Economics, Buisiness classes

[RGacky3]

Most of these college or university classes (in the united states) have a clear Bias, I remember first day of a buisiness class the professor said "Government is the wealth CONFISCATOR, and buisiness is the wealth CREATOR, it is always that way." My first thought was "what about the post office?" Then you have economics classes where the options are "free markets" or "central control," and market equilibrium is always seen as where markets move and that the equilibrium is a good thing for everyone.

If you study economics you'll see none of that stuff makes real sense, what things have they taught you in economics or buisiness classes that you've come to learn later were just capitalist propeganda.

[Tim Cornelis]

Well I think it's true the government itself creates no wealth and merely confiscates it and redistributes it. A post office merely is a business which happens to be owned by the government.

[RGacky3]

Well I think it's true the government itself creates no wealth and merely confiscates it and redistributes it. A post office merely is a business which happens to be owned by the government.


A buisiness CREATED BY and RUN BY and OWNED by the government, in which case government is a wealth creator.

[danyboy27]

governement services are actually wealth creator, ESPECIALLY if you are a capitalist.

IF you are a buisnessmen, and lets say 1000$ of your whole revenues goes to the fire departement and the police departement, its a pretty good deal.

It would cost you double triple, to hire a private firm to do the job.

the same reasoning could be applied to healthcare and other social services.
having public healthcare mean for the bosses less paperwork to fill, less money to spend on a costly insurance plan, more heathy worker, more productivity.

Plus, with a wide range of various subsidies such has food subsidies to make the meat and vegetable cheaper reduce the cost of the capitalist, beccause since the worker can have relatively cheap food, the boss is not forced to increase his wage.

and this whole bundle of services is increasing the productivity of the workers, wich mean that even if capitalists have to pay more taxes, they still get richer beccause of an increased productivity from the workforce.

Its dosnt really matter if you pay more taxes has a buisness if the end result is more comsumer buying your stuff and more worker producing more stuff faster.

all this system would work fine if it wasnt managed by shortsighted individual, and this is exactly what you got when you put a fews unaccountables folks in control of the mean of production; folks devoted to short time profits.

[Lynx]

Mainstream economics is not to be taken literally, especially if your intention is to run a successful business.

[RichardAWilson]

It’s true that equilibrium is a good thing. The problem is that capitalism is too chaotic and unstable for equilibrium to even be attained, let alone maintained. Keynes showed this to be the case with labor markets. Even when labor markets did settle at a supposed equilibrium, we still faced massive amounts of unused labor. Labor, which could have been creating wealth and value, was being idled and wasted.

Equilibrium, it should be said, is nothing more than an approximation, much like trying to value stocks is more an art than a science. There are, of course, a few objective methods for valuing stocks. However, in most instances, it's often the subjective methods that come much closer to predicting the truth.

[Skooma Addict]

Most of these college or university classes (in the united states) have a clear Bias, I remember first day of a buisiness class the professor said "Government is the wealth CONFISCATOR, and buisiness is the wealth CREATOR, it is always that way." My first thought was "what about the post office?" Then you have economics classes where the options are "free markets" or "central control," and market equilibrium is always seen as where markets move and that the equilibrium is a good thing for everyone.

If you study economics you'll see none of that stuff makes real sense, what things have they taught you in economics or buisiness classes that you've come to learn later were just capitalist propeganda.

The stuff you learn in business class isn't propaganda. For the most part it is basically teaching you a skill to be applied to the workforce. Economics on the other hand contains more political theory. But most economists consider socialism and Marx to be debunked, so spending too much time teaching it would be a disservice to the students.

[RGacky3]

The stuff you learn in business class isn't propaganda

I don't know, I heard a lot of propaganda.


But most economists consider socialism and Marx to be debunked, so spending too much time teaching it would be a disservice to the students.

Most economists have also gone to economics schools that say that and thus don't teach marx.

[Dean]

The stuff you learn in business class isn't propaganda. For the most part it is basically teaching you a skill to be applied to the workforce. Economics on the other hand contains more political theory. But most economists consider socialism and Marx to be debunked, so spending too much time teaching it would be a disservice to the students.

Political theory is consistently propaganda meant to prop up the mainstream narrative. Whether this is deliberate or not is up for debate - suffice it to say, somewhere down the line there is enough resistance to rational discussion of political economy to stifle the real inquiry substantially.

Firstly, the LTV in economics is a rather straightforward system if you understand ecology:



In ecology, we are taught that there are two major resources that biological entities need: energy (sunlight) and material. The same is true of economics: what is required is energy (labor) and material.
Because photosynthesis forms the basis of energy transfer in the biosphere, scientists frequently discuss ecology in terms of net energy production by plants.
And yet, labor does not get the same treatment in the human economy. Why not?


It's not complicated, but Marx's success in systematizing the structure of capitalism seems to have discouraged rational inquiry there.


In terms of political science - what seems obvious to us is not obvious there. For instance, I've pointed out repeatedly that the state acts in the interests of the highest bidder. This is systematized by Thomas Ferguson:



It is time, therefore, to recognize that the chief reason why no social scientists have succeeded in specifying unambiguous electoral criteria to identify "partisan realignment" may well be that there are no such criteria to be found. And it is high time, accordingly, to begin developing a different approach - a fresh account of political systems in which business elites, not voters, play the leading part; an account that treats mass party structures and voting behavior as dependent variables, explicable in terms of rules for ballot access, issues, and institutional change, in a context of class conflict and change within the business community. More (http://books.google.com/books?id=CU8oyIlNyQcC&printsec=frontcover)

[Skooma Addict]

I don't know, I heard a lot of propaganda.

Idk what business classes you took where this would be the case. Most people in business school are uninterested in/don't know anything about comparative economic systems. They just want to learn how to succeed in the business world. Idk what business class would contain any kind of political theory.


Political theory is consistently propaganda meant to prop up the mainstream narrative. Whether this is deliberate or not is up for debate - suffice it to say, somewhere down the line there is enough resistance to rational discussion of political economy to stifle the real inquiry substantially.

Political theory is only relevant in economics, since business doesn't incorporate it. Political theory in econ classes has a general bias towards democracy and capitalism usually. Although it depends on the school. Amherst will be different from GMU.

[Dean]

Political theory is only relevant in economics, since business doesn't incorporate it. Political theory in econ classes has a general bias towards democracy and capitalism usually. Although it depends on the school. Amherst will be different from GMU.



They don't have a bias towards democracy. They have a bias towards the electorate-based theory of party competition, which attempts to define our political system as democratic, despite the tenuous relationship between shifts in voter interests and demands and changes in political institutions.


This is not the same as the bias towards capitalism. You don't have a narrative that emphasizes the point that capitalism exists in the US - but rather, that w are becoming more "socialist" or otherwise less market-oriented, despite the facts. There is no similar criticism of western "democracy," however. Democratic elements are overemphasized, while capitalist elements are deemphasized, in order to claim that we have plenty of the former and too little of the latter.

2. Different universities have different priorities. But the investment theories of party competition seem to be far less prevalent, while electorate theories are probably taught in every university, including those which tend to have more audacious political theory programs. However, the media does not cultivate critical theories of political science; it deeply reflects the electorate theories. However much UMass and GMU differ, it is the electorate theories that prevail and go on to national attention.

[Judicator]

Firstly, the LTV in economics is a rather straightforward system if you understand ecology:

In ecology, we are taught that there are two major resources that biological entities need: energy (sunlight) and material. The same is true of economics: what is required is energy (labor) and material.
Because photosynthesis forms the basis of energy transfer in the biosphere, scientists frequently discuss ecology in terms of net energy production by plants.
And yet, labor does not get the same treatment in the human economy. Why not?


Do you have a specific source for the claim about "scientists frequent discussion?"

Labor is a factor in tons of econ 101 models, so what do you think is being left out?


In terms of political science - what seems obvious to us is not obvious there. For instance, I've pointed out repeatedly that the state acts in the interests of the highest bidder. This is systematized by Thomas Ferguson:

So then it must be the case in the US that either:
1) The highest bidder wants effective corporate tax rates above 0
2) The state does not always act in the interest of the highest bidder

[RGacky3]

Labor is a factor in tons of econ 101 models, so what do you think is being left out?


Its place in modern economy is as a resource, thats the dominant theory, no other economic theory is really presented seriously, like the fact that labor is the wealth creator.


So then it must be the case in the US that either:
1) The highest bidder wants effective corporate tax rates above 0
2) The state does not always act in the interest of the highest bidder

First of all, the state ALSO has to respond to public preassure, also the highest bidder wants an effective state.

[Judicator]

Its place in modern economy is as a resource, thats the dominant theory, no other economic theory is really presented seriously, like the fact that labor is the wealth creator.

There are plenty of other theories in general (ex neoclassical versus Keynesian). You mean a particular theory where labor is central isn't presented seriously?

The mainstream view on wealth creation I think is that technology accounts for growth. I don't see how you can build an economic model that makes predictions about common economic questions like "what determines long run growth?" "what determines the price level?" based on the claim that labor is the wealth creator.


First of all, the state ALSO has to respond to public preassure, also the highest bidder wants an effective state.

Right, so both the voting public and private interests influence politics. What's the revolutionary claim?

[RGacky3]

The mainstream view on wealth creation I think is that technology accounts for growth.

Thats not the mainstream view, there are many views, most eocnomists admit that growth is neccessary for Capitalism to work.


I don't see how you can build an economic model that makes predictions about common economic questions like "what determines long run growth?" "what determines the price level?" based on the claim that labor is the wealth creator.


Well you have Marxism, you have institutional economics, different socialist economics, you even have leftist keynsians, a lot of them ignored.


Right, so both the voting public and private interests influence politics. What's the revolutionary claim?

Its not the voting booth, when I talk about public pressure, I'm talking about strikes, protests, occupations, i.e. revolutionary activity, i.e. the ONLY things that have historically made change, its almost never been elections.

[Drosophila]

I think most economics classes will immediately assume that American capitalism is the best. They really don't delve into any form of socialism.

[Judicator]

Thats not the mainstream view, there are many views, most eocnomists admit that growth is neccessary for Capitalism to work.

Who says that? Are you claiming that if growth is negative for a few years, Capitalism "stops working" (whatever that means)?


Well you have Marxism, you have institutional economics, different socialist economics, you even have leftist keynsians, a lot of them ignored.

Okay, so perhaps they ignore all of those because they don't provide answers to the questions I suggested above which would be of interest to economists.


Its not the voting booth, when I talk about public pressure, I'm talking about strikes, protests, occupations, i.e. revolutionary activity, i.e. the ONLY things that have historically made change, its almost never been elections.

This is because you claim voters are sheep, or because you think all candidates are identical? What kind of change are you talking about? Do you think the world would be different in any relevant way if Gore had been elected rather than Bush?



I think most economics classes will immediately assume that American capitalism is the best. They really don't delve into any form of socialism.

They will talk only about capitalism because that's what we have now. I don't know why that requires passing judgment on it.

[Revolution starts with U]

Meet the new boss, same as the old boss ~Bob Dylan (I think)
That's why elections rarely change things for the better.

[Landsharks eat metal]

Meet the new boss, same as the old boss ~Bob Dylan (I think)

The Who... "Won't Get Fooled Again"

[L.A.P.]

Not teaching Marxian economics in an economics class is a huge disservice to educating students about economics, it doesn't matter if you disagree with it or not. Marx has had a much bigger influence on economics than most economists will admit to.

[Judicator]

Not teaching Marxian economics in an economics class is a huge disservice to educating students about economics, it doesn't matter if you disagree with it or not. Marx has had a much bigger influence on economics than most economists will admit to.

I'm sure at some universities there are Marxist economics classes, but why should the Marxist approach be included in most/all econ classes? Aristotle had a big influence on Western thought, but we don't hear about him in every class...should we?

[Skooma Addict]

Teaching Marx would be a disservice to students who are paying thousands of dollars or taking out student loans. In my opinion undergrad econ should be oriented towards providing a more practical education which can be applied to the workforce. Marxist econ can be saved for graduate school.

[RGacky3]

Marx imo is JUST as significant as Adam Smith.

[RGacky3]

Who says that? Are you claiming that if growth is negative for a few years, Capitalism "stops working" (whatever that means)?


A growing economy does not mean a good economy for most people, Chinas economy has been growing, that does'nt mean its been really benefitial to most people.

THe Crisis now, is not just a downturn, its a crash, we know live in essencially a bubble economy, captialism requires growth, and it can only grow up to a point.


Okay, so perhaps they ignore all of those because they don't provide answers to the questions I suggested above which would be of interest to economists.


Except they do, read you'll learn a lot.


This is because you claim voters are sheep, or because you think all candidates are identical? What kind of change are you talking about? Do you think the world would be different in any relevant way if Gore had been elected rather than Bush?


Economically Gore and BUsh would have probably been exactly the same, economically Obama has essencially been a light republican.

If your gay, yeah it makes a difference, or a minority yeah, or an atheist, but for the working class it does'nt really make that much of a difference, what works is fighting the system outsitde the system.

[Kiev Communard]

Teaching Marx would be a disservice to students who are paying thousands of dollars or taking out student loans.

If only they did want to continue "paying thousands of dollars" or "taking out loans" for all their life by following mainstream (i.e. monetarist/marginalist) assumptions of economics and society. Marxian economics is indeed worthless from the point of view of teaching how to make a profit for your future boss, but it is indispensable if one does not want to live as mere source of profit for eternity.


In my opinion undergrad econ should be oriented towards providing a more practical education which can be applied to the workforce. Marxist econ can be saved for graduate school.

Such a reasoning is one of the main causes of relative decline of the U.S. education system, which, as far as I can conclude from the reflections of my friends participating in the student exchange programmes to the U.S., is even less critical thought-friendly than the old Brezhnevite high education system we used to have here in Ukraine and other post-USSR republics.

[Judicator]

A growing economy does not mean a good economy for most people, Chinas economy has been growing, that does'nt mean its been really benefitial to most people.

THe Crisis now, is not just a downturn, its a crash, we know live in essencially a bubble economy, captialism requires growth, and it can only grow up to a point.


Wages are going up in China. China's GDP has increased 8-10% every year for a couple decades; while most of the benefit accrued to urban areas, the farmers can still do what they've been doing for thousands of years.

Up to a point? Really? So you think once world GDP reaches a certain magic number, say 200 trillion, it will just abruptly stop?



Except they do, read you'll learn a lot.


Either way, they are just as likely to be published in a mainstream econ journal as papers from the Discovery Institute are to be published in a biology journal.



Economically Gore and BUsh would have probably been exactly the same, economically Obama has essencially been a light republican.

If your gay, yeah it makes a difference, or a minority yeah, or an atheist, but for the working class it does'nt really make that much of a difference, what works is fighting the system outsitde the system.


Exactly the same? I doubt Gore would have passed the tax cuts, to name one policy.

Minorities, gays, and atheists are over half of the population. Working class, defined as factory workers, is something like 10-20% of the US population today, and you're saying they matter more?

[Sperm-Doll Setsuna]

Working class, defined as factory workers, is something like 10-20% of the US population today, and you're saying they matter more?

Except that's never been the definition of the working class.

[MortyMingledon]

Exactly the same? I doubt Gore would have passed the tax cuts, to name one policy.

Minorities, gays, and atheists are over half of the population. Working class, defined as factory workers, is something like 10-20% of the US population today, and you're saying they matter more?

So what if the taxation under Gore would have been slightly more in favor of the working class when compared to Bush: both would have done their utmost to defend the current oppressive system.

As far as the hierarchy and power structure goes, Gore and Bush wouldn't have changed shit. Even for gays and atheists electoral politics have only had a limited effect. Acceptance of gays or atheists is a vital matter of culture, which is built from the ground up by individuals, and cannot really be influenced by the state. Almost any victories that have been achieved for the oppressed have been achieved through direct action and campaigns, not through elections.

Government is synonymous with the capitalist class; they both form the ruling elite. It is a liberal fallacy to view the world as a struggle between government and business, when in actual fact they represent the same elite group of people which have passed through the filters of capital (electoral funding, money for a Harvard education etc.). You cannot get elected without the support of Big Business, and your corporation can't function properly without the state protecting your property through police and the justice system.

And the working class in a socialist sense doesn't solely consist of factory workers. Service workers also produce value without having control of the means of production, and therefore also deserve to manage their own affairs in an egalitarian manner.

[sattvika]

Oh hai guyz. I are Commerce [50% Economics, 25% Accounting, 25% Finance] student at top skule in home country.

Right off the bat, it's all bullshit. IT'S ALL BULLSHIT. Trust me, I study this bullshit daily, not because I want to (anymore), but because I have to to get that banking job lined up for me (I'm training to be an investment banker/economist/chartered accountant at the very least).

It's not science, call it a social science if you want, I personally call it pseudo/junk science. There's a thing in Economics called the "Law of Demand," stating that as prices increase, quantity purchased drops. I can name many scenarios in which that doesn't hold. Example: few years ago, Trump wasn't selling condos at one of his towers, his advisers said "sir, you should lower prices" Trump was like "FUCK THAT SHIT WE'RE GONNA JACK EM UP," jacked up the prices, and people started buying. Where's your "law" now? In a REAL science, like Physics or Chemistry, laws hold no matter what. I throw a ball into the air, it comes down. Hell, the Pythagorean Theorem has been around for thousands of years, works everywhere, and mathematicians are STILL cautiously calling it a "theorem" and not a "law." Don't even get me started on consumer theory or macroeconomics. In neoclassical consumer theory, there's a concept called "utility maximization." Basically, there exist bundles of goods (Bundle A composed of F units of good X, G units of good Y, etc.), and we have theories on what consumers will choose. In my class, we measure people's happiness(mathematically) using a unit called "utils." Why yes Horatio, consuming Bundle A consisting of 3 bananas and 4 apples will yield 247 utils of happiness, but consuming Bundle B (consisting of 5 bananas and 1 apple) will actually yield 298 utils of happiness, so my utility is indeed maximized by purchasing Bundle B. Does that sound like bullshit to you? Well, that's what we were doing in class all year.

That was economics. How about accounting...sounds impressive, refined and "trustworthy," doesn't it? It might conjure images of exact numbers, specific amounts, precise quantities of money. NOTHING COULD BE FURTHER FROM THE TRUTH. One of the first things we're taught - valuation methods and amortization procedures. What do I mean by valuation methods? Well, right this moment I just glanced at my PlayStation 3. I bought it for $300. That would be its "historical cost." I can call up my drunk friend right now, who's a certified appraiser of electronic devices, and he can value it at $450, for whatever reason, and post that number under "assets" somewhere where shareholders and investors can clearly see it. Alternatively, I can decide to deduct amortization - how much "wear and tear" is believed to have occurred. Using the accelerated method, I can deduce that the console is almost dead, value it at $100, and send that number to the government, paying less tax. Using the straight line method, I can say that the console will last 5 years, have no residual value, and deduct $60 a year from it, giving me a completely different value. The point I'm trying to make is, I can assign this thing almost any value I want, make it official on the books, and pass an audit if I can explain my judgement/know the auditors. There are also differences between entire streams of accounting - "Financial Accounting" is one set of rules that accountants use to prepare documents for shareholders/investors/the financial community, "Managerial Accounting" is what accountants use for "internal purposes," and set of numbers different from either of those can be submitted to the government for income taxes purposes. Once you begin to grasp the profound implications of such a farcical system, suddenly the accounting "scandals" such as Enron, WorldCom, and a thousand others make infinitely more sense.

Finally, finance. Just as bullshit as the other two. A central concept is risk. Risk is correlated to return and measured in "standard deviations" - the likelihood of a particular scenario/particular return to occur. Matrices are constructed and risk is inferred from a probability of events. For example, I can say that a stock will return -15% if the economy worsens slightly, and then assign a probability of 40% to the possibility of the economy worsening slightly. Whoa, where did I get that 40%?? I pulled it out of my ass, because there's no fucking way of knowing what the economy will do tomorrow let alone six months from now, no matter how much those dipshits who sit in their glass towers get paid to claim the contrary.

Anyways, that was three relatively short paragraphs on the utter inanity of the entire "financial" "system." It would be greatly entertaining otherwise, but seeing how much power and influence this parasitic sector wields over the world's citizens and resources, I actually find it downright terrifying, so much so that I am now double-majoring in something actually productive (engineering) and teaching myself programming/IT stuff on my spare time.

The takeaway is, when you look up at those towering, magnificent skyscrapers in any major city and realize financial institutions occupy the majority of them, you should also know that they are staffed by people who know nothing, studied bullshit for four years at school, and are now running the world based on theories devoid of substance and constructs designed to accelerate the accumulation of wealth towards the top 0.1% of humanity.

[ZombieRothbard]

Marx imo is JUST as significant as Adam Smith.

Considering the fact that I consider Smith to be a proto-marxist, I can see why you would think that.

[ZombieRothbard]

Oh hai guyz. I are Commerce [50% Economics, 25% Accounting, 25% Finance] student at top skule in home country.

Right off the bat, it's all bullshit. IT'S ALL BULLSHIT. Trust me, I study this bullshit daily, not because I want to (anymore), but because I have to to get that banking job lined up for me (I'm training to be an investment banker/economist/chartered accountant at the very least).

It's not science, call it a social science if you want, I personally call it pseudo/junk science. There's a thing in Economics called the "Law of Demand," stating that as prices increase, quantity purchased drops. I can name many scenarios in which that doesn't hold. Example: few years ago, Trump wasn't selling condos at one of his towers, his advisers said "sir, you should lower prices" Trump was like "FUCK THAT SHIT WE'RE GONNA JACK EM UP," jacked up the prices, and people started buying. Where's your "law" now? In a REAL science, like Physics or Chemistry, laws hold no matter what. I throw a ball into the air, it comes down. Hell, the Pythagorean Theorem has been around for thousands of years, works everywhere, and mathematicians are STILL cautiously calling it a "theorem" and not a "law." Don't even get me started on consumer theory or macroeconomics. In neoclassical consumer theory, there's a concept called "utility maximization." Basically, there exist bundles of goods (Bundle A composed of F units of good X, G units of good Y, etc.), and we have theories on what consumers will choose. In my class, we measure people's happiness(mathematically) using a unit called "utils." Why yes Horatio, consuming Bundle A consisting of 3 bananas and 4 apples will yield 247 utils of happiness, but consuming Bundle B (consisting of 5 bananas and 1 apple) will actually yield 298 utils of happiness, so my utility is indeed maximized by purchasing Bundle B. Does that sound like bullshit to you? Well, that's what we were doing in class all year.

That was economics. How about accounting...sounds impressive, refined and "trustworthy," doesn't it? It might conjure images of exact numbers, specific amounts, precise quantities of money. NOTHING COULD BE FURTHER FROM THE TRUTH. One of the first things we're taught - valuation methods and amortization procedures. What do I mean by valuation methods? Well, right this moment I just glanced at my PlayStation 3. I bought it for $300. That would be its "historical cost." I can call up my drunk friend right now, who's a certified appraiser of electronic devices, and he can value it at $450, for whatever reason, and post that number under "assets" somewhere where shareholders and investors can clearly see it. Alternatively, I can decide to deduct amortization - how much "wear and tear" is believed to have occurred. Using the accelerated method, I can deduce that the console is almost dead, value it at $100, and send that number to the government, paying less tax. Using the straight line method, I can say that the console will last 5 years, have no residual value, and deduct $60 a year from it, giving me a completely different value. The point I'm trying to make is, I can assign this thing almost any value I want, make it official on the books, and pass an audit if I can explain my judgement/know the auditors. There are also differences between entire streams of accounting - "Financial Accounting" is one set of rules that accountants use to prepare documents for shareholders/investors/the financial community, "Managerial Accounting" is what accountants use for "internal purposes," and set of numbers different from either of those can be submitted to the government for income taxes purposes. Once you begin to grasp the profound implications of such a farcical system, suddenly the accounting "scandals" such as Enron, WorldCom, and a thousand others make infinitely more sense.

Finally, finance. Just as bullshit as the other two. A central concept is risk. Risk is correlated to return and measured in "standard deviations" - the likelihood of a particular scenario/particular return to occur. Matrices are constructed and risk is inferred from a probability of events. For example, I can say that a stock will return -15% if the economy worsens slightly, and then assign a probability of 40% to the possibility of the economy worsening slightly. Whoa, where did I get that 40%?? I pulled it out of my ass, because there's no fucking way of knowing what the economy will do tomorrow let alone six months from now, no matter how much those dipshits who sit in their glass towers get paid to claim the contrary.

Anyways, that was three relatively short paragraphs on the utter inanity of the entire "financial" "system." It would be greatly entertaining otherwise, but seeing how much power and influence this parasitic sector wields over the world's citizens and resources, I actually find it downright terrifying, so much so that I am now double-majoring in something actually productive (engineering) and teaching myself programming/IT stuff on my spare time.

The takeaway is, when you look up at those towering, magnificent skyscrapers in any major city and realize financial institutions occupy the majority of them, you should also know that they are staffed by people who know nothing, studied bullshit for four years at school, and are now running the world based on theories devoid of substance and constructs designed to accelerate the accumulation of wealth towards the top 0.1% of humanity.


www.mises.org

Welcome

[sattvika]

^ lol, I've read at least a quarter of the crap here

ht tp : / /mises . org/Books/

Some of it makes sense, some of it doesn't. Which is good, I guess, because neoclassical economics makes no sense at all. I think I'm just going to try picking and blending schools

[Skooma Addict]

Oh hai guyz. I are Commerce [50% Economics, 25% Accounting, 25% Finance] student at top skule in home country.

Right off the bat, it's all bullshit. IT'S ALL BULLSHIT. Trust me, I study this bullshit daily, not because I want to (anymore), but because I have to to get that banking job lined up for me (I'm training to be an investment banker/economist/chartered accountant at the very least).

It's not science, call it a social science if you want, I personally call it pseudo/junk science. There's a thing in Economics called the "Law of Demand," stating that as prices increase, quantity purchased drops. I can name many scenarios in which that doesn't hold. Example: few years ago, Trump wasn't selling condos at one of his towers, his advisers said "sir, you should lower prices" Trump was like "FUCK THAT SHIT WE'RE GONNA JACK EM UP," jacked up the prices, and people started buying. Where's your "law" now? In a REAL science, like Physics or Chemistry, laws hold no matter what. I throw a ball into the air, it comes down. Hell, the Pythagorean Theorem has been around for thousands of years, works everywhere, and mathematicians are STILL cautiously calling it a "theorem" and not a "law." Don't even get me started on consumer theory or macroeconomics. In neoclassical consumer theory, there's a concept called "utility maximization." Basically, there exist bundles of goods (Bundle A composed of F units of good X, G units of good Y, etc.), and we have theories on what consumers will choose. In my class, we measure people's happiness(mathematically) using a unit called "utils." Why yes Horatio, consuming Bundle A consisting of 3 bananas and 4 apples will yield 247 utils of happiness, but consuming Bundle B (consisting of 5 bananas and 1 apple) will actually yield 298 utils of happiness, so my utility is indeed maximized by purchasing Bundle B. Does that sound like bullshit to you? Well, that's what we were doing in class all year.

That was economics. How about accounting...sounds impressive, refined and "trustworthy," doesn't it? It might conjure images of exact numbers, specific amounts, precise quantities of money. NOTHING COULD BE FURTHER FROM THE TRUTH. One of the first things we're taught - valuation methods and amortization procedures. What do I mean by valuation methods? Well, right this moment I just glanced at my PlayStation 3. I bought it for $300. That would be its "historical cost." I can call up my drunk friend right now, who's a certified appraiser of electronic devices, and he can value it at $450, for whatever reason, and post that number under "assets" somewhere where shareholders and investors can clearly see it. Alternatively, I can decide to deduct amortization - how much "wear and tear" is believed to have occurred. Using the accelerated method, I can deduce that the console is almost dead, value it at $100, and send that number to the government, paying less tax. Using the straight line method, I can say that the console will last 5 years, have no residual value, and deduct $60 a year from it, giving me a completely different value. The point I'm trying to make is, I can assign this thing almost any value I want, make it official on the books, and pass an audit if I can explain my judgement/know the auditors. There are also differences between entire streams of accounting - "Financial Accounting" is one set of rules that accountants use to prepare documents for shareholders/investors/the financial community, "Managerial Accounting" is what accountants use for "internal purposes," and set of numbers different from either of those can be submitted to the government for income taxes purposes. Once you begin to grasp the profound implications of such a farcical system, suddenly the accounting "scandals" such as Enron, WorldCom, and a thousand others make infinitely more sense.

Finally, finance. Just as bullshit as the other two. A central concept is risk. Risk is correlated to return and measured in "standard deviations" - the likelihood of a particular scenario/particular return to occur. Matrices are constructed and risk is inferred from a probability of events. For example, I can say that a stock will return -15% if the economy worsens slightly, and then assign a probability of 40% to the possibility of the economy worsening slightly. Whoa, where did I get that 40%?? I pulled it out of my ass, because there's no fucking way of knowing what the economy will do tomorrow let alone six months from now, no matter how much those dipshits who sit in their glass towers get paid to claim the contrary.

Anyways, that was three relatively short paragraphs on the utter inanity of the entire "financial" "system." It would be greatly entertaining otherwise, but seeing how much power and influence this parasitic sector wields over the world's citizens and resources, I actually find it downright terrifying, so much so that I am now double-majoring in something actually productive (engineering) and teaching myself programming/IT stuff on my spare time.

The takeaway is, when you look up at those towering, magnificent skyscrapers in any major city and realize financial institutions occupy the majority of them, you should also know that they are staffed by people who know nothing, studied bullshit for four years at school, and are now running the world based on theories devoid of substance and constructs designed to accelerate the accumulation of wealth towards the top 0.1% of humanity.

Should have chosen something more specialized.

[JustMovement]

u could join the international proleterian revolutionary movement. you kno for the laughs

[Revolution starts with U]

www.mises.org (http://www.mises.org)

Welcome

You really think in a free market profit inflating wonderkids won't be in high demand? I like to call it the "it won't happen to me" axiom :D
There's a new book out, I haven't read it. But it says that Bernie Madoff's clients weren't coming to hijm for a quick buck. His returns were usually lower than many competitors. He was attracting clients for his security. He always made money.
Damned if you want a quick buck, damned if you don't.

[Judicator]

So what if the taxation under Gore would have been slightly more in favor of the working class when compared to Bush: both would have done their utmost to defend the current oppressive system.

As far as the hierarchy and power structure goes, Gore and Bush wouldn't have changed shit. Even for gays and atheists electoral politics have only had a limited effect. Acceptance of gays or atheists is a vital matter of culture, which is built from the ground up by individuals, and cannot really be influenced by the state. Almost any victories that have been achieved for the oppressed have been achieved through direct action and campaigns, not through elections.

Government is synonymous with the capitalist class; they both form the ruling elite. It is a liberal fallacy to view the world as a struggle between government and business, when in actual fact they represent the same elite group of people which have passed through the filters of capital (electoral funding, money for a Harvard education etc.). You cannot get elected without the support of Big Business, and your corporation can't function properly without the state protecting your property through police and the justice system.

And the working class in a socialist sense doesn't solely consist of factory workers. Service workers also produce value without having control of the means of production, and therefore also deserve to manage their own affairs in an egalitarian manner.

They aren't exactly the same, then. Over time, if you look at the cumulative wealth transfer policies, there's a world of difference for working class people - minimum wages, OSHA, child labor laws, public education, social security, welfare, and the list goes on. They would be a lot poorer without these things.

Cultural acceptance is different from legal acceptance - many forms of speech are culturally unacceptable but legal. Politicians can influence make laws to the benefit of gays and atheists.

I think liberals are right in the sense that on the margin, it is a struggle. If tax rates fall, business usually benefits (since rule of law will continue), while if they increase, business usually suffers. A lot of things will be cut to the benefit of business before rule of law goes out the window.

Fair point on service workers.

[RGacky3]

Wages are going up in China. China's GDP has increased 8-10% every year for a couple decades; while most of the benefit accrued to urban areas, the farmers can still do what they've been doing for thousands of years.


Well no they can't because farmers cannot compete with corporate farms.

Anyway, NO SHIT Chinas GDP has increased, its gonnen a HUGE flow of outside investment and a capital influx, but how much of that is going to the actual workers? Or the populous of China? Thats the point.



Up to a point? Really? So you think once world GDP reaches a certain magic number, say 200 trillion, it will just abruptly stop?


Since around the 1970s the economies growth has been more and more so made of bubbles, growth not based on real markets, but more financial games. Everytime the bubble bursts its worse, because its bigger. I think we are at a point right now where actual market growth is definately lower than 2%, yet markets demand a 3% growth, what makes that up is bubbles, which when they burst has a ripple effect accross the economy.

The next crash is gonna be much worse than this one, (and it will come before this one actually recovers for most people), and it will get to a point to where its obvious that Capitalism simply does'nt work.

Even masssiave government spending, wars, or welfare states don't stop it, they just delay it.


Exactly the same? I doubt Gore would have passed the tax cuts, to name one policy.

Minorities, gays, and atheists are over half of the population. Working class, defined as factory workers, is something like 10-20% of the US population today, and you're saying they matter more?

Well clinton did, and he deregulated the markets.

I'm talking economic policy, he probably would have passed tax cuts.

Working class is not defined as factory workers BY ANYONE, they are defined as people who's main source of income is a wage.

[Judicator]

Well no they can't because farmers cannot compete with corporate farms.

Anyway, NO SHIT Chinas GDP has increased, its gonnen a HUGE flow of outside investment and a capital influx, but how much of that is going to the actual workers? Or the populous of China? Thats the point.


Farmers can just eat what they produce, or switch to producing something they eat. Food prices haven't been falling much, despite the best efforts of corporate farms.

Presumably, just as in the US, nearly 100% of China's labor force was employed in agriculture. Many of those people, formerly farm workers, are now in the city making much more.



Since around the 1970s the economies growth has been more and more so made of bubbles, growth not based on real markets, but more financial games. Everytime the bubble bursts its worse, because its bigger. I think we are at a point right now where actual market growth is definately lower than 2%, yet markets demand a 3% growth, what makes that up is bubbles, which when they burst has a ripple effect accross the economy.


Okay, so we're still growing at 2%, but the market thinks we are growing at 3% and every decade or so there's a correction. How is 2% growth a bad thing? If capitalism can grow at 2% forever, I'll take it.

Also, where's the evidence bubbles are getting larger (versus say commodity driven bubbles in the 1900s or something like that). Were Marxists saying "the next crash is gonna be worse" after the Great Depression?



Working class is not defined as factory workers BY ANYONE, they are defined as people who's main source of income is a wage.


You can define it in many ways, and it is debateable, but:

"As with many terms describing social class, working class is defined and used in many different ways. When used non-academically, it typically refers to a section of society dependent on physical labor, especially when compensated with an hourly wage. Its use in academic discourse is contentious, especially following the decline of manual labor in postindustrial societies. Some academics question the usefulness of the concept of a working class." (from wiki "working class")

Also, a person with $2 million in assets making 5% and a $250,000 income is a worker?

[RGacky3]

Farmers can just eat what they produce, or switch to producing something they eat. Food prices haven't been falling much, despite the best efforts of corporate farms.


Farmers cannot just eat what they produce, a statement like that shows bleeds of ignorance.

Corporate farms DO NOT WNAT falling food prices overall, infact food prices get inflated due to speculation, sometimes they want food prices to drop in specific areas.

But anyway, are you claiming, that in China Corporate farms are not overtaking local farmers? If you want to make that rediculous claim make it and then we'll talk about it.


Presumably, just as in the US, nearly 100% of China's labor force was employed in agriculture. Many of those people, formerly farm workers, are now in the city making much more.


Thats irrelivent to the point, HOW MUCH OF THE WEALTH IS GOING TO THEM??? thats the question, in ancient rome SLAVES were making a lot too, that does'nt mean they saw the benefits.


Okay, so we're still growing at 2%, but the market thinks we are growing at 3% and every decade or so there's a correction. How is 2% growth a bad thing? If capitalism can grow at 2% forever, I'll take it.


Capitalism needs about a 3% growth to be healthy (i.e. for conditions overall to be getting bette rand not worse), the "correction" your talking about is a burst buble and an economic collapse, and nothing gets corrected the internal contradictions just shift around.

And no Capitalism cannot grow at 2% forever, thats why more and more of it is just bubble growth and financial games growth.


Also, where's the evidence bubbles are getting larger (versus say commodity driven bubbles in the 1900s or something like that). Were Marxists saying "the next crash is gonna be worse" after the Great Depression?


Marxists were saying that, and marxists have been saying the whole time that Capitalism never fixed the internal contradictions they just patched them up and moved them around.

The evidence bubbles are getting larger? Do you want me to get numbers on all the Credit Default Swaps, CDOs and other derivatives involved in the mortgage crash? The derivatives market is many many times larger than the WORLD GDP, I'd say thats bigger than previous bubbles.


You can define it in many ways, and it is debateable, but:

"As with many terms describing social class, working class is defined and used in many different ways. When used non-academically, it typically refers to a section of society dependent on physical labor, especially when compensated with an hourly wage. Its use in academic discourse is contentious, especially following the decline of manual labor in postindustrial societies. Some academics question the usefulness of the concept of a working class." (from wiki "working class")

Also, a person with $2 million in assets making 5% and a $250,000 income is a worker?

Well, in that case, not really, because his livelyhood is not dependant on his labor, either way, this whole train of thought is irrelivant to the discussion.

[Dean]

Who says that? Are you claiming that if growth is negative for a few years, Capitalism "stops working" (whatever that means)?
The capitalist model ceases to provide value for the owners of capital when it is not expansive. In such a state, investment in capital is discouraged by negative returns - so production seizes up. For capitalism to work - that is to use the means of production - it does indeed have to expand.


Teaching Marx would be a disservice to students who are paying thousands of dollars or taking out student loans. In my opinion undergrad econ should be oriented towards providing a more practical education which can be applied to the workforce. Marxist econ can be saved for graduate school.

Marxist Economics are heavily involved in accounting; for this reason, Marx is credited as expanding interest in how the accounting process affects capitalist production - not only in general, but specifically for capitalists themselves. It is also valuable for being more economical with your personal finance.

The economics course I took was specifically trying to prove how free-markets are always the best option. That isn't very applicable to personal finance, but understanding how the division of labor helps speed up tasks can be applied to your personal economy (I read some econ teacher's blog recently that made a similar point, and spoke of doing many similar tasks at once to save time).

I get the distinct sense that you haven't read Marx to claim that it is less applicable than other common economic theories. If nothing else, introductory courses should discuss Smith/Ricardian/Marx theories, including the LTV and surplus-value theories.

[Skooma Addict]

Marxist Economics are heavily involved in accounting; for this reason, Marx is credited as expanding interest in how the accounting process affects capitalist production - not only in general, but specifically for capitalists themselves. It is also valuable for being more economical with your personal finance.

Marxist economics are not involved in accounting whatsoever, let alone heavily. Very, very little econ is involved in accounting.


The economics course I took was specifically trying to prove how free-markets are always the best option. That isn't very applicable to personal finance, but understanding how the division of labor helps speed up tasks can be applied to your personal economy (I read some econ teacher's blog recently that made a similar point, and spoke of doing many similar tasks at once to save time).Econ in not very applicable to anything really. That is why people always suggest to double major when considering econ.


I get the distinct sense that you haven't read Marx to claim that it is less applicable than other common economic theories. If nothing else, introductory courses should discuss Smith/Ricardian/Marx theories, including the LTV and surplus-value theories. Why would students learn economics which is considered discredited in an intro class? That would just be confusing. If someone wants to learn about Marx, then there should be a separate class for that. Or if it is going to be discussed in an intro class, it should only be looked at briefly.

[Kiev Communard]

Why would students learn economics which is considered discredited in an intro class? That would just be confusing. If someone wants to learn about Marx, then there should be a separate class for that. Or if it is going to be discussed in an intro class, it should only be looked at briefly.

Considering the fact that mainstream neoclassical economics is discredited by the events each and every time there is a major economic crisis (which would be impossible under their unrealistic "perfect competition" scheme), yet continues to be viewed as a sort of economic Holy Gospel, I don't think your appeal to the subjective perception of what is discredited and what is not holds any truth here. If anything, the same point might have been applied to the heliocentric theory in, say, the 16th century by some Jesuit scholars (who were pretty much mainstream then), but this bias would not have changed anything on real relevance of this or another theory.

[Klaatu]

Most of these college or university classes (in the united states) have a clear Bias, I remember first day of a buisiness class the professor said "Government is the wealth CONFISCATOR, and buisiness is the wealth CREATOR, it is always that way." My first thought was "what about the post office?" Then you have economics classes where the options are "free markets" or "central control," and market equilibrium is always seen as where markets move and that the equilibrium is a good thing for everyone.

If you study economics you'll see none of that stuff makes real sense, what things have they taught you in economics or buisiness classes that you've come to learn later were just capitalist propeganda.

To say that private business ALWAYS creates wealth is simply not true.
Consider gambling. Consider banking hedge-funds. NO WEALTH IS CREATED AT ALL.

To say that government ALWAYS "confiscates" wealth is not true either. The word "confiscate" is a very poor word choice anyway,
considering that paying for government services is essential: Road-building, fire fighters, environment protection, etc

Now consider public schoolteachers: they "manufacture" students' knowledge. Consider police: they "manufacture" public safety.
It may seem strange to say that police and teachers "manufacture" something, but that is exactly what they do.
They manufacture a tangible and important service.

That being said, the "expert-opinion" of that college instructor has been turned right on it's head.
This just goes to show what narrow-minded thinkers Right-Wing people are: not capable of an original thought!

[ZombieRothbard]

I get the distinct sense that you haven't read Marx to claim that it is less applicable than other common economic theories. If nothing else, introductory courses should discuss Smith/Ricardian/Marx theories, including the LTV and surplus-value theories.

Smith held the LTV because he was a Calvinist and couldn't figure out why the hell subjectivity in pricing existed when it contradicted his religious views that things like diamonds and luxury items were immoral or useless. It actually sounds quite a bit like Marx, who held his own religious views about why price subjectivity shouldn't exist, as it is immoral to "exploit labor" or something like that.

[Dean]

Why would students learn economics which is considered discredited in an intro class?
You keep citing that it is "discredited" but that has nothing to do with the argument we are making. WE neither think that Marxism has been discredited in general, nor have you provided even a modicum of example as to what has been considered discredited, nor why our argument should follow what these nameless authorities consider.


That would just be confusing. If someone wants to learn about Marx, then there should be a separate class for that. Or if it is going to be discussed in an intro class, it should only be looked at briefly.
Many of Marx's theories are not unique to him; indeed, most of the commonly known ones were prevalent before Marx (surplus value and labor value) and confront issues which are not otherwise confronted in economics. Introductory courses should introduce the different answers to different questions that are common, which is what Marxist theories do.

Indeed, the same courses could discuss Marxist theories without even referencing or mentioning Marx or socialist theoreticians. This is because so much of what he discussed and argued was widely appreciated in academia at the time, and among different tendencies. It is foolish to discuss Adam Smith, Ricardo, Say, et. al. without mentioning Marx, however, and that is what I and some others are criticizing here.

Your argument that Marx is considered discredited is tantamount to saying "well they don't teach Marx cause they don't believe in Marx." No shit? The only other possibility is that you think academia is correct in dismissing Marx. Of course, I've never seen a modicum of example given for this belief from you.

[Dean]

Marxist economics are not involved in accounting whatsoever, let alone heavily. Very, very little econ is involved in accounting.

Sure?


NOWADAYS ACCOUNTING and economics departments are bastions of right-wing free-market thinking. So to have socialist or Marxist views can make you feel left out and very confused. It can be very hard for a socialist student to work out what parts of their course material is neutral theory, what parts are proven facts and what parts are right-wing ideology.However, there are a group of accounting lecturers worldwide that hold to what is termed "critical perspectives" thinking by the mainstream. Many of these are orthodox Marxists. For example the European Critical Accounting Symposium, which was held in Glasgow in July 2007, was attended by 30 left-wing accounting lecturers from around the world.


Some technicals:





Many recent accounting standards have moved towards Fair Value Accounting and an emphasis on the Balance Sheet rather than the Income (Profit and Loss) Statement.
Implicit in the Balance Sheet View is the theory that asset value is equal to the present value of expected future cash flows rather than historical cost or replacement cost.
This is reflected in the Statement of Accounting Concepts (SAC4) in the old Australian Conceptual Framework, in which expenses and revenues were defined as simply changes in assets or liabilities without any reference to an underlying earnings process or production process.
These definitions are dangerous because they lead people to believe that revenues, and hence profit, can be created independently of any production process.
This is unacceptable for a Marxist holding to the labour theory of value (LTV). Mainstream theory sees value as "naturally" flowing from factors of production. In other words, large-scale owners of capital are wealthy because they are somehow more "productive".
Marxists reject this argument. Instead, Marx used the LTV to explain how the collective labour of workers produced an economic surplus that was then taken by capitalists and realised as profit at the point of sale.
Even most practising accountants hold to some form of LTV-although it is rarely expressed as such.
As a result SAC4 was rejected by most accountants on the grounds that it was too divorced from current practice.
So principles of revenue recognition and matching in traditional accounting are completely consistent with Marx's writings on the production process in the three volumes of Capital.


http://www.socialistworker.org.au/573/all-in-the-numbers-marxism-and-critical-accounting/

[Dean]

Smith held the LTV because he was a Calvinist and couldn't figure out why the hell subjectivity in pricing existed when it contradicted his religious views that things like diamonds and luxury items were immoral or useless. It actually sounds quite a bit like Marx, who held his own religious views about why price subjectivity shouldn't exist, as it is immoral to "exploit labor" or something like that.

No, they believe in the LTV because it was the only material change that accounted for value changes in material.

Your attempt to paint these thinkers as blindly moralist merely betrays your own pedantic need to redefine things on a moral basis. At least in Marx's case, his theory of value was based on an expansion of Aristotle's framework. Smith did spend a lot of time on morality, but I don't see where it damaged his interpretation of economics - and certainly not on this issue.

[Judicator]

Farmers cannot just eat what they produce, a statement like that shows bleeds of ignorance.

Corporate farms DO NOT WNAT falling food prices overall, infact food prices get inflated due to speculation, sometimes they want food prices to drop in specific areas.

But anyway, are you claiming, that in China Corporate farms are not overtaking local farmers? If you want to make that rediculous claim make it and then we'll talk about it.



Subsistence farms are very much alive in China. Those that want to continue subsistence farming can just keep their land. I'm not surprised that they are being overtaken by (more efficient) corporate farmers.

Corporate farms don't want falling food prices, but it's a natural consequence of their higher productivity.



Thats irrelivent to the point, HOW MUCH OF THE WEALTH IS GOING TO THEM??? thats the question, in ancient rome SLAVES were making a lot too, that does'nt mean they saw the benefits.



Who cares about % of wealth? Absolute real income increase are what matter, and the US poor today are much much richer than the US poor farmers of 1800. I'm better off making $20,000 while everyone else is making $200,000 than I am making $10,000 along with everyone else (real dollars of course).



Capitalism needs about a 3% growth to be healthy (i.e. for conditions overall to be getting bette rand not worse), the "correction" your talking about is a burst buble and an economic collapse, and nothing gets corrected the internal contradictions just shift around.


How is 2% more not better? The market only corrects when you expect 3% and realize it's 2%. Financial assets will drop in value, but national income is still increasing at 2% a year.


The evidence bubbles are getting larger? Do you want me to get numbers on all the Credit Default Swaps, CDOs and other derivatives involved in the mortgage crash? The derivatives market is many many times larger than the WORLD GDP, I'd say thats bigger than previous bubbles.

No, I want you to provide evidence that the size of market corrections (as a fraction of GDP) has consistently gotten larger since the dawn of capitalism.

Bubbles following the great depression obviously got smaller. Does Marx's predictoin only apply from 1870 onwards?

On the CDO point, look up notional value.



The capitalist model ceases to provide value for the owners of capital when it is not expansive. In such a state, investment in capital is discouraged by negative returns - so production seizes up. For capitalism to work - that is to use the means of production - it does indeed have to expand.


Can you clarify what you mean by "expansive."

[RichardAWilson]

Where the hell are you getting that bubbles have gotten smaller? Bubbles were smaller during the Post-War Boom (I.e. During the Keynesian Woods System).

However, beginning in 1971, the world changed. The Woods System had been rejected because America broke with the Standard. America couldn't finance Vietnam and the infamous Arms Industrial Complex without resorting to the printing press.

Global Financial Crises, which were uncommon during the Post-War Boom, would soon become a common feature of Anglo-Saxon Capitalism. (I.e. Mexico, Brazil, Argentina, the Internet Stock Mania, Long-Term Capital Management, the Asian Financial Crisis, the International Housing Bubble, the European Crisis, Japan's Land and Corporate Stock Bubble).

The bubbles are getting larger and larger. The .com bubble was the largest financial bubble since before the Great-Depression and this housing and financial bubble was even larger than the .com bubble.

http://www.ritholtz.com/blog/wp-content/uploads/2011/02/2-18-11-Market-Cap-1.gif

http://static8.businessinsider.com/~~/f?id=49a02ccc796c7afa009b4708&maxX=620&maxY=474

As for so-called "economic growth," America's growth has been unsustainable. Had America not had a housing bubble and large fiscal deficits, the U.S. economy wouldn't have grown during the Bush Administration and we would have faced a net job loss during the decade. The same can be said for Clinton's Go-Go Economy.

U.S. Growth was below the long-term average until 1998. The IT Stock Bubble and the rise of the housing bubble is what saved Clinton.

[RichardAWilson]

I'm awaiting an answer on this. If you're going to argue with this, you better provide a damn interesting case.

[RichardAWilson]

You're right that America's poor are better than in 1870. However, they're poorer than in 1970. Since 1970, the inflation-adjusted (purchasing power) of the minimum wage has fallen. One in four Americans is making a wage that's close to the minimum.

(Among those are Certified Nursing Assistants, which has been one of our nation's fastest growing occupations.)

Minimum Wage + EITC

http://epionline.org/images/mw_statistics_annual_r1_c2.gif
In 1969, before the EITC even existed, the minimum wage provided a purchasing power of $8.97. Furthermore, since Americans that don't have children receive less in EITC than households with children, young Americans are often at a disadvantage. When a college tuition is more expensive than ever before, the income of our youth is just as important as the income for single mothers.

U.S. Minimum Wage as % of Poverty Level Income

http://oregonstate.edu/instruct/anth484/minperpov.jpg

[Judicator]

I'm awaiting an answer on this. If you're going to argue with this, you better provide a damn interesting case.

Which claim are we disputing, that Bubbles have gotten larger since 1970, or that Bubbles have gotten larger since Marx first predicted increasingly large bubbles?


America's growth has been unsustainable. Had America not had a housing bubble and large fiscal deficits, the U.S. economy wouldn't have grown during the Bush Administration and we would have faced a net job loss during the decade. The same can be said for Clinton's Go-Go Economy.

U.S. Growth was below the long-term average until 1998. The IT Stock Bubble and the rise of the housing bubble is what saved Clinton.

If the capitalist economy wasn't sustainble in 1870 I don't know what's going on here:

http://visualecon.wpengine.netdna-cdn.com/wp-content/uploads/2010/11/RealGDP_Log.png

And if growth since 1970 has been so bad, what's happening here???

http://www.wolframalpha.com/input/?i=us+gdp


EDIT:


You're right that America's poor are better than in 1870. However, they're poorer than in 1970. Since 1970, the inflation-adjusted (purchasing power) of the minimum wage has fallen. One in four Americans is making a wage that's close to the minimum.

I wouldn't be surprised if unskilled workers got the shaft since 1970, most of the benefits of growth since 1970 have gonned to skilled workers. However, shouldn't we consider wages + social welfare income? Has THAT also gotten worse?

Although on those % of poverty line statistics I think that may be partly due to the poverty line being moved upwards.

[RichardAWilson]

Once again, U.S. GDP Growth since 1997 has been unsustainable and we're seeing a correction.

GDP Growth will remain sub par for quite a long time. We're seeing the "Muddle Through Economy" of slow growth and high joblessness. We're looking more and more like Japan and Spain.

Marx never imagined Keynesian Economics would emerge and offer solutions to the problems that were common with capitalism. However, as we've seen, Keynesianism was abandoned in the interests of short-sighted profits.

Marx was right that unregulated capitalism would lead to larger bubbles. Circa 1971! Bigger than 1929!

[Judicator]

Once again, U.S. GDP Growth since 1997 has been unsustainable and we're seeing a correction.

GDP Growth will remain sub par for quite a long time. We're seeing the "Muddle Through Economy" of slow growth and high joblessness. We're looking more and more like Japan and Spain.

Marx never imagined Keynesian Economics would emerge and offer solutions to the problems that were common with capitalism. However, as we've seen, Keynesianism was abandoned in the interests of short-sighted profits.

Marx was right that unregulated capitalism would lead to larger bubbles. Circa 1971! Bigger than 1929!

Since 1997? Look at the GDP graph again. There's a blip in 2008 and that's about it. Either way, how does cherry picking 10 year periods prove any point about general economic trends?

I don't how how we look like Japan when Japanese unemployment is 5%.

They abandoned Keynesianism, and look how much government spending will fall!

http://upload.wikimedia.org/wikipedia/commons/5/5c/US_Federal_Outlay_and_GDP_linear_graph.png

[RichardAWilson]

In the absence of debt-driven consumerism and using housing and stocks as an ATM: The U.S. Economy would have been like Japan since even before 1997.


Consumer indebtedness to disposable income rose from under 70% in 1980 to over 130% in 2006.

[RichardAWilson]

Japan has had almost ZERO GROWTH since 1991.


Their jobless rate is lower because they have more regulated labor markets. It's much harder for employers to discharge their associates than in America. WTF GTFO Dude.

[RichardAWilson]

Furthermore, the U.S. Growth Rate has slowed since 1968.

http://www.mckinsey.com/mgi/publications/growth_and_renewal_in_the_us/index.asp



New research by the McKinsey Global Institute finds that, to match the GDP growth of the past 20 years and the rising living standards of past generations, America needs to boost labor productivity growth from 1.7 to 2.3 percent a year.




That’s an acceleration of 34 percent to a rate not seen since the 1960s.

[Judicator]

In the absence of debt-driven consumerism and using housing and stocks as an ATM: The U.S. Economy would have been like Japan since even before 1997.



Evidence?


Furthermore, the U.S. Growth Rate has slowed since 1968.

http://www.mckinsey.com/mgi/publications/growth_and_renewal_in_the_us/index.asp

What a tragedy, positive but slower growth.


Their jobless rate is lower because they have more regulated labor markets. It's much harder for employers to discharge their associates than in America. WTF GTFO Dude.

Firms can still choose not to hire, which would increase jobless rates. Look at how well regulated labor markets are working out for French employment rates.

[IcarusAngel]

How is the continued growth since the 50s, and the fact that depressions have been shorter in duration, evidence of free-market capitalism? That seems to be evidence of corporate capitalism, and more widespread equality.

[RichardAWilson]

Japan has a SHRIKING working age population. Which universe do you come from? As long as Japanese businesses don't downsize, the jobless rate will remain low.

France, on the other hand, maintains a growing working age population, meaning new jobs have to be created.

[RichardAWilson]

Consumer indebtedness to disposable income rose from under 70% in 1980 to over 130% in 2006.


http://chartingtheeconomy.com/wp-content/uploads/2009/06/book4_2637_image004.gif

There's your evidence.



Meanwhile, the U.S. Personal Savings Rate fell from close to 10% in 1980 to 1% in 2006!


http://research.stlouisfed.org/fred2/data/PSAVERT_Max_630_378.png

Consumerism, the .com bubble and the housing bubble have provided unsustainable short-term growth that must now return to the mean.

Meanwhile, we owe trillions of dollars to China, Japan and the Arab World for unsustainable trade deficits. We invested to little in production and too much in financial speculation.

http://graphics8.nytimes.com/images/2009/05/01/business/20090502_CHARTS_GRAPHIC.jpg

I'm sure you haven't read the Age of Turbulence by Sir Alan Greenspan. However, Greenspan discusses these matters in much greater detail than I have time to offer you.

[Judicator]

http://chartingtheeconomy.com/wp-content/uploads/2009/06/book4_2637_image004.gif

There's your evidence.



How is this evidence of the counterfactual claim that we would have been like Japan without the increase in consumer debt? I was mostly looking for evidence for the bolded part of your claim "The U.S. Economy would have been like Japan since even before 1997. "


Meanwhile, we owe trillions of dollars to China, Japan and the Arab World for unsustainable trade deficits. We invested to little in production and too much in financial speculation.

Perhaps, but why worry so much? Exchange rates will move until we are forced to be net exporters.

[RichardAWilson]

Dude, if you can't see how consumer spending has contributed to our economic growth rate, than you're not worth debating because you don't even understand economics. The U.S. Economy grew because consumers borrowed more and more money and began saving less and less. Meanwhile, we weren't producing and were running massive trade and current account deficits with Asia.

If we hadn't borrowed and consumed, our economy wouldn't have grown. I.e. Much like Japan!

Even Warren Buffet became worried and alarmed over the issue, which is the reason he called on Congress to legislate the so-called "Warren Buffet Act" into law, which would have resolved our long-term trade imbalance.

As for Sir Alan Greenspan, you should read his Age of Turbulence.

"Exchange rates will move?" How is that when China maintains a peg to our Dollar?

Japan and Korea are keeping their currencies undervalued for the same reason.

Furthermore, unlike the Europeans, we're addicted to oil. We're running massive trade deficits with Saudi Arabia and Venezuela and we're going to war to secure our longer-term oil supplies. We're sounding more and more like the Roman Empire in that regard.

Here's American Casino Capitalism:

http://education.wallstreetsurvivor.com/images_articles/dot-com_bubble.png

Does it remind you of this?

http://www.antique-wine.com/blog/image.axd?picture=2011%2F2%2FWindMillTulips.jpg

[Judicator]

Dude, if you can't see how consumer spending has contributed to our economic growth rate, than you're not worth debating because you don't even understand economics. The U.S. Economy grew because consumers borrowed more and more money and began saving less and less. Meanwhile, we weren't producing and were running massive trade and current account deficits with Asia.

Even Warren Buffet became worried and alarmed over the issue, which is the reason he called on Congress to legislate the so-called "Warren Buffet Act" into law, which would have resolved our long-term trade imbalance.

As for Sir Alan Greenspan, you should read his Age of Turbulence.

If you can't be bothered to back up your claims, then it's hardly a debate at all. The question is not whether consumer spending has an impact on economic growth, but by how much. You make a very specific claim, that we "would have been like Japan" without it. This would require specific evidence, not just handwaving.

If you want an example of an econ model where consumer spending has minimal impact on growth, just look at http://en.wikipedia.org/wiki/Neoclassical_growth_model


"Exchange rates will move?" How is that when China maintains a peg to our Dollar?

Japan and Korea are keeping their currencies undervalued for the same reason.

Pegs are nominal exchange rate. When they try to maintain a peg for too long they just get inflation...China is seeing 6% now, so clearly real exchange rates are moving already.

[RichardAWilson]

When two-thirds of the economy is consumer driven, I believe the effect is damn large.

[RichardAWilson]

BTW: Your model proves nothing. All it proves is that saving less today means less growth in the future. I happen to agree! However, in the short-term, the model shows that increases in spending (I.e. less saving and more borrowing) can stimulate the economy. America has been doing this for three decades. We've had budget deficits, too much consumer spending, to little personal savings, housing bubbles, stock bubbles and even bond bubbles. Homes became an ATM for a new Hummer and high-class vacations. The budget deficits were designed to further enrich Wall Street with Corporate Welfare, Subsidies, Lower Tax Rates for Hedge Funds and Wars in Iraq).

[Judicator]

When two-thirds of the economy is consumer driven, I believe the effect is damn large.

When it's so difficult to provide evidence for the "obvious" you begin to wonder how obvious it really is.



BTW: Your model proves nothing. All it proves is that saving less today means less growth in the future. I happen to agree! However, in the short-term, the model shows that increases in spending (I.e. less saving and more borrowing) can stimulate the economy. America has been doing this for three decades. We've had budget deficits, too much consumer spending, to little personal savings, housing bubbles, stock bubbles and even bond bubbles. Homes became an ATM for a new Hummer and high-class vacations.

How strange, you say my model proves nothing, and then go on to explain what it proves!

"In neoclassical growth models, the long-run rate of growth is exogenously determined – in other words, it is determined outside of the model. A common prediction of these models is that an economy will always converge towards a steady state rate of growth, which depends only on the rate of technological progress and the rate of labor force growth."

Savings rates are only relevant when the economy is converging to a steady state (e.g. when the Asian Tigers were catching up to the West). They are far less relevant for developed countries.

[RGacky3]

When it's so difficult to provide evidence for the "obvious" you begin to wonder how obvious it really is.


I hav'nt gone through the argument, but are you seriously claiming that consumer spending is'nt a GIANT part of our economy?

A: our trade deficit, we import more than we export, which means that growth is not comming from people in other countries buying stuff .... SO WHERE DOES IT COME FROM?

[Hoipolloi Cassidy]

Just a brief mention, and I'll try to flesh this out as a real review later on.

Yesterday I "visited" the Wirtschaftsmuseum in a run-down area of Vienna. Quote marks because the place was closed, but the Director was getting out of his car and we chatted, so they brought us in and gave us a tour.

Interesting point #1:
"Wirtschaft" translates as "Economics" or "Business" or, probably closest, "The Economy." Already you can see that if it's about "Economics" it's Economics as a practical application, not pulled out of some Economist's butt-hole assuming they have one.

Interesting point #2:
The Wirtschaftsmuseum was founded by Otto Neurath, the guy who was part of the Vienna Circle of philosophers and who had no patience for Wittgenstein, and far too much with Popper (who had a LOT of patience with the likes of F. Hayek.) Its purpose is eminently practical, and set up within a Social-democratic context.

Interesting point #3:
Not that I agreed with a number of the arguments presented (viz., over supply and demand), but that the arguments were presented in such a manner that even a high-school kid might raise questions about them. To give one example: there were two movable displays, side-by-side, one showing how price fluctuates in reverse proportion to supply, the other how price fluctuates in proportion to demand. As I pointed out, there was nothing to suggest that demand fluctuates in proportion to supply or vice-versa. Because the two arguments were presented in visual/statistical form (as opposed to purely verbal) the visitor was left to answer that question for him-/herself. It's a question of less being more.

Interesting point #4:
No wonder, Neurath, who disagreed with Wittgenstein and most of the other theorists of language, developed a system for the presentation of statistical material that was radically new, that was meant to empower the visitor, not just provide him or her with the Party line.

Interesting point #5:
I learned more about business and economics in half-an-hour than most any undergraduate I know. You'd think capitalists would teach their kids as much about business as Social-democrats, no? Maybe there's a reason for that?

Anyhoo. Later.

[RichardAWilson]

Dude, you pull one stinking chart out of your ass and you expect that to be evidence? I've provided you with numerous web links, charts and statistical data. GTFO How about you prove something you said with a source?

Read the entire Article and you'll see the importance of savings in the model. You have to have savings to finance the R&D that leads to technological innovation.

You also have to have the savings to produce and use the technology.

READ: http://en.wikipedia.org/wiki/Golden_rule_savings_rate

America is now running a Negative Net Savings Rate, which means that our "real" economy continues shrinking. However, short-term demand from borrowing and spending can provide short-term growth. Hell, even Austrian Economists agree with this one.

America is in a Catch-22.

[Judicator]

Dude, you pull one stinking chart out of your ass and you expect that to be evidence? I've provided you with numerous web links, charts and statistical data. GTFO How about you prove something you said with a source?

Read the entire Article and you'll see the importance of savings in the model. You have to have savings to finance the R&D that leads to technological innovation.

You also have to have the savings to produce and use the technology.

READ: http://en.wikipedia.org/wiki/Golden_rule_savings_rate

America is now running a Negative Net Savings Rate, which means that our "real" economy continues shrinking. However, short-term demand from borrowing and spending can provide short-term growth. Hell, even Austrian Economists agree with this one.

America is in a Catch-22.

You're linking charts and claiming those are evidence, kind of a double standard when you reject other charts. Go back and look at your posts where you say "there's your evidence" and post a single chart.

If you have a negative net savings rate, you are basically selling assets to fund spending. How does this prohibit economic growth?

The golden savings rule is just a point about how to solve for optimum savings rate. The neoclassical growth model just says that:

"[Under higher savings rates] Initially the economy expands faster, but eventually goes back to the steady state rate of growth which equals n."

In the Solow model technology is exogenous...so your point about saving so R&D is irrelevant.


I hav'nt gone through the argument, but are you seriously claiming that consumer spending is'nt a GIANT part of our economy?

A: our trade deficit, we import more than we export, which means that growth is not comming from people in other countries buying stuff .... SO WHERE DOES IT COME FROM?

I'm claiming consumer spending may not be a major factor in long run growth.

Growth comes from technology.

[RichardAWilson]

Where does technology come from? Answer: Research and Science

How is research financed? Answer: Savings and corporate expenditures (corporate savings)

In a world where no one saved, how would entrepreneurs raise capital?

Venture Capital is, after all, a form of savings.

If you have a total consumption-based economy where everything is consumed and nothing is saved, the capital stock would begin dwindling.

Corporate and individual savings have to match depreciation to maintain the existing capital stock.

In an open-economy, like the United States, national savings can be replaced with foreign savings (I.e. Greenspan noticed this trend. America is financed by too much savings in China and Japan).

This is what Solow's Model showed us: National savings in industrial economies isn't needed because industrial economies can borrow from global financial markets.

For this reason, state policies directed toward increasing the savings rate can be counterproductive. Furthermore, increasing the national savings rate doesn't make much sense in an open-economy.

For those reasons, Solow believed in allowing the markets to determine their own equilibrium.

However, this trend is unsustainable when the borrowed cash is being used for consumer spending instead of productive business spending.

There's a difference between borrowing to purchase a brand new laptop computer for video games and borrowing to purchase a brand new laptop for the new business you have started.

[RichardAWilson]

P.S. I figured that I'd mention that I'm a Business Major and have taken courses in macro and microeconomics. Furthermore, macroeconomics is a personal interest of mine.

[RGacky3]

I'm claiming consumer spending may not be a major factor in long run growth.

Growth comes from technology.

No it does'nt, better efficiency may come from technology, to have actual growth you need more markets. A technology might create room for new markets, but ultimately you need consumers for that.

Growth comes from consumers.

[Judicator]

For those reasons, Solow believed in allowing the markets to determine their own equilibrium.

However, this trend is unsustainable when the borrowed cash is being used for consumer spending instead of productive business spending.

There's a difference between borrowing to purchase a brand new laptop computer for video games and borrowing to purchase a brand new laptop for the new business you have started.

How does it make sense to say a trend is "unsustainable" if it's self correcting?


No it does'nt, better efficiency may come from technology, to have actual growth you need more markets. A technology might create room for new markets, but ultimately you need consumers for that.

Growth comes from consumers.

Consumers are more a byproduct of growth than a cause of it. Efficient production is the only way people can ever be richer than before, and the only way this can happen is with technology.

[RichardAWilson]

How does it make sense to say a trend is "unsustainable" if it's self correcting?


The problem is that it isn't self-correcting. Exchange rate manipulation and differences in taxation have created a global imbalance. China and Japan save too much and America and certain European Countries are borrowing and spending too much.

The European and American Housing Bubbles showed that the borrowed money wasn't being used in a productive manner. The housing bubble was unsustainable and we're suffering from the worst economic downturn since the Great-Depression.

[Judicator]

The problem is that it isn't self-correcting. Exchange rate manipulation and differences in taxation have created a global imbalance. China and Japan save too much and America and certain European Countries are borrowing and spending too much.

The European and American Housing Bubbles showed that the borrowed money wasn't being used in a productive manner. The housing bubble was unsustainable and we're suffering from the worst economic downturn since the Great-Depression.

The savings rate has bounced back significantly to pre-boom averages:

http://research.stlouisfed.org/fred2/data/PSAVERT.txt

[RGacky3]

How does it make sense to say a trend is "unsustainable" if it's self correcting?


If by self-correcting you mean crashed, and then bailed out by the state, then yeah I suppose.


Consumers are more a byproduct of growth than a cause of it. Efficient production is the only way people can ever be richer than before, and the only way this can happen is with technology.

They are a cause of it, you CANNOT grow unless your selling to people, never happened in history that supply preceded demand.

Efficient production makes production better but it does'nt grow the economy unless people are buying what it produces. What it does is lower prices, which somewhat increases consumption, but again, its only there when demand is there, and if that increase in production means less wages and less employment it does'nt lead to growth at all.


The savings rate has bounced back significantly to pre-boom averages:


Because rich people are not investing, because there is no demand.

[RichardAWilson]

The Net National Savings Rate remains negative because federal spending negates the increase in personal savings. The problem is that we're a house of cards and wouldn't be able to survive a serious reduction in the deficit. Meanwhile, we're still borrowing hundreds of billions of dollars from the Chinese and Arabs to finance our trade, fiscal and capital imbalance.

[Judicator]

They are a cause of it, you CANNOT grow unless your selling to people, never happened in history that supply preceded demand.

Efficient production makes production better but it does'nt grow the economy unless people are buying what it produces. What it does is lower prices, which somewhat increases consumption, but again, its only there when demand is there, and if that increase in production means less wages and less employment it does'nt lead to growth at all.



You can't buy something unless somebody is selling. You can't sell something unless somebody is buying. Kind of circular. I don't know what you mean by "supply preceding demand." Do you just mean chronologically? So for example I open a store first, then people come to buy stuff?

Has there ever been a period (measured over decades, rather than the short run) where there were huge productivity gains, but no increases in GDP? People have unlimited wants, so over the long run demand always appears. If you believe demand isn't a foregone conclusion, please provide an example of the above situation (where you have productivity growth in the long run but no GDP increase).



Because rich people are not investing, because there is no demand.


Do you also believe they weren't investing in every other year in that historical dataset?


The Net National Savings Rate remains negative because federal spending negates the increase in personal savings. The problem is that we're a house of cards and wouldn't be able to survive a serious reduction in the deficit. Meanwhile, we're still borrowing hundreds of billions of dollars from the Chinese and Arabs to finance our trade, fiscal and capital imbalance.

Plenty of borrowing is the US govenrment borrowing from the fed, US retirement funds, and so forth. You have to exclude this.

I don't see what will be so difficult to survive about deficit reduction - do you really believe all government spending is so essential that if you cut even $500 billion a year, everything will collapse?

[RichardAWilson]

Foreigners own over 50% of our financial obligations. China alone owns over $2 trillion. Yes, a reduction in spending on that scale would plunge us into a recession.

GDP growth has slowed to 1.3% (annualized). It wouldn't take much for that to turn negative.

[RGacky3]

So basically we are cutting social security to pay China off, so they can make jobs here ....???

It used to be that the US was the buyer and manager and other countires were producers, soon the US won't be any of those.

[RichardAWilson]

America isn't either one. That's the case (now). We're the world's borrower, consumer and debtor. We owe more than anybody else and we spend more than anybody else. Meanwhile, we save less and we produce much less.

[RGacky3]

Soon we're not gonna be the worlds consumer, and if our economy continues to drop we might not be the worlds borrower that much either.

[Judicator]

Foreigners own over 50% of our financial obligations. China alone owns over $2 trillion. Yes, a reduction in spending on that scale would plunge us into a recession.

GDP growth has slowed to 1.3% (annualized). It wouldn't take much for that to turn negative.

The federal reserve still owns about half: http://en.wikipedia.org/wiki/File:Estimated_ownership_of_treasury_securities_by _year.gif probably more with QE.

We have increased spending to a huge percentage of GDP today, while it was a much smaller percentage of GDP in 1900, yet growth today is much lower. Why, if increasing spending doesn't increase long run growth, why whould we expect that reducing spending will reduce growth?

[RichardAWilson]

1. The population growth rate was higher in 1900. Furthermore, economic growth was higher from 1940 through 1970 than it was from 1900 to 1930. (Notice: I'm excluding 1930-1940 for a reason). Technological innovation and labor efficiency have increased more since 1940 than even during the Industrial Revolution. (I.e. NASA, Defense R&D, the National Institutes of Health) Hell, this internet that we're using to debate can be attributed to Defense Research. It would have been too expensive for a single private business to have researched and implemented. These technologies, which have been financed with taxpayer dollars, are often handed over to private businesses to make usable and profitable in the private sector.

http://pubs.aeaweb.org/doi/pdfplus/10.1257/0895330041371286

Disclaimer: I'm not making the claim that efficiency is correlated with public-sector spending.

Wasteful spending, for obvious reasons, won't yield a return. However, investments in human capital (I.e. education) and scientific research will increase longer-term Multifactor Productivity.

2. Like I've said, there are other factors to our current downturn than public spending. We're recovering from the worst financial crisis since the depression. Our economy has been unsustainable since around 1980. (Savings rates have fallen, we've been running large trade and capital deficits, our infrastructure has fallen behind and we've moved from financial bubble to financial bubble.) In Finance, there's a law called "reversion to the mean." America is reverting to the mean.

The question is would the economy be in a worse condition had it not been for the spending? In that regard, even the American Enterprise Institute agrees that federal spending has softened the downturn.

Even with the stimulus spending, federal spending in relation to GDP hasn't increased as much as Conservatives would like us to believe. In relation to GDP, fiscal spending wasn't much higher in 2010 than it was in 1985 (Reagan).

http://krugman.blogs.nytimes.com/2011/07/29/the-truth-about-federal-spending/ (http://krugman.blogs.nytimes.com/2011/07/29/the-truth-about-federal-spending/)

State and local governments were reducing their spending levels even as Washington was increasing federal spending, meaning that net governmental spending has been even more restrained than one would think by following right-wing propaganda.

http://www.bea.gov/newsreleases/international/intinv/intinvnewsrelease.htm

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt