minimum downpayment on house purchases to say, 30 or 40%? What if you put caps on how much people can put on credit cards?
posted by storybored at 9:17 AM on May 20, 2012
Rampant credit is as much a symptom as it is the actual disease.
If wages were more equitable, credit wouldn't be as necessary. Also, if you dig into who is extending the credit and how they benefit, the questions get a little thornier.
posted by Benny Andajetz at 9:24 AM on May 20, 2012 [1 favorite]
If wages were more equitable, credit wouldn't be as necessary. Also, if you dig into who is extending the credit and how they benefit, the questions get a little thornier.
posted by Benny Andajetz at 9:24 AM on May 20, 2012 [1 favorite]
I'd venture to suggest that wages would be more equitable if you put reasonable restrictions on credit lending. The reason why Wall Street payouts skyrocketed (and CEO pay packets too) is that they grew fat taking a slice of the $15 Trillion lent out to consumers speculating on real estate and keeping up with the Jones. How can a system remain uncorrupted when you have that amount of hot money sloshing through it?
posted by storybored at 10:16 AM on May 20, 2012
posted by storybored at 10:16 AM on May 20, 2012
One thing that he doesn't mention that would go far toward solving some of the problems he points out is extreme campaign reform. No Super PACs, no contributions by individuals of more than $1,000, etc.
Candidates don't need hundreds of millions of dollars to get elected, so long as none of them have hundreds of millions of dollars to spend on a campaign. If voter turn-out decreases because a bunch of mouth-breathers only vote when they see a $150K campaign ad every time they watch American Idol and Ghost Hunters, so be it.
posted by nosila at 10:24 AM on May 20, 2012 [1 favorite]
Candidates don't need hundreds of millions of dollars to get elected, so long as none of them have hundreds of millions of dollars to spend on a campaign. If voter turn-out decreases because a bunch of mouth-breathers only vote when they see a $150K campaign ad every time they watch American Idol and Ghost Hunters, so be it.
posted by nosila at 10:24 AM on May 20, 2012 [1 favorite]
Great talk, by the way. I tried pretty hard to disagree with him, but in the end, I don't think I do. And he is ABSOLUTELY RIGHT that EVERY institution should be consistently and roundly questioned at its core to see if it still holds up. I'm looking at you, Catholic Church.
posted by nosila at 10:25 AM on May 20, 2012 [1 favorite]
posted by nosila at 10:25 AM on May 20, 2012 [1 favorite]
That's the problem though isn't it. Trouble happens because institutions get corrupted. The payoff for everyone whether it's workers, CEOs, lawyers, regulators and legislators is too high to turn down. These payoffs aren't necessarily all monetary either.
We don't seem to have fail safe mechanisms that can stop once-in-a-generation financial disasters.
I don't think worker-owned enterprises are immune from speculative euphoria either. Under the right conditions, any crowd can be gulled into thinking they can get rich quick by borrowing money.
posted by storybored at 10:35 AM on May 20, 2012 [1 favorite]
We don't seem to have fail safe mechanisms that can stop once-in-a-generation financial disasters.
I don't think worker-owned enterprises are immune from speculative euphoria either. Under the right conditions, any crowd can be gulled into thinking they can get rich quick by borrowing money.
posted by storybored at 10:35 AM on May 20, 2012 [1 favorite]
Metafilter: I tried pretty hard to disagree with him
posted by Philosopher Dirtbike at 10:39 AM on May 20, 2012 [4 favorites]
posted by Philosopher Dirtbike at 10:39 AM on May 20, 2012 [4 favorites]
...finally in1999 Clinton repealed Glass-Steagull...
All by himself? Wow.
Actually, check out the history of the repeal and you will see that there was strong bipartisan support for the repeal. Same sort of support that is currently acting to repeal the financial regs that went into effect over the last few years.
posted by mygoditsbob at 10:55 AM on May 20, 2012
All by himself? Wow.
Actually, check out the history of the repeal and you will see that there was strong bipartisan support for the repeal. Same sort of support that is currently acting to repeal the financial regs that went into effect over the last few years.
posted by mygoditsbob at 10:55 AM on May 20, 2012
Or something.
Thanks, you sort of reinforced my point.
posted by mygoditsbob at 11:26 AM on May 20, 2012
Thanks, you sort of reinforced my point.
posted by mygoditsbob at 11:26 AM on May 20, 2012
well, i think Clinton apologists should also consider Obama's unwillingness to reenact Glass-Steagall (an interesting wiki).
the 99% are not altogether pleased with Incumbent Candidate Obama.
posted by dongolier at 11:28 AM on May 20, 2012 [1 favorite]
the 99% are not altogether pleased with Incumbent Candidate Obama.
posted by dongolier at 11:28 AM on May 20, 2012 [1 favorite]
well, the wikipedia article implies that naysayers were still surprised to find the shit hadn't hit the fan by 2004...
posted by dongolier at 11:55 AM on May 20, 2012
posted by dongolier at 11:55 AM on May 20, 2012
This is a fantastic find. Wolff is a very engaging and communicative instructor. It's nice to hear someone finally saying what's been clearly obvious for years now!
posted by Meagan at 12:17 PM on May 20, 2012 [1 favorite]
posted by Meagan at 12:17 PM on May 20, 2012 [1 favorite]
storybored and nosila, if you buy his premise, then no regulation, be it of credit limits or campaign finance, will, standing alone, achieve the results he hopes for, since the power structure remains untouched and will fight tooth and nail to reverse such regulation. And to be clear, I do buy his premise -- as an undergrad Economics major at UMass-Amherst in the mid-90's, I had the fortune of taking a graduate level seminar with Professor Wolff. Listening to this was lovely reminder of those glorious 90-minute classes with him twice a week. He was saying exactly this back then too.
posted by lassie at 12:41 PM on May 20, 2012 [5 favorites]
posted by lassie at 12:41 PM on May 20, 2012 [5 favorites]
I think the idea of worker run entities is percolating in a lot of people's minds these days. I know I've been thinking about them, and I was surprised to find that a friend just quit their job to see if they could start one. Ironically, I need some employment experience/money before I can think of following in their footsteps :(
posted by tychotesla at 1:03 PM on May 20, 2012 [2 favorites]
posted by tychotesla at 1:03 PM on May 20, 2012 [2 favorites]
Here is a very interesting read [pdf] from the HBR about a huge worker-run company. It goes into some detail about what democracy looks like in the workplace, and how it can produce more efficient & sustainable organisations than a traditional hierarchy can.
posted by mhjb at 1:27 PM on May 20, 2012 [9 favorites]
posted by mhjb at 1:27 PM on May 20, 2012 [9 favorites]
This is a really good lecture. Informative, easy to understand and on one of the key issues of our time.
Also, because of the guy's accent, it sounds like you're getting a lecture from the Simpson's Mob Boss "Big Tony", so, you know, bonus.
posted by lucien_reeve at 6:27 AM on May 21, 2012
Also, because of the guy's accent, it sounds like you're getting a lecture from the Simpson's Mob Boss "Big Tony", so, you know, bonus.
posted by lucien_reeve at 6:27 AM on May 21, 2012
Big Tony also knew a lot about dealing with debt.
posted by colie at 7:12 AM on May 21, 2012 [1 favorite]
posted by colie at 7:12 AM on May 21, 2012 [1 favorite]
Thanks mhjb for that article about Morning Star. Reading about a real-life example makes for a much more convincing case. What troubled me about Wolff's lecture are his prescriptions (e.g. workers meet every week for a day for council meetings) are detached from the complex task of running a complex organization.
posted by storybored at 9:18 AM on May 21, 2012 [1 favorite]
posted by storybored at 9:18 AM on May 21, 2012 [1 favorite]
If wages were more equitable, credit wouldn't be as necessary.
That's only assuming that people have an absolute need to a lot of the things they're buying on credit. For example, houses. When did the expectation of buying houses come about? And not just houses, rather large houses compared to previous expectations? People buy houses when they can't afford them because they think that it's the right thing to do, and "worth" taking on hundreds of thousands of dollars in debt for, rather than living frugally and saving for said house.
My grandmother bought her house in cash money saved from the household budget over twenty or thirty years. She never bought ready-made clothes, or prime groceries. And she didn't have that house until much later in her life, and only then was she able to leave it to her children.
Now we expect that everyone should be able to buy a house in their lifetime, essentially without being intensely frugal. That's an assumption, but I don't think it's a good one.
What do people use credit for? They use credit to acquire the trappings of a lifestyle that they can't actually afford, rather than accepting the limitations of their current economic conditions and striving to better them.
In many ways, the crisis came about because of rampant lending to people who could not afford their debts, and who should have been well aware that they could not afford a home, were they better educated about actual finances and not debt-based ones.
posted by corb at 9:57 AM on May 21, 2012
That's only assuming that people have an absolute need to a lot of the things they're buying on credit. For example, houses. When did the expectation of buying houses come about? And not just houses, rather large houses compared to previous expectations? People buy houses when they can't afford them because they think that it's the right thing to do, and "worth" taking on hundreds of thousands of dollars in debt for, rather than living frugally and saving for said house.
My grandmother bought her house in cash money saved from the household budget over twenty or thirty years. She never bought ready-made clothes, or prime groceries. And she didn't have that house until much later in her life, and only then was she able to leave it to her children.
Now we expect that everyone should be able to buy a house in their lifetime, essentially without being intensely frugal. That's an assumption, but I don't think it's a good one.
What do people use credit for? They use credit to acquire the trappings of a lifestyle that they can't actually afford, rather than accepting the limitations of their current economic conditions and striving to better them.
In many ways, the crisis came about because of rampant lending to people who could not afford their debts, and who should have been well aware that they could not afford a home, were they better educated about actual finances and not debt-based ones.
posted by corb at 9:57 AM on May 21, 2012
What do people use credit for? They use credit to acquire the trappings of a lifestyle that they can't actually afford, rather than accepting the limitations of their current economic conditions and striving to better them.
That's the "striving/thrifty" argument: one deserves what one manages to obtain by working. While it seems sensible, consider this corollary: you become sick, can't work, can't afford drugs/medicines/tratement; consequently, you must accept your current economic limitations and die, or suffer for years till a merciful death relieves you of your pain.
If you haven't saved enough money to pay for these medical services at the _current_ rates, it's your fault and you shall die, regardless of the fact that the medical services actually are available.
Obviously, one would say "fuck that rule" and steal the necessary drugs, force people at gunpoint if so necessary...but if you are sick, you're unlikely to be strong enough to do that.
In many ways, the crisis came about because of rampant lending to people who could not afford their debts, and who should have been well aware that they could not afford a home, were they better educated about actual finances and not debt-based ones.
That's the "I can foresee my financial future" argument. Notice that of the Wall Street Gurus, economists, et al , maybe an handful predicted the 2007-ongoing Crisis with some detail (usually, not exactly when and why the crisis would occour) . How could have an ordinary Joe/Jane have predicted that and plan accordingly?
And consider also that it takes two to tango and two to make a loan: why did the banks accept to finance these "deadbeats"?
posted by elpapacito at 1:17 PM on May 21, 2012 [1 favorite]
That's the "striving/thrifty" argument: one deserves what one manages to obtain by working. While it seems sensible, consider this corollary: you become sick, can't work, can't afford drugs/medicines/tratement; consequently, you must accept your current economic limitations and die, or suffer for years till a merciful death relieves you of your pain.
If you haven't saved enough money to pay for these medical services at the _current_ rates, it's your fault and you shall die, regardless of the fact that the medical services actually are available.
Obviously, one would say "fuck that rule" and steal the necessary drugs, force people at gunpoint if so necessary...but if you are sick, you're unlikely to be strong enough to do that.
In many ways, the crisis came about because of rampant lending to people who could not afford their debts, and who should have been well aware that they could not afford a home, were they better educated about actual finances and not debt-based ones.
That's the "I can foresee my financial future" argument. Notice that of the Wall Street Gurus, economists, et al , maybe an handful predicted the 2007-ongoing Crisis with some detail (usually, not exactly when and why the crisis would occour) . How could have an ordinary Joe/Jane have predicted that and plan accordingly?
And consider also that it takes two to tango and two to make a loan: why did the banks accept to finance these "deadbeats"?
posted by elpapacito at 1:17 PM on May 21, 2012 [1 favorite]
The medical issue is an interesting sidenote, that actually has a lot of complexity: including at what point a society should be forced to take care of your medical bills, in exchange for what amount and what quality of life. Here's an interesting piece on the tradeoffs of cost versus results, from a son trying to care for his ill mother. He notes that at one point, taxpayers have paid hundreds of thousands of dollars trying to extend her life, for few positive results. I also don't agree that it would be moral, or even that most people would feel entitled to take such action if they were sick and couldn't afford medical care.
That aside, medical care is not the housing crisis, for a lot of reasons, not least among them being that renting rather than buying does not cause death. There's little actual, measurable suffering from renting a home rather than buying one. Sure, it could be argued that it's not good financial sense, because at the end of the game you have no equity, but it is not an actual hazard to live in a rented apartment or house.
That's the "I can foresee my financial future" argument...How could have an ordinary Joe/Jane have predicted that and plan accordingly?>
No, no. This isn't my saying, "People should have predicted that the housing market would bust and they would wind up being underwater on their home." That would be extremely silly. But I do think people should have done assessments on how much home they could realistically afford on their earnings potential, current savings, and judging the stability of said earnings.
And consider also that it takes two to tango and two to make a loan: why did the banks accept to finance these "deadbeats"?
Banks probably financed the loans because in these situations, they effectively held all the cards. They could collect payments for as long as the people were able to pay them, and they anticipated that even if they had to foreclose, they would still be holding onto valuable property which they could then sell when things got better. Now, they didn't anticipate the housing bust, so they wound up losing money on a lot of these deals-which is legitimate, because unlike individuals, the practice of investing and thus risking money is one of the things that modern banks do.
posted by corb at 5:28 PM on May 21, 2012
That aside, medical care is not the housing crisis, for a lot of reasons, not least among them being that renting rather than buying does not cause death. There's little actual, measurable suffering from renting a home rather than buying one. Sure, it could be argued that it's not good financial sense, because at the end of the game you have no equity, but it is not an actual hazard to live in a rented apartment or house.
That's the "I can foresee my financial future" argument...How could have an ordinary Joe/Jane have predicted that and plan accordingly?>
No, no. This isn't my saying, "People should have predicted that the housing market would bust and they would wind up being underwater on their home." That would be extremely silly. But I do think people should have done assessments on how much home they could realistically afford on their earnings potential, current savings, and judging the stability of said earnings.
And consider also that it takes two to tango and two to make a loan: why did the banks accept to finance these "deadbeats"?
Banks probably financed the loans because in these situations, they effectively held all the cards. They could collect payments for as long as the people were able to pay them, and they anticipated that even if they had to foreclose, they would still be holding onto valuable property which they could then sell when things got better. Now, they didn't anticipate the housing bust, so they wound up losing money on a lot of these deals-which is legitimate, because unlike individuals, the practice of investing and thus risking money is one of the things that modern banks do.
posted by corb at 5:28 PM on May 21, 2012
but it is not an actual hazard to live in a rented apartment or house.
Sure there is, you can get evicted; what if you don't find some other home because your income can't cover the new rent? Or because, according to some "credit record" (that aren't always perfect) you are not creditworthy and the landlord refuses? That's not at all that unlikely an haven't, nor impossible.
Actually, even people who have a mortage on their house have problems, even if they are ok with their payments, thanks to the mounting evidence of how the banks have seriously fucked up the mortage recording systems. Good luck to you, if that happens and you don't have the money needed to fight trough the legal system.
including at what point a society should be forced to take care of your medical bills
Oh, usually people (me included of course) don't think they would like to be forced to pay for anybody else, until they get in such troubled waters they change their mind on a flip of a coin.
Of course nobody expects to get there, but it happens nonetheless; some plan ahead and yet they actually are unprepared. Then, when they ask for the help they didn't think they would ever have needed in their life, they hope some generous being will rescue them, or they start acting as if they were born-again-something "I have seen light!". Some are sincere, but being sincere at that point is irrelevant, because the whole system was set for a "fuck you if you can't make it on your own" attitude.
so they wound up losing money on a lot of these deals-which is legitimate, because unlike individuals, the practice of investing and thus risking money is one of the things that modern banks do.
Of course it's legitimate; apparently, it's also legitimate to shift the burned of that massive bank failure from stockholders to people NOT involved in the transaction, aka The Bailout.
So the so called "socialism" and "de facto nationalization" is ok for friends of connected friends, for other people..no.
Of course, for them it's austerity and endless problems, because it's "their fault" if they bought stuff, it's "their fault" if they got caught in a catch 22 that goes like that
1) if you don't consume, we won't have money to pay you for your work;
2) but if you ask for too much money, we'll offshore the job;
3) so ask exactly for the amount of money you need to survive;
4) then keep on consuming, never ever decrease your level of spending otherwise we'll stop investing / not invest at all in an economy that isn't growing, we'll go to China, and you won't get a job/ lose your job;
so if I stop consuming, I lose my job - if I keep on consuming when I shouldn't, I lose my job.
posted by elpapacito at 6:41 PM on May 21, 2012 [1 favorite]
Sure there is, you can get evicted; what if you don't find some other home because your income can't cover the new rent? Or because, according to some "credit record" (that aren't always perfect) you are not creditworthy and the landlord refuses? That's not at all that unlikely an haven't, nor impossible.
Actually, even people who have a mortage on their house have problems, even if they are ok with their payments, thanks to the mounting evidence of how the banks have seriously fucked up the mortage recording systems. Good luck to you, if that happens and you don't have the money needed to fight trough the legal system.
including at what point a society should be forced to take care of your medical bills
Oh, usually people (me included of course) don't think they would like to be forced to pay for anybody else, until they get in such troubled waters they change their mind on a flip of a coin.
Of course nobody expects to get there, but it happens nonetheless; some plan ahead and yet they actually are unprepared. Then, when they ask for the help they didn't think they would ever have needed in their life, they hope some generous being will rescue them, or they start acting as if they were born-again-something "I have seen light!". Some are sincere, but being sincere at that point is irrelevant, because the whole system was set for a "fuck you if you can't make it on your own" attitude.
so they wound up losing money on a lot of these deals-which is legitimate, because unlike individuals, the practice of investing and thus risking money is one of the things that modern banks do.
Of course it's legitimate; apparently, it's also legitimate to shift the burned of that massive bank failure from stockholders to people NOT involved in the transaction, aka The Bailout.
So the so called "socialism" and "de facto nationalization" is ok for friends of connected friends, for other people..no.
Of course, for them it's austerity and endless problems, because it's "their fault" if they bought stuff, it's "their fault" if they got caught in a catch 22 that goes like that
1) if you don't consume, we won't have money to pay you for your work;
2) but if you ask for too much money, we'll offshore the job;
3) so ask exactly for the amount of money you need to survive;
4) then keep on consuming, never ever decrease your level of spending otherwise we'll stop investing / not invest at all in an economy that isn't growing, we'll go to China, and you won't get a job/ lose your job;
so if I stop consuming, I lose my job - if I keep on consuming when I shouldn't, I lose my job.
posted by elpapacito at 6:41 PM on May 21, 2012 [1 favorite]
I enjoyed the video, although I was surprised to hear a piece on this week's More or Less (the World Service version) about which countries work the hardest. Having just heard Wolff's talk, I was fully expecting them to go and say that it was the US who worked the hardest. That didn't happen.
The man they had on from the International Labour Organisation said that it's predominantly Asian countries that work the longest, with Korea being a noteworthy example. He addressed the US directly and said that they do work more hours than many developed nations, but it didn't sound like it compared with developing countries and those in Asia.
Not saying this destroys Wolff's argument, but it at least made me question some other aspects of his narrative and before believing that worker run companies are the solution, I'd have a lot of questions I'd want answered first.
That said, I do think worker run companies are a great idea...
posted by jonrob at 5:33 AM on May 22, 2012
The man they had on from the International Labour Organisation said that it's predominantly Asian countries that work the longest, with Korea being a noteworthy example. He addressed the US directly and said that they do work more hours than many developed nations, but it didn't sound like it compared with developing countries and those in Asia.
Not saying this destroys Wolff's argument, but it at least made me question some other aspects of his narrative and before believing that worker run companies are the solution, I'd have a lot of questions I'd want answered first.
That said, I do think worker run companies are a great idea...
posted by jonrob at 5:33 AM on May 22, 2012
including at what point a society should be forced to take care of your medical bills
Tipped your hand right there, scout. By whom is society forced? It seems that society will only take care of your medical bills if it elects to. Your language suggests some steeping in an ideology not entirely tied to reality.
posted by Mental Wimp at 7:32 AM on May 22, 2012
Tipped your hand right there, scout. By whom is society forced? It seems that society will only take care of your medical bills if it elects to. Your language suggests some steeping in an ideology not entirely tied to reality.
posted by Mental Wimp at 7:32 AM on May 22, 2012
Sure there is, you can get evicted; what if you don't find some other home because your income can't cover the new rent? Or because, according to some "credit record" (that aren't always perfect) you are not creditworthy and the landlord refuses?
Oh, these are all legitimate issues, but none of them are life-threatening. Most of them are also defeatable through downscaling. Can't cover the new rent? Go smaller. Split an apartment, like a lot of people do. The "Creditworthy" thing is also addressed by eliminating most of the credit/debt issues, but even if it wasn't, it's generally defeatable by combining resources with someone else, or subletting. And also, none of them are defeated by home ownership. What if you can't pay your taxes? Then the state seizes your home, and all of these issues are still also legitimate.
Oh, usually people (me included of course) don't think they would like to be forced to pay for anybody else, until they get in such troubled waters they change their mind on a flip of a coin.
I think like the previous note, this isn't realistic for everyone. Many people get into troubled waters, and do not change their mind, but continue fighting through. I know a lot of people like this. Maybe I just have an unusual amount of friends and family that are fairly stubborn. I have family (admittedly the older generations primarily) that used folk remedies rather than visit the doctor, because they didn't have enough money for treatment, and didn't want to take other people's charity. Some of them worked. Some of them did not.
I'm not saying this is the way everyone would go, but that it's certainly far from a certainty that everyone believes they don't want to give to healthcare until they get sick. Just like the old canard that "Everyone hates gun control until they're mugged." No, there are some people who sincerely believe in gun control and a mugging wouldn't change that. Just as there are some people who genuinely believe in the idea of self-sufficiency.
Of course it's legitimate; apparently, it's also legitimate to shift the burned of that massive bank failure from stockholders to people NOT involved in the transaction, aka The Bailout.
Actually, this isn't capitalism. Because the current US government engages in it, doesn't make it automatically capitalism. In fact, the US government is quite notable as an example of /not/ being purely capitalistic. If you're arguing the merits of pure capitalism vs pure non-capitalism, it really shouldn't be counted into the equation at all.
so if I stop consuming, I lose my job - if I keep on consuming when I shouldn't, I lose my job.
Only under Keynesian models which force people to act counter to their interests-to avoid saving and to encourage high consumption. Non-Keynesian models do not require this.
posted by corb at 8:33 AM on May 22, 2012
Oh, these are all legitimate issues, but none of them are life-threatening. Most of them are also defeatable through downscaling. Can't cover the new rent? Go smaller. Split an apartment, like a lot of people do. The "Creditworthy" thing is also addressed by eliminating most of the credit/debt issues, but even if it wasn't, it's generally defeatable by combining resources with someone else, or subletting. And also, none of them are defeated by home ownership. What if you can't pay your taxes? Then the state seizes your home, and all of these issues are still also legitimate.
Oh, usually people (me included of course) don't think they would like to be forced to pay for anybody else, until they get in such troubled waters they change their mind on a flip of a coin.
I think like the previous note, this isn't realistic for everyone. Many people get into troubled waters, and do not change their mind, but continue fighting through. I know a lot of people like this. Maybe I just have an unusual amount of friends and family that are fairly stubborn. I have family (admittedly the older generations primarily) that used folk remedies rather than visit the doctor, because they didn't have enough money for treatment, and didn't want to take other people's charity. Some of them worked. Some of them did not.
I'm not saying this is the way everyone would go, but that it's certainly far from a certainty that everyone believes they don't want to give to healthcare until they get sick. Just like the old canard that "Everyone hates gun control until they're mugged." No, there are some people who sincerely believe in gun control and a mugging wouldn't change that. Just as there are some people who genuinely believe in the idea of self-sufficiency.
Of course it's legitimate; apparently, it's also legitimate to shift the burned of that massive bank failure from stockholders to people NOT involved in the transaction, aka The Bailout.
Actually, this isn't capitalism. Because the current US government engages in it, doesn't make it automatically capitalism. In fact, the US government is quite notable as an example of /not/ being purely capitalistic. If you're arguing the merits of pure capitalism vs pure non-capitalism, it really shouldn't be counted into the equation at all.
so if I stop consuming, I lose my job - if I keep on consuming when I shouldn't, I lose my job.
Only under Keynesian models which force people to act counter to their interests-to avoid saving and to encourage high consumption. Non-Keynesian models do not require this.
posted by corb at 8:33 AM on May 22, 2012
I know a lot of people like this. Maybe I just have an unusual amount of friends and family that are fairly stubborn. I have family (admittedly the older generations primarily) that used folk remedies rather than visit the doctor, because they didn't have enough money for treatment, and didn't want to take other people's charity. Some of them worked. Some of them did not.
Shenanigans. People on their deathbed call ambulances, or their relatives do. The question is whether you want to pay into a system that costs more because everyone waits until their illnesses become catastrophic and expensive to treat, or do you want to pay into a system where people seek medical advice early and often?
The third option — leaving the needy to die in hospital parking lots and stranded in slums — isn't one that should be acceptable to a society that has plenty of resources to spare. It's similar to the reason we did away with private firehouses: it's actually cheaper and safer for everyone to chip in and have fire protection for everyone.
Only under Keynesian models which force people to act counter to their interests-to avoid saving and to encourage high consumption. Non-Keynesian models do not require this.
Super Shenanigans. Which models force people to avoid saving and consume more than they can afford? Are you saying human nature itself would change with different economic models?
posted by deanklear at 11:16 AM on May 22, 2012
Shenanigans. People on their deathbed call ambulances, or their relatives do. The question is whether you want to pay into a system that costs more because everyone waits until their illnesses become catastrophic and expensive to treat, or do you want to pay into a system where people seek medical advice early and often?
The third option — leaving the needy to die in hospital parking lots and stranded in slums — isn't one that should be acceptable to a society that has plenty of resources to spare. It's similar to the reason we did away with private firehouses: it's actually cheaper and safer for everyone to chip in and have fire protection for everyone.
Only under Keynesian models which force people to act counter to their interests-to avoid saving and to encourage high consumption. Non-Keynesian models do not require this.
Super Shenanigans. Which models force people to avoid saving and consume more than they can afford? Are you saying human nature itself would change with different economic models?
posted by deanklear at 11:16 AM on May 22, 2012
People on their deathbed call ambulances, or their relatives do.
You keep doing this thing, where you assign your own motives to the entire mass of humanity. Not everyone on their deathbed calls an ambulance. Not everyone has principles only until they're tested. Not everyone is willing to scrabble for any scrap of life. And often, relatives only call the ambulance because they will be liable if they don't. There are a lot more people who wouldn't utilize extension-of-life methods if they weren't forced to it by our current legal codes that make willfully allowing or accelerating your death a crime. Did you read the article I linked above, or the metafilter discussion about it also going on?
We need to be willing to allow people to die at a certain point, rather than prolonging life at high cost and low benefit.
Which models force people to avoid saving and consume more than they can afford?
Perhaps "force" is a poor choice of word, but when you have a model that argues that excessive saving is what causes an inventory glut that leads to economic failure, there is no incentive to incentivize saving vs spending-in fact, quite the contrary. And this can be seen if you look over the last hundred years-as Keynesian ideas took hold, so too did the social emphasis on thriftiness disappear, as expressed in literature, film, print, advertisements, and other things which are convenient markers in time of culture.
When you are constantly bombarding people with calls to consume, and telling them that anything other than constant consumption is wrong, then they are likely to do so. They're likely to buy more clothes rather than mend them. Buy lots and lots of flimsy furniture because they're supposed to replace it every few years, aren't they? And when they buy flimsy furniture, they can't leave it to the next generation, so there's no accumulation of wealth to stop the ever increasing cycle of consumption. Which means those individuals aren't improving their lives, and they're not improving the lives of their children. They're suffering, just for a flawed economic model that values the production of excess amounts of money. Each for its own causes-government and industry both have their own ulterior motives-but joined, it's far beyond what the country can reasonably stand.
posted by corb at 1:12 PM on May 22, 2012
You keep doing this thing, where you assign your own motives to the entire mass of humanity. Not everyone on their deathbed calls an ambulance. Not everyone has principles only until they're tested. Not everyone is willing to scrabble for any scrap of life. And often, relatives only call the ambulance because they will be liable if they don't. There are a lot more people who wouldn't utilize extension-of-life methods if they weren't forced to it by our current legal codes that make willfully allowing or accelerating your death a crime. Did you read the article I linked above, or the metafilter discussion about it also going on?
We need to be willing to allow people to die at a certain point, rather than prolonging life at high cost and low benefit.
Which models force people to avoid saving and consume more than they can afford?
Perhaps "force" is a poor choice of word, but when you have a model that argues that excessive saving is what causes an inventory glut that leads to economic failure, there is no incentive to incentivize saving vs spending-in fact, quite the contrary. And this can be seen if you look over the last hundred years-as Keynesian ideas took hold, so too did the social emphasis on thriftiness disappear, as expressed in literature, film, print, advertisements, and other things which are convenient markers in time of culture.
When you are constantly bombarding people with calls to consume, and telling them that anything other than constant consumption is wrong, then they are likely to do so. They're likely to buy more clothes rather than mend them. Buy lots and lots of flimsy furniture because they're supposed to replace it every few years, aren't they? And when they buy flimsy furniture, they can't leave it to the next generation, so there's no accumulation of wealth to stop the ever increasing cycle of consumption. Which means those individuals aren't improving their lives, and they're not improving the lives of their children. They're suffering, just for a flawed economic model that values the production of excess amounts of money. Each for its own causes-government and industry both have their own ulterior motives-but joined, it's far beyond what the country can reasonably stand.
posted by corb at 1:12 PM on May 22, 2012
You keep doing this thing, where you assign your own motives to the entire mass of humanity.
The will to live is one of those things I can safely ascribe to the rest of humanity.
We need to be willing to allow people to die at a certain point, rather than prolonging life at high cost and low benefit.
If we're limiting this topic to the terminally ill, I agree. But you would have to bring me a mountain of evidence to convince me that there's any significant portion of the population that would choose death instead of debt in any other situation. That hypothesis is contrary to basic human nature.
when you have a model that argues that excessive saving is what causes an inventory glut that leads to economic failure
Excessive saving is only one element of the model. The whole model argues that rational self-interest in the aggregate can sometimes lead to bad outcomes for the economy as a whole, and interventionist government policies can reduce the harmful effects of downward business cycles.
there is no incentive to incentivize saving vs spending-in fact, quite the contrary. And this can be seen if you look over the last hundred years-as Keynesian ideas took hold, so too did the social emphasis on thriftiness disappear, as expressed in literature, film, print, advertisements, and other things which are convenient markers in time of culture
I know this because in other nations with Keynesian policies — which the rest of the world refers to simply as economic policies — strong union participation, and a more equitable distribution of income, the savings rate remained constant.
They're suffering, just for a flawed economic model that values the production of excess amounts of money.
They're suffering in the US because our market solution for health care is a complete failure, and because every law that we had to protect individuals from corporate predation and society in general from risky investment behavior has been done away with. There are many countries with sensible economic policies based on Keynes' work that are doing much better than we are, so you can't blame modern economics. You have to blame our government for failing to govern in the interest of the middle and working classes.
posted by deanklear at 3:27 PM on May 22, 2012 [3 favorites]
The will to live is one of those things I can safely ascribe to the rest of humanity.
We need to be willing to allow people to die at a certain point, rather than prolonging life at high cost and low benefit.
If we're limiting this topic to the terminally ill, I agree. But you would have to bring me a mountain of evidence to convince me that there's any significant portion of the population that would choose death instead of debt in any other situation. That hypothesis is contrary to basic human nature.
when you have a model that argues that excessive saving is what causes an inventory glut that leads to economic failure
Excessive saving is only one element of the model. The whole model argues that rational self-interest in the aggregate can sometimes lead to bad outcomes for the economy as a whole, and interventionist government policies can reduce the harmful effects of downward business cycles.
there is no incentive to incentivize saving vs spending-in fact, quite the contrary. And this can be seen if you look over the last hundred years-as Keynesian ideas took hold, so too did the social emphasis on thriftiness disappear, as expressed in literature, film, print, advertisements, and other things which are convenient markers in time of culture
Amar C. Bakshi: U.S. household saving rates peaked in the 1980s at around 11 percent, and by 2005, they had plummeted to near zero. How did America go from a nation of savers to a nation of consumers?So, what you claim is factually incorrect. Savings rates in our country peaked from 1945 to 1980, and began falling in the last 30 years. This is right around the time that our wages started to flatline and the credit markets were deregulated, so in reality, the savings rate went down because of a lack of government intervention and the decline of unions, not because of some made up takeover of "Keynesian" ideals.
Sheldon Garon: Well, in fact, before World War II we weren’t a nation of great savers. We were a nation of OK savers. Those who did save, saved a lot. But as late as 1910, most Americans didn’t have a savings account. Unlike Europeans and Japanese, they lacked access to savings institutions that would accept very small deposits—such as savings banks and postal savings banks.
But then in the two World Wars, and particularly in World War II, the federal government intervened to encourage ordinary people to save in ways the Europeans and Japanese were doing at the time.
The U.S. government undertook two innovations. First, it introduced U.S. savings bonds right before World War II, and they became very popular and very accessible during and after the war. So that was one of the ways people saved and became good savers in America.
And the other way was the Federal Deposit Insurance Corporation, introduced in 1934, which guaranteed the deposits of small savers in most American banks. So during the Great Depression and after World War II for several decades, we saved at pretty good rates - between about 7 and 11 percent, from 1946 to the 1980s. (CNN)
I know this because in other nations with Keynesian policies — which the rest of the world refers to simply as economic policies — strong union participation, and a more equitable distribution of income, the savings rate remained constant.
They're suffering, just for a flawed economic model that values the production of excess amounts of money.
They're suffering in the US because our market solution for health care is a complete failure, and because every law that we had to protect individuals from corporate predation and society in general from risky investment behavior has been done away with. There are many countries with sensible economic policies based on Keynes' work that are doing much better than we are, so you can't blame modern economics. You have to blame our government for failing to govern in the interest of the middle and working classes.
posted by deanklear at 3:27 PM on May 22, 2012 [3 favorites]
The will to live is one of those things I can safely ascribe to the rest of humanity...you would have to bring me a mountain of evidence to convince me that there's any significant portion of the population that would choose death instead of debt in any other situation. That hypothesis is contrary to basic human nature.
It's not, really. The one thing that is safe to say is part of human nature is not the desire to live at any cost, but rather, the desire to reproduce and to ensure successful genetic continuation. To have children and to make sure that those children are equipped with the best tools to survive. Which often means making sure that your children don't inherit a mountain of debt...to make sure that the things that you have managed to accumulate can pass to them directly, without being eaten up by creditors. So, yes, I think that there is a good chunk of the population that would choose death over debt, when there was a significant chance of that debt being passed to and negatively impacting their children.
We were a nation of OK savers. Those who did save, saved a lot. But as late as 1910, most Americans didn’t have a savings account.
I don't think that this means that Americans weren't saving. It means that there's no hard data to show that Americans were saving in the most convenient form for accessing data. I.e. there were a lot of small savers who weren't putting their savings in banks, but rather in hard cash. This is why I referenced such clues as literary markers, because they're useful tools in seeing how people anticipated the transition of wealth. And wealth is frequently referenced as being sunk in land, tools, other property, or stored away hard cash.
The notion that it was bad when few were saving in banks, even though those who were, "saved a lot," but then it got better because everyone started saving but at kind of crummy rates, is a flawed one.
There are many countries with sensible economic policies based on Keynes' work that are doing much better than we are, so you can't blame modern economics.
Please to give examples. The only ones I see are ones which either have crippling levels of taxes, or which are currently crashing and burning in quite spectacular fashion due to their entitlement culture.
posted by corb at 10:52 PM on May 22, 2012
It's not, really. The one thing that is safe to say is part of human nature is not the desire to live at any cost, but rather, the desire to reproduce and to ensure successful genetic continuation. To have children and to make sure that those children are equipped with the best tools to survive. Which often means making sure that your children don't inherit a mountain of debt...to make sure that the things that you have managed to accumulate can pass to them directly, without being eaten up by creditors. So, yes, I think that there is a good chunk of the population that would choose death over debt, when there was a significant chance of that debt being passed to and negatively impacting their children.
We were a nation of OK savers. Those who did save, saved a lot. But as late as 1910, most Americans didn’t have a savings account.
I don't think that this means that Americans weren't saving. It means that there's no hard data to show that Americans were saving in the most convenient form for accessing data. I.e. there were a lot of small savers who weren't putting their savings in banks, but rather in hard cash. This is why I referenced such clues as literary markers, because they're useful tools in seeing how people anticipated the transition of wealth. And wealth is frequently referenced as being sunk in land, tools, other property, or stored away hard cash.
The notion that it was bad when few were saving in banks, even though those who were, "saved a lot," but then it got better because everyone started saving but at kind of crummy rates, is a flawed one.
There are many countries with sensible economic policies based on Keynes' work that are doing much better than we are, so you can't blame modern economics.
Please to give examples. The only ones I see are ones which either have crippling levels of taxes, or which are currently crashing and burning in quite spectacular fashion due to their entitlement culture.
posted by corb at 10:52 PM on May 22, 2012
Great depression was pre-Keynsian. That is all.
posted by Mental Wimp at 11:02 PM on May 22, 2012
posted by Mental Wimp at 11:02 PM on May 22, 2012
To have children and to make sure that those children are equipped with the best tools to survive. Which often means making sure that your children don't inherit a mountain of debt...to make sure that the things that you have managed to accumulate can pass to them directly, without being eaten up by creditors.
You don't inherit your parent's debt when they die unless you are a cosigner, and then you're limited to whatever you decided to take responsibility for. The whole rationality you've invented makes no sense.
This is why I referenced such clues as literary markers
You referenced literary markers because you didn't have any facts. Let's look at another form of savings: the cash position of current major US corporations.
Please to give examples. The only ones I see are ones which either have crippling levels of taxes, or which are currently crashing and burning in quite spectacular fashion due to their entitlement culture.
Germany's story is even more impressive when you take into account that reunification happened only 20 years ago, and they've already converted 20% of their power generation to renewable sources. I don't know what statistics you're reading that lead you to believe that the democratic-socialist model is failing. From all of the numbers I have seen, it's the only model that can do well without relying on spectacularly valuable natural resources.
Maybe you're getting hoodwinked by all of the scary news stories about the Euro crisis, but as a whole, they're still doing better than we are if debt, inequality, and life expectancy have any meaning.
posted by deanklear at 8:33 AM on May 23, 2012
You don't inherit your parent's debt when they die unless you are a cosigner, and then you're limited to whatever you decided to take responsibility for. The whole rationality you've invented makes no sense.
This is why I referenced such clues as literary markers
You referenced literary markers because you didn't have any facts. Let's look at another form of savings: the cash position of current major US corporations.
An annual study by USA Today found that private sector paychecks as a share of Americans’ total income fell to 41.9 percent earlier this year, a record low. Conservative analysts seized on the report as proof of President Obama’s agenda to redistribute wealth from, in their words, those ‘pulling the cart’ to those ‘simply riding in it’. Their accusation withstands the evidence—only it’s corporate executives and wealthy investors enjoying the free ride. Corporate executives have found a simple formula: the less they contribute to the economy, the more they keep for themselves and shareholders. The Fed’s Flow of Funds reveals corporate profits represented a near record 11.2% of national income in the second quarter.Here's what Keynes said:
Non-financial companies have amassed nearly two-trillion in cash, representing 11% of total assets, a sixty year high. Companies have not deployed the cash on hiring as weak demand and excess capacity plague most industries. Companies have found better use for the cash, as Robert Doll explains, “high cash levels are already generating dividend increases, share buybacks, capital investments and M&A activity—all extremely shareholder friendly.”
...
The corporate cash glut has become a point of recurrent contention between the Obama administration and corporate executives. In mid December, a group of 20 corporate executives met with the Obama administration and pleaded for a tax holiday on the $1 trillion stashed overseas, claiming the money will spur jobs and investment. In 2004, corporate executives convinced President Bush and Congress to include a similar amnesty provision in the American Jobs Creation Act; 842 companies participated in the program, repatriating $312 billion back to the U.S. at 5.25% rather than 35%. In 2009, the Congressional Research Service concluded that most of the money went to stock buybacks and dividends—in direct violation of the Act.
...while [savings] increases the existing aggregate of capital, [it] simultaneously reduces the quantity of utilities and conveniences consumed; any undue exercise of this habit must, therefore, cause an accumulation of capital in excess of that which is required for use, and this excess will exist in the form of general over-production.So, yes, excessive savings can damage an economy. It looks like the invisible hand has a habit of sticking cash in the pockets of the very wealthy instead of reinvesting in the real economy, to the detriment of the vast population who participate in that economy.
Please to give examples. The only ones I see are ones which either have crippling levels of taxes, or which are currently crashing and burning in quite spectacular fashion due to their entitlement culture.
OECD Unemployment (2011):
USA: 09.0
CAN: 07.4
GER: 05.9
EUR: 10.1
Gini Inequality Index (lower is better):
USA: 45
CAN: 32.1
GER: 27
EUR: 30.4
Per capita external debt:
USA: $47k
CAN: $29k
GER: $57k
EUR: $27k
Public debt % of GDP:
USA: 102%
CAN: 084%
GER: 082%
EUR: 080%
Life expectancy:
USA: 78.2
CAN: 80.7
GER: 79.4
EUR: 78.8
Trade balance:
USA: -600 billion
CAN: -050 billion
GER: +150 billion
EUR: -030 billionGermany's story is even more impressive when you take into account that reunification happened only 20 years ago, and they've already converted 20% of their power generation to renewable sources. I don't know what statistics you're reading that lead you to believe that the democratic-socialist model is failing. From all of the numbers I have seen, it's the only model that can do well without relying on spectacularly valuable natural resources.
Maybe you're getting hoodwinked by all of the scary news stories about the Euro crisis, but as a whole, they're still doing better than we are if debt, inequality, and life expectancy have any meaning.
posted by deanklear at 8:33 AM on May 23, 2012
You don't inherit your parent's debt when they die unless you are a cosigner, and then you're limited to whatever you decided to take responsibility for.
You don't inherit your parent's debt, but whatever your parents would like to pass down to you is eaten up by that debt before they can do so. So, let's say for example there's a nice, modest family home, owned by your mother. She gets sick with a really tough cancer. It'll take a lot of money to treat-more than the amount of your home-and she doesn't have enough years left to earn enough money to cancel out the debt. She has a choice at that point-should she let herself be treated, with money she doesn't have, knowing that when she dies, her house will be sold and creditors will have dibs before family does? Or should she decide not to be treated-she may die several years before she would otherwise, but she can make sure that her children still receive the fruits of her labors.
I know which decision I would make in that position. It may be different because I actually have a child, and so understand how this feels, but I would absolutely rather die than saddle my child with a burden instead of a gift. And that's not to mention how people feel morally about their parent's debts. My mother has debts. When she dies, I will likely take over paying them-because actual people gave actual money for those things that she needed, and I personally feel it would be immoral to just say "Oh, screw it, I have no legal liability so you can just whistle for it."
Germany's story is even more impressive when you take into account that reunification happened only 20 years ago, and they've already converted 20% of their power generation to renewable sources.
So hilariously, I've actually lived in Germany, and Germany is my model for where cripplingly high taxes come from. The VAT (Value Added Tax) and other taxes are enormously expensive. The VAT is nearly 20% of the cost of goods. Gas costs a couple euros per liter, not per gallon, because of the high taxes on it. Income tax is up to 45% of income, nearly half. Not to mention church taxes. Then there's the bullshit "solidarity surcharge", which is levied on top of your actual income tax, which can put it even closer to that line.
So, yes, Germany has higher life expectancy, and lower debt - though I would argue that it's quite possible that the debt issue has more to do with cultural attitudes, I'll even grant that. But it comes at the cost of crippling taxes, like I said.
And no, the inequality index is meaningless noise to me.
posted by corb at 6:36 AM on May 24, 2012
You don't inherit your parent's debt, but whatever your parents would like to pass down to you is eaten up by that debt before they can do so. So, let's say for example there's a nice, modest family home, owned by your mother. She gets sick with a really tough cancer. It'll take a lot of money to treat-more than the amount of your home-and she doesn't have enough years left to earn enough money to cancel out the debt. She has a choice at that point-should she let herself be treated, with money she doesn't have, knowing that when she dies, her house will be sold and creditors will have dibs before family does? Or should she decide not to be treated-she may die several years before she would otherwise, but she can make sure that her children still receive the fruits of her labors.
I know which decision I would make in that position. It may be different because I actually have a child, and so understand how this feels, but I would absolutely rather die than saddle my child with a burden instead of a gift. And that's not to mention how people feel morally about their parent's debts. My mother has debts. When she dies, I will likely take over paying them-because actual people gave actual money for those things that she needed, and I personally feel it would be immoral to just say "Oh, screw it, I have no legal liability so you can just whistle for it."
Germany's story is even more impressive when you take into account that reunification happened only 20 years ago, and they've already converted 20% of their power generation to renewable sources.
So hilariously, I've actually lived in Germany, and Germany is my model for where cripplingly high taxes come from. The VAT (Value Added Tax) and other taxes are enormously expensive. The VAT is nearly 20% of the cost of goods. Gas costs a couple euros per liter, not per gallon, because of the high taxes on it. Income tax is up to 45% of income, nearly half. Not to mention church taxes. Then there's the bullshit "solidarity surcharge", which is levied on top of your actual income tax, which can put it even closer to that line.
So, yes, Germany has higher life expectancy, and lower debt - though I would argue that it's quite possible that the debt issue has more to do with cultural attitudes, I'll even grant that. But it comes at the cost of crippling taxes, like I said.
And no, the inequality index is meaningless noise to me.
posted by corb at 6:36 AM on May 24, 2012
My mother has debts. When she dies, I will likely take over paying them-because actual people gave actual money for those things that she needed, and I personally feel it would be immoral to just say "Oh, screw it, I have no legal liability so you can just whistle for it."
So, if it came down to it, you'd pay off your mother's debts instead of sending your kids to college?
So, yes, Germany has higher life expectancy, and lower debt - though I would argue that it's quite possible that the debt issue has more to do with cultural attitudes, I'll even grant that. But it comes at the cost of crippling taxes, like I said.
So even though it's a matter of fact that other nations have healthier populations with lower debt and a more diverse and productive economies, it doesn't matter to you because they have "crippling" taxes? Who exactly are these taxes crippling? The people who get a good public education for less money? The patients who receive better care for less spending per capita? The industries who have a stable economic environment and a healthy, educated labor pool?
posted by deanklear at 9:19 AM on May 24, 2012
So, if it came down to it, you'd pay off your mother's debts instead of sending your kids to college?
So, yes, Germany has higher life expectancy, and lower debt - though I would argue that it's quite possible that the debt issue has more to do with cultural attitudes, I'll even grant that. But it comes at the cost of crippling taxes, like I said.
So even though it's a matter of fact that other nations have healthier populations with lower debt and a more diverse and productive economies, it doesn't matter to you because they have "crippling" taxes? Who exactly are these taxes crippling? The people who get a good public education for less money? The patients who receive better care for less spending per capita? The industries who have a stable economic environment and a healthy, educated labor pool?
posted by deanklear at 9:19 AM on May 24, 2012
So, if it came down to it, you'd pay off your mother's debts instead of sending your kids to college?
Yes. And I think it would make my kids better human beings if I modeled fiscal responsibility instead of running away from problems.
So even though it's a matter of fact that other nations have healthier populations with lower debt and a more diverse and productive economies, it doesn't matter to you because they have "crippling" taxes? Who exactly are these taxes crippling? The people who get a good public education for less money? The patients who receive better care for less spending per capita? The industries who have a stable economic environment and a healthy, educated labor pool?
Look, you obviously have a moral stance that I look on as completely alien, and probably vice versa. But yes, I do not support taxing the people who are the most successful at excessively high rates in order to support those who are not. I do not believe all people are somehow entitled to a good public education. I don't think everyone is entitled to healthcare. And I think that industries don't need nearly as high of a "healthy, educated labor pool" as you seem to think. The industries that need educated workers have no shortage of them.
In my view, it is more important that the best, brightest, and most hard-working succeed, rather than that everyone succeeds at a lower level. It is more important to preserve the freedom to succeed at a very high level, than it is to make sure everyone at least lives at a mediocre level. Obviously, your mileage varies. But I think it's really offensive for you to assume that everyone must share your views, or your priorities.
posted by corb at 2:27 PM on May 24, 2012
Yes. And I think it would make my kids better human beings if I modeled fiscal responsibility instead of running away from problems.
So even though it's a matter of fact that other nations have healthier populations with lower debt and a more diverse and productive economies, it doesn't matter to you because they have "crippling" taxes? Who exactly are these taxes crippling? The people who get a good public education for less money? The patients who receive better care for less spending per capita? The industries who have a stable economic environment and a healthy, educated labor pool?
Look, you obviously have a moral stance that I look on as completely alien, and probably vice versa. But yes, I do not support taxing the people who are the most successful at excessively high rates in order to support those who are not. I do not believe all people are somehow entitled to a good public education. I don't think everyone is entitled to healthcare. And I think that industries don't need nearly as high of a "healthy, educated labor pool" as you seem to think. The industries that need educated workers have no shortage of them.
In my view, it is more important that the best, brightest, and most hard-working succeed, rather than that everyone succeeds at a lower level. It is more important to preserve the freedom to succeed at a very high level, than it is to make sure everyone at least lives at a mediocre level. Obviously, your mileage varies. But I think it's really offensive for you to assume that everyone must share your views, or your priorities.
posted by corb at 2:27 PM on May 24, 2012
Also, it is worth noting that serfs in the Middle Ages, who are often referenced as the most down-trodden and oppressed because of their level of taxation, generally had to pay no more than at most 25% of their income in taxes to their liege-lord. Usually much less-and far less than current taxes.
posted by corb at 2:34 PM on May 24, 2012
posted by corb at 2:34 PM on May 24, 2012
I do not support taxing the people who are the most successful at excessively high rates in order to support those who are not.
This is where you lose me. Bill Gates born in Somalia would probably be dead. Bill Gates born in rural Alabama would perhaps be a truck driver. If Bill Gates were born in a nation that didn't have ARPANET, and didn't develop technology with massive taxpayer contributions, maybe he'd be a moderately successful warehousing magnate. Bill Gates born to a wealthy family and by chance attending a school that allowed him unlimited access to a computer — for free — in a country brimming with technology advancements due to public investment is Bill Gates.
If Steve Jobs had been adopted by someone in the military and stationed in Alaska, what are the chances Apple would exist? Let's make it even simpler: suppose he had an eye injury, and his parents couldn't afford proper treatment, so he was left legally blind. How did society at large benefit? How was the economy improved by abandoning his hundreds of billions of dollars worth of ideas for a few thousand dollars in savings?
Also, it is worth noting that serfs in the Middle Ages, who are often referenced as the most down-trodden and oppressed because of their level of taxation, generally had to pay no more than at most 25% of their income in taxes to their liege-lord. Usually much less-and far less than current taxes.
Serfs in the middle ages were subsistence farmers. Their liege-lord was collecting 25% of jack shit. Their aristocratic rulers survived for centuries on the idea that God had chosen them to live the good life, while the serfs were born to suffer and die.
I'm not offended by your viewpoint; I'm just confused as to how you arrived at belief in an ideal (Low taxes are always better!) instead of a perspective based on falsifiable hypotheses. In other words, are you seriously suggesting that you'd rather pay 15% of your $800 yearly income to live in Kandahar rather than pay 40% of your €80,000 salary to live in Stockholm? Because I don't think you are.
This is where you lose me. Bill Gates born in Somalia would probably be dead. Bill Gates born in rural Alabama would perhaps be a truck driver. If Bill Gates were born in a nation that didn't have ARPANET, and didn't develop technology with massive taxpayer contributions, maybe he'd be a moderately successful warehousing magnate. Bill Gates born to a wealthy family and by chance attending a school that allowed him unlimited access to a computer — for free — in a country brimming with technology advancements due to public investment is Bill Gates.
If Steve Jobs had been adopted by someone in the military and stationed in Alaska, what are the chances Apple would exist? Let's make it even simpler: suppose he had an eye injury, and his parents couldn't afford proper treatment, so he was left legally blind. How did society at large benefit? How was the economy improved by abandoning his hundreds of billions of dollars worth of ideas for a few thousand dollars in savings?
Also, it is worth noting that serfs in the Middle Ages, who are often referenced as the most down-trodden and oppressed because of their level of taxation, generally had to pay no more than at most 25% of their income in taxes to their liege-lord. Usually much less-and far less than current taxes.
Serfs in the middle ages were subsistence farmers. Their liege-lord was collecting 25% of jack shit. Their aristocratic rulers survived for centuries on the idea that God had chosen them to live the good life, while the serfs were born to suffer and die.
I'm not offended by your viewpoint; I'm just confused as to how you arrived at belief in an ideal (Low taxes are always better!) instead of a perspective based on falsifiable hypotheses. In other words, are you seriously suggesting that you'd rather pay 15% of your $800 yearly income to live in Kandahar rather than pay 40% of your €80,000 salary to live in Stockholm? Because I don't think you are.
I am ideally wired for the system I fell into here. I came out and got into something that enables me to allocate capital. Nothing so wonderful about that. If all of us were stranded on a desert island somewhere and we were never going to get off of it, the most valuable person there would be the one who could raise the most rice over time. I can say, “I can allocate capital!” You wouldn’t be very excited about that. So I have been born in the right place.posted by deanklear at 4:46 PM on May 24, 2012 [1 favorite]
Gates says that if I had been born three million years ago, I would have been some animal’s lunch. He says, “You can’t run very fast, you can’t climb trees, you can’t do anything.” You would just be chewed up the first day. You are lucky; you were born today.
And I am.
— Warren Buffett
This is where you lose me. Bill Gates born in Somalia would probably be dead. Bill Gates born in rural Alabama would perhaps be a truck driver.
And this is where you lose /me/. What is the relevance? Yes, perhaps. But I would argue that one of the keys of high intelligence is flexibility and adaptability. Maybe Bill Gates in Somalia would have been a very successful warlord. Maybe Bill Gates in rural Alabama would have eventually taken over a trucking empire. Intelligent people adapt to the circumstances they live in - and that is the quality worth rewarding.
How did society at large benefit? How was the economy improved by abandoning his hundreds of billions of dollars worth of ideas for a few thousand dollars in savings?
We have different ideas, as noted, about priorities and benefits. How does society at large benefit? Because in the long run, those who are the most adaptable and able to take advantage of rapidly shifting circumstances would be rewarded for their success. This means over time, the upper curve of intelligence and adaptability will continue to improve. Thus, humanity at large benefits. Not all of the individuals in the society may benefit - as measured by the general "economy." But it's not about that-it's about what you are choosing to incentivize. Mediocrity or intelligence?
In other words, are you seriously suggesting that you'd rather pay 15% of your $800 yearly income to live in Kandahar rather than pay 40% of your €80,000 salary to live in Stockholm? Because I don't think you are.
It depends. What does that remainder leave me? How do I measure up, comparatively, in Kandahar society? What sort of luxury do I live in? What opportunities do I have to succeed? And how much am I able to avoid paying into a system I find morally repugnant? We talk a lot about how we are living in the lap of luxury in Europe or America, but in fact, due to a lot of laws, that's not necessarily so. We could live much better for much less in a lot of supposed "third world" countries.
Again, I don't think we'll ever be able to have a meeting of the minds here. You prioritize things that I find valueless, and I prioritize things that you find valueless. This isn't because of flawed data - this is because of radically differing core values that both of us seem to find alien.
posted by corb at 8:31 PM on May 24, 2012
And this is where you lose /me/. What is the relevance? Yes, perhaps. But I would argue that one of the keys of high intelligence is flexibility and adaptability. Maybe Bill Gates in Somalia would have been a very successful warlord. Maybe Bill Gates in rural Alabama would have eventually taken over a trucking empire. Intelligent people adapt to the circumstances they live in - and that is the quality worth rewarding.
How did society at large benefit? How was the economy improved by abandoning his hundreds of billions of dollars worth of ideas for a few thousand dollars in savings?
We have different ideas, as noted, about priorities and benefits. How does society at large benefit? Because in the long run, those who are the most adaptable and able to take advantage of rapidly shifting circumstances would be rewarded for their success. This means over time, the upper curve of intelligence and adaptability will continue to improve. Thus, humanity at large benefits. Not all of the individuals in the society may benefit - as measured by the general "economy." But it's not about that-it's about what you are choosing to incentivize. Mediocrity or intelligence?
In other words, are you seriously suggesting that you'd rather pay 15% of your $800 yearly income to live in Kandahar rather than pay 40% of your €80,000 salary to live in Stockholm? Because I don't think you are.
It depends. What does that remainder leave me? How do I measure up, comparatively, in Kandahar society? What sort of luxury do I live in? What opportunities do I have to succeed? And how much am I able to avoid paying into a system I find morally repugnant? We talk a lot about how we are living in the lap of luxury in Europe or America, but in fact, due to a lot of laws, that's not necessarily so. We could live much better for much less in a lot of supposed "third world" countries.
Again, I don't think we'll ever be able to have a meeting of the minds here. You prioritize things that I find valueless, and I prioritize things that you find valueless. This isn't because of flawed data - this is because of radically differing core values that both of us seem to find alien.
posted by corb at 8:31 PM on May 24, 2012
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