I am going to have to get to this tonight. All of my work and grown up shit are getting in the way of my internet forum debates.
When I see evidence to the contrary I will do just that. That is why I stopped being a socialist midway through college in the first place. Your smug sense of self-satisfaction in a “stroke job” of an economic theory (a trait you share quite strongly with your Austrian antagonists) is greatly appreciated though.
Back in a moment.
[quote]Ryan P. McCarter wrote:
But the facts are simple, if you are willing to examine them–nothing was wrong with Europe’s economies until the global recession (hint: not caused by poor people, or welfare states) set in, and now the working class is asked to pay for it all. They do not like this, leading to the unrest you barely acknowledged (which has certainly not been decreasing since the crisis began).
[/quote]
Do you have any proof that nothing was wrong with Europe’s economies? Many of the European nations in trouble at the moment had high levels of public debt before the global recession. And many had high levels of private debt too.
If every European nation had high levels of individual savings and low levels of public debt would they be in the trouble they are now? Highly unlikely. So to state there was nothing wrong with Europe’s economies is nonsense.
The problem is consumerism and advertising. It is not businesses and capitalism (except so far as businesses advertise). Poor people piss their money away instead of saving it. They then take out loans and screw themselves over more. I have friends who spend $200/wk on alcohol and e. It is insane! If they saved the money instead then in a year they would have POWER. $10k in savings at my current spending level is enough to support me for 8-9 months without work.
I believe the true problem with our society is that savings are not respected enough in our culture. Because I saved significant money from the age of 20-25 I now have enough in the bank to support myself for ~3 years without a job. This gives me an amazing amount of power and allows me to take advantage of the free market.
What I don’t think many libertarians understand is that when you are close to the bread line the free market works against you. When I had no savings I wouldn’t dare do things differently at work…because if I did and it didn’t work out then I would be on the streets. I also didn’t dare apply for other positions in case my boss found out and fired me before I had secured a new job.
What commie sorts don’t understand is that living on government assistance (i.e. welfare) is mentally debilitating. When assisted by family you get much more than simply $$. You get actual support and it is personal. Government assistance is a serious problem for 3 reasons:
People take advantage of it. Because of this we have a whole bunch of bullshit checks which get in the way of the truly needy but are required to at least stop some of the people trying to take advantage of the system.
It acts as a crutch for people so that they can rationalise away not saving for themselves. Many people I know don’t save because they know the government will stop them from starving.
People don’t realise until they are on government assistance how badly it damages your psych. You feel useless, stupid, lazy, etc. And this is not so much because of social customs but because the assistance is far removed from humanity. There is no sense of people actually caring. There is no emotional support.
[quote]phaethon wrote:
Do you have any proof that nothing was wrong with Europe’s economies? Many of the European nations in trouble at the moment had high levels of public debt before the global recession. And many had high levels of private debt too.
If every European nation had high levels of individual savings and low levels of public debt would they be in the trouble they are now? Highly unlikely. So to state there was nothing wrong with Europe’s economies is nonsense.
The problem is consumerism and advertising. It is not businesses and capitalism (except so far as businesses advertise). Poor people piss their money away instead of saving it.
[/quote]
I agree about consumerism and advertising, they’re psychologically destructive. However, the illusion of unending growth (which the whole “Rich people investing creates jobs!” argument hinges on) relies on people constantly buying shit they dont need.
Also, poor people piss their money away because they’d be poor anyway for long enough that it doesn’t matter to them. To make an analogy, if we’re kids and I get 100 dollars a week allowance and you get 10, me saving up for a 400 stereo makes sense because I can do it in five or six weeks. You’d have to wait 40 weeks of spending zero money, so you say fuck it and enjoy going to the movies once a week.
Because everything major requires loans - cars, houses, college.
So we should, as a society, see to it that as many workers as possible make significantly more than government assistance offers.
Or because they could save fifty bucks a week, if that, if they give up precious creature comforts. Thats 200 a month or 2600 a year (in other words, jack shit). Its simply not worth it to most when the extra fifty means going out to dinner or catching a movie on occasion.
I’m glad you at least see this. A few people in this thread seem to have the “Welfare recipients are freeloaders laughing their way to the bank with MY money!” attitude.
[quote]ReignIB wrote:…speaking of the housing bubble, the whole thing started with democrats “fighting” to get the banks to relax their mortgage approval criteria so that those who wouldn’t qualify on the basis of their credit history/income previously would be able to do so.
[/quote]
Show me the information you are basing this off of, please. And then, show me where the banks complained of these new regulations, as they must have if they were forced to make these loans against their will (they lobby for every other thing they want; if they saw this as a threat to profitability, as you claim, then they surely must have lobbied against this). And then show me how this caused similar real estate bubbles in England, Ireland, Spain, and other countries.
That’s the thing: I highly doubt you will. You were just shown information in that post which severely damages your claims that the government caused the housing bubble (by the way, you have not provided any actual data to support your claims yet, while I have). So far, neither you, nor any other poster has been able to produce any evidence to the contrary. Yet you refuse to acknowledge your error. This is not a laudable trait, it is the behavior of a zealot.
[quote]Ryan P. McCarter wrote:
[quote]ReignIB wrote:…speaking of the housing bubble, the whole thing started with democrats “fighting” to get the banks to relax their mortgage approval criteria so that those who wouldn’t qualify on the basis of their credit history/income previously would be able to do so.
[/quote]
Show me the information you are basing this off of, please. And then, show me where the banks complained of these new regulations, as they must have if they were forced to make these loans against their will (they lobby for every other thing they want; if they saw this as a threat to profitability, as you claim, then they surely must have lobbied against this). And then show me how this caused similar real estate bubbles in England, Ireland, Spain, and other countries.
[/quote]
This would be a good start: Clinton Pressure to Promote Affordable Housing Led to Mortgage Meltdown - Competitive Enterprise Institute
"The executives of government-backed mortgage giants Fannie Mae and Freddie Mac â??eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out.â?? But they realized the risk: â??In 2004, Freddie Mac warned regulators that affordable housing goals could force the company to buy riskier loans.â?? Ultimately, though, Freddie Macâ??s CEO, Richard F. Syron, told colleagues that â??we couldnâ??t afford to say no to anyone.â??
European markets are of course tied to US’,although I’m talking about the crash here in the US specifically.
[quote]Ryan P. McCarter wrote:
[quote]JoeGood wrote:The Fed’s purchasing of treasury bonds has a huge effect on keeping interest rates lower because treasury bonds are sold at auction. The Fed Funds Rate is by no means the only way they have of supressing interest rates.
Now you can argue if they should or should not be doing that but their purchases at auction have supressed treasury rates which does indeed carry over to mortgage rates.[/quote]
First of all, I note that you object without addressing any of the data which contradicts your statements.
Second of all, you say: “The Fed’s purchasing of treasury bonds has a huge effect on keeping interest rates lower because treasury bonds are sold at auction.”
True, true, but it is primarily long-term rates we are interested in here. These long-term rates are primarily influenced by expectations of inflation.
“The Fed Funds Rate is by no means the only way they have of supressing interest rates.”
Well then, by all means, tell me how else they are responsible for keeping mortgage rates low. Explain yourself.
After you are done with that, explain how this Fed action was responsible for the housing bubbles in Europe.
[/quote]
I did tell you how the Fed keeps rates low without using the Fed Funds rate. The Fed Funds rate has nothing to do with its purchasing of bonds. The bonds are bought at auction as I said, the more demand for the bonds the lower the rate has to be for them to attract the needed subscription. Thus when the Fed buys into the auction the rate is supressed by the increased demand which as I said has zero to do with the Fed Funds rate.
I don’t actually care about Europe in any shape, form or fashion as what they do or how they do it is none of my business. You made a catagorically incorrect statement about a very basic financial idea which you should have learned in your finance classes.
[quote]CappedAndPlanIt wrote:
Also, poor people piss their money away because they’d be poor anyway for long enough that it doesn’t matter to them. To make an analogy, if we’re kids and I get 100 dollars a week allowance and you get 10, me saving up for a 400 stereo makes sense because I can do it in five or six weeks. You’d have to wait 40 weeks of spending zero money, so you say fuck it and enjoy going to the movies once a week.
[/quote]
And that is my point. Saying “fuck it” keeps them poor.
[quote]CappedAndPlanIt wrote:
Because everything major requires loans - cars, houses, college.
[/quote]
On cars and houses: You should not be purchasing a car or a house if you don’t have the savings to support yourself without a job for 6 months. To do otherwise is reckless.
I walked an hour each way to my first job. I caught public transport 1.5 hours each way for my second. Even if public transport is not in reach you can ride a bike or buy a cheap scooter.
[quote]CappedAndPlanIt wrote:
Or because they could save fifty bucks a week, if that, if they give up precious creature comforts. Thats 200 a month or 2600 a year (in other words, jack shit). Its simply not worth it to most when the extra fifty means going out to dinner or catching a movie on occasion.
[/quote]
Except of course $2600 is not jack shit. Saved over 4 years that is >$10k. It is enough to sustain living without a job for 6months. This gives you power. Within 4 years you can turn from a slave to a power broker. That is amazing but very few of the poor take advantage of it.
The problem is the poor have fucked up attitudes. They are trading in true freedom and power to go to the movies. And our culture at least passively supports it.
[quote]phaethon wrote:
[quote]CappedAndPlanIt wrote:
Also, poor people piss their money away because they’d be poor anyway for long enough that it doesn’t matter to them. To make an analogy, if we’re kids and I get 100 dollars a week allowance and you get 10, me saving up for a 400 stereo makes sense because I can do it in five or six weeks. You’d have to wait 40 weeks of spending zero money, so you say fuck it and enjoy going to the movies once a week.
[/quote]
And that is my point. Saying “fuck it” keeps them poor.
[quote]CappedAndPlanIt wrote:
Because everything major requires loans - cars, houses, college.
[/quote]
On cars and houses: You should not be purchasing a car or a house if you don’t have the savings to support yourself without a job for 6 months. To do otherwise is reckless.
I walked an hour each way to my first job. I caught public transport 1.5 hours each way for my second. Even if public transport is not in reach you can ride a bike or buy a cheap scooter.
[quote]CappedAndPlanIt wrote:
Or because they could save fifty bucks a week, if that, if they give up precious creature comforts. Thats 200 a month or 2600 a year (in other words, jack shit). Its simply not worth it to most when the extra fifty means going out to dinner or catching a movie on occasion.
[/quote]
Except of course $2600 is not jack shit. Saved over 4 years that is >$10k. It is enough to sustain living without a job for 6months. This gives you power. Within 4 years you can turn from a slave to a power broker. That is amazing but very few of the poor take advantage of it.
The problem is the poor have fucked up attitudes. They are trading in true freedom and power to go to the movies. And our culture at least passively supports it.[/quote]
Two things: You’re right, them saying “fuck it” keeps them poor - but keeping them poor is what keeps them saying fuck it. Its a cycle.
Also, you talk about people going from slave to a power broker. Here’s my concern: Could everyone do that? I dont mean “each individual”, I mean could everyone, as a whole society, all together, be power brokers?
[quote]CappedAndPlanIt wrote:
[quote]phaethon wrote:
[quote]CappedAndPlanIt wrote:
Also, poor people piss their money away because they’d be poor anyway for long enough that it doesn’t matter to them. To make an analogy, if we’re kids and I get 100 dollars a week allowance and you get 10, me saving up for a 400 stereo makes sense because I can do it in five or six weeks. You’d have to wait 40 weeks of spending zero money, so you say fuck it and enjoy going to the movies once a week.
[/quote]
And that is my point. Saying “fuck it” keeps them poor.
[quote]CappedAndPlanIt wrote:
Because everything major requires loans - cars, houses, college.
[/quote]
On cars and houses: You should not be purchasing a car or a house if you don’t have the savings to support yourself without a job for 6 months. To do otherwise is reckless.
I walked an hour each way to my first job. I caught public transport 1.5 hours each way for my second. Even if public transport is not in reach you can ride a bike or buy a cheap scooter.
[quote]CappedAndPlanIt wrote:
Or because they could save fifty bucks a week, if that, if they give up precious creature comforts. Thats 200 a month or 2600 a year (in other words, jack shit). Its simply not worth it to most when the extra fifty means going out to dinner or catching a movie on occasion.
[/quote]
Except of course $2600 is not jack shit. Saved over 4 years that is >$10k. It is enough to sustain living without a job for 6months. This gives you power. Within 4 years you can turn from a slave to a power broker. That is amazing but very few of the poor take advantage of it.
The problem is the poor have fucked up attitudes. They are trading in true freedom and power to go to the movies. And our culture at least passively supports it.[/quote]
Two things: You’re right, them saying “fuck it” keeps them poor - but keeping them poor is what keeps them saying fuck it. Its a cycle.
Also, you talk about people going from slave to a power broker. Here’s my concern: Could everyone do that? I dont mean “each individual”, I mean could everyone, as a whole society, all together, be power brokers?[/quote]
Why does every member of society have to be able to be a power broker? Our very human nature is based around dominance hierarchies, and some people are always going to be at the bottom, regardless of the political system we operate under. For a thought provoking read, check out “The Lucifer Principle”.
When I was younger, I worked at a shitty warehouse job, and I saw the exact same thing as phaethon. Except people there wasted on average a hundred dollars a week on “comforts”.
It was very apparent to me as I was saving all I could to take night classes part time at university. People would be amazed that I could do this, and when I pointed out all the things they could cut out, they all had the same reply. “Pfft, a guy’s got to live”.
Movies, alcohol, cable tv, dvd’s, fast food, cigarettes, drugs, video games, vehicles/mods, and lottery tickets just to name a few. The exact mix changed depending on the person, but most of the people working there could have saved a decent amount of money by showing just a little bit of self discipline. They could have taken that money and put it towards a degree or trade, thus making a better life for themselves, but hey, a guys got to live.
As far as paying them better, one guy won almost 10 grand playing the lottery, and another got
a payout on a lawsuit of over 30 grand after his lawyers fees. The first guy put a thousand away in a saving account, and spent the rest on a home theater system and a leather couch. The second guy went through it all in less than 3 months, on a car, weed, and partying.
You could have given almost every one of my coworkers better pay, and all they would have done is waste most of it.
[quote]fraggle wrote:
Why does every member of society have to be able to be a power broker? Our very human nature is based around dominance hierarchies, and some people are always going to be at the bottom, regardless of the political system we operate under. For a thought provoking read, check out “The Lucifer Principle”.
[/quote]
No time for a new book atm, mind summarizing?
Also, if the success of any one individual is directly dependant on the continued poverty of others, its an unsound system both morally and functionally.
First off, I think its great you worked full time and went to school. However, what was your living situation? How many other responsibilites did you have, what kind of background did you come from? All that stuff adds up - the psychology of coming from a poor family is one that contributes to continued poverty; most poor people dont see any other future for themselves because poverty is all they’ve known, so they say fuck it.
Again, the wealth of those “successful” people we’re talking about depends on people buying lottery tickets and alcohol and movies and cable TV.
Its also engrained in our culture that we need to show outward signs of wealth to “keep up” with everyone else, lest we face social condemnation (the exact force we need to employ to solve these problems). People get a lease on a car because they know driving a “better” car will get people to treat them with more respect. People who probably shouldnt get mortgages on houses so they aren’t told they’re “living at home with mommy and daddy”. People waste 40 dollars on a t-shirt because they’re treated better when they wear it. Cosmetics, for the vast majority, aren’t a luxury, they’re a social necessity.
So, yes, I agree that people spend too much on things they dont need - BUT if they didnt, the economy wouldn’t be able to sustain the illusion of unending growth.
Also, if your coworkers had “wasted” their money, their quality of living would be improved (not just in terms of luxuries but also food, medicine, etc), and that money would continue to recirculate in the economy.
Cuba Rejoinder
I think if anything we can take away from the article you posted, which I agree is a well balanced and thoughtful article, is that no economic system is wholly good or wholly bad which I would firmly agree with. It is more a question of which is better than the other and here is where I think evidence shows that free markets and freer societies OVERALL are superior to those that are less so.
One final issue I would point out which is a confounder is namely that Latin America hasn’t exactly been the bastion of freedom and capitalism for the majority of its history. Not necessarily their fault, but Communism was a huge force in Latin America and has influenced it for better or worse for quite sometime. Cuba also has the luxury of being a tiny country with virtually its entire population living in one city. This makes administering health and education significantly easier than other larger Latin American countries.
Here are articles discussing and quoting Raul Castro regarding economic reforms. I think the fact the brother of Fidel and leader of Cuba is saying these things publically is very telling. Ignoring the leader of Cuba’s advice on his own countries economy would be foolish I think. One article from 2008 the others from 2010 to show his tune has stayed relatively the same for a few years now. Neither of these publications is exactly a conservative hotbed.
Note that half of all the arable land in Cuba is currently laying idle as a result of collectivist agriculture while there is simultaneously a lack of food in the country.
Somalia
And even allowing that Cuba did grow fairly well given its set of circumstances (which doesn’t mean it couldn’t have done better with freer markets which it has also had to increasingly allow in past years), this does not necessarily mean it had anything to do with the government. I see your Cuba and raise you the basically stateless society of Somalia which has seen similar growth rates and quality of life improvements without a government.
“For 1994, the CIA estimated the GDP at $3.3 billion.[150] In 2001, it was estimated to be $4.1 billion.[151] By 2009, the CIA estimated that the GDP had grown to $5.731 billion, with a projected real growth rate of 2.6%.”
Source: “Somalia”. World Factbook. Central Intelligence Agency. 2009-05-14. https://www.cia.gov/library/publications/the-world-factbook/geos/so.html. Retrieved 2009-05-31.
And a couple of academic papers that popped up on a quick google search. Perhaps biased, but they are a bit more academically rigorous than your standard op-ed piece.
First hand account of communism and then market economy in Poland
This is not a scientific paper by any stretch, but a real life account of life under both communism and free markets. Doesn’t sound like the Soviet economy, in terms of the everyday people, was up to much. Industrialization alone does not an economy make.
Examples of Successful state planning
First off, most of your examples are one off examples of government run PROJECTS not necessarily whole economies, but I probably could have been more clear. But let’s look at them anyways:
Russia- Did Russia improve the overall output of its heavy industry? Yes (let’s forget for a time that it was spurred on by military production which unless you plan on fighting forever is a limited stimulus). Is increased industrialization a good thing in and of itself, especially at the margins? No. Did over-industrialization and hideous mismanagement by central planners ultimately destroy the Russian economy? Yes.
If the Soviet economy, now non-existant, is supposed to be a great example of central planning at work Marxism is in trouble. In fact, much of the fruits of the rapid industrialization (military arms) were sold to Third World Countries incapable of producing them on their own (“Reconstruction and Cold War”. Library of Congress Country Studies. http://rs6.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+su0391). Retrieved 23 October 2010.). Which begs the question, if capitalism will fail because of a lack of markets in the future, how would communism similarly avoid this problem?
Related article with bibliography: Answers - The Most Trusted Place for Answering Life's Questions
Japan- not being an anarchist (I am a minarchist for what labels are worth), I believe there is some very valid times when a government can greatly help a society and economy. Following one of the most devastating wars in history is one of them. But government should also know when to get the hell out of the way once recovery has begun. Japan is a beautiful example of this and its spectacular economic growth (at one point the 2nd largest economy in the world) in the face of extremely limited natural resources is a testament to the free market (Japan has historically had one of the freest markets in the world).
China- again, liberalization and moving away from central planning has caused massive growth in their economy, on this we both agree. Marx says this is in line with his thinking (at least for a time) so I will agree with him there as well. Capitalism does cause growth and increased standards of living as we have both agreed, Marx just happens to think it will have to stop at some point, where I do not believe that this MUST be the case.
Personally I would not call moving further and further away from centralized planning and towards a market economy a slam dunk for centralized planning, but clearly you feel differently on this score.
I also would point out I have said multiple times that there are varying degrees of free markets. My only assertion was that freer markets do better than less free markets, a libertarian principle as I see it. China supports this assertion powerfully as you have also agreed by simply acknowledging that free markets are at least currently doing better than they were previously without them. Hard to see how this is playing games on my end.
American Railroads- At best this is an example of a governemnent project that did what government’s should do- facilitate the economy and open up markets and trade and then let markets do their job. While it isn’t clear that this would not have happened privately, I will admit it opened up markets. It should be pointed out it was also accomplished by contracted private companies and did have the nasty side effect of creating a monopoly in the private market and ultimately a labor riot thanks to the monopolist powers the government gave the railroads.
Again no policy is wholly good or wholly bad, but it isn’t clear that this couldn’t have been done better by the private sector. Regardless I will go ahead and concede this is an example of a government project OVERALL being very beneficial to the country. It still does not speak to a centrally planned economy very well though.
The building of the atom bomb- I will admit creating a weapon capable of leveling cities and ending humanity is not something the market is likely to create on its own. There is probably a very good reason for this though. So I will concede that when it comes to instigating the creation of WMD’s the government is a necessary element in spurring that development.
Hitler’s rebuilding- As often as I hear the “false sense of growth” argument from you and many other Marxist, it is curious that you would choose this example. Much like Russia, a major factor in the redevelopment of Nazi Germany’s economy was based off massive military spending (at best a temporary and very artificial stimulus as noted by the Broken Window Fallacy), huge and unsustainable government debt, and eventually only sustained by the conquest and plunder of other peoples.
This strikes me as the epitome of “illusory growth” and an economy doomed to eventual failure. So again, long term, how this can possibly be viewed as a success for centralized planning is extremely curious.
Not sure how any of these points makes the defense of centralized planning unassailable, but I think even you would have to conceded that, at best, you would have a hell of an argument on your hands to prove centralized planning is clearly superior.
Epochs
I am well aware Marx believed in historical epochs and I still contend that it is a fairly useless predictive model because it is riddled with “this will happen unless x,y,z happens”. I think this is the same deficiency that the Austrians and praxeology suffer at times.
Neither theory is wrong per se and in fact both camps can usually rationalize any deviation from predictions with a bunch of qualifying remarks which seem to adequately explain the situation (both Marxists and Austrians are claiming victory for predicting our current economic troubles).
That’s fine. Simply put, it doesn’t predict in the way you would want a predictive theory to work. The best analogy I can draw on is evolutionary theory in this respect. Once an event happens, it has strong explanatory and “predictive” powers in hindsight, but in terms of projecting actual long term predictions it is a poor model. We might say, man will eventually have wings unless any one of 10,000,000 things happens.
This could be a completely factual statement, but it is hard to view this as a powerful predictive theory at that point. You might say who cares how predictive Marx theories are he could still be right. Fine I say. Just don’t trumpet to the heavens how marvelous of a predictive model it is.
So I agree Marx said that capitalism will work for a time, but simply saying at some point capitalism must fail doesn’t tell us much about how we should proceed today, even if it is eventually accurate and is not really that great of a “prediction” at all. It is an examination and explanation of events that have already occurred. Economists are notoriously bad at predictions for a reason- the Calculation Problem. This is the same reason central planners do such a poor job of recognizing, no matter how smart they are, all of the effects of an action.
Free Market Being dead and irrelevant
If free markets have been dead and irrelevant for 50 years what does that make Marxism and Communism? If you think the Austrians are the laughing stock of academia and the economic world then you surely haven’t been paying attention to the treatment Marxists receive.
The labor theory of value has been widely discredited and abandoned (for the Austrian school’s marginalism) by all but the most die hard Marx supporters and Marxism is in general viewed as at best instructive but ultimately obsolete and antiquated. Talk about the pot calling the kettle black on this score.
[quote]Again, the free market is irrelevant, and the Fed’s actions have very little effect on mortgage rates:
http://www.getrichslowly.org/...ral-funds-rate/
http://www.themortgagegeek.com/...tgage_Rates.pdf[/quote]
I won’t go into how this is completely misunderstanding basic econ points as other posters have mentioned how bond purchases by the Fed and the like can affect those rates.
Aside from this, there are two problems here. The first is I never said the Fed fund rate had direct control over mortage rates (so not sure why you brought this rebuttal up as if I did), although it significantly impacts it indirectly. Secondly, if you would care to read the article it does say, if anything, that it RAISES mortgage rates (that is called having an affect) when there is a funds rate cut because this leads to inflationary pressures.
This would be called fucking the poor, because at best the fed is raising their mortgage rates and if they have an ARM then they are in deep trouble as we have seen. This is not a result of the market, it is in fact a result of fed policy intervention quite obviously.
Secondly, mortgage rates dropped to historic lows for a number of reasons not least of which was government intervention in the housing market via Fannie and Freddie Mac which made loans possible for folks who would typically never have been able to get it and for good reason. These same mechanisms also were able to offer super low interest rates and 100% financing thanks to their effective state backing. Pretty clearly this type of intervention caused a massive market distortion and it wasn’t because of the free market.
So in short, the Fed and other government interventions have clearly caused massive problems in the market and trying to drop the current situation on the free market entirely is being willfully ignorant of the real situation.
For all the reasons listed above, I do not see you as having presented any conclusive or even strong rejoinders to any of my points. Evidence is not clearly, if at all, on your side.
I will end with this as I have wasted far too much time already on this forum discussing this:
Marx was not an idiot and anyone who thinks he was is either being glib or foolish. You are not an idiot either. In fact you seem very thoughtful and intelligent by and large even if you do have an ego and a smug attitude to match. I am not an idiot and yes I have my own ego. Mises, Menger, Hayek, Rothbard, Friedman and (shudder the thought) Keynes were also not idiots. In fact they were all clearly brilliant and heads and shoulder above all their peers mentally and academically. Being smart does not make you, me, Marx, or anyone infallible however.
I think the weight of evidence rides with freedom and I have not seen many examples to the contrary. When I do I will reconsider my position. I believe government has its place, but I also believe that the majority of good things derive from the market and individual liberty. To use a poor but site related analogy, I think it is like the relationship between the core lifts (markets) and accessory work (non-market).
The most benefit is derived from focusing and doing the basics frequently and making them the bedrock of any program. Accessory work can help correct some imbalances and deficiency, but they ultimately only have serious merit when they assist the big lifts. To paraphrase Jim Wendler “don’t major in the minors”. I don’t see this changing anytime soon.
This has been a stimulating debate if acrimonious at times and I feel I am better for it as I have had to reconsider the merits of many of my positions as well as those of my opposites. I look forward to reading your considered reply, but will not be responding on this thread from here on due to time constraints. PM me if you feel you really need to discuss something else.
[quote]ReignIB wrote:This would be a good start: Clinton Pressure to Promote Affordable Housing Led to Mortgage Meltdown - Competitive Enterprise Institute
"The executives of government-backed mortgage giants Fannie Mae and Freddie Mac â??eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out.â?? But they realized the risk: â??In 2004, Freddie Mac warned regulators that affordable housing goals could force the company to buy riskier loans.â?? Ultimately, though, Freddie Macâ??s CEO, Richard F. Syron, told colleagues that â??we couldnâ??t afford to say no to anyone.â??
European markets are of course tied to US’,although I’m talking about the crash here in the US specifically.
[/quote]
I had to dig through your links, seeing as you made no hard claims (which is what I asked you to do), but I’ll address the points that I assume you are referring to.
The main culprit in your links seems to be Cuomo, who used his HUD position to increase Fanny and Freddie’s targets for purchase of loans to low-income borrowers. Not an insignificant detail, I grant you, but what exactly did he do? In 2000, he increased this target to 50% from 42%, and in 2005, it was again increased to 52%. But let’s look at the evolution of subprime lending over those years:
http://upload.wikimedia.org/wikipedia/en/e/ef/U.S._Home_Ownership_and_Subprime_Origination_Share.png
This chart shows the what percent of the total mortgage market was represented by subprime mortgages over the period from 1997 to 2007. If HUD really was the villian, what we would expect to see would be significant increases in the subprime market following the increase in the lending targets. But the largest increase, in 2000, from 42% to 50%, did not significantly alter the composition of the market, as is clearly shown by this chart. In fact, after a small initial increase, it stayed fairly flat until 2004, at which point it doubled, to nearly 20%. But HUD would not further raise the target until the next year, by which time the sharp increase had already occurred. What did occur in 2004 was the SEC’s easing of the net capital rule, at which point investment banks sharply increased their leverage in the subprime market. You could argue that this is still government action, but it was an action that left banks less regulated, and more free to do what they wished.
So, while Fannie and Freddie were certainly not harmless, there does not appear to be significant evidence available indicating that they caused the mortgage bubble. Add to this the fact that these targets applied only to Fannie and Freddie’s purchases of loans, not their origination, and it is evident that there was already a market for these loans, casting further doubt on the notion that the GSEs caused the crisis.
In this NYT article:
while details the failure of Freddie to adjust its risk-structure in the wake of the overheating subprime market, it is stated that their CEO received a memo in 2004 that they were purchasing risky loans that could put their business at risk. But again, this is 4 years after the expanded targets went into effect. The article also states that the company was pressured by its shareholders to become more heavily involved in the subprime market because it was more profitable. It also contains this line:
“Last year, Treasury Secretary Henry M. Paulson Jr. and the Federal Reserve chairman, Ben S. Bernanke, privately urged both companies to raise more money. At one point, Mr. Bernanke threatened to publicly scold the companies if they did not raise more cash.”
Again, the GSEs were far from harmless, but there is too much conflicting information to assign them primary blame for the mortgage meltdown.
Capped,
I not familiar enough to directly quote, so here goes.
The book I hesitated to mention, as it isn’t so much the book, but the things it may make you think differently about. Also it talks about a lot of different things, some I think he was reaching on, a few things I disagreed with, and a lot that made me go “whoa!”
One of the main things I took from it, was that throughout nature, dominance hierarchies exist and always will as it is in our DNA. With these hierarchies comes a constant battle to determine one’s place within it. Some do well, some poorly, and some do both at varying times.
It also speaks to the moral issue you mentioned wrt the system, though I would have to reread the book.
I came from a middle class background, was single with no children, just like the vast majority of the people I worked with. The exceptions were the dozen or so immigrants with a poor command of english, and one guy who had to pay a couple hundred per month in child support. Incidentally, the Asian immigrants were excellent savers, even with the relatively low pay, children, and sometimes parents to look after. They also believed that nobody else was going to take care of them, so they had better.
Like the others, I had initially squandered the advantage my upbringing gave me, and said fuck it, who cares, I’m young and want all the toys. The thing is, I got my shit together, while after a number of years there are only about four who aren’t still there doing the exact same thing.
I think it’s important to distinguish between poor and dysfunctional, as there are plenty who aren’t both. Giving people who are dysfunctional more money is a recipe for disaster, and has actually led to some people suing the government here. The lawsuits were with lump sum payouts, but I can’t see it changing if it were a wage increase.
I also agree that it is wrong that we are so focussed on status and consumerism. The thing is, the fight for status, recognition and power will always exist, and it will always have a fee, whether it’s currency, influence, sex or any other number of things.
I have to do real work now, so I won’t be able to address the rest in any substantial way today.
[quote]JoeGood wrote:I did tell you how the Fed keeps rates low without using the Fed Funds rate. The Fed Funds rate has nothing to do with its purchasing of bonds. The bonds are bought at auction as I said, the more demand for the bonds the lower the rate has to be for them to attract the needed subscription. Thus when the Fed buys into the auction the rate is supressed by the increased demand which as I said has zero to do with the Fed Funds rate.
I don’t actually care about Europe in any shape, form or fashion as what they do or how they do it is none of my business. You made a catagorically incorrect statement about a very basic financial idea which you should have learned in your finance classes.[/quote]
OK, you got me. That proves the Fed caused the whole thing. Even the bubbles in Europe.
[quote]kilpaba wrote:Here are articles discussing and quoting Raul Castro regarding economic reforms. I think the fact the brother of Fidel and leader of Cuba is saying these things publically is very telling. Ignoring the leader of Cuba’s advice on his own countries economy would be foolish I think. One article from 2008 the others from 2010 to show his tune has stayed relatively the same for a few years now. Neither of these publications is exactly a conservative hotbed.
Note that half of all the arable land in Cuba is currently laying idle as a result of collectivist agriculture while there is simultaneously a lack of food in the country.[/quote]
If they think market reforms will bring them success, then I encourage them to implement them. After all, few socialists would demand the nationalization of literally everything. The only point I wished to make was the progress that Cuba had made since the revolution in face of the crippling embargo, and that any explanation of Cuba’s doldrums that left out the effects of the embargo was incomplete and dishonest, especially considering the rapid growth they saw before it was put into place.
[quote]Somalia
And even allowing that Cuba did grow fairly well given its set of circumstances (which doesn’t mean it couldn’t have done better with freer markets which it has also had to increasingly allow in past years),[/quote]
Correct, but it doesn’t mean that they would have done any better with freer markets, either.
[quote]this does not necessarily mean it had anything to do with the government. I see your Cuba and raise you the basically stateless society of Somalia which has seen similar growth rates and quality of life improvements without a government.
“For 1994, the CIA estimated the GDP at $3.3 billion.[150] In 2001, it was estimated to be $4.1 billion.[151] By 2009, the CIA estimated that the GDP had grown to $5.731 billion, with a projected real growth rate of 2.6%.”
Source: “Somalia”. World Factbook. Central Intelligence Agency. 2009-05-14. https://www.cia.gov/library/publications/the-world-factbook/geos/so.html. Retrieved 2009-05-31.[/quote]
Interesting indeed, and I don’t know anything about Somalia, so I’ll only say this: while I’m not attempting to dismiss this achievement, growing a $3.3 billion economy is generally a lot different than growing one with a GDP in the hundreds of billions.
[quote]First hand account of communism and then market economy in Poland
This is not a scientific paper by any stretch, but a real life account of life under both communism and free markets. Doesn’t sound like the Soviet economy, in terms of the everyday people, was up to much. Industrialization alone does not an economy make.
But Poland is only one example. Here is another one:
“AFTER THE FALL; 10 YEARS AFTER IN GERMANY: AN OCCASIONAL SERIES; When the Berlin Wall crumbled, East Germans imagined a life of freedom where consumer goods were abundant and hardships would fade. Ten years later, a remarkable 51% say they were happier with communism.”
source: USA Today archives Oct. 11, 1999
Similar feelings have been expressed by Russians. So the reality is a bit more complicated than anyone ever acknowledges.
[quote]Examples of Successful state planning
First off, most of your examples are one off examples of government run PROJECTS not necessarily whole economies, but I probably could have been more clear. But let’s look at them anyways:[/quote]
Irrelevant. One thing that free-marketers, in their mysticism, never acknowledge is that someone has to coordinate economic activity–the only question is what organizational form this should take. All of these accomplishments demonstrate the ability of governments to effectively manage these activities.
In reality, the collapse of Soviet Union was brought on primarily due to the huge expenditures of the arms race with the USA. Does it represent mismanagement and poor-decision making on the part of planners? Yes. But for one thing, this argues for more local input from the population in determining economic priorities, not less, and second, this crisis, which was really brought to a head by the collapse of oil prices, is something that would have led to a bailout in a capitalist country. Indeed, crises of this magnitude in capitalist countries are not at all uncommon, they simply have the advantage of having greater access to capital, and thus are able to survive them.
So in short, if you charge the Soviet economy with being vulnerable to mismanagement, I concur, but you’ve failed to really make a case that planning (not necessarily planning of every single thing) is worse than markets.
But that’s just it: it’s NOT supposed to be a great example, and it never really was. The Soviet Union jailed many socialists who spoke out against it, and if you look at how it was formed (it amounted, of course, to a coup), it shouldn’t be that surprising. Socialism is by definition and necessity a democratic affair, while very little about the Soviet economy was demcratic.
Because socialism, not requiring a profit to be made for industry to function, will never have a problem providing its citizens with an income sufficient to purchase everything produced. It is production for use (the logical goal of production, ultimately, is consumption, not savings). Capitalism suffers from the contradiction between production (which must ultimately lead to higher consumption if it is to even make sense) and profitability (which eventually demands that the public consume less).
The main point, however, is the industrialization itself, not the wisdom of that goal or its consequences. When a plan is agreed upon, governments are typically able to accomplish the goals relatively quickly and efficiently. Anything else falls into the realm of “good management” or decision-making, which are required in all economic systems.
In fact, the government is especially good at large-scale projects like this which demands that a ton of resources from all over be coordinated. There is a (in my opinion) convincing argument that socialization should occur only in large industries, at least for some time, and that planning in smaller, less important industries (like, for instance, sock production) should be left more or less to the market.
OK, but you seem to strategically avoid acknowledging that it was the government’s diversion of resources to key industries that was responsible for the growth in the first place. The free market had absolutely nothing to do with it, and the fact that the economy may have been “handed off” to free enterprise after the government set the stage for the growth they experienced is irrelevant. You cannot claim the Japanese government’s victory for the free market.
[quote]China- again, liberalization and moving away from central planning has caused massive growth in their economy, on this we both agree. Marx says this is in line with his thinking (at least for a time) so I will agree with him there as well. Capitalism does cause growth and increased standards of living as we have both agreed, Marx just happens to think it will have to stop at some point, where I do not believe that this MUST be the case.
Personally I would not call moving further and further away from centralized planning and towards a market economy a slam dunk for centralized planning, but clearly you feel differently on this score.[/quote]
But again, the fact remains that they are NOT a free market, as they see all kinds of government direction of loans and subsidies to industries. This is the definition of planning. It need not be a total command economy to “count,” either. At any rate, Libertarians typically argue that ANY government intervention produces less optimal results than the totally free market, and you still have not acknowledged that, regardless of their direction, China is an outstanding strike against that hypothesis.
That’s all I’m asking for you to do: acknowledge the fact, not equivocate over their direction.
Because this Libertarian principle, like most other ones, is false on its face. China, most people would agree, features more government intervention in their economy than we do, yet they were out of recession in, what, under a year? It’s also the reason they’re kicking the rest of the world’s collective ass in the area of clean technology.
As regards your assertion that there are varying degrees of free markets, that leads to two conclusions, as I see it, based on the definition of “free market.”
If you define the free market in the absolutist sense of no government intervention or regulation of any kind (or at least, a bare minimum), then Libertarians, since I don’t know of any instance where they have argued for additional government involvement as a solution, must endorse this free market over state-guided economies (not necesarily planned, in the Soviet sense) as being more conducive to growth. But as we have seen, this is false, as state-guided economies outperform “pure” market economies in almost every single instance.
If you allow for varying degrees of free markets, the Libertarians must argue that the freer, the better (on the same grounds as I used in the previous case). But this claim is also false, as we see when comparing the US and China. China is more free than it used to be, and is doing better, yet it is significantly less free than the US, but is doing better than us, too. Clearly, there are more variables than simply the amount of government involvement.
Thank you for acknowledging this, but that is all I ask. I don’t think the planning I advocate is as extensive as you may be thinking.
I never said governments were not liable to mistakes, and you are correct.
Again, I’m beginning to think I haven’t made myself as clear as I ought to have, and I suspect that you have a different type of planning in mind than I do. I believe that most of the time, individuals and individual firms operate and make decisions pretty well, and socialism would not change that. As I alluded to before, depending on who you talk to (opinions differ), socialism may not even touch some industries. But it is apparent to me and to many others that our society is faced with many problems that the market is unable to or uninterested in solving. Believe it or not, I have no problem with the market when it functions well, and if it does function well, there’s no harm in leaving it alone. However, I believe it functions well a smaller percentage of the time than you apparently do, and I also believe that if society is faced with a problem that is difficult to solve via the market, we should not be afraid to decide to just do it.
It was not only the weapon itself, but also the infrastructure that went along with it–as you know, the government built a large base in Oak Ridge to support development of the device. I chose this example because I thought it was a good instance of the government making a decision, and then pulling out all the stops to accomplish the goal.
True, but what the government did was set a floundering economy in motion again, and powerful industries were built up. Again, good judgement is still needed.
I hope I have cleared up misconceptions of the planning I advocate, and if I have, I believe that this objection will have been answered.
[quote]Epochs
I am well aware Marx believed in historical epochs and I still contend that it is a fairly useless predictive model because it is riddled with “this will happen unless x,y,z happens”. I think this is the same deficiency that the Austrians and praxeology suffer at times.
Neither theory is wrong per se and in fact both camps can usually rationalize any deviation from predictions with a bunch of qualifying remarks which seem to adequately explain the situation (both Marxists and Austrians are claiming victory for predicting our current economic troubles).[/quote]
But only the Marxists have most of the details on their side: a Marxist would say that the purchasing power of the citizens would decrease over time UNLESS something like credit wee used to stave off the inevitable. For quite a while, it looked like he was wrong UNTIL the credit crunch and the collapse in home prices, which had provided a buffer against declining incomes for many years. Once the countervailing influence was removed, the reality of insufficient demand was revealed. You’ll also notice that more attention in the capitalist West lately has turned to ways of boosting exports–this is a way to remain profitable in spite of flagging domestic demand, and lines up pretty well with the concept of the constant search for new markets.
[quote]That’s fine. Simply put, it doesn’t predict in the way you would want a predictive theory to work. The best analogy I can draw on is evolutionary theory in this respect. Once an event happens, it has strong explanatory and “predictive” powers in hindsight, but in terms of projecting actual long term predictions it is a poor model. We might say, man will eventually have wings unless any one of 10,000,000 things happens.
This could be a completely factual statement, but it is hard to view this as a powerful predictive theory at that point. You might say who cares how predictive Marx theories are he could still be right. Fine I say. Just don’t trumpet to the heavens how marvelous of a predictive model it is.[/quote]
But you analogy is too broad. If one were to say, “I’ll bet that if I breed these cattle in such-and-such a way, in a few generations they’ll be a lot bigger and provide more meat,” then one would of course be correct, and breeders did this long ago before they really even understood what was happening.
The reality with economics is that most of the time, there are too many uncontrollable variables to be able to say definitively if a model is correct or not. Almost the only thing one can do is to come up with a model, and then see how well it fits with the known facts, and then to see if it has any predictive value, and in these respects, Marx’s theory has stood up pretty well.
But that is not all he says. He gives reasons for the failures and these reasons suggest solutions. The insufficient buying power, for example, of the public suggests a few different solutions, but they basically all boil down to income redistribution (this is within a capitalist framework; in a socialist framework, the solution might be different). It is not only Marxists who have come up with this response, but most liberal economists, as you know.
[quote]Free Market Being dead and irrelevant
If free markets have been dead and irrelevant for 50 years what does that make Marxism and Communism? If you think the Austrians are the laughing stock of academia and the economic world then you surely haven’t been paying attention to the treatment Marxists receive.[/quote]
Sales of Capital have jumped in reponse to this crisis. I’m not predicting a mass resurgence of Marxist ideas, but people are questioning the validity of the eocnomic orthodoxy. The mainstream press, being controlled by business interests, and considering the ideological persuasions of those in the West, does not consider Marxism, but it is not necessarily because he is wrong. It is because Marx threatens their interests. That is the reason he is widely unpopular in capitalist countries, but if one looks at his theory, and weighs it against recent occurrences, it comes out a lot better than what they teach in the universities.
So in short, the treatment that Marxists receive is not because they are wrong. In fact, it’s likely the opposite–if he were just a rambling nutbag, nobody would feel threatened by him and they would ignore him. It is because he threatens the legitimacy of the established economic doctrine that he is so maligned.
The Austrians, however, fully support capitalism and business interests, and they are still not really taken seriously.
On the contrary, the labor theory of value is the only one that is consistent. In fact, I briefly rejected the labor theory until I really began to think about the implications, at which point it became evident that it was the only theory that worked. Marginalism, it should be noted, was considered by Jevons to be completely compatible with the labor theory, and the labor theory has enjoyed many empirical confirmations of its accuracy:
http://homepage.newschool.edu/~AShaikh/labthvalue.pdf
http://reality.gn.apc.org/econ/Zachariah_LabourValue.pdf
I’m used to people arguing that keeping the fed funds rate low caused the bubble, so that was purely reflexive. Sorry.
But aren’t long term rates determined by the market’s expectations of short term rates over the period of the instrument plus a risk premium? Am I confused?
At any rate, I am not arguing that the Fed was blameless. What I am arguing is that the Fed, by itself, did not cause the housing bubble, as many people contend. Furthermore, see my above post about Fannie and Freddie. Furthermore, none of the explanations even touch the subject of why the bubble was more-or-less global in scope, which is not easily explained by blaming the US government, and the global nature of the crisis becomes a futher problem for the free-market crowd when one considers the effects of the worldwide “savings glut” in lowering interest rates independent of Fed action.
If you consider ALL of the evidence, there is little to no way to feasibly avoid blaming the market for the majority of this crisis.
With all due respect, your positions and criticisms of mine depend far more on a different interpretation and different weighting of evidence than they do the actual facts, which come in far short of being a ringing endorsement for the free market.
[quote]Ryan P. McCarter wrote:
[quote]ReignIB wrote:This would be a good start: Clinton Pressure to Promote Affordable Housing Led to Mortgage Meltdown - Competitive Enterprise Institute
"The executives of government-backed mortgage giants Fannie Mae and Freddie Mac �¢??eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out.�¢?? But they realized the risk: �¢??In 2004, Freddie Mac warned regulators that affordable housing goals could force the company to buy riskier loans.�¢?? Ultimately, though, Freddie Mac�¢??s CEO, Richard F. Syron, told colleagues that �¢??we couldn�¢??t afford to say no to anyone.�¢??
European markets are of course tied to US’,although I’m talking about the crash here in the US specifically.
[/quote]
I had to dig through your links, seeing as you made no hard claims (which is what I asked you to do), but I’ll address the points that I assume you are referring to.
The main culprit in your links seems to be Cuomo, who used his HUD position to increase Fanny and Freddie’s targets for purchase of loans to low-income borrowers. Not an insignificant detail, I grant you, but what exactly did he do? In 2000, he increased this target to 50% from 42%, and in 2005, it was again increased to 52%. But let’s look at the evolution of subprime lending over those years:
http://upload.wikimedia.org/wikipedia/en/e/ef/U.S._Home_Ownership_and_Subprime_Origination_Share.png
This chart shows the what percent of the total mortgage market was represented by subprime mortgages over the period from 1997 to 2007. If HUD really was the villian, what we would expect to see would be significant increases in the subprime market following the increase in the lending targets. But the largest increase, in 2000, from 42% to 50%, did not significantly alter the composition of the market, as is clearly shown by this chart. In fact, after a small initial increase, it stayed fairly flat until 2004, at which point it doubled, to nearly 20%. But HUD would not further raise the target until the next year, by which time the sharp increase had already occurred. What did occur in 2004 was the SEC’s easing of the net capital rule, at which point investment banks sharply increased their leverage in the subprime market. You could argue that this is still government action, but it was an action that left banks less regulated, and more free to do what they wished.
So, while Fannie and Freddie were certainly not harmless, there does not appear to be significant evidence available indicating that they caused the mortgage bubble. Add to this the fact that these targets applied only to Fannie and Freddie’s purchases of loans, not their origination, and it is evident that there was already a market for these loans, casting further doubt on the notion that the GSEs caused the crisis.
In this NYT article:
while details the failure of Freddie to adjust its risk-structure in the wake of the overheating subprime market, it is stated that their CEO received a memo in 2004 that they were purchasing risky loans that could put their business at risk. But again, this is 4 years after the expanded targets went into effect. The article also states that the company was pressured by its shareholders to become more heavily involved in the subprime market because it was more profitable. It also contains this line:
“Last year, Treasury Secretary Henry M. Paulson Jr. and the Federal Reserve chairman, Ben S. Bernanke, privately urged both companies to raise more money. At one point, Mr. Bernanke threatened to publicly scold the companies if they did not raise more cash.”
Again, the GSEs were far from harmless, but there is too much conflicting information to assign them primary blame for the mortgage meltdown.
[/quote]
hmm, hard claims.
how about review of the CRA act under Clinton in 1995 ?
Yeah, you can’t point at one person or institution and blame them solely for the mortage meltdown, but without a doubt Clinton’s “equal housing” policies got things rolling in a “wrong” direction.
[quote]CappedAndPlanIt wrote:
Two things: You’re right, them saying “fuck it” keeps them poor - but keeping them poor is what keeps them saying fuck it. Its a cycle.
[/quote]
See I don’t agree. It is not a cycle. They aren’t saying “fuck it” because they are poor. Plenty of spoilt rich kids also say “fuck it”. Likewise there are millions of poor Asians who are saving like crazy.
It is only a cycle with our current culture that pushes the cycle.
[quote]CappedAndPlanIt wrote:
Also, you talk about people going from slave to a power broker. Here’s my concern: Could everyone do that? I dont mean “each individual”, I mean could everyone, as a whole society, all together, be power brokers?[/quote]
In the context I was using the the term power broker? Yes. Will it take a lot longer for some people? Yes. Is it possible for everyone? Yes (baring people with long standing mental illnesses or very serious physical disabilities).
If everybody was a little more spendthrift and had a decent chunk of savings you would see income inequality drop substantially. This is because when you have large loans and little savings you have no negotiation power. And when, as a society, the poor and lower middle class have no negotiation power then corporations can take advantage of it and we get the social problems we have now.
If you have enough savings in the bank to last you a year, and say 40% of the population also has this in emergency savings lets look at a few common scenarios:
Outcome: Business loses a lot of skilled workers, and will actually have some trouble replacing them. So either the business goes downhill or the boss gets fired (or shifted position etc). A good outcome for society.
Now in our current society what happens: You hate the boss but can’t dare quit because you have $10k in credit card debt and no savings. If you quit they could reposes you home. You would lose respect because you didn’t have a job. So you put up with it and it significantly decreases your quality of life.
Outcome: You spend quality time with your wife when she really needs it. You marriage is strengthened and you are a much happier man. You can go get another job in a month as there is no pressing financial worry.
Now in our current society what happens: You hope you have a boss who is kind enough to let you have a few weeks off work. Now I hope you work for a good boss like this, but many people don’t. And if he doesn’t then I would hope you quit in any case for your wife…but some financially cannot and even those that do will be really stressed because of unpaid bills etc.
Outcome: Best case is your boss is a good man and lets you have the time off. But then you are really relying on your boss not to be a dick. It might be a small business and he might think he needs you to work and cannot afford letting you have the time off (remember he also likely has bills to pay). Worst case is you cannot quit because you have no savings and a massive load of debt: In this situation you will be feeling like shit because you cannot help your wife and to be honest it will severely damage your marriage. Your quality of life will drop.
On the other hand without any savings many are likely to accept the position. Except of course you won’t be happy and because people aren’t really any good at compartmentalizing their emotions this will flow over into your personal life. Outcome is a shitty job and a worse off personal life.
I can list these problems all damn day and detail how without savings you get pushed around. The world would be a much better place if everyone had 6 months to 1 years worth of savings. And at least in the US it is possible for every adult to save these funds.
[quote]fraggle wrote:
Capped,
I not familiar enough to directly quote, so here goes.
The book I hesitated to mention, as it isn’t so much the book, but the things it may make you think differently about. Also it talks about a lot of different things, some I think he was reaching on, a few things I disagreed with, and a lot that made me go “whoa!”
One of the main things I took from it, was that throughout nature, dominance hierarchies exist and always will as it is in our DNA. With these hierarchies comes a constant battle to determine one’s place within it. Some do well, some poorly, and some do both at varying times.
It also speaks to the moral issue you mentioned wrt the system, though I would have to reread the book.
I came from a middle class background, was single with no children, just like the vast majority of the people I worked with. The exceptions were the dozen or so immigrants with a poor command of english, and one guy who had to pay a couple hundred per month in child support. Incidentally, the Asian immigrants were excellent savers, even with the relatively low pay, children, and sometimes parents to look after. They also believed that nobody else was going to take care of them, so they had better.
Like the others, I had initially squandered the advantage my upbringing gave me, and said fuck it, who cares, I’m young and want all the toys. The thing is, I got my shit together, while after a number of years there are only about four who aren’t still there doing the exact same thing.
I think it’s important to distinguish between poor and dysfunctional, as there are plenty who aren’t both. Giving people who are dysfunctional more money is a recipe for disaster, and has actually led to some people suing the government here. The lawsuits were with lump sum payouts, but I can’t see it changing if it were a wage increase.
I also agree that it is wrong that we are so focussed on status and consumerism. The thing is, the fight for status, recognition and power will always exist, and it will always have a fee, whether it’s currency, influence, sex or any other number of things.
I have to do real work now, so I won’t be able to address the rest in any substantial way today.[/quote]
Good post. I disagree with the part about wage increases, though. If a person makes enough that saving is, to them, a realistic endeavor, I think they would tend to.
I think the one of the main problems is a psychological one - people get locked in poverty and dont see any other option.