to wuf: faultlines and the rich, obama's failings

[Numbr2intheWorld]

When one person is rich, it's because other people are poor. Nobody has ever been able to deny this reality of economics

Let's say I own a huge tomato farm, and I have what people feel are the best Tomatoes in the entire world. People come from all over the United States to buy my Tomatoes during harvest (at only slightly above a normal tomato's price cause i'm an altruistic guy). I earn 1 million dollars from the harvest and a couple hundred thousand people have my tomatoes.

Each person who buys my tomatoes feels they are of equal or greater value than the money they exchanged for them because a) they were willing to purchase them and b) many were willing to even spend money and time coming to buy them. Therefore, every person who buys a tomato is actually gaining wealth when they use their money. Nobody has become poorer in this exchange, except maybe for me because I could have charged more for my tomatoes.

I think you're confusing who gains more cash in the exchange for who becomes wealthier.

[wufwugy]

Let's say I own a huge tomato farm, and I have what people feel are the best Tomatoes in the entire world. People come from all over the United States to buy my Tomatoes during harvest (at only slightly above a normal tomato's price cause i'm an altruistic guy). I earn 1 million dollars from the harvest and a couple hundred thousand people have my tomatoes.

Each person who buys my tomatoes feels they are of equal or greater value than the money they exchanged for them because a) they were willing to purchase them and b) many were willing to even spend money and time coming to buy them. Therefore, every person who buys a tomato is actually gaining wealth when they use their money. Nobody has become poorer in this exchange, except maybe for me because I could have charged more for my tomatoes.

I think you're confusing who gains more cash in the exchange for who becomes wealthier.

I'm glad you did this because it can perfectly illustrate the US economy of recent



Then we eat the tomatos, but you don't eat your money. You put some of your money back into personal consumption, some for your business investments, and save some. We (your customers) lost the wealth of the tomatos we bought from you, but we want more, and need more money for that. So we work for the money. Who pays us? You do, and people like you. Where did you get your money? From us, from our consumption, from the work, from the entire process of a churning economy

But what happens when a percentage of your income from tomatos sales is regularly put into savings? There is then less money to pay workers, and you end up selling fewer tomatos, and we all suffer. You saving personally was not a problem, but every other business owner is doing the same, and then we created a Tragedy of the Commons, where a sizable chunk of the economy is cleaved from that economy, and everybody else suffers. Saving for a rainy day is good, unless everybody saves for it, and then that rainy day comes due to too much saving.


When you look at the data over the last four decades, you see this is what has happened. Productivity as gone up and profits have gone up, but their share has been decreasingly in the middle class and poor. People had less money to buy stuff, but the game of cyclical consumption must go on. So we started in on credit cards. It was as good as money, and it kept the game going without executives having to share profits with their workers. But that started becoming a problem, because you can only accumulate so much debt, and bumped up a few bubbles in tech and housing, but those burst. The second one so badly that we couldn't so quickly re-bubble to get out of it like we did the tech one

Over the last four decades, policy has made the rich richer, and poor poorer. No matter the ideology, that's the fact, and that's the problem. There is a wealth of evidence in our history and in other modern nations about this kind of thing. The game of the economy is most fundamentally about how the wealth flows through what sectors. Stagnations and disruptions cause turmoil and destruction of wealth. Just follow the money. When it moves its way to the top, then a portion of that doesn't come back down, the economy is less healthy. It's supply and demand, cyclical consumption and production. We have been systemically dumping our economy's wealth onto only one side, then wonder why there is no balance

[Numbr2intheWorld]

I'm glad you did this because it can perfectly illustrate the US economy of recent



Then we eat the tomatos, but you don't eat your money. You put some of your money back into personal consumption, some for your business investments, and save some. We (your customers) lost the wealth of the tomatos we bought from you.

Under your world view the person who doesn't eat any food and is malnourished is wealthier than the person who eats food and stays healthy... Is that really true?

[wufwugy]

Under your world view the person who doesn't eat any food and is malnourished is wealthier than the person who eats food and stays healthy... Is that really true?

That's the opposite of what I'm saying. That the latter is more wealthy is a demonstration of the necessity of cyclical wealth distribution. I'm not advocating for an equity of all wealth throughout the system, but a balance. The lower rungs of an economy are necessary to keep the higher rungs operating well. The lack of investment we're seeing now is because the lower rungs are not able to participate in the economy the way they're supposed to. This is due to pretty much just two reasons 1) widening of wealth inequality, and 2) rising energy costs.

[IowaSkinsFan]

That's the opposite of what I'm saying. That the latter is more wealthy is a demonstration of the necessity of cyclical wealth distribution. I'm not advocating for an equity of all wealth throughout the system, but a balance. The lower rungs of an economy are necessary to keep the higher rungs operating well. The lack of investment we're seeing now is because the lower rungs are not able to participate in the economy the way they're supposed to. This is due to pretty much just two reasons 1) widening of wealth inequality, and 2) rising energy costs.

I don't know what any of this means. Does anyone get what he's saying here?

[Numbr2intheWorld]

We (your customers) lost the wealth of the tomatos we bought from you

...

[wufwugy]

...

You were telling me that I said burning wealth and no longer participating in the system is better than consuming wealth and further participating in the system.

Regardless, this kind of deep abstraction is mostly irrelevant to the real-world operation of the system

[Numbr2intheWorld]

You were telling me that I said burning wealth and no longer participating in the system is better than consuming wealth and further participating in the system.

I didn't want to even take it that far. I wanted to know whether you thought a hungry person who owns a tomato is wealthier than a satiated person who just consumed a tomato.

[IowaSkinsFan]

I'm glad you did this because it can perfectly illustrate the US economy of recent



Then we eat the tomatos, but you don't eat your money. You put some of your money back into personal consumption, some for your business investments, and save some. We (your customers) lost the wealth of the tomatos we bought from you, No, you lost money and gained a tomato. Wealth isn't just money. If you bought a bunch of cars and houses for money would you say you lost wealth? but we want more, and need more money for that. So we work for the money. Who pays us? You do, and people like you. Where did you get your money? From us, from our consumption, from the work, from the entire process of a churning economy. Ummmm what?

But what happens when a percentage of your income from tomatos sales is regularly put into savings? There is then less money to pay workers, and you end up selling fewer tomatos, and we all suffer. This is absurd logic. This isn't how the economy or any business works. The owner takes some amount of money from his profits to pay himself for his work. That doesn't harm anyone, unless you consider not giving charity as harm. You saving personally was not a problem, but every other business owner is doing the same, and then we created a Tragedy of the Commons, where a sizable chunk of the economy is cleaved from that economy, and everybody else suffers. Saving for a rainy day is good, unless everybody saves for it, and then that rainy day comes due to too much saving. So we should force everyone to spend and consume because that helps everyone right?


When you look at the data over the last four decades, you see this is what has happened. Productivity as gone up and profits have gone up, but their share has been decreasingly in the middle class and poor. People had less money to buy stuff, but the game of cyclical consumption must go on. So we started in on credit cards. It was as good as money, and it kept the game going without executives having to share profits with their workers. But that started becoming a problem, because you can only accumulate so much debt, and bumped up a few bubbles in tech and housing, but those burst. The second one so badly that we couldn't so quickly re-bubble to get out of it like we did the tech one There is no logic or evidence here you are just spouting out your opinions.

Over the last four decades, policy has made the rich richer, and poor poorer. You got this right. No matter the ideology, that's the fact, and that's the problem. There is a wealth of evidence in our history and in other modern nations about this kind of thing. The game of the economy is most fundamentally about how the wealth flows through what sectors. Stagnations and disruptions cause turmoil and destruction of wealth. Just follow the money. When it moves its way to the top, then a portion of that doesn't come back down, the economy is less healthy. It's supply and demand, cyclical consumption and production. We have been systemically dumping our economy's wealth onto only one side, then wonder why there is no balance

Rich are richer and poor are poorer because of regulations of the government.

[wufwugy]

No, you lost money and gained a tomato. Wealth isn't just money. If you bought a bunch of cars and houses for money would you say you lost wealth?

That was after I ate the tomato and you didn't burn the money I paid for it with

Ummmm what?

Supply and demand. That thing that has always been the backbone of economics, yet we've forgotten about due to the brainwash machines pumping full-force ideologies that only benefit the owners of those machines

This is absurd logic. This isn't how the economy or any business works. The owner takes some amount of money from his profits to pay himself for his work. That doesn't harm anyone, unless you consider not giving charity as harm.

My next sentence expounded. The problem is not in the taking of profit, but when too much profit is taken. Profits not returned the economy are an effective reduction of wealth from that economy. When amount of profits are reasonable, this is not a problem because they're used for further consumption and investment. But when profits are unreasonably high, the few who have them stop using them because of lack of stuff to use them on. And when they do use them, they mostly go towards sectors that don't recycle the wealth through the rest of the economy. The extreme growth of the finance industry and luxury items, and the huge amounts of money currently sitting in incredibly rich peoples' vaults doing nothing has proven this point. The reason all this over-profit taking is bad is because it hurts everybody else by siphoning wealth from the economy and thus from everybody else

So we should force everyone to spend and consume because that helps everyone right?

Well, if you want an economy, then yes it needs to be structurally designed on cyclical consumption and production. That's what economics is, after all.

This is all a matter of the super rich among us wanting to force an economy upon everybody else, but not themselves. They want us to give them our money for their goods, then they want to keep that money and not pay it back. They refuse to participate in an economy. This is the contrast between actual economics and the Randian Libertarian sort. The former is, well, actual economics, the latter is a moral system of arbitrary deservedness masquerading as economics

When running an economy, the wealth that gets distributed from consumer to producer MUST be then redistributed back from producer to consumer in order to repeat the cycle and keep the economy operating. What we have been seeing these last several decades is the producer not wanting to play his part, wanting to keep everything he deems worthy based on a dysfunctional moral ideology, and create a new rendition of nobility and serfdom

There is no logic or evidence here you are just spouting out your opinions.

I thought the last time we went at it, I did provide some evidences. The issues of wealth inequality and household debt accumulation are well documented. Bureau of Labor and such

[wufwugy]

Rich are richer and poor are poorer because of regulations of the government.

What regulations?

[IowaSkinsFan]

What regulations?

Look in the last thread where we argued. I'm sorry, I admire your passion for talking about politics but I don't really want to get into this stuff anymore. gl

[IowaSkinsFan]

What regulations?

I'm prob not going to look at this thread anymore but to give one good example: the regulation of the beer industry. There's a great documentary called beer wars I think that gets into it. The regulations are set up so the small companies have an artificially large disadvantage over larger competitors.

[wufwugy]

Well if you won't see this, you won't see it, I guess

I'm prob not going to look at this thread anymore but to give one good example: the regulation of the beer industry. There's a great documentary called beer wars I think that gets into it. The regulations are set up so the small companies have an artificially large disadvantage over larger competitors.

That does happen, and is a problem in some industries. Gambling is a perfect example. Others like software, entertainment, and probably your beer example are good ones too. However, there are two necessary things to apply: 1) what happens with no regulation in either direction? Some industries are not naturally competitive, and so not regulating for some equity will just create the same results as regulating against equity. 2) Some industries are the opposite what works best for an economy when deregulated. Banking and healthcare are big ones. A lot of industries are in the middle where some aspects should be regulated but others should not. Like food and drugs. Both over-regulation and over-deregulation would be disasters

Also, regulation is itself a non-separable facet of society. Regulation is just another way of saying words like "rules" and "laws", and will always manifest in some way. Even Peter Schiff once slipped up and said (not verbatim) that it's not so much that he's for or against amount of regulation, but that he's for smarter regulation. Which is right, yet belies the position that all we need is deregulation

Regardless, there are a wealth of industries that are fucked up by bribery lobbying government to regulate for benefit of the special interests. But sadly, the times in which we hear about how government is so bad is when the Koch's don't like the EPA and want to be able to dump chemical waste wherever they please, or when Goldman Sachs doesn't like the SEC trying to stop them from their ability to create bubbles then bet against the bubble not bursting, etc

Corporate personhood has turned government into lobbied whores for those with the money to buy them, and we find over-regulation in areas where that is destructive for the society yet beneficial for the special, and under-regulation in areas where that is destructive for society yet beneficial for the special.

It's about creating smart laws, not creating absence of laws

[IowaSkinsFan]

Well if you won't see this, you won't see it, I guess

K I lied, I'm bored, gf is out of town.

That does happen, and is a problem in some industries. Gambling is a perfect example. Others like software, entertainment, and probably your beer example are good ones too. However, there are two necessary things to apply: 1) what happens with no regulation in either direction? Some industries are not naturally competitive Name one, and so not regulating for some equity will just create the same results as regulating against equity. 2) Some industries are the opposite what works best for an economy when deregulated. Banking and healthcare are big ones I think its the other way around. Regulated health care has increased health care costs in many ways. By restricting the amount of people who can practice medicine, by forcing people to buy health insurance that has protections completely unnecessary for their lives, etc. Banks, same thing. How many people here would love to be able to use own and use a currency other than the US dollar. You can't, because government regulations make it unprofitable. Banks currently have to work under regulations that cost enormous amounts of money, which means they cant give consumers as good of deals . A lot of industries are in the middle where some aspects should be regulated but others should not. Like food and drugs. Both over-regulation and over-deregulation would be disasters Regulation of food and drugs hurts the poor. People who want information about the food they are consuming can pay for that information. Forcing poor people to pay for that information is unfair. Deregulation would cause food and drug providers to pay for the information about the safety of their products, or else no one would buy them.

Also, regulation is itself a non-separable facet of society. Regulation is just another way of saying words like "rules" and "laws", and will always manifest in some way. Even Peter Schiff once slipped up and said (not verbatim) that it's not so much that he's for or against amount of regulation, but that he's for smarter regulation. Which is right, yet belies the position that all we need is deregulation

I'm not against regulation I'm just against government regulation, because they consistently don't act in our best interest. CME, a futures exchange, regulates consumer behavior who participate. I'm not against that.

Regardless, there are a wealth of industries that are fucked up by bribery lobbying government to regulate for benefit of the special interests. But sadly, the times in which we hear about how government is so bad is when the Koch's don't like the EPA and want to be able to dump chemical waste wherever they please, or when Goldman Sachs doesn't like the SEC trying to stop them from their ability to create bubbles then bet against the bubble not bursting, etc

Honestly, I have no disagreement here. I don't like many business men.

Corporate personhood has turned government into lobbied whores for those with the money to buy them, and we find over-regulation in areas where that is destructive for the society yet beneficial for the special, and under-regulation in areas where that is destructive for society yet beneficial for the special.

It's about creating smart laws, not creating absence of laws

Agree with you about over regulation, again disagree about under regulation. I'm not against the absence of laws and I want smart laws too. I just think most laws that deter the freedom of individuals to make free choices are bad ones, and most laws/regulations you are a proponent of do just that.

[d0zer]

Rich are richer and poor are poorer because of regulations of the government.

That seems like an absurd over-simplification of a complex issue.

You can cherry-pick examples of extreme regulation hurting the little guy just like you could cherry-pick examples of extreme deregulation allowing the big guy to screw over the little guy.

The fact is that we need regulation of some form, and we also need taxes. The extent of each is up for debate, but laisse-faire economic libertarianism taken to an extreme allows for things like the american housing bubble crash to occur when groupthink sets into the minds of the "great" fiscal minds of wall street. Canada for example has much stricter lending policies and its housing market was relatively unscathed.

I know there are some bullshit regulations out there, and they should be dealt with, but I also don't believe we can throw the baby out with the bathwater and have wild-west economics either.

[IowaSkinsFan]

That seems like an absurd over-simplification of a complex issue.

You can cherry-pick examples of extreme regulation hurting the little guy just like you could cherry-pick examples of extreme deregulation allowing the big guy to screw over the little guy.

Give me one example big guy screwing over little guy without doing something currently illegal and without government help

The fact is that we need regulation of some form, and we also need taxes. The extent of each is up for debate, but laisse-faire economic libertarianism taken to an extreme allows for things like the american housing bubble crash to occur when groupthink sets into the minds of the "great" fiscal minds of wall street. Canada for example has much stricter lending policies and its housing market was relatively unscathed.

The american housing bubble without a doubt was caused by regulation that artificially increased demand for home ownership from the government forcing banks to make loans to people who wouldnt be able to pay the loan if they met even a little bit of a snag income wise. The government caused unstrict lending policies.

I know there are some bullshit regulations out there, and they should be dealt with, but I also don't believe we can throw the baby out with the bathwater and have wild-west economics either.

You don't believe it but that doesn't make it any less correct.

K I'm bored I came back.

[Numbr2intheWorld]

The fact is that we need regulation of some form, and we also need taxes. The extent of each is up for debate, but laisse-faire economic libertarianism taken to an extreme allows for things like the american housing bubble crash to occur when groupthink sets into the minds of the "great" fiscal minds of wall street. Canada for example has much stricter lending policies and its housing market was relatively unscathed.

The US had very strong regulations on housing loans. They strongly encouraged banks to make shitty loans in the name of the "American Dream." The housing crash had everything to do with regulation.

Having strict regulations the other way doesn't help much either. When you have very strict, conservative lending policies you end up fucking the middle class because banks who actually would have take a chance on them are prohibited from giving them a loan. I'm not surprised the housing market was unscathed because your prices we're probably falling well before.

That being said, if the regulations of Canada matched the normal due diligence a good bank would do before giving a loan, then they would be fine.

[d0zer]

ISF: monsanto vs small farmers

The US had very strong regulations on housing loans. They strongly encouraged banks to make shitty loans in the name of the "American Dream." The housing crash had everything to do with regulation.

I'll admit it's very possible that I don't understand the housing crash, but if the US had such strong regulations on housing loans, why were american banks allowed to hand out risky 50 year mortgages to bustos? Stricter lending policies could have prevented that.

Having strict regulations the other way doesn't help much either. When you have very strict, conservative lending policies you end up fucking the middle class because banks who actually would have take a chance on them are prohibited from giving them a loan. I'm not surprised the housing market was unscathed because your prices we're probably falling well before.

That being said, if the regulations of Canada matched the normal due diligence a good bank would do before giving a loan, then they would be fine.

You speak as if we have the option of one extreme or the other, and then seem to cautiously endorse a more moderate approach to regulation which is exactly the approach I support. I'm not suggesting we regulate the market so heavily it can't breathe -- I recognize the problems with that approach but I also believe the other extreme has its share of problems. Balance.

[IowaSkinsFan]

ISF: monsanto vs small farmers

Explain. I'm not familiar with this.

I'll admit it's very possible that I don't understand the housing crash, but if the US had such strong regulations on housing loans, why were american banks allowed to hand out risky 50 year mortgages to bustos? Stricter lending policies could have prevented that.

Banks regulate themselves. They will not make bad loans because bad loans means they will lose money. The only way this lead to a good outcome for banks was because the government bailed them out and the banks knew they were going to do so.

You speak as if we have the option of one extreme or the other, and then seem to cautiously endorse a more moderate approach to regulation which is exactly the approach I support. I'm not suggesting we regulate the market so heavily it can't breathe -- I recognize the problems with that approach but I also believe the other extreme has its share of problems. Balance.

Max nor I support a "balanced" approach. It's easy to say "Everything needs a balanced approach." But its simply a logical fallacy. I'm not saying you should fuck hookers all the time when your married or not fuck hookers at all, you should take a balanced approach, fuck hookers sometimes. When something is amoral conceptually there's no reason to have a balanced approach.

I'm not saying you are saying that, as you believe no regulation creates problems. But I challenge you to look markets and ask yourself "Are the problems with this market because it is unregulated or because of regulations?"