You've riled my ire Archy, now what can we do about it I wonder. My
knowledge of things isn't up to the complexities of economics but the
principles of simple exchange keep making me think we should have a dual
economy: let corporations exist (remove personhood), and establish a
social system (independent of government) to allow people the option to
serve the commonwealth of society. With all the things that need to be
done there is such a high unemployment, people cannot afford property
taxes and various costs, why not let people live and prosper? Perhaps
there isn't enough to go around (sarcasm), or maybe we just need some
balance.
On 6/28/2011 4:13 PM, archytas wrote:
What the isn't is any public dialogue on whether the stuff about law,
freedom, entrepreneurialism, innovation and the motivation of wealth
is the problem.
On Jun 28, 8:32 pm, archytas<[email protected]> wrote:
When you look at GDP figures (not that many do) in the US you see real
wage decline over 30 years yet an increase in consumption (and hence
GDP). Questions obviously arise here on how - the answer is debt
spending - but how did the borrowing arise - wouldn't we expect
lending to fall with less money coming in to pay of debt contracted?
Part of the answer lies in greed and a property bubble created by
this. Loans appeared to be secured against property, but the banks
were fueling speculation to inflate property prices to 'earn'
bonuses. I see little difference in what they did and Deng ordering
'homes' that no one will live in. In a sense we all went into a
command economy. As with the famous Sino-Soviet experiments this was
and still is based on 'elite madness' and false accounting.
I mention habros because a poisoning feature of luxury seems
involved. It's surely all over - just switch on TV. The way we
normally think about running a household just don't apply, though
politicians mug us with this kind of false analogy. The promise in
the last election in the UK was that frontline services would not be
affected by cuts in waste and all the other lies of this kind - the
usual 5 cents in the dollar stuff pace Bob Dole. This never works and
we know it doesn't.
I would guess most people have a notion that GDP is a reflection of
effort and this is the problem. GDP goes up when we buy plastic
Chinese crap or TVs we didn't make on money borrowed against what was
supposed to be the ever rising value of our assets like housing. So
GDP goes up when we simply bubble property prices - usually good for
people owning property. What the banks did in this needs long
investigation and description - but in short they began to make money
make money - something that clearly can't be 'real'. The accounting
here involves governments creating electronic money (now QE) and
lending this at low rates to favoured banks (a surplus of capital
never built on effort) who appeared to be making money hand over
fist. This was really the Ponzi scheme and no more than anything
Madoff was doing. Ponzi schemes pay out not on earnings but with the
new money their lies on performance bring in. The lies are supported
by elaborate maths. I teach the maths and they don't work as claimed,
only reducing risk in margins. The key metaphor is to imagine playing
Monopoly against a banker with a couple of spare sets of money in her
back pocket.
The idea in this is to use capital ore and more effectively (fine) but
it all goes mad when the capital becomes earnings ten years off
treated as though you've made it now. The maths is complicated but
the schemes are not - it's almost like placing bets on all horses and
living it up on the winnings whilst ignoring the losses or inflating
the currency you use to 'account' for them.
What people can't grab is that economics and accounting is like this
anyway - though supposedly under strict rules. Businesses need to
stay alive until the good times when most profit is made. This is
fine until the madness or crooks get in and the idea ceases to be
about the viable business and becomes just profit.
I can build the case in figures but the issue is corruption - a
corruption as endemic as that in Soviet performance management. What
they are telling us is stark. We can't have the public services (who
cares who runs them if they do it properly) to educate kids, look
after old and disabled people and the rest even though we have plenty
of labour to do this - labour in some senses earned through massive
productivity rises in agriculture and manufacturing. Looming over us
is a massive and generally parasitic financial services sector that
matches these productivity gains in size - all of which could be
routinised to a fraction.
When we talk about making an industry efficient we have little problem
with allowing wages to come under international competition and all
the rest, Yet to match this in, say, policing by importing droves of
keen Chinese and sacking our expensive finest - and the very idea of
doing this at the top of banking seems impossible - though all the
skills are comparable.
I suspect the real issues cannot be addressed because most people
adjust to a view of just being cogs in the wheel and feel their sanity
threatened by thoughts of the criminality that has been going on
around them. They look for homely answers like 'blaming profligate
Greeks' (a hospital doctor in Greece gets under half what a lecturer
gets in the UK) and imagining austerity measures will let us save our
way out of the problems. This is not what history tells us - though,
of course, most people know no real history.
What is happening now is history. - it may as well be a re-write of
much imperialist history. I hope war is less on the cards, but I'm
not at all sure. Our ignorance is the real issue - and I suspect this
is ignorance about just how unfair the world is and how massively
irrational our systems are.. It's worse than we are thinking and our
public dialogue allows us to say.
The questions we aren't asking are about what would be left if there
was no more 'international trade' and we got round to making stuff
locally and allowing more global exchange of expertise through virtual
exchange. We aren't broke in such a system and have capital.
My guess is that most of what we call 'work' in the current system is
no such thing - it's neurosis.
On Jun 28, 12:58 pm, Ash<[email protected]> wrote:
So, bullets=100pts, futures=-100TNpts. ;-)
On 6/28/2011 12:07 AM, archytas wrote:
The truth on bullets is you get to eat if you have them and the food
holders don't!
On Jun 28, 3:52 am, rigsy03<[email protected]> wrote:
I wonder the number of vacant, distressed properties in the West?
Well, China was humiliated by the tactics of the West in our forcing
her to open to trade via opium and dynasty overthrow plus the theft of
her national arts and treasures- keeping them "safe" in western
museums, like the rest of our lootings.
Americans accumulated their own debt with abuse of credit when it was
easy street. The banks/financial institutions were irresponsible and
so were our governments. You can't eat bullets.
On Jun 27, 4:49 pm, archytas<[email protected]> wrote:
I don't believe the modern arguments (post 1950) concern communism
other than as a futile ideal. We seem to have forgotten about habros
- the polluting quality of luxury. The term arises in a Greek play
celebrating the victory of the Athenian Democracy over the Persians.
The warning to the Greeks was that they must never become sissies
wallowing in emotions and luxury like the defeated Persians. Most of
us are barely aware of history and have no real clue what the Soviets
and Chinese were up to. Even in relation to what's going on in China
now, I find few who know they have built ghost cities and are fueling
GDP growth with a property bubble.
The broad brush of western economics is that the ignorant rabble have
no place in real decision-making and that they must both know this (in
order not to forget their place) and to deny it in fantasies to
encourage virtual self-aggrandizement. Thus we are to live in virtual
meritocracy whilst actually just part of a pack that will not
challenge the alphas. In a very real way, we do not argue with facts,
but the stories of literature which bounds our expectations. Video
games are a warning of what we are, even if we don't play them.
The debts that are everywhere like a nightmare are not to do with
money as a means of simple exchange, taken on to be worked off in some
equation of labour value. They have been manipulated as surely as any
in past empires. Just as Chinese GDP is floating on 64 million empty
buildings no one can afford to live in (terms are often half up front,
the balance over 3 years), our currencies float on deals between
governments and favoured banks. We have suppressed wages and banks
hardly even provide working capital for business, instead engaging in
speculation in giant Ponzi schemes hedged in ever increasing prices
for assets that no one would eventually be able to buy from a wage,
and securitised to the tax payer. Wages were collapsed over 30 years
by exporting manufacturing - but GDP kept rising as we borrowed
against the asset pile to buy more and more crap and pay welfare to
those deprived of jobs.
The rich grew vastly richer in this period. If there are 64 million
Chinese apartments empty, how many across the world are now holiday
homes and the rest. None of this is communist or capitalist economics
- it's more fundamental, possibly the economics of the city in which
absentee landlords gamble the labour of poor tenants and then replace
them with more economic sheep. The money that was always making money
in high finance was never making anything other than the debt. You
need to understand mark to model and mark to market. The money was
never being made - banks were allowed to value their own assets to
models kept secret for reasons of commercial security. Now, if they
have to really sell any 'assets' they are worth what the market will
pay. And given the way banks count loans as assets, they are all
probably bankrupt because most of the loans will be real liabilities.
None of us borrowed this 'money'. It was pumped in by the Fed, BoE,
EU Central and so on and stole your hard-earned from underneath you.
This
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