How Do We Fix The Economy? - Page 2

We need more of this kind of poster boy.

Apparently not. <sigh>



I know what you asked and I answered this as clearly as I could. Often time you don't have customers, you only have prospective customers or think you will have customers.

Let me try to explain what I mean about the relationship between consumption and production and production's role in driving the economy forward.

Let's say you are stranded on a deserted island with only the clothes on your back, no readily available food or shelter. At this point it would be safe to say that you have a demand for consuming food and shelter. But this demand in and of itself does nothing. It is the next step that gets things rolling. The next steps are that you forgo current consumption and you invest your labor to produce something (i.e., father food by foraging, fishing or hunting). Only after production has occurred can you consume anything. Yes demand exists a priori, but this is already known. There is infinite demand for goods and services. It is production that cannot keep up with all of the demand and which drives an economy forward. And, in order to actually produce something, some degree of present consumption must be forgone (saved) in order to invest it in production. Thus it is saving and the corresponding investment into production that drives things forward.

What Keynesian "economics" suggests is that all that needs to happen is we need to get enough money into the hands of consumers. This is exactly the opposite. Yes, there are some consumers who lack money, but that doesn't also mean they lack all means of trade/exchange to obtain produced goods. That's a fairly superficial fallacy. The problem with Keynesian "economics" is that is assumes production will happen. It basically takes it for granted. The problem of wealth creation has always been about how productions happens. Demand is known and assumed (and correctly so).

This is the flaw in your argument. There is infinite demand for FREE goods and services, however for goods and services that cost, demand may be less, or non-existent.

No it's not. \



Sorta. For some goods there will be no demand even at a price of zero (or possibly even at a negative price). I get how the demand curve works. I also get that there elasticity issues associated with it (i.e., some things will continue to be in high demand despite increases in prices for a variety of reasons at least in the short term.) I also get that producers can end up producing something for which there is no demand (they guess wrong). That's part of the risk and uncertainty of the market. It's also why successful entrepreneurs and businesses deserve the profit they get...they guessed right in their production choices. But the fundamental point here is that people want things. They also have things. They have things they can and will exchange for the other things they want more. Minimally this is their labor or barter. In a more modern sense money acts as the intermediate form. But people always want (and need) things. What is always uncertain is whether or not someone will produce what they want (and for a price they're willing to pay.)

I must say that from what I've seen of your posts, I expect a much better understanding of this fundamental concept than this.

P.S. I just realized that we may actually really be misunderstanding each other. I never said that demand did not have a role in this or that it didn't precede production. I said that production precedes consumption. Maybe that helps here.

We are completely in agreement on these points.

Perhaps I'm just not getting the previous point, but I completely disagree that there is limitless need for production. With most of the world's production needs fulfilled by outsourcing to China or other populous nations where labor costs are very low, there are other factors which drive consumption patterns, such as uncertainty at the consumer level, not just the producer level. Most of what is consumed in the modern world is unnecessary (in other words, not needed for survival), therefore the continual production of goods which are not "necessary" would be ill-advised. I typically agree with your comments also, so based on my personal experience and exposure with manufacturing, this is a point that does not square with reality. Perhaps there is a more general concept that you are floating that I'm not picking up on, but I also don't agree with elements of the links you posted from The Freeman, WealthIsNotTheProblem, and the other. I think we are still both in agreement that Keynesian economics is a fraud, and perhaps if not viewed in a vacuum and as part of a real-world scenario we may be in closer agreement.

Well we can never know for sure if it is truly limitless (i.e., infinity) for obvious logical reasons. And I used that phrase a bit casually and sloppily there I'll admit. But the history of economic development clearly shows that we all keep wanting more (at least in aggregate). Sure, some people decide to live a more modest and minimalist life. But in the large demand keeps growing not just for existing goods and services but for new and sometimes previously completely unimagined goods and services.



Nope. Most of the demand of the world is not met by current production. Far from it in fact.



Of course. And uncertainty is quite a problem today. But I'd argue it is the producer's uncertainty that is holding things back more right now.



Well, to be fair, this is your opinion. And I might even agree. And to some degree it is factual (with regard to the bare minimum required to survive and live). But people want more than to just survive. They want much more.



OK

After all is said and done, I think we are mostly in agreement on the generalities and whatever differences we may have are due to the peculiarities of each of our life experiences.

Greed is NOT good. Sorry Mr. Gecko. A little restraint and a little compassion would go a long way. How many jobs could have been saved if those at the top didn't vote themselves huge bonuses for cutting costs by cutting jobs?

You have good concepts which some might actually work.Number 6 I agree with completely. To much spending on these dam wars and these 3rd world countries especially where corruption runs amok.regulate the banks completely. They are out of control.

It would explain a lot!

Some employers love this aspect of downturns. They can do anything and there isn't another job down the road for these people so they'll just take it. Disgusting. And it's shooting themselves in the foot because it's so short sighted. When things get better people tend to have memories of what happened and good workers leave. But that's the metality out there. It was that way in every recession I worked through in the 70's and 80's as well.

I've heard this many times before, sometimes even from the pulpit and I totally disagree. Greed is not what drives the economy. This is a word that has almost lost its meaning because it is thrown around so often and carelessly.


This does not describe how most people in the market operate. One will also note that greed isn't simply about money but also status and power. It also doesn't say that someone who is wealthy is greedy. Poor people can be greedy as well. Greed is not at all limited to people in the marketplace. Greed does exists in a wide variety of places and social domains including government, religious institutions and even non-profits organizations.

People having a desire for a better life is not greed. People simply looking our for their interests and those of their families is not greed. People earning a lot of money or profit is not greed.

I'd also note that those shouting "greed!" are almost always looking up. In other words, they appear to have no concept that the family that's living in poverty in Africa might envision them as greedy with their rather modest (by American standards) lifestyle.


P.S. BR, you haven't told us how exactly you think we can or should "end the culture of greed."

So... how do you feel about workers/unions demanding (requesting/expecting) pay RAISES when the business/economy is booming?

These workers just expect to get pay raises because a company is doing good!... They're taking advantage of an up economy and screwing their company/boss/shareholders and the company can't do anything about it because there are more empty jobs than quality workers to fill them !!!!

I used to be anti-union, but I've come to accept the right of people to bargain en masse with an employer, HOWEVER if the union is too heavy-handed (just as an employer could be too heavy-handed) they may end up out of a job or destroy the very company they attempt to negotiate with. Also, I don't think a union should be protected by the government any more than an oil company should be subsidized (for example).

Absolutely! They absolutely have this right. Which is to say they have the right to attempt to exercise group negotiation with an employer. An individual should have a right to delegate negotiation of his employment agreement to a larger body (the union). However, they don't have the right to force the other side to accept this negotiation. The individual should also have the right to opt out of the union (which they don't in some cases.)



Indeed.



This is the real problem. Many unions get special protection under the law over and above the simple, basic and natural right to act as a group.

Well, I disagree. I don't think this a philosophical/semantical point per se. It's about using the fucking word in the right way, at the right time and to describe the right thing. I'm sorry if my pointing out the definition of the word threw some cold water on your facile and simplistic "greed is what makes the economy go 'round" theory, but words have meanings.

NO! Don't end the greed! Huge corporations need to continue to post record profits each year. The more money they make then the more people they hire! right?. I see it in the news all the time. "Exxon Mobil posts record profits and hires 10,000 people to celebrate" and "The Walton family of Wal-Mart decides that having 89.5 Billion in the bank is enough and will now pay employees above minimum wage!" If being able to dump toxic chemicals into the water table instead of properly disposing of them helps corporations make more money then I am all for it. Just think of how much more money these companies could make if it wasn't for the FDA, EPA, and OSHA. Get rid of them now!

Actually, Wal-Mart does pay above minimum wage. That's why they supported an increase in the minimum wage...to force their competitors to pay higher wages.

P.S. The purpose of a company is not to create jobs. It creates jobs as a function of other things it is trying to do.

Exactly. I was attempting to point out that some wrongly think if we lower the tax on businesses that they will hire more people.

The minimum wage may have not been the perfect example. It is primarily meant to help the poor areas of our nation and is close to irrelevant in much of America. I will list another incorrect reasons that some despise our progressive tax system......

Dont make rich people pay more tax because one day Ill be rich and I wont want to pay tax The American Delusion

Well, you're almost certainly wrong here. Businesses are in business to make a profit. They will hire people who will increase their profit. This is almost certainly not nobody.



It may be meant to, that it doesn't and, in fact, actually hurts many of them should be no concern to us, because all that matters are good intentions.



Well, arguably, the progressive income tax scheme is an anti-wealth accumulation tax. It is a treadmill that increases in grade for those climbing up it.

Having a minimum wage hurts the poor?



Exactly, I would rather be taxed after I have become wealthy than before. Commonly it takes money to make money and so as it gets easier for a person they get taxed at a higher rate. This balances if not reverses your incline theory. There is a base fee to exist (the cost of food,shelter,etc) That is why we get taxed at a lower percentage on our first X amount of income and at a higher percentage on the income beyond that. So... you wish to lower taxes on the wealthy and raise taxes on the poor to make things "even and fair"?

Yes.



Well since, from an income tax perspective, the poor aren't really paying anything anyway, the only way to reduce their taxes would be to give them tax "rebates" on taxes they haven't paid. At that point we have outright and naked redistribution. \

What I wish for is lower taxes overall for everyone (including eliminating the income tax completely.) This requires lower spending and much less redistribution.

I didn't post anything about lowering the tax rate on the poor. You have made it clear you want all Bush Tax cuts extended and I have made it clear that I want all of them all to expire.

Obviously you would caucus with the Republicans but would you describe yourself as Libertarian if you had to classify yourself? By much less spending and redistribution you would eliminate or make severe cuts to all entitlements along with moderate defense cuts?

Yes I do.



How kind of you.



Yes.



Yes except that I believe more than moderate defense cuts could be made if we returned to a stature of defense rather than offense.

As if we needed any more reason... guess which formerly great nation tied for dead last in 2009 math achievement scores. Other subjects aren't doing so well either.

The US is a laughingstock. Truly pathetic.

Sure, let's throw more money at the problem

With the tax cuts directed at the top 2%, we could have funded pre-school education nationwide. That would have helped.

Once again, probably not.

Your statement is based on the assumption that those who are threatened with this additional taxation would simply sit there and take it. This is almost certainly and incorrect assumption. Those threatened with the confiscation of their property usually adjust and those with higher incomes (certainly those in the "top 2%") typically have much greater flexibility and making adjustments to avoid this confiscation typically rendering this tax ineffective or (usually) worse.

This is the fatal assumption that all "soak the rich" initiatives is based on...that they won't do anything to defend themselves.

Is this coming from BR-pedia again? It must be so nice to speak in sweeping generalities with nary the need for a number, citation or fact.

Yet another reason the income tax is inherently flawed. It's broken. Tweaking an inherently flawed concept is pointless. Even a flat tax won't fix it.

Scrap it.

Find that country yet?

I chose just one example after a cursory search, but there are a few that are very similar. All of them are capitalist havens - some very large multinational corporations are based in them, due to a favorable business climate.

get rid of Tim G who truthfully is on the side of large corporations not the people!Stop borrowing money from China and start making products in the USA.Really start to control big banks and wall street not the crap Obama try to do.Start with this and go from there.

Of course.



Stop the spending, then the borrowing will stop.



We do make things in the US. A lot actually. This meme that we don't make anything in the US anymore is basically a lie.



Better yet, cut them loose from their monopolistic/cartelized protections and make them compete. No need for government "control" then.

Hokum!


Double hokum!

And he's not saying anything he hasn't said a zillion times before.