US economy is in scary shape, no matter what Hank Paulson sez

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65 Responses to “US economy is in scary shape, no matter what Hank Paulson sez”

  1. Gilbert Wham says:

    The UK has perpetrated a similar lie for decades now.

    If you are recently unemployed, and have been paying National Insurance credits from your paycheque for more than 12 months, you qualify for ‘contributions based’ unemployment benefits, which last for six months.

    After this six month period, or if you were not working for long enough to pay said contributions, your unemployment benefits are classed as ‘income based’ and you are not counted on the statistics. Been doing it for as long as I can remember.

  2. CastanhasDoPara says:

    “”There is very little practical difference between having 100 million dollars and 100 billion dollars.”

    *faceplant* Are you serious?! Try running Walmart, or an oil company, or an airline, on $100 million.”

    In the sense of a corporation being a legal (yet fictional) person then sure that spurious argument makes sense. Just to be clear here corporations are not people like you or me and 100 million vs. 100 billion for personal use, while both are gross and unnecessary, would be more than sufficient wealth.

    “Well, there are no billionaires in the UK, where the word billion means 10^12. ;) But it isn’t just a question of the number of billionaires. It’s a question of how many billions have been earned in fair business, and how many appropriated through forced transfer.

    “Excessive wealth should be regarded”

    By whom?”

    If you want people to pay attention to your argument you might do better to avoid the semantic baseball bat, who cares that billion as a word has different meanings on different continents. However, at a certain degree of wealth the holder of that wealth no longer has to “work hard” the money does all the work (a good reason that the super-rich stay that way) and that is inherently unfair to the person that has to work exceedingly hard just to get by (usually for paltry wages working for a super-rich person). The wealth should be regulated either by personal altruism (fat chance there) or through some sort of progressive tax or caps on personal income, in other words by government (a little better chance but still prone to corruption).

    “So answer me this: what is the optimum level of wealth? Please give a figure in currency or in commodities, or give me a configuration of material goods that compose the optimum wealth.”

    There is no optimum level of wealth really. One might say that a million dollars in the bank would be sufficient since the interest one would earn would afford that person a decent middle class lifestyle. The problem is that if everybody had this optimum setup nobody would work and nothing would get done and society would collapse. So really the optimum wealth would be closer to being a partner with real interest in an organization that one wished to work for/with collectively. Look into Participatory Economics for a more in depth look at what I am getting at here. http://en.wikipedia.org/wiki/Participatory_economics

  3. flamingphonebook says:

    “If you want people to pay attention to your argument you might do better to avoid the semantic baseball bat, who cares that billion as a word has different meanings on different continents.”

    I’m just being cute. Hence the smiley.

    “However, at a certain degree of wealth the holder of that wealth no longer has to ‘work hard’ the money does all the work (a good reason that the super-rich stay that way) and that is inherently unfair to the person that has to work exceedingly hard just to get by (usually for paltry wages working for a super-rich person).”

    But to attain that certain degree of wealth, a person must work hard. It is not necessarily the holder of the wealth, but it should be. But if I understand your point, you’re saying that no one should not have to work hard perpetually to have great wealth. There is an economic problem with that and a moral one. The economic one is that it limits capital movement. When we say that the money does the work, we mean it serves as capital for other people. If I have to keep working, I will keep all my capital to help me with that work. The moral problem is that it’s just as unfair to not let people retire in luxury as it is to not give them enough to ‘get by.’ (What constitutes getting by anyway?)

    “So really the optimum wealth would be closer to being a partner with real interest in an organization that one wished to work for/with collectively.”

    And my argument is that I don’t want to work. Or rather, I want to work just enough for the utility I want. Utility is the end of economics, not a side effect.

  4. mdhatter says:

    Similarly, when someone is denied unemployment benefits because their former employers are shady, they also don’t get counted.

    That’s my one data point.

  5. flamingphonebook says:

    @CastanhasDoPara

    And no the capitalist would not be forced into the system, hopefully they would come to recognize the benefits of this system by themselves.

    Then we have no real disagreement. As is, the capitalist is forced into a non-capitalist system by the tax, anti-trust, and environmental laws. If you’ll allow havens from them, then yours is a far better system for capitalists than the current one.

    @Nick D.

    You start by reiterating a point that’s not even in dispute, that it’s possible to work hard and do well in America. So what? I never said it wasn’t. I just said you could do it lots of other places, too.

    Ah, that’s why I didn’t understand your point 1. You were not saying that working hard in America doesn’t make you rich; you were saying that working hard out of America does. Which is true. What I spoke of was Europe, and I should restrict that to the EU. Countries like Estonia are quite capitalistic. But where the laws tilt toward the worker and the consumer and the unemployed and everyone but the businessman, how easy is it to get rich?

    The fact that you know a Korean proctologist or something who wants to come here, doesn’t disprove this one simple fact: the world is filled with people who have absolutely no need or desire to come to the US to be happy or well-off. I know it rankles, but try to cope.

    You said it was a myth that people wanted to live in the US. Not “every person,” but “people.” I showed people who do want to live here. Myth busted.

    So the starving children in country B should SHUT UP AND STOP WHINING because the children in Country A are being fed? I’ll buy you a ticket to Darfur or Rwanda–you can go explain that to them. Make sure to eat a cheeseburger in front of them and not offer them any while you’re at it. That will show them!

    If it were just food, I might be inclined to shut up about it. But once they’re fed, they’re going to want water, and then medicine, and then transportation, and then education, and before you know it you’ve got some bleeding-heart talking about how they feel inferior because their cell phones can’t get signal in the grasslands, and what are you going to do about it, America?

    If we want to help the people of Rwanda, let’s go in with military force, remove the government, establish property rights, and let the people work for money from anyone willing to hire them.

    The fact remains that the US, in comparison to a lot of other nations, is stingy when it gives out foreign aid. It’s simple math, and neither your national pride nor your contempt for the poor changes that.

    No, it isn’t. It’s generous to the receivers, but not debilitating to the givers. And that causes you to be ungrateful. If the receivers took that attitude, I’d say stop all foreign aid until they grow up.

    Who gives a fuck?

    I do.

    If you understood that the richest are better off in any country in direct proportion to how poor the poorest are, you wouldn’t brag about this. But there I go again with the math! I’ll wait while you look up “direct proportion.”

    So you’re claiming the ratio of A’s utility:A’s wealth is inversely proportional to B’s wealth (and independent of B’s utility)? Now, I’ll wait while you look that up, and while you do, maybe you can answer why in the world that would be true?

    I mean, let’s look at what you’re saying here: A rich person sits in his palatial estate in the Hamptons or in Beverly Hills. Someone gives money to a penniless beggar in Detroit. The rich man sits up and says, “I just felt a great disturbance in the force.”

    Wealth is not not NOT a relative quantity. A minimum wage worker today is more wealthy than Alexander the Great was. A rich person is no better off for the existence of poor persons, nor is the poor person worse off for the existence of the rich.

    The working man and woman in the US is getting shafted in order to fund the excesses of the few, but hey, it’s OK! Our billionaires are richest! (Cue squelchy sound of credulous worker bee licking clean the ass of a billionaire.)

    Shafted by whom? No one is forced to get on a hiring line. There is no slavery. The club or the gun never comes into play. Everyone who “funds the excesses of the few” does so voluntarily. They may whine and hold their nose while doing it, but they can stop any time they want, go on strike, and stop buying from large companies. If they don’t, they’ve no cause to complain.

  6. Deviant says:

    @NICK D

    MYTH 1) “America’s the only place where people are free to get as rich as they want, they just have to work hard.”

    I’ll wait for all you millionaires out there to stop tittering before I go on…. What? You say you’re not rich? Lazy moron!

    No intelligent person would say that hard work alone must lead to wealth. It is typically necessary but not sufficient. A third of all millionaires in the world live in the US. In my home town of Austin, Texas, about 1 in 50 households have wealth of a million or more. In the US, you are surrounded by people who have found a way to succeed.

    @PYROS

    You may dislike American market-based sensibilities, but western Europe relies on adopting American practices. German economists in the journal ISPOR Connections:

    Furthermore, the majority of developments in organizational or funding issues in health care finally are to some extent rooted in the US market. Topics from recent European history include disease management programs for chronic conditions, managed care or integrated health care concepts. Another example is diagnosis related group (DRG) systems for hospital services which were enacted in most European counties (like Germany) very recently. Europeans, especially German health politicians, tend to look exclusively to the US for new concepts having cost containment in the back of their head. The United States in the 80’s and 90’s undoubtedly was the laboratory for new health care concepts for the rest of the world.

    We try things out that don’t always work. Someone has to take on the responsibility of trying new things. Most of your “things to consider” in #5 are half-truths at best. For one, the definition of infant mortality differs substantially country by country. In the US, a baby born after only five months of gestation is likely to receive exceptionally costly heroic care. If it dies, it is considered infant mortality. In most of western Europe, the heroic care is unlikely, and it is labeled a miscarriage.

  7. rsatx says:

    Not much discussion of what I see as the long term economic problems effects of which are starting to become obvious:

    1. We have long had a negative balance of trade. What are our real exports? Upon whom and what are we dependent? Seems to me we’ve been living beyond our means for a long time, supported by others because we’re such an important market and out of fear of the consequences of our collapse.

    2. We’re worsening our own position by exporting jobs and whole industries.

    3. Much of our workforce is ill-prepared for the future efforts that will be necessary to make us competitive again.

  8. Takuan says:

    There is one possible solution; arms sales.

    While one must never sell equal or superior to one’s own weapons, there is always an unlimited market for guns and ammunition lesser than one’s own. If economic ruin could somehow be wrought upon presently middle ranked quality-of-life nations, a vast new and profitable market could be opened up. The example of Africa is the best demonstration of this principle. They soak up vast quantities of AK47s,ammo,land mines and “insurgency” level munitions. Surely this lesson could be adapted to salvage the current American situation.

  9. duus says:

    When someone gives up looking for work, the government no longer considers them unemployed–thus the huge discrepancy in the two figures.

    I do want to point out that all governments measure it this way. Unemployed is the fraction of the labor force that does not have a job; and the labor force are the people who have a job or are looking for a job. Otherwise, what of, for example, stay-at-home parents? People in jail?

    I think it’s worth understanding the different numbers (for example, much of the difference in unemployment rates btw. Europe and the US can be explained by, in my opinion, the difference in incarceration rates) but I think it’s a bit extreme to say that it is willfully deceptive. That said, I think how unemployment rates are calculated is an important piece of information that people should know.

  10. prollymolly says:

    If I get a check, it’s going to O’bama!

  11. CastanhasDoPara says:

    “It is not necessarily the holder of the wealth, but it should be. But if I understand your point, you’re saying that no one should not have to work hard perpetually to have great wealth.”

    No, I believe you have missed my point. I personally don’t think anybody should have “great wealth”, and at the same time I am not saying that one should not be fairly remunerated for hard work. Basically what I am saying is that everybody should be able to enjoy the fruits of their labor or creativity up to the point that those rewards do not create a gross imbalance of power over other people.

    “The economic one is that it limits capital movement. When we say that the money does the work, we mean it serves as capital for other people. If I have to keep working, I will keep all my capital to help me with that work.”

    Capital is in itself a legal fiction. The only true force of work is labor. When a person works to add value to some process the typical way to rate that is by attaching a dollar amount to it either in the form of wages or profit. The current capitalist system allows a huge gulf between wages and profits, one going to the laborer and the other going to the moneyed interest (shareholders/corporations). This system is basically unfair and unnecessary. You should use your labor wisely and that will serve as your capital. In other words organize for mutual benefit and capital ceases to be so important to the equation.

    “The moral problem is that it’s just as unfair to not let people retire in luxury as it is to not give them enough to ‘get by.’ (What constitutes getting by anyway?)”

    And in a system such as ParEcon that moral question is nullified. The system can be organized to allow all people to retire to a very decent life, not just some as is the case under capitalism. Also the determination of what is “a decent life” is given a wide range of personal variation, meaning that the individual is allowed to achieve what he wants out of the system up to a limit of what is reasonable and sustainable.

    If you only want to work enough to meet your basic needs you can. If you want to be an ascetic you can. If you want to work really hard and be involved to achieve a very comfortable (yet not exorbitant) life you can.

    The important aspect here is that when the work and the resources are being used for the direct benefit of all those that are involved in the system (not the enrichment of a small segment) equality prevails, people have to work less overall and at the end of the day get a better slice of the pie for the work that they do do.

  12. flamingphonebook says:

    @ #5 PYROS:

    The one thing Europe doesn’t have is the ability to get really, really rich. If your goal is to make as much money as possible, and you’re willing to bank on your own ability, the US is the place to be. Lower average, higher variability.

    And from the article:

    “Treasury Secretary Paulson, meeting with the G-7 Finance Ministers in Washington, tried to reassure them that the U.S. economic slump was only temporary.”

    Is Mr. Talpin suggesting that the slump could be permanent?

  13. Kit10inDublin says:

    This economic prediction is scare tactics BUT it does have some merit.

    It is true that US banks irresponsible mortgage lending has led to a credit problem that is only now being reported in a wider way. Many news reporters and newspapers etc, have been decrying this problem for many months.

    What annoys me HUGELY is that the US banks, who are the base cause of this, have not taken any real responsibility for their stupidity and that economists are using it NOW to make the Western world believe there will be a global credit problem or recession because of the US banks stupidity.

    Today G7 nations met to discuss the issue – http://news.bbc.co.uk/2/hi/business/7342419.stm.

    If only all financial problems were so easily brought to their attention. If Western banks (or US banks) had NOT been the cause of this they wouldn’t have bothered.

    And I still don’t believe there is, or will be, a genuine ‘global’ problem because of this.

    It’s truly shitty for the people and families involved in house repossessions in the US. But it is not warranted to predict a global problem.

    The current high price of rice and the rising price of other foods is a far wider concern but the G7 don’t need to discuss that – cos it doesn’t concern Western economies directly – yet.

  14. flamingphonebook says:

    “No, I believe you have missed my point. I personally don’t think anybody should have ‘great wealth’,”

    But what if they want it, and can acquire it from agreeing parties? Suppose all the capitalists go off on an island somewhere and agree to a no-tax, free-come-and-go, unlimited-wealth society. Should the Participatory Economists force them into the system?

    This is why I am such an ardent capitalist/libertarian: because if you want to form a ParEcon subsystem within a capitalistic system with willing participants, you can. But under no system will you be allowed to form a capitalistic subsystem. That tells me that capitalism is the most fair system.

    “Capital is in itself a legal fiction. The only true force of work is labor. When a person works to add value to some process the typical way to rate that is by attaching a dollar amount to it either in the form of wages or profit.”

    It is no more fictional than wages. Even in a barter system, if I trade for more of a good than I will use, it becomes capital to me. I can then trade the excess again for something else I want, or get more capital. Certainly someone can come along with a club and take the capital away, but they could take away everything I traded for in the first place as well.

    “The current capitalist system allows a huge gulf between wages and profits, one going to the laborer and the other going to the moneyed interest (shareholders/corporations). This system is basically unfair and unnecessary.”

    I disagree. The laborer is almost no part of the value of the produced good or service. A laborer without materials produces nothing. A laborer without a boss produces nothing. A boss with materials and capital but no laborers can still create a one-person shop. Labor is a means of efficiency of production, not production itself.

    “Also the determination of what is ‘a decent life’ is given a wide range of personal variation, meaning that the individual is allowed to achieve what he wants out of the system up to a limit of what is reasonable and sustainable.”

    If I can prove by reason that I need a billion dollars, I am then free to earn it?

    “If you only want to work enough to meet your basic needs you can. If you want to be an ascetic you can. If you want to work really hard and be involved to achieve a very comfortable (yet not exorbitant) life you can.”

    And what of the person who refuses to work at all? Are they assumed to be ascetics? If you are saying that such persons should not be given aid, I agree with you.

    “The important aspect here is that when the work and the resources are being used for the direct benefit of all those that are involved in the system (not the enrichment of a small segment) equality prevails, people have to work less overall and at the end of the day get a better slice of the pie for the work that they do do.”

    But why should I care about whether you have more for less work? I don’t want to be equal with everyone. I want to be better than everyone. If you don’t like that, you can not do business with me. But if you use the force of government, I feel justified in taking any action to prevent you.

  15. Takuan says:

    I do not understand why people keep calling the decisions that led to this situation “stupid”. They were in point of fact brilliant in accomplishing the immediate enrichment of the decision makers and further, surpass genius since they also increase their relative wealth by making th average citizen poorer. This is the kind of thing that should get streets named after one, not abuse.

  16. jonjonz says:

    While the TFK’s (trust fund Kids) may sneer and guffaw at the unemployment rate and the unemployed, they may soon be starting to feel the pinch of inflation on Daddy’s gratuity. But that will not stop them from ridiculing anyone so bold as to complain about the seating arrangement in the overall fascist pyramid as long as they feel they are far enough up above the comfort waterline.

    And don’t ever forget the wonderful Kapitalist crapshoot game where there can always be one lucky winner and millions of losers.

    The next thing you know, killing the unemployed will be promoted as a new upper class macho sport, giving the sportsmen rewards for ridding society of the weak while providing a new market for ammo.

  17. desiredusername says:

    So for those who know..

    What is the inevitable result if the rich get richer and the poor get poorer? From a rich person’s perspective is there anything not to like about this situation continuing in perpetuity? Is it inflation that will occur if all poor people join the military , go to jail, die, or descend into drugs and violence? Or is that nirvana for rich people?

  18. Takuan says:

    nonsense!

    there is always honest labour for the lower classes

    http://www.uky.edu/AS/Classics/gladiator.jpg

  19. Nick D says:

    “The one thing Europe doesn’t have is the ability to get really, really rich.”

    R-i-i-g-h-t. No rich people in Europe, no sir. Those communist bastards!

    We Americans have some very well-cherished notions about ourselves and other nations that haven’t been true since around 1955. Here’s a few:

    MYTH 1) “America’s the only place where people are free to get as rich as they want, they just have to work hard.”

    I’ll wait for all you millionaires out there to stop tittering before I go on…. What? You say you’re not rich? Lazy moron!

    MYTH 2) “People in other countries envy us, and wish they could live here.”

    I’ve had many friends from other countries, and none of them ever wished they could live here. “Two weeks vacation? No health care? A regressive income tax? Why the fuck would I want to live here?”

    MYTH 3) “America gives more foreign aid than anyone else.”

    Actually, as a percentage of GNP, America gives far less than many countries. Look it up.

    4) “America has the highest standard of living in the world.”

    I refer you to Pyros’ excellent post. Having lots of billionaires, oddly enough, doesn’t seem to have translated into a higher standard of living for the lower and middle classes here (the vast majority, remember). Go figure.

    Not to mention, contrary to what many Americans believe (mostly those who have never travelled to another country) the rest of the world is not living without electricity or indoor plumbing.

    Ordinary working folk in many countries live quite nicely, just as we do. But they also have medical coverage, free college, and humane work environments. What? Middle class people in foreign countries living better than us? Impossible! Our sttreets are paved with gold!

  20. Takuan says:

    is there an American Dream?

  21. Deviant says:

    @flamingphonebook

    This is why I am such an ardent capitalist/libertarian: because if you want to form a ParEcon subsystem within a capitalistic system with willing participants, you can. But under no system will you be allowed to form a capitalistic subsystem. That tells me that capitalism is the most fair system.

    Nicely put. That’s a way of looking at things that I don’t think I would’ve considered.

    @CastanhasDoPara

    This whole Marxist-type ideology just isn’t for us humans, who, after all, have succeeded as a species due to our competitive nature. Those who aren’t satisfied innovate and thrive. Even a basic understanding of game theory is enough to see why some goofy scheme like ParEcon will break down.

  22. Nick D says:

    Oh yeah, I almost forgot: right on, RSATX: !

  23. Antinous says:

    This whole Marxist-type ideology just isn’t for us humans, who, after all, have succeeded as a species due to our competitive nature.

    Says you. I would have thought that our ability to cooperate defined our evolutionary successes, such as the development of complex language.

  24. Pyros says:

    @Flamingphonebook

    It is axiomatic in America, as I suppose it is in other places too, that by definition one could not have too much wealth, and it is, perhaps because of this reason that excessive wealth accumulation is not seen as a kind of societal pathology somewhat akin to obesity.

    Heretofore, there was no need for us to evolve a wealth accumulation off-switch. Wealth accumulation is almost tantamount to status accumulation, and it is hard to imagine a person choosing less status when more might be available.

    This is an unfortunate, strange and absurd reality which is never, never talked about or understood. That is, wealth accumulation past a certain point merely points up a flaw in the human status mechanism. There is very little practical difference between having 100 million dollars and 100 billion dollars. But there is a status difference, and this is why the greater amount will be desired and pursued.

    In a normal environment, we are served by our status mechanism. But in conditions where abundance and over abundance are the norm, the human status mechanism is grossly distorted.

    In any case, I don’t know that it is true that there are fewer billionaires in Europe. I also don’t think there is a necessary correlation between the number of billionaires and overall economic opportunity for the most capable within a society. This would be very difficult to prove.

    Excessive wealth should be regarded as a somewhat accidental and undesirable by-produkt of industrialization much in the same way that high levels of crime, toxic waste, obesity, and unemployment are.

    Unfortunately, most people were not born with the critical thinking skills which would best serve them in an industrial or post industrial society and are therefore easily mislead by the wealthy who control media apparati and the levers of power generally.

    I personally feel that it is unlikely that we will get a clear picture about this pathology from the very people who suffer from it any time soon.

  25. mathus says:

    # 25 well that’s not exactly true, bear sterns which took the brunt of this shit storm was forced by the fed to sell itself at almost zero to another bank and the week before this it was worth about $45 per stock.

  26. Deviant says:

    @antinous

    Says you. I would have thought that our ability to cooperate defined our evolutionary successes, such as the development of complex language.

    The process of evolution is competition–between individuals, societies, and species. Why do we cooperate? What do we use language for? Prehistoric man did nothing out of desire to achieve self-actualization. He did it to get the most healthy mate and the best food source, in direct competition with his fellow man. Like it or not, the ones who weren’t easily satisfied, who always wanted more, were the ones who procreated more successfully. We are defined more by our competitive nature than any other thing. All else is a result.

  27. Antinous says:

    That’s social Darwinism, not evolutionary theory.

  28. Takuan says:

    Is this competition conscious? Or the luck of the genetic die roll of that particular brood? Did you choose YOUR traits?

  29. Nick D says:

    “You’ve got some bleeding-heart talking about how they feel inferior because their cell phones can’t get signal in the grasslands, and what are you going to do about it, America?”(flamingphonebook)

    First off: no one knows what the hell you’re talking about here.

    Look, you can go on believing that there’s an unlimited amount of wealth and resources in the world, and that somehow the pot will magically replenish itself as the wealthy drain off the lion’s share, and that somehow that will not effect the living standards of the rest of us.

    You can insist on believing that disparities of wealth are somehow abstract and have nothing to do with things like a regressive income tax, low wages, or huge asymmetries in the ownership and thus control of the means of production.

    But believing it doesn’t make it true.

    Every year, unless you are very wealthy, your living standard and buying power are declining, and your cost of living is rising. Yours, flamingphonebook, not the wealthy’s. If you think that the reason that the vast majority of Americans aren’t doing better is because we are taxing the rich too much, I can only scratch my head in disbelief.

    “But where the laws tilt toward the worker and the consumer and the unemployed and everyone but the businessman, how easy is it to get rich?”

    Newsflash: the welfare recipient, the consumer, the worker, and the businessman are all in the same category: the not-rich. You seem to conflating the working man and the businessman with the wealthy, and you are making a category error.

    I say tax the wealthy owners of the 97% of the assets of this country, and give the workers, the independent businessmen, and the poor, who are struggling to get by with the remaining 3%, a break.

    The hardpressed workingperson and the endangered small businessperson in America are struggling partly because they are shouldering a far greater proportion of the tax burden than is just. If you think this has no relation with the ridiculously low tax rates the wealthy pay, again, I can only scratch my head in puzzlement.

  30. zuzu says:

    Savers vs. Speculators – People & Power – Max Keiser – 23 Mar 08

    That video hits most of the important highlights of this economic crisis. The Federal Reserve has drastically inflated the money supply to fund the Iraq war without raising a war tax. This has caused massive disruptions to the market, of which the sub-prime and “liquidity crisis” are just the first stress fractures to present themselves.

    The problem is inflation; expanding the supply of credit further increases inflation by definition. The solution is to cut spending, raise interest rates, and allow all of the malinvestment to be flushed from the system.

  31. Grant says:

    More than a million homeowners will keep their homes…for another month.

  32. Daemon says:

    So, the official US government position is that if you’re not working, and have given up on trying to find work, you are actually employed.

    Is there any remotely rational reason to explain this?

  33. flamingphonebook says:

    Look, you can go on believing that there’s an unlimited amount of wealth and resources in the world, and that somehow the pot will magically replenish itself as the wealthy drain off the lion’s share, and that somehow that will not effect the living standards of the rest of us.

    Obviously, the amount of material is finite. But we’re far from exhausting it. If we can get off this planet in any meaningful way, we’ll up our resources exponentially. More to the point, there are always more ways of parlaying resources into wealth.

    You can insist on believing that disparities of wealth are somehow abstract and have nothing to do with things like a regressive income tax, low wages, or huge asymmetries in the ownership and thus control of the means of production.

    I’m not saying they aren’t. I’m saying that disparities of wealth are not, in and of themselves, bad. I tell you three times, a rich person is no better off for the existence of poor persons, nor is the poor person worse off for the existence of the rich.

    Every year, unless you are very wealthy, your living standard and buying power are declining, and your cost of living is rising. Yours, flamingphonebook, not the wealthy’s. If you think that the reason that the vast majority of Americans aren’t doing better is because we are taxing the rich too much, I can only scratch my head in disbelief.

    I am not very wealthy. But my living standard has increased tremendously over the past 10 years. Who is it who’s hasn’t? The dot-com millionaire who bamboozled some venture capitalist in ’96? For him I’ve no sympathy.

    Newsflash: the welfare recipient, the consumer, the worker, and the businessman are all in the same category: the not-rich. You seem to conflating the working man and the businessman with the wealthy, and you are making a category error.

    No they are not. The businessman may someday be rich. The welfare recipient will never be. The worker’s children may be businessmen. All this IF there is a free economy.

  34. Mindpowered says:

    @38 Bear Stearns was not bailed out by JP Morgan. Bear were forced to sell all their assets at fire sale prices. If I went to your house, took all your assets and gave you 20 cents per dollar would you say I was “bailing” you out? In fact Bear was seen as so toxic that the only way JP Morgan got involved was because the Fed put up Tax Payer money to the tune of 30 billion (to save 20 trillion from going sour).

    @48 Social Darwinism is saying the English deserve to rule all due to their superior breeding, not the recognition of competition as an evolutionary driver.

    Competition along with sexual selection and environmental stimuli, is a prime mover in evolution.

    It seems a lot of people in the US are unwilling to look themselves in the face as to their shortcomings and would rather point the finger elsewhere. However the thing is, if you didn’t over extend yourself you will be fine. It’s all the people who pulled out those refinancings and then blew it. If you have a prudent fiscal reserve
    the crisis should be nothing more than a chance to get some good deals.

  35. zuzu says:

    So, the official US government position is that if you’re not working, and have given up on trying to find work, you are actually employed. Is there any remotely rational reason to explain this?

    Lies, damn lies, and statistics.

    Fudge your methodology to get the desired result, and an unemployment rate of 4% sounds acceptable. You didn’t think “security theater” was only limited to security, did you? :p

    See also: Consumer Price Index (CPI) vs. actual inflation rate. (Ever wonder why the Federal Reserve stopped publishing its M3 money supply data in 2006? or why the price of gold hit $1000/oz? but the CPI basket says inflation is still only 4%.)

    “Go back to sleep America. Your government is in control. Here’s American Gladiators.” — Bill Hicks

  36. Mindpowered says:

    Doh.. just got the “text error bug”

    “The solution is to cut spending, raise interest rates, and allow all of the malinvestment to be flushed from the system.”

    Moralistic purging was tried in 1930. It didn’t work to well.

  37. Pyros says:

    Americans have been held in thrall by a set of toxic economic beliefs for quite some time now. Two of the most prominent are:

    1. Government is bad; or, at best is a necessary evil

    2. The Market is the best arbiter of human behavior.

    In the meantime, Europe enjoys a much more enlightened understanding of things across the political and economic spectrum which might explain why there currency is doing so well against the dollar.

    Here’s something for Americans to consider:

    1. Europeans live longer than Americans

    2. Europeans grow taller (in many countries) than Americans

    3. There are far fewer Europeans in jail or prison (American leads the world both in per capita and absolute terms!)

    4. Europe’s banking system isn’t in crisis because of laissez fair economic policy

    5. Crime in Europe is much lower than in America

    6. Infant mortality rate is lower

    7. Educational system is better

    And the list goes on. Now, some people would say that the list above contains things that are important to a lot of people. Nevertheless, Americans have been so bamboozled by the media apparatus that most have no idea where to begin to discuss any of this stuff. Enlightenment in the U.S. is tantamount to cherishing a few Ron Paul-like aphorisms about how government needs to be reduced blah blah blah. Having a rational discussion about politics or economics with an American is like trying to have a rational discussion about evolution with a born again Christian.

    Americans take note: Europeans lead healthier, happier lives, AND they have big government. Connect the dots. Consider that your beliefs are wrong.

    Despite all this
    Our whole economy it teetering because of a pack of greedy, ill-informed ideologues both in Washington and Wall Street refuse to acknowledge that their belief system is defunct. Well, what would you expect?

  38. zuzu says:

    Moralistic purging was tried in 1930. It didn’t work to well.

    Instead subsequent inflation attempting to stave the contraction deepened and elongated the depression — which (along with the Dust Bowl) is why we think of it as The Great Depression.

    Better to take care of it like a bandage — right off!

  39. Sister Y says:

    “I tell you three times, a rich person is no better off for the existence of poor persons, nor is the poor person worse off for the existence of the rich.”

    If only that were true – unfortunately, income inequality causes its own problems, above and beyond that of poverty. For instance, income inequality is the best predictor of homicide rates, even better than poverty:

    http://psych.mcmaster.ca/dalywilson/iiahr2001.pdf

  40. travelina says:

    I visited the second largest mall in America last night in King of Prussia, PA, and you couldn’t tell that the US economy is in terrible shape. In fact, judging by the staggering volume of shoppers on a perfectly ordinary Saturday night, you’d be forced to conclude the opposite.

  41. flamingphonebook says:

    @Nick D.

    I don’t get your point one. It’s quite true. The fact that there are alternate ways to be rich, doesn’t change the fact that if you educate yourself, produce economically, and save frugally, you can become rich. If you have creative talent, so much the better. I knew a man from Wisconsin who started out on the assembly lines of a car company, until he noticed that by altering the machine at his station slightly, he could skip the next station. That little change parlayed into a $60 million company.

    Point 2: You don’t know them != they don’t exist. I can introduce you to my grandmother’s oncologist, Dr. Tang from Korea. Or my co-worker Nadia, from Haiti by way of Canada. Or the fifty gentlemen of Hispanic descent who show up every day outside the convenience store to go to work. Good heavens man, look at the people who come here from Cuba! No one’s getting on a raft in Miami to go the other way.

    Point 3: A) As an absolute, that’s still more, yes? That seems a little ungrateful, like saying to your auntie at Christmas, “Thanks for the PS3, but you’re rich, couldn’t you have gotten me a home theater?” B) Is it the American government you’re rating, or all gifts from America?

    Point 4: But the rich are better off in America, yes?

    @PYROS:

    “It is axiomatic in America, as I suppose it is in other places too, that by definition one could not have too much wealth, and it is, perhaps because of this reason that excessive wealth accumulation is not seen as a kind of societal pathology somewhat akin to obesity.”

    No, it is not axiomatic. It is a result of the axiom that the amount of wealth deserved is a function of the amount earned. An American has every right to cap his own wealth. He also has the right to place no cap on it. However far we’ve strayed from our principles, we still hold philosophically that the individual is sovereign, not society.

    “. . . wealth accumulation past a certain point merely points up a flaw in the human status mechanism.”

    A flaw by what standard of flawlessness?

    “There is very little practical difference between having 100 million dollars and 100 billion dollars.”

    *faceplant* Are you serious?! Try running Walmart, or an oil company, or an airline, on $100 million.

    “In a normal environment, we are served by our status mechanism.”

    Normal by what standard?

    “In any case, I don’t know that it is true that there are fewer billionaires in Europe.”

    Well, there are no billionaires in the UK, where the word billion means 10^12. ;) But it isn’t just a question of the number of billionaires. It’s a question of how many billions have been earned in fair business, and how many appropriated through forced transfer.

    “Excessive wealth should be regarded”

    By whom?

    “as a somewhat accidental and undesirable by-produkt of industrialization much in the same way that high levels of crime, toxic waste, obesity, and unemployment are.”

    Crime, toxic waste, obesity, and unemployment are undesirable in any numbers (qualified by what is defined as a crime, the cost-benefit of the toxic waste, the health nature of the obese, and the economic nature of the unemployed, but let me get on with it). Wealth is a good thing.

    So answer me this: what is the optimum level of wealth? Please give a figure in currency or in commodities, or give me a configuration of material goods that compose the optimum wealth.

  42. CastanhasDoPara says:

    @ 44 a quick and dirty retort, hopefully more quick than dirty…

    Capitalist Island theme park: Come for overpriced, poorly made hot-dogs and cheap beer, to aide the digestion of course. Seriously though, sure have your little island paradise, I don’t really think anybody that thinks the way I do about the theory of economy would object, especially since they could return at any time to a system that made sense and respected all people and their ability to contribute to society according to simple free association. And no the capitalist would not be forced into the system, hopefully they would come to recognize the benefits of this system by themselves. Also I respect your point about a ParEcon subset being able to exist with in capitalism, this is logically how it would be started and grown anyway. Capitalism would in my perfect world just fade away but much like capitalism coexisting with communism in the past I don’t see much of a problem there, as long as the capitalists played with their own toys. Though that would almost seem like to much to ask of folks that think “free-market” is whatever they can get their hands on. I will also have to disagree with you on the fairness of capitalism since it’s only goal is to generate wealth in complete disregard of things like human rights and environmental protection. As we have seen with bad lending/borrowing practices.

    Yes wages are a fiction. Barter is not since it is trade in real goods. Money is a consensual agreement of worth that acts as a place-holder for real goods. Therefore it is not entirely needed for a functioning economy, handy but not necessary. And certainly one could acquire more goods than they personally needed, this is not strictly forbidden under ParEcon but acquiring and holding/trading in more would be unnecessary and counterintuitive to the system. That is one main problem with capitalism, overproduction that leads to overconsumption. The idea of ParEcon is to balance production and consumption for the overall benefit of those participating. Making too much would just be waste and therefore the organizations would try to diminish that tendency. Any overage would be virtually worthless and so would it’s collection. Plus there would be no need to resort of violence as all of the participants needs and wants would be met efficiently. In theory of course.

    I disagree, the labor is the product. Without effort to produce goods nothing but what one person can make is made. In an economy at that scale technology would be impossible or at least highly infeasible and the only goods that would be produced would be simple tools for personal use. Neo-primitivism isn’t such an appealing option for a society at our stage of development. Though it does appeal to some. But then again so does Jainism. I also find it abhorrent personally that we “need” bosses. Organization yes, but autocratic direction not so much.

    A billion dollars? Sure, you can have the near worthless paper. Make art with it, wipe your ass with it, just do something valuable with it. And certainly if you can convince me and everybody else that is a good idea go for it. Authority must be made to justify itself at every step of the way, transparently and convincingly. It’s only fair after all.

    Ascetics, invalids, slackers? Well that is a sticky wicket, sort of. Ascetics would get by on scraps and alms like they do now, maybe. Invalids would probably be accommodated in some fair and acceptable fashion, and not just through charity, after all everybody can contribute something. Slackers, I agree should not be given aid. The able that refuse to help would be pariahs in such a society. Maybe we could sell them to the operators of Capitalist Island as slaves. Just kidding.

    Unfortunately, your last point is haltingly true of some people. That’s what we call pretension or perhaps arrogance. Though I think you are missing a key point, ParEcon is not a straight Marxist “from each according to their ability, to each according to their need”. It’s geared for efficiency and mutual aid. But there is clearly a system of merit that can be incorporated into the production organizations. There would be no reason to use the force of government either, logically the government would have to be as close to true democracy as possible and therefore there would be no need for coercion or situations of duress. I would agree with you totally to justify action against an autocratic organization that tried to suborn either of our natural rights.

    @45

    It’s not really Marxism, but I already said that. As for competition, yes that does play a large part in human interaction and that is also a part of ParEcon, in order to breed efficiency and motivation. However, mutual aid also plays a large role in our “nature” and in ParEcon. You can indeed have it both ways.

    Anyway, that was a lot longer than I expected it to be. I’ll stop beating the ParEcon drum for now.

    To bring it full circle I am personally going to spend my whopping chunk of government cheese on more fair-trade organic Peruvian coffee and a bamboo-bike complete with banana-seat. Economic stimulus here we come.

  43. Mindpowered says:

    Uh no.

    There was no inflation. Please see

    http://www.shambhala.org/business/goldocean/causdep.html#Centralbank

    And take a look at the graph entitled “money supply and real gdp”. As you can see money supply actuall contracted in the years following 1929, and it only increased once FDR got the New Deal working again.

  44. cuvtixo says:

    I don’t think the recently disabled are included in “unemployed” stats- or people who don’t qualify for unemployment benefits: working part-time and seasonal jobs. I don’t think the US government would produce unemployment figures at all, if financial markets didn’t demand it.
    As it is, they provide a very misleading measurement. There’s an army of Paulson-types selling a “goldilocks” economy to Americans, constantly.

  45. Nick D says:

    Nick (#30): Your point three strikes me as really selfish and self-serving. As flamingphonebook says, what does it matter what the percentage is, if the dollar amount is higher than anyone else? It’s still more. ”

    Yes, how selfish of me to want all that foreign aid for myself! As you know, much of our foreign aid does go directly to me! Weee!

    My suggestion to you is that you repeat the above statement out loud to yourself, over and over again, until the sheer absurdity of it becomes apparent to you.

    “What does it matter?”?! Think about it–I’m sure it will come to you why it does matter. Eventually. Just be patient. I’ll wait.

  46. Nick D says:

    “First off: no one knows what the hell you’re talking about here.”

    Hmmm… I seem to have gotten a little cranky here. Too much caffeine, perhaps. :)

  47. ill lich says:

    I was thinking of the recent push by some conservatives for McCain to get Romney as a VP, “because he knows the economy.” Well, whether Romney “knows the economy” or not won’t matter, because the GOP is married to this romantic Reagan-era notion of “trickle-down economics” and tax-cuts for the rich– if/when the sh!t really hits the fan, and McCain/Romney were in charge, what exactly would they do? Certainly not some massive New Deal-styled quasi-socialist plan a la FDR, I wouldn’t be surprised if they claimed that “the real problem is that taxes are too high” and cut taxes some more.

  48. desiredusername says:

    We compete to provide the most efficient use of resources, I agree. We have learned to recursively do this in terms of interrelationships as well, or stated another way compete to operate in a community. It is easy enough to understand.

    The recursive competition seems to lead to a paradox though. Are we competing to root out competitiveness?

    Maybe we are always going to compete at brinkmanship, always competing to reduce our competitiveness in order to be a community or social force without ever actually losing our competitive edge?

  49. mizerock says:

    If I believed that the worst that might happen will happen, what should I be doing to hedge? Buying gold? Foreign stocks? Buying large goods (car, house) before hyperinflation kicks in?

  50. Takuan says:

    how can I enjoy my wealth without someone to feel bad for not having it?

  51. Mindpowered says:

    It’s a very simple solution to the problem.

    The problem is at all levels of society Americans spent too much, and got themselves into too much debt. Lowering interest rates is pointless, as there is no further capacity to absorb debt on any scale.

    The solution is actually taking place right now without government intervention. Banks and individuals are saving money, dropping assets, and paying down debt while retaining cash on hand to hedge against further risk. Which is why sales have fallen(except for bargain hunting) and the bank interest rates have firmly remained where they are.

    In a few years this will reduce debt to the point where people can absorb more debt and the economy will grow again.

    Where the pain comes in, is that a war is being paid for on the back of collapsing economy, and too many people again, at all levels over extended themselves in search of higher returns, whether it was banks giving money to hedge funds or individuals re-mortgaging their homes so they could buy a second one.

    The only law that needs be enacted is that risk /reward training becomes part of the elementary school curriculum.

  52. Mindpowered says:

    The best thing you can do is teach yourself how to garden and grow your own food.

    Hard assets are completely inedible.

  53. Nick D says:

    flamingphonebook (#37):

    “I knew a man from Wisconsin who started out on the assembly lines of a car company….”

    You start by reiterating a point that’s not even in dispute, that it’s possible to work hard and do well in America. So what? I never said it wasn’t. I just said you could do it lots of other places, too.

    “I can introduce you to my grandmother’s oncologist, Dr. Tang from Korea.”

    The fact that you know a Korean proctologist or something who wants to come here, doesn’t disprove this one simple fact: the world is filled with people who have absolutely no need or desire to come to the US to be happy or well-off. I know it rankles, but try to cope.

    “Thanks for the PS3, but you’re rich, couldn’t you have gotten me a home theater?”

    So the starving children in country B should SHUT UP AND STOP WHINING because the children in Country A are being fed? I’ll buy you a ticket to Darfur or Rwanda–you can go explain that to them. Make sure to eat a cheeseburger in front of them and not offer them any while you’re at it. That will show them!

    The fact remains that the US, in comparison to a lot of other nations, is stingy when it gives out foreign aid. It’s simple math, and neither your national pride nor your contempt for the poor changes that.

    “Point 4: But the rich are better off in America, yes?”

    Who gives a fuck?

    If you understood that the richest are better off in any country in direct proportion to how poor the poorest are, you wouldn’t brag about this. But there I go again with the math! I’ll wait while you look up “direct proportion.”

    The working man and woman in the US is getting shafted in order to fund the excesses of the few, but hey, it’s OK! Our billionaires are richest! (Cue squelchy sound of credulous worker bee licking clean the ass of a billionaire.)

  54. Kit10inDublin says:

    @ -#35-MATHUS – Bear Stearns were helped out with millions by JP Chase Morgan, who essentially bailed then out of deep trouble. This doesn’t meant Bear Stearns took any responsibility. The reason they were in such shit was due own stupid bad judgment.

  55. Caledonian Jim says:

    The current ” Credit Crunch ” afflicting all western countries was caused by the Banks and other financial institutions . To insult our intelligence they suggest it was all triggered by a few thousand trailer-trashers defaulting on their mortgages but that’s nonsense.

    The blame game is always one way with the banks – it’s always ” irresponsible borrowing “, never ” irresponsible lending ” . Their gung-ho stupid performance related mentality whereby their employees were rewarded when deals were closed rather than when deals delivered has caused reckless lending . And as always, when things go wrong the banks pull up the drawbridge, blame us for their incompetence and still make fat profits .

  56. dculberson says:

    Nick (#30): Your point three strikes me as really selfish and self-serving. As flamingphonebook says, what does it matter what the percentage is, if the dollar amount is higher than anyone else? It’s still more. The only reason to claim it isn’t is to fulfill some predetermined “the US isn’t good enough” claim.

  57. CastanhasDoPara says:

    I would also hasten to point out that the scant little aid the US does give out is overwhelmingly military aid. The largest recipients being Colombia, Israel, Egypt, Turkey and Indonesia. None of this aid seems to make the situations in these countries better, in fact things seem to only get worse.

  58. niten says:

    @DAEMON: Unemployment stats are not a measure of the number of people in the country without jobs; it’s the count of the number of people who want jobs but don’t have them.

    People who quit looking for work aren’t counted as ‘employed’, they’re removed altogether from the job market, and bundled with the kids, elderly, and stay-at-home parents who are also not interested in finding jobs.

    This is perfectly normal, and not something they’ve done to fudge these particular stats.

    It makes a kind of sense to do it this way, but it means that there’s a ‘hidden’ unemployment rate during recessions, consisting of people who have given up. I’m not sure how much of that is the government’s (or statisticians’) fault, and how much of it is the media, which grabs onto “4% unemployment” and put it in all the headlines, totally ignoring the other stats (which do exist!) about how much the job market shrank and how. “Unemployment at 4%!” makes a better headline than “Unemployment at 4%, but job market shrinks 3%, 50% of which was due to job-hunters giving up!”

  59. Mindpowered says:

    I’m always stunned at the vitrol and economic immaturity that comes out on BB.

    Subprime loans to “Trailer trashers” are but the most obvious surface expression of the collapse of the US real estate market upon which the last 5 years of economic growth was based.

    I was in Miami recently and spoke with several successful professionals, doctors, lawyers, brokers etc.. One had re-mortgaged his house, bought two apartments at 675 K each and is now getting offers for 50 K, or 7 cents for each dollar invested.

    Not Subprime, not taken advantage of, yet deeply in trouble.

  60. clothingoptional says:

    @NITEN I agree. There’s just a huge pile of data, which is difficult to summarize with clarity.

    Below is a link to the actual BLS report. Well worth digging into if you want to see what the real numbers look like.

    http://www.bls.gov/news.release/empsit.toc.htm

    The only figure I found really surprising was the drop in YOY ag performance. With all the talk about corn and commodities of late, you’d think jobs in that sector would look better.

    http://www.bls.gov/news.release/empsit.t10.htm

  61. Caledonian Jim says:

    #15

    I wasn’t suggesting they were “trailer-trashers” . But I was intimating that the Banks have very very subtle in implying it it is all the fault of trailer-trashers .

    As for economic immaturity, if your “successful” people in Miami are only now getting 7 cents on their dollar I think that charge might be directed at them rather than me !

  62. Nick D says:

    “How can I enjoy my wealth without someone to feel bad for not having it?”
    (Takuan, #64)

    I don’t know about you, Takuan, but nothing gives me greater satisfaction than thinking about how superior I am to all those lazy, marker-sniffing poor people!

    When I want to relieve some tension, so to speak, I … (giggle) … you know , “think about” all the sexy millionaires running around on their yachts.

    Then I fantasize (wink)… you know what I mean… about the day when I will have my Captain Video space suit and fly up to the Satellite of Infinite Merchandise and get me some of those cell phones and PS3 that poor people are always whining about not having.

    By then, of course, me and the other rich people will be living on our own super-special, only for businessmen, poor-people-free planet.

    Where I will be their pool boy.

    Ooooo… yeah, baby… that’s the ticket!

  63. kaifilion says:

    @Niten, thank you for providing the argument for why the BLS unemployment statistics are useful. However, they still underestimate because they fail to account for those who want a full time job but have a part time job, and those who are qualified for a better job than what they have, but need the money from their current job. These are two groups that have grown dramatically in recent years, but which don’t show up in the basic statistics that most news organization throw out.
    The lesson here – take every statistic you hear with a grain of salt. Take every statistic you hear from a politician with a pile.

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