"A poor person never gave me a job!"

[TimG]

Another is overall economic benefit.

Again economic benefit? What does that mean? Everyone benefits if the economy is more productive. Everyone loses if policies are put in place that reduce productivity. IOW you cannot have an over all economic benefit unless productivity increases.

[dre]

Everyone benefits if the economy is more productive.

Not necessarily and thats why quite a few people arent happy.

http://thecurrentmoment.files.wordpress.com/2011/08/productivity-and-real-wages.jpg

That graph shows when the trend changed... It changed between 1970, and 1980 shortly after Bretton woods collapsed, and the new fiat economy was born... the "Why bother making STUFF, if we can just print money!" era.

Edited September 5, 2012 by dre

[TimG]

Not necessarily and thats why quite a few people arent happy.

Aggregate long term benefits don't always mean everyone wins in the short term. Sometimes all you can do is minimize the harm. You can't build a highway without evicting some people. Governments needs to pursue policies that build the economy. Engaging in public lynchings to satisfy the blood lust of the masses is bad policy. Edited September 5, 2012 by TimG

[Michael Hardner]

After the Industrial Revolution productivity increases put many off their land and out of work.

[TimG]

After the Industrial Revolution productivity increases put many off their land and out of work.

Yet in long term everyone has benefited from the industrial revolution.

[cybercoma]

Yet in long term everyone has benefited from the industrial revolution.

Are you sure about that? Are things better or just different?

[TimG]

Are you sure about that? Are things better or just different?

Are your really so deluded that you need to ask that? Do you really believe that a world where 50% or more children never made it to adulthood was better? Do you really believe that a world were a year of bad crops would condemn 1000s to death was better? Do you really believe that a world where a simple cut is a death sentence because of a bacterial infection? If you do you really need to grow up.

[cybercoma]

Are your really so deluded that you need to ask that? Do you really believe that a world where 50% or more children never made it to adulthood was better? Do you really believe that a world were a year of bad crops would condemn 1000s to death was better? Do you really believe that a world where a simple cut is a death sentence because of a bacterial infection? If you do you really need to grow up.

You're assuming the germ theory would have never happened without the industrial revolution. You're wrong.

[TimG]

You're assuming the germ theory would have never happened without the industrial revolution. You're wrong.

What a ridiculous comment. The industrial revolution is what created the wealth that gave people to time to research such things. Without that wealth no one would have ever discovered 'germ theory' because they would have been more worried about collecting enough food for winter. And even if germ theory was discovered it was the industrial production of books that allowed that knowledge to be spread. And when drugs were found it required the industrial revolution to create the factories that produced them in the quantities needed.

Also germ theory was not the only gain I listed. We live in a world where food can be transported anywhere quickly. This has virtually eliminated starvation as a result of bad weather. The only place where starvation exists is in places with no functioning civil society. Transportation is a direct result of the industrial revolution.

I can't help wondering if you are being a deliberate troll. I can't imagine that someone could seriously believe what you say. If you do believe it just shows that you have no clue about how economies work.

[cybercoma]

What a ridiculous comment. The industrial revolution is what created the wealth that gave people to time to research such things. Without that wealth no one would have ever discovered 'germ theory' because they would have been more worried about collecting enough food for winter. And even if germ theory was discovered it was the industrial production of books that allowed that knowledge to be spread. And when drugs were found it required the industrial revolution to create the factories that produced them in the quantities needed.

Well, at least I know you have absolutely no knowledge of the history of medicine. Thanks for your completely uneducated opinions though. Go read up on germ theory. While you're at it, you might want to refresh your memory about the Gutenberg Press. But why stop there, perhaps you should look into how medical recipes were mixed in the home by women and later in offices (and on the road) by physicians, all before the Industrial Revolution. Hell, you may just want to brush up on the history of physicians themselves, what kind of books they were reading, where they got those books, how they practiced medicine, and what theories did they follow. Frankly, I don't think you know a single thing about medicine in the early modern era.

Edited September 5, 2012 by cybercoma

[TimG]

But why stop there, perhaps you should look into how medical recipes were mixed in the home by women and later in offices (and on the road) by physicians, all before the Industrial Revolution.

Germ theory was nothing more than phlogiston theory until they actually created a microscope that could observe the single celled animals. Even then definitive link between disease and germs was hypothetical. It took the equipment from the industrial revolution to do the experiments that turned the hypothesis into a theory. Without the revolution your "physicians" were glorified shamans peddling herbs.

[Bonam]

If you believe that then you simply dont believe in the law of supply and demand. Labor and materials get combined into goods because theres demand for those goods. Ford hires workers when demand for their automobiles is increasing and they lay them off when demand is decreasing. So its a complete fallacy to attribute the creation of those jobs to Ford. The marketplace is the causative factor in the existance of those jobs.

But demand is heavily influenced through the efforts and marketing done by the companies in question. Most of the demand for Ford's automobiles is a result of Ford's reputation for producing certain types of automobiles that appeal to a certain market segment, the ads that it runs, the network of dealerships and service centers that it has established, innovation and engineering keeping it up to date with its competitors, etc. Demand for vehicles may rise as a result of market dynamics, but demand for Fords specifically rises to a large extent due to the actions of the Ford company.

[Bonam]

Today anybody with a work ethic and smarts can become wealthy.

Keep your head in the sand and the condescending remarks coming. I'm sure all those people that lost their jobs during the recession and the youth coming out of universities to face an unemployment rate over 15% for their age group aren't just lazy morons, as you've characterized them. It's because jerks like you keep saying crap like this that those who are struggling are beginning to resent the wealthy.

Unemployment for university grads with technical degrees (science, technology, engineering, math) is as low as 3-5% depending on the field, and there are hundreds of thousands of unfilled jobs in these fields in Europe and North America. People getting degrees in art history and sociology are not necessarily "lazy morons" and no one is saying that they are, but they clearly didn't use their "smarts" in the process of picking what degree to go for.

Blueblood's claim was that it takes smarts and a work ethic to become wealthy. Note that his claim did not include the promise that you will become wealthy doing what you love. Not everyone can be fortunate enough to love a field that also happens to pay well and be in demand. One must consider job prospects when choosing what to study. Not everyone can be a rock star. But he is absolutely right: someone with above average intelligence ("smarts") and who works hard has an extremely good chance of being at least in the upper middle class ("wealthy").

[Bonam]

Not necessarily and thats why quite a few people arent happy.

http://thecurrentmoment.files.wordpress.com/2011/08/productivity-and-real-wages.jpg

That graph shows when the trend changed... It changed between 1970, and 1980 shortly after Bretton woods collapsed, and the new fiat economy was born... the "Why bother making STUFF, if we can just print money!" era.

Identifying one thing that changed in the 1970s (the monetary system) does not constitute proof that that one change was the cause of the trend shown in your graph. Other things also changed in the 1970s that are just as likely culprits. For example, the rapid rise of globalization began in the 1970s. Your graph is (I assume) for the US or some Western country, and these workers being exposed to foreign competition is just as likely a cause of wage stagnation as technical changes in the way the monetary system works.

[Wilber]

How does Germany do it? Large strong public sector unions, generous social programs, high taxes and they kick our ass on productivity.

High end products. The Germans realized some time ago they couldn't compete with Asia when it comes to every day manufactured products so names like Mercedes, BMW, Audi, Leica etc are their most successful companies. Even VW is at the top end of its segment. Increasingly Asia is becoming the biggest market for those products.

[Michael Hardner]

Yet in long term everyone has benefited from the industrial revolution.

Right, but these happened because society demanded social change.

Are you calling for better benefits, lower hours ... ?

[cybercoma]

It took the equipment from the industrial revolution to do the experiments that turned the hypothesis into a theory.

I guess you've never heard of Anthony Leeuwenhoek. He died before the industrial revolution, by the way.

[eyeball]

Blueblood's claim was that it takes smarts and a work ethic to become wealthy. Note that his claim did not include the promise that you will become wealthy doing what you love.

Note the word ethic in his claim.

His claim includes the promise that our governments will manage the economy ethically, fairly and justly so that your stake will not simply be lobbied or mismanaged out of existence for the sake of someone more powerful and wealthier than you.

[kimmy]

When it's one group asking to pay more instead of everyone then yes.

So what do you call it when one group is promised tax cuts while everybody else has to pay more?

The soak the rich movement is driven entirely by anger and resentment.

Blah blah blah, that's a catch-phrase. Anger and resentment, properly directed, can be highly beneficial.

It is not a rational approach to dealing with the economic challenges we face.

Further reducing the spending power of the overwhelming majority of the American consumers for the sake of giving tax cuts to the richest Americans is not a rational approach either. It is not even remotely rational.

I am not actually opposed to increasing taxes provided it is part of a comprehensive reform to government and entitlement programs. What I am opposed to are public "lynchings" demanded by people looking for a scapegoat.

Willard paid 13.9% tax in 2010, which is the only year he's not ashamed to show us. Do you really think he's getting "soaked"?

First off, I don't think he's getting "soaked" at all. Second, when is somebody going to step up and make the case for the claim they're making, which is that it'll create jobs?

Exactly. It doesn't create jobs , it doesn't help the economy, but it makes then feel good inside.

Still waiting for somebody to make a believable case that cutting Willard's taxes to 0.86% creates jobs.

The idea that cutting rich-guy taxes creates jobs is fantasy, a fantasy promoted by rich-guys. It rides on the belief that they'll invest it in things that create jobs in America. That's false. The will invest it in things that create profits. And nowadays, the idea that creating profits and creating jobs are one and the same is just not true.

-k

Edited September 6, 2012 by kimmy

[dre]

Identifying one thing that changed in the 1970s (the monetary system) does not constitute proof that that one change was the cause of the trend shown in your graph. Other things also changed in the 1970s that are just as likely culprits. For example, the rapid rise of globalization began in the 1970s. Your graph is (I assume) for the US or some Western country, and these workers being exposed to foreign competition is just as likely a cause of wage stagnation as technical changes in the way the monetary system works.

The rapid rise of globalization came because major western economies started going deeply in debt and running huge trade deficits. Its not a coincidence that so many things changed at once. Suddenly the west could draw up an unlimited ammount of treasury instruments and trade them for real goods. Thats why trade increased, and thats why we were able to pay other people to make stuff for us instead of making it ourselves.

And I would hardly call the change from asset backed currency to fiat currency a "technical change". It was a huge sea change, that caused the entire developed world to act a certain way. The entire west began financing economic growth with debt... because they could.

Edited September 6, 2012 by dre

[dre]

But demand is heavily influenced through the efforts and marketing done by the companies in question. Most of the demand for Ford's automobiles is a result of Ford's reputation for producing certain types of automobiles that appeal to a certain market segment, the ads that it runs, the network of dealerships and service centers that it has established, innovation and engineering keeping it up to date with its competitors, etc. Demand for vehicles may rise as a result of market dynamics, but demand for Fords specifically rises to a large extent due to the actions of the Ford company.

I disagree. Demand for automobiles is an extension of demand for transportation. Fords reputation and marketing might cause someone to buy a ford over a nissan but it wont cause someone to pick driving over walking unless it introduces a product that fundamentally changes the market.

So ford makes a profit by by combining labor with materials to meet demand. Its a privilege for them to get a piece of that market, and its a privilege that they earn buy running a competent business but they arent GIVING anybody anything.

[Bonam]

Its a privilege for them to get a piece of that market, and its a privilege that they earn buy running a competent business but they arent GIVING anybody anything.

I didn't say they were "giving" anyone anything.

The point I was making is that demand for Fords exists because of how Ford runs its business. Even if demand for automobiles was very high, demand for Fords could be low if Ford made a substandard product. Indeed, Ford and other American car companies lost significant market share to their global competitors over the last two decades. For workers at Ford to be employed, the company must run its business competently and turn a profit. If Ford runs its business poorly, then its competitors take over its market share, and many of these competitors may be based in other nations, employing people there instead.

You see, all "automobiles" aren't created equal, all goods are not created equal, all services are not created equal, it is a company's job to carve out for itself a segment of the market and to make a profit, and it is only those companies that succeed in doing so that are able to employ anyone at all.

Edited September 6, 2012 by Bonam

[Bonam]

The rapid rise of globalization came because major western economies started going deeply in debt and running huge trade deficits.

Meh, that is a narrow view. The most fundamental driver of such change is technology, not financial systems. In all human history, trade routes and trade volumes have been limited by one thing and one thing alone: the technical difficulty, time, cost, and danger of travel. The 2nd half of the twentieth century saw a vast reduction in the cost of intercontinental transportation and a vast reduction in shipping times, as land, sea, and air transportation infrastructure was created and continually improved. Furthermore, a greater and greater part of the economy became non-physical goods and services, such as information: software, knowledge, designs, etc, and these had negligible transportation costs compared to their value.

These were the drivers of globalization, not the end of the Bretton woods system.

[dre]

Aggregate long term benefits don't always mean everyone wins in the short term. Sometimes all you can do is minimize the harm. You can't build a highway without evicting some people. Governments needs to pursue policies that build the economy. Engaging in public lynchings to satisfy the blood lust of the masses is bad policy.

Allowing wealth to concentrate is bad policy as well because it leads to violence, and wrecks economies. And you dont necessarily have to have lyching. I dont remember a whole lot of English Aristocrats getting lynched. All they needed to do to break up the aristocracy was take some political power away from the wealthy (removal of the veto from the house of lords), and implement some property taxation. I dont remember any lynching when they broke up the robber barons or the railroad tycoons with taxation either.

[dre]

Meh, that is a narrow view. The most fundamental driver of such change is technology, not financial systems. In all human history, trade routes and trade volumes have been limited by one thing and one thing alone: the technical difficulty, time, cost, and danger of travel. The 2nd half of the twentieth century saw a vast reduction in the cost of intercontinental transportation and a vast reduction in shipping times, as land, sea, and air transportation infrastructure was created and continually improved. Furthermore, a greater and greater part of the economy became non-physical goods and services, such as information: software, knowledge, designs, etc, and these had negligible transportation costs compared to their value.

These were the drivers of globalization, not the end of the Bretton woods system.

The glut of trade that most people refer to as "globalization" simply could not have happened if the west did not run big trade deficits and build up debt. It was really an entirely predictable macro-economic consequence.

Lets say you need to trade a certain commodity to your neighbors for their goods and services. And lets say you need to go out and work your ass off to get that certain commodity. That was bretton woods. But now imagine you can publish tokens based on your reputation and exchange them for the products and services of others!. Simply put... imagine you could just print money with a machine in your basement!!! There would be a huge explosion of trade! Goods would be flowing from all your neighbors houses to your house, and paper tokens would be going in the opposite direction. You would have a huge trade deficit but a huge wealth in material goods, and the GDP of your neighborhood would soar. That basically describes the west since 1971.

Now Ill grant you... This entirely new economic experiment is not the sole causative factor in all this stuff. Its more like a "key enabler".

The best way to understand "globalization" and the massive flow of goods from east to west is to picture your own relationship with an immediate neighbor. What possible scenario could result in the constant flow of REAL GOODS from him to you with nothing but "promises" flowing in the other direction? The ONLY possible factors are trust and reputation, which is precisely why the countries that were able to trade huge ammounts of promises for real goods and services were large, established western nations with prominent currencies.

This is what allowed this glut of trade to happen and that is what will cause that same glut of trade to stop. At the end of the day the "promises" you might trade to your neighbor for real goods will become redeemable, and those bits of paper you have been trading for your neighbors "seemingly cheap labor" will come back to roost as a real claim on your own goods and services.

Edited September 6, 2012 by dre