The Economics Thread

Apparently, US companies have started moving from China to Vietnam due to the trade war and setting up their new supply chains there. And some of you thought it couldn't happen. Globalization at work - they move to another poor country where they can pay slave labor wages. The rich get richer, the poor get a little bit better off - you make a penny, I make 100,000 is the new world order. We need to just put an automatic tariff of 15 percent on any company that employs more than 50 percent of its work force in another country. If they want to exploit these people like this, let them pay.

Link?
 
It says China based manufacturers (so that term is inclusive). It's not just the US companies. The key point here is "Labor costs are actually more affordable outside of China" so they go where they can find the cheapest work force since that is usually the biggest expense in the cost of goods sold (other than capital expenditure). Globalization has created a race to the bottom for these people and you can forget about ever organizing a union to demand fair wages or decent working conditions as the modern globalized world does not allow that. This move out of China to lower wage countries was happening before the tariffs but the tariffs are just going to be a catalyst for it. The asshat economists will just say that this is 'efficiency of the labor workforce'. Lets call it by its other name - perpetual 19th century slave labor conditions.
 
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@Danny_
Were you supporting these moves because the hurt China or because they aid the US?
Neither. I have nothing against the Chinese - I actually admire what they have done. I am against an economic system, glorified by @!#!@hole economists, that is akin to what we had in the 19th century. That system is called globalization and when you pair it with free trade, it creates the conditions of wealth inequality that we see today. It needs government intervention to moderate it and we don't have that (at least in the US). I'm not even sure that govt intervention can make it work though.

The argument for it that it was 'lifting people out of poverty' in the developing countries. And it is true - it did do that in China to an extent. But, it only lifts them to the point where they are a bit better off and it massively enriches the multinational companies that exploit their labor. Then these companies move on to the next place. And in the US, nothing has been more responsible for the contraction of the middle class and the stagnation of wages than globalization. That's why I favor Trumps tariffs - they may not work but at least, he is recognizing that there is a problem and trying to do something about it, something that neither the left nor the right in this country have done to this point. And we are all sick of these tone deaf assholes over here.
 
Neither. I have nothing against the Chinese - I actually admire what they have done. I am against an economic system, glorified by @!#!@hole economists, that is akin to what we had in the 19th century. That system is called globalization and when you pair it with free trade, it creates the conditions of wealth inequality that we see today. It needs government intervention to moderate it and we don't have that (at least in the US). I'm not even sure that govt intervention can make it work though.

The argument for it that it was 'lifting people out of poverty' in the developing countries. And it is true - it did do that in China to an extent. But, it only lifts them to the point where they are a bit better off and it massively enriches the multinational companies that exploit their labor. Then these companies move on to the next place. And in the US, nothing has been more responsible for the contraction of the middle class and the stagnation of wages than globalization. That's why I favor Trumps tariffs - they may not work but at least, he is recognizing that there is a problem and trying to do something about it, something that neither the left nor the right in this country have done to this point. And we are all sick of these tone deaf assholes over here.

I'm not sure any government of a state can regulate a global phenomenon. It's difficult enough to point an economy in the direction you want it within your borders, let alone outside it. If you wan't to ensure multinationals paying enough tax, you need an international tax law. If you want them to pay for carbon emissions, you need an international carbon tax law.

A decent fraction of globalisation is caused by technological advancement, and can't easily be reversed by regulation regardless. Nor should it.
 
Globalisation won't be stopped, besides it's creating wealth. The issue I have is with the distribution of the fruit of globalisation. That's where govts. can effectively do something.

I don't think that manufacturing jobs will ever come back to the US. These jobless people need a good welfare state and re-training opportunities sponsored by the govt. which should get the money from the guys accumulating globalisation profits.
 
The argument for it that it was 'lifting people out of poverty' in the developing countries. And it is true - it did do that in China to an extent. But, it only lifts them to the point where they are a bit better off and it massively enriches the multinational companies that exploit their labor. Then these companies move on to the next place.

The increase in income of the billions of people in 3rd world countries over the past 40 years is a larger number than the increase in corporate profits.

Yours sincerely,
An economist
 
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@MTF
@PedroMendez

I've come across some graphics like this:
607954-14909847164667752.jpg


original.jpg

The point the first is making is simple - that the various competing private airlines in the US have a high degree of common ownership. You can make a similar point from the second, with a single parent company releasing multiple products to fill all the niches of the market for a particular product. I think it'll be the ame fo most sectors given the size of pension funds, etc.
Now, I know that airlines are a cut-throat business within the US, that American and Delta etc genuinely fight for market-share.

So, what am I missing here? Is it that airlines are actually an uncompetitive oligopoly with many inefficiencies? Is the actual operation of these large companies totally divorced from their shareholders (owners)? Does competition not matter that much in maintain a market? (Or some other explanation).
 
@MTF
@PedroMendez

I've come across some graphics like this:
607954-14909847164667752.jpg


original.jpg

The point the first is making is simple - that the various competing private airlines in the US have a high degree of common ownership. You can make a similar point from the second, with a single parent company releasing multiple products to fill all the niches of the market for a particular product. I think it'll be the ame fo most sectors given the size of pension funds, etc.
Now, I know that airlines are a cut-throat business within the US, that American and Delta etc genuinely fight for market-share.

So, what am I missing here? Is it that airlines are actually an uncompetitive oligopoly with many inefficiencies? Is the actual operation of these large companies totally divorced from their shareholders (owners)? Does competition not matter that much in maintain a market? (Or some other explanation).
I've heard this argument crop up recently, and not really heard a formal counter-argument, but here's some of my own observations:

These firms like T Rowe Price, Vanguard, State Street, etc. aren't active managers of their portfolios and the companies therein. A lot of these holdings are in index funds or client accounts. So they essentially don't meddle in the actual business of the companies.

When I first read about this one of my thoughts was that we better just hope the CEO and other executives at one company don't have large holdings in the others :lol:. Which thankfully generally isn't the case. So CEOs are generally still very incented to maximize their own company's sales and profits.

But I've observed some markets that didn't seem price competitive, and either the companies were colluding offline - which I doubt they were - or they play like a reverse game of chicken that's not about who swerves first but about both staying the course and not lowering prices. Then they get on quarterly earnings calls and say that pricing in the market continues to be "rational".
 
Its a good question, but I struggle to articulate any coherent or interesting answer. Passenger air traffic seems to be prime example for a very inefficient market. I don't think that the structure of ownership has anything to do with it in this specific case. Competition matters.
 
Once again, apologies for the slow replies, busy week unfortunately. This debate is getting a little awkward because I was trying my best not to move the discussion away from UBI, but hey-ho.

Besides the point really, I could sit here all day and say X debunks Y, that's merely a claim, you claiming it so voiciforesouly doesn't add to it's truth or detract from it. I would suggest you engage with Mises and Hayek directly, because that argument is incorrect; they are not opposed to empiricism, but merely question how prominent that kind of research should be when relating to the social sciences.

There is nothing more contrived than an academic dick-waving contest, because as you know, there are numerous nobel laureates who fall into the Hayekian sphere. If you have an argument, I would be able to engage with it more if, rather than throwing out names, you presented it rather than tell me the famous name it is attributed to. I didn't tell you I disagree with experimental economics because Mises and Hayek said so, I told you that because that's what I think. You may think I'm wrong, but at least do me the courtesy laying out the arguments rather than just saying "oh this rube disagrees with these economists I like" - as I hope I've done to you.

Ironic again. You haven't laid out a single argument supported by evidence. All you've done is make drive-by subjective claims without backing them up.

For instance you claimed experimental economics lack academic rigor and are on par with "election polling" which you never supported with an argument let alone with supporting evidence. I linked research from neuroeconomists to show that, in fact, neuroeconomics and behavioral economics have a much stricter degree of academic rigour than neo-classical economics such as Austrian school.

You also just dismissed Galbraith's seminal work on many of the causes of the Great Depression without an argument or evidence either (hand waving away bad distribution of income, corporate structure, banking structure,etc).

There's rather a lot to unpack in this section. On the highlighted point, he's not an 'honest libertarian' - he's just one that vaguely agrees with your preferred end-state. I am not in the pay of any healthcare corporation so what the hell do I have to gain by representing them in an argument against someone I don't know on the internet? Agreeing with you isn't the barometer of honesty and it's incredible you seem to think that.

This is a silly claim. It has to do with the process. Goldhill takes an honest look at all the incentive problems with the US privatized health care while looking for a market based solution. Even he concludes that government has a role ""things that only government can do" such as "(protect the poor, cover us against true catastrophe,etc"

You haven't produced an argument or supporting evidence that Goldhill is wrong. All you have done is basically dismiss Goldhill because he "vaguely agrees" with me. No evidence supporting your view and no argument on why he is wrong.

Secondly, if economics has taught us anything over the last century, it is that whenever government tries to regulate an industry, it is always the corporate lobbyists that write the law. They have the ear of politicians, they have more of an interest (and therefore motivation) to spend money lobbying and ultimately, understand how the regulations play out better than most people (especially politicians). You're American so you'll understand this analogy: Al Capone loved prohibition because it allowed him to make more money, and it allowed him to get close to politicians, pay them and beat out competitors to entrench himself as the biggest player in the game. A similar, but less extreme, version of this plays out in almost every other heavily regulated industry from banking to taxis. If the answer to healthcare is to have single payer systems, why not those?

Actually if economics has taught us anything its that without regulation companies will pollute and damage the environment, companies will allow the most unsafe working conditions possible, will run risks that endanger the entire economy in order to seek personal profit, companies will privatize the profit and socialize the risk creating misaligned incentive problems in their wake.

The biggest problem with the Great Recession was the fact that financial services were almost entirely un-regulated. If economics has taught us anything its that Wall Street in particular cannot self-regulate without fecking up the entire economy because of greed.

" These were new, complex, exotic, non-transparent, non-traded, marked-to-model rather than market-to-market and mis-rated by the rating agencies. Indeed, the rating agencies were also culprits as they had massive conflicts of interest: they made most of their profits from mis-rating these new instruments and being paid handsomely by the issuers. Also, the regulators and supervisors were asleep at the wheel as the ideology in Washington for the last decade was one of laissez faire “Wild West” capitalism with little prudential regulation and supervision of banks and other financial institutions."
-Nouriel Roubini

"New-fangled derivatives? No oversight, reporting, or reserves necessary, courtesy of the Commodities Futures Modernization Act of 2000 (CFMA). You can thank Enron Board Member Wendy Gramm, and her Senator husband Phil Gramm, for that one. Subprime-Lend-to-sell-to-securitizers business model? Those are the financial innovators! At least, that is what Alan Greenspan called them, and why he refused to oversee them as Fed chair. Rules on SEC leverage? Let’s create a special exemption from the law for just 5 investment banks.

And so on. The list of radical deregulation and false beliefs is long and painful and dangerous and costly.

Of course “reputational risk” would serve as a deterrent to poor decision making! No bank would ever behave so recklessly as to put their own hard won status on the line — forget their very existence."
-Barry Ritholtz

Fact is de-regulation (FSMA and CFMA among others) was a massive problem that greatly contributed to the Great Recession. "over-regulation" was not even relevant here.

Whether one guy who is a 'die-hard libertarian' advocates something is quite frankly of no interest to me. I agree with all of his criticisms of the US healthcare system, and I think what he suggests is the most politically expedient solution, rather than being the most optimal. But let's not let perfection get in the way of good enough, shall we?

In this thread, you've said I argue against straw-men a lot but... simultaneously keep telling me about Rush Limbaugh and Fox News.

Again, you're making claims and throwing out names. Recessions are incredibly complex things and to some extent, are a natural part of economies. These 'great depressions' though, are a different beast, and almost always come directly after a period of monetary expansion. Which, I believe is the primary cause for them.

As I said previously, this is a false dichotomy. Austrians don't deny empiricism, and the Chicago school doesn't dismiss the Austrian school either. I read widely in economics, but I do believe that Mises (along with Menger, Marshall etc) should be the foundational texts for economics and everything else needs to be looked at in that context.

As I said before, I don't like throwing out names in discussions but, in this case I'll make an exception: I think it would be a good idea to check out Hayek. Put simply, food does not have a scarcity problem. It has a coordination problem. What does this have to do with Hayek? Well, Hayek was awarded the nobel prize because of one of the key insights about economics: it is primarily a 'knowledge' science. That is, knowledge is very dispersed so it's incredibly difficult (he would say impossible) to coordinate centrally, and that the only coordination mechanism human beings have hitherto discovered, is the market.

So now referencing studies is reduced to "throwing out names". :lol: ooohkay guy.

Anyway moving forward, let's look at the core assumptions of the premises of neo-classical economics - how individuals make decisions. If you don't believe they reject empiricism in practice you shouldn't have a problem with this research:

"Recent investigations have uncovered large, consistent deviations from the predictions of the textbook representation of Homo economicus (Alvin E. Roth et al., 1991; Ernst Fehr and Simon Ga¨chter, 2000; Colin Camerer, 2001). One problem appears to lie in economists’ canonical assumption that individuals are entirely self-interested: in addition to their own material payoffs, many experimental subjects appear to care about fairness and reciprocity, are willing to change the distribution of material outcomes at personal cost, and are willing to reward those who act in a cooperative manner while punishing those who do not even when these actions are costly to the individual. These deviations from what we will term the canonical model have important consequences for a wide range of economic phenomena, including the optimal design of institutions and contracts, the allocation of property rights, the conditions for successful collective action, the analysis of incomplete contracts, and the persistence of noncompetitive wage premia."

https://www.umass.edu/preferen/gintis/Anthro AER 2001.pdf

This challenges the notion the premise that a lot of neo-classical extrapolations are based on.
 
Ironic again. You haven't laid out a single argument supported by evidence. All you've done is make drive-by subjective claims without backing them up.

For instance you claimed experimental economics lack academic rigor and are on par with "election polling" which you never supported with an argument let alone with supporting evidence. I linked research from neuroeconomists to show that, in fact, neuroeconomics and behavioral economics have a much stricter degree of academic rigour than neo-classical economics such as Austrian school.

You also just dismissed Galbraith's seminal work on many of the causes of the Great Depression without an argument or evidence either (hand waving away bad distribution of income, corporate structure, banking structure,etc).

We never got to talking about them really. Behavioural economics and 'neuroeconomics' says something that's blindingly obvious: that people make decisions in a state of informational opacity (leading to all sorts of weird outcomes). So basically, the day one, week one stuff Econ students are told about perfect information etc etc isn't massively useful in the real world. This isn't something you need experiments to prove.

As for Galbraith, I just think he's wrong. Income distribution can't cause recessions, neither can corporate structure. Banking structure I agree with simply because money is the common denominator of the market economy, so any changes to the way money flows will invariably have effects on the entire economy. Examples of this are everywhere, Spain (and the rest of europe) in the 17th Century; The Federal Reserve preceding the Great Depression and of course, Alan Greenspan manipulating interest rates after the Dot Com bubble.

This is a silly claim. It has to do with the process. Goldhill takes an honest look at all the incentive problems with the US privatized health care while looking for a market based solution. Even he concludes that government has a role ""things that only government can do" such as "(protect the poor, cover us against true catastrophe,etc"

You haven't produced an argument or supporting evidence that Goldhill is wrong. All you have done is basically dismiss Goldhill because he "vaguely agrees" with me. No evidence supporting your view and no argument on why he is wrong.

I'll repeat again, his criticisms of the US healthcare system are that it is not free market enough, which I agree with. I like his solution for it's political expediency, and it introduces market functions that would be palatable to even most Democrats. Why can only the government do those things?

"I'm God" - produce an argument against this or evidence, or you're wrong. That's nonsense.

Actually if economics has taught us anything its that without regulation companies will pollute and damage the environment, companies will allow the most unsafe working conditions possible, will run risks that endanger the entire economy in order to seek personal profit, companies will privatize the profit and socialize the risk creating misaligned incentive problems in their wake.

The biggest problem with the Great Recession was the fact that financial services were almost entirely un-regulated. If economics has taught us anything its that Wall Street in particular cannot self-regulate without fecking up the entire economy because of greed.

...

Fact is de-regulation (FSMA and CFMA among others) was a massive problem that greatly contributed to the Great Recession. "over-regulation" was not even relevant here.

Even at the time of the 2008 banking crisis, the financial industry was one of the most heavily regulated industries in the US/UK. The moral hazard of the banking industry comes directly from the fact that government insures all their losses, then allows them to write their regulations, and then legislators and ex-regulators are almost always angling for a job at the big finance companies.

But somehow, banks are never regulated enough.


So now referencing studies is reduced to "throwing out names". :lol: ooohkay guy.

Anyway moving forward, let's look at the core assumptions of the premises of neo-classical economics - how individuals make decisions. If you don't believe they reject empiricism in practice you shouldn't have a problem with this research:

"Recent investigations have uncovered large, consistent deviations from the predictions of the textbook representation of Homo economicus (Alvin E. Roth et al., 1991; Ernst Fehr and Simon Ga¨chter, 2000; Colin Camerer, 2001). One problem appears to lie in economists’ canonical assumption that individuals are entirely self-interested: in addition to their own material payoffs, many experimental subjects appear to care about fairness and reciprocity, are willing to change the distribution of material outcomes at personal cost, and are willing to reward those who act in a cooperative manner while punishing those who do not even when these actions are costly to the individual. These deviations from what we will term the canonical model have important consequences for a wide range of economic phenomena, including the optimal design of institutions and contracts, the allocation of property rights, the conditions for successful collective action, the analysis of incomplete contracts, and the persistence of noncompetitive wage premia."

https://www.umass.edu/preferen/gintis/Anthro AER 2001.pdf

This challenges the notion the premise that a lot of neo-classical extrapolations are based on.

Cool. I genuinely think you should spend some time reading Mises and Hayek. They have similar criticisms of the Homo Economicus abstraction. That said, this is a massive misunderstanding of what self-interest means to economists, and a very narrow idea of what payoffs can be. For example, in a hunger-gatherer society, it makes sense for you to give up some of your food now (making you at face value 'worse off') in order to gain other things (trust, protection, etc etc).
 
We never got to talking about them really. Behavioural economics and 'neuroeconomics' says something that's blindingly obvious: that people make decisions in a state of informational opacity (leading to all sorts of weird outcomes). So basically, the day one, week one stuff Econ students are told about perfect information etc etc isn't massively useful in the real world. This isn't something you need experiments to prove.

This is a disingenuous and rather dismissive summary that isn't exactly a good summary of behavioral economics. And you talk of being glib. A better defintion would be the fields investigate all the conditions under which we actually make decisions and those conditions are quite different than what is assumed and presumed in neo-classical and Austrian.

"Behavioural economics indeed produced a large literature showing the existence of numerous and systematic incoherences in the preferences of the individual (see for instance Kahneman and Tversky 2000 and Camerer 2003). Behavioural economists have then suggested leaving the model of a rational homo œconomicus as a descriptive model of human behaviour in order to produce more accurate and psychology based models of individual behaviour – an extreme form of this approach is neuroeconomics and the study of the neurological basis of economic 3 behaviour (Loewenstein et al. 2008), but such models probably lose in simplicity and tractability what they gain in empirical validity."

As for Galbraith, I just think he's wrong. Income distribution can't cause recessions, neither can corporate structure. Banking structure I agree with simply because money is the common denominator of the market economy, so any changes to the way money flows will invariably have effects on the entire economy. Examples of this are everywhere, Spain (and the rest of europe) in the 17th Century; The Federal Reserve preceding the Great Depression and of course, Alan Greenspan manipulating interest rates after the Dot Com bubble.

You say someone is wrong but like your summary of behavioral economics all you did was throw out a strawman and not build a valid (let alone sound) argument.

I'll repeat again, his criticisms of the US healthcare system are that it is not free market enough, which I agree with. I like his solution for it's political expediency, and it introduces market functions that would be palatable to even most Democrats. Why can only the government do those things?

Because of the obvious misaligned incentive problems when you privatize an industry like health care. The goal of any HMO is not to provide the best health care coverage to the most amount of people, its to create the most profit. Same with pharmaceuticals. But we can get into this more below since this is just one example of an overall concept

"I'm God" - produce an argument against this or evidence, or you're wrong. That's nonsense.

A fairly accurate summary of your "arguments" in this discussion so far.

Even at the time of the 2008 banking crisis, the financial industry was one of the most heavily regulated industries in the US/UK. The moral hazard of the banking industry comes directly from the fact that government insures all their losses, then allows them to write their regulations, and then legislators and ex-regulators are almost always angling for a job at the big finance companies.

But somehow, banks are never regulated enough.

This reminds me of every discussion I have with self-described libertarians about the 2008 derivative crisis. Give them direct quotes about how so many aspects surrounding what actual causes the crisis were completely de-regulated and they just repeat some vague pronounce about "banking being over regulated".

1. Credit agencies business model opens up in the late 1990s to sell to securitizers. This change affected their financial incentive structure (in this case they profited immensely from giving dishonest ratings

2. The Commodity Futures Modernization Act of 2000 removed all oversight from derivatives which included reserve requirements, exchange listings and disclosures. This was a massive de-regulation.
"Due to the deregulatory effect of the CFMA, OTC derivatives were not sufficiently monitored during the run-up to the financial crisis in 2008. 114 Regulators were stripped of their ability to monitor systemic risk or implement appropriate prophylactic measures.115 Christopher Cox, former chairman of the SEC, noted in October 2008 that the OTC derivatives market (in particular, credit default swaps) had become a “regulatory black hole.”

3. From 1975 to 2004 there was a 12 to 1 leverage rule. The five biggest investment houses lobbied to remove that limit. Leveraging up to 35-1 without the old rule was a big problem for Bear and Lehman.

4. Removal of the Glass-Steagal barrier between commercial and investment banks. Another de-regulation scheme that many commercial bankers I know opposed at the time and believe that barrier should never be removed.

5. 84% of subprime lending was done through mortgage lenders not regulated by the Federal Reserve or the states they were located in. In other words most of the bad lending was not coming from banks but much looser regulated private mortgage lenders.

6. Greenspan called all these de-regulated financial service products "innovations" and didn't even want them regulated being a firm believer

7."The Office of the Comptroller of the Currency along with the Office of Thrift Supervision, “federally pre-empted” (blocked) state regulators from reining in lending abuses"

8. Just to counter another common nonsense cause from the right wing if the problem was the Community Reinvestment Act (a favorite target of right wingers) then the crisis wouldn't have been global.

So no, 'over-regulation' literally had nothing to do with the financial crisis. The investment houses and mortgage lenders wanted this de-regulation, they lobbied and got it.

Cool. I genuinely think you should spend some time reading Mises and Hayek. They have similar criticisms of the Homo Economicus abstraction. That said, this is a massive misunderstanding of what self-interest means to economists, and a very narrow idea of what payoffs can be. For example, in a hunger-gatherer society, it makes sense for you to give up some of your food now (making you at face value 'worse off') in order to gain other things (trust, protection, etc etc).

Not sure what you are trying to say with that example but lets now move on from the initial assumptions about how individuals behave since you (sort of) acknowledged individuals don't behave based on the premise of neo-classical rational actor theory.

The problem with most self-identifying libertarians is they believe the best policy is allow all entities to maximize their utility (or profit) with as little interference as possible. The notion that allowing “the market” as little regulation as possible always produces the best cumulative results in every sector. Do you believe that as close to "free market" solutions are always the most desirable? Do you believe in the "invisible hand" that all we have to do is de-regulate and we get the best of all possible results?

Going back to health care there is a problem with misaligned incentives. Do you believe that privatized "free market" healthcare can take care of the poor, protect against catastrophic circumstances, enforce safety and health standards?
See the problem with privatized health care as a system is that you can never get the incentives of an immortal for-profit entity to align with the best and most efficient coverage for all of society, especially one with a growing income and wealth disparity (and why I disagree with Goldhill but I believe the nationalized catastrophic/terminal coverage is a good compromise because I don't trust any for-profit entity to self-regulate itself)
 
This is a disingenuous and rather dismissive summary that isn't exactly a good summary of behavioral economics. And you talk of being glib. A better defintion would be the fields investigate all the conditions under which we actually make decisions and those conditions are quite different than what is assumed and presumed in neo-classical and Austrian.

What assumptions does the Austrian model make?


This reminds me of every discussion I have with self-described libertarians about the 2008 derivative crisis. Give them direct quotes about how so many aspects surrounding what actual causes the crisis were completely de-regulated and they just repeat some vague pronounce about "banking being over regulated".

...
So no, 'over-regulation' literally had nothing to do with the financial crisis. The investment houses and mortgage lenders wanted this de-regulation, they lobbied and got it.

I never said the crisis was caused by over-regulation, just that your claim that de-regulation was the cause doesn't pass the smell test when we're talking about one of, if not the, most heavily regulated industries.

Not sure what you are trying to say with that example but lets now move on from the initial assumptions about how individuals behave since you (sort of) acknowledged individuals don't behave based on the premise of neo-classical rational actor theory.

The problem with most self-identifying libertarians is they believe the best policy is allow all entities to maximize their utility (or profit) with as little interference as possible. The notion that allowing “the market” as little regulation as possible always produces the best cumulative results in every sector. Do you believe that as close to "free market" solutions are always the most desirable? Do you believe in the "invisible hand" that all we have to do is de-regulate and we get the best of all possible results?

Going back to health care there is a problem with misaligned incentives. Do you believe that privatized "free market" healthcare can take care of the poor, protect against catastrophic circumstances, enforce safety and health standards?
See the problem with privatized health care as a system is that you can never get the incentives of an immortal for-profit entity to align with the best and most efficient coverage for all of society, especially one with a growing income and wealth disparity (and why I disagree with Goldhill but I believe the nationalized catastrophic/terminal coverage is a good compromise because I don't trust any for-profit entity to self-regulate itself)

The point of the story is to illustrate that people do act in a utility-maximising way, but that (and this is very important now) what that 'utility' is, is often very difficult to surmise unless you crack open someone's head and find out. Everything stems from that fact. It's not a statement about 'best policy', merely a statement about reality. And the logical conclusion of that isn't that the market will always come up with the best results, it's that (i) it will come up with better results than centralised policy and (ii), when it is wrong, the damage is far more localised and (iii) when it's wrong, the process of change is much faster than the state.

What this means for healthcare is, you do not (and cannot) know what the 'best and most efficient coverage for all of society' is. Those words mean wildly different things to different people. And the only way for people to get that is to allow them to trade with each other. You say 'for-profit' almost pejoratively but, profit is literally the only thing that's aligned with getting the best coverage.

On a separate note, I'm getting the vibe you haven't directly read any Austrian works. So I would recommend you check out two short-ish books:

(i) Principles Of Economics - Carl Menger
(ii) Individualism and Economic Order - Friedrich von Hayek

These are pretty uncontroversial works in the Austrian tradition, and they are short enough not to make you go crazy like Mises does. At least having a first hand insight will allow you to debunk any Austrians you talk to more authoritatively.
 
What assumptions does the Austrian model make?

What are the premises of the Austrian school?

I never said the crisis was caused by over-regulation, just that your claim that de-regulation was the cause doesn't pass the smell test when we're talking about one of, if not the, most heavily regulated industries.

I just gave you tonnes of specific examples of how all specific aspects related to the crisis were radically de-regulated so falling back on the claim that the its 'heavily regulated industries" is completely meaningless, irrelevant and doesn't address any of the evidence

Since you are arguing the point I'll just post it again:

1. Credit agencies business model opens up in the late 1990s to sell to securitizers. This change affected their financial incentive structure (in this case they profited immensely from giving dishonest ratings

2. The Commodity Futures Modernization Act of 2000 removed all oversight from derivatives which included reserve requirements, exchange listings and disclosures. This was a massive de-regulation.
"Due to the deregulatory effect of the CFMA, OTC derivatives were not sufficiently monitored during the run-up to the financial crisis in 2008. 114 Regulators were stripped of their ability to monitor systemic risk or implement appropriate prophylactic measures.115 Christopher Cox, former chairman of the SEC, noted in October 2008 that the OTC derivatives market (in particular, credit default swaps) had become a “regulatory black hole.”

3. From 1975 to 2004 there was a 12 to 1 leverage rule. The five biggest investment houses lobbied to remove that limit. Leveraging up to 35-1 without the old rule was a big problem for Bear and Lehman.

4. Removal of the Glass-Steagal barrier between commercial and investment banks. Another de-regulation scheme that many commercial bankers I know opposed at the time and believe that barrier should never be removed.

5. 84% of subprime lending was done through mortgage lenders not regulated by the Federal Reserve or the states they were located in. In other words most of the bad lending was not coming from banks but much looser regulated private mortgage lenders.

6. Greenspan called all these de-regulated financial service products "innovations" and didn't even want them regulated being a firm believer

7."The Office of the Comptroller of the Currency along with the Office of Thrift Supervision, “federally pre-empted” (blocked) state regulators from reining in lending abuses"

8. Just to counter another common nonsense cause from the right wing if the problem was the Community Reinvestment Act (a favorite target of right wingers) then the crisis wouldn't have been global.

So no, 'over-regulation' literally had nothing to do with the financial crisis. The investment houses and mortgage lenders wanted this de-regulation, they lobbied and got it.
Its hard to believe you are intending to argue in good faith

The point of the story is to illustrate that people do act in a utility-maximising way, but that (and this is very important now) what that 'utility' is, is often very difficult to surmise unless you crack open someone's head and find out. Everything stems from that fact. It's not a statement about 'best policy', merely a statement about reality. And the logical conclusion of that isn't that the market will always come up with the best results, it's that (i) it will come up with better results than centralised policy and (ii), when it is wrong, the damage is far more localised and (iii) when it's wrong, the process of change is much faster than the state.

Do you believe in the efficient market hypothesis?

What this means for healthcare is, you do not (and cannot) know what the 'best and most efficient coverage for all of society' is. Those words mean wildly different things to different people. And the only way for people to get that is to allow them to trade with each other. You say 'for-profit' almost pejoratively but, profit is literally the only thing that's aligned with getting the best coverage.

Well we know the free market doesn't provide that left to its own devices because the goal of any for-profit healthcare company is to maximize profit. We know the free market isn't concerned with universal coverage as covering the poor is not profitable. We know for-profit health care left to its own devices doesn't prevent medical bankruptcies or middle class/poor families losing life savings to medical expense.

You claim, "profit is literally the only thing that's aligned with getting the best coverage" but that is far from proven and has counter evidence in both experiments and observations of reality.

Edit:
Its pretty clear that by most human centered metrics every universal healthcare country is superior to the US privatized both in per capita cost across the population and in the preventing the worst health care outcomes like medical bankruptcy, loss of savings due to outrageous medical costs, and bad medical conditions and death due to lack of money.

This really should be emphasized. When you say "best and most efficient coverage for all of society' is. Those words mean wildly different things to different people."

To some people quality of health care should be based on how rich someone is. To some people they don't care if tens of millions of poor go without coverage or go bankrupt or lose life savings negating class mobility.

The problem is that your conclusion seems to be, well some people don't care about others so letting the free market decide is the best way to solve it. But we know for a fact that isn't the case. That was proven in history 100 years ago during the industrialization era and the the human costs of factories from unsafe working conditions to pollution. That is the human cost of laissez-faire market fundamentalism.

The problem is when 400 people literally have more wealth and political influence the bottom 50% there is a massive human cost to this wild west version of capitalism. This is why we cannot allow free reign of the "free market" because what it really means in practice is Wealth Makes Right.

On a separate note, I'm getting the vibe you haven't directly read any Austrian works. So I would recommend you check out two short-ish books:

(i) Principles Of Economics - Carl Menger
(ii) Individualism and Economic Order - Friedrich von Hayek

These are pretty uncontroversial works in the Austrian tradition, and they are short enough not to make you go crazy like Mises does. At least having a first hand insight will allow you to debunk any Austrians you talk to more authoritatively.

On a separate note I'm getting the vibe you haven't ever read any research actually related to behavior economics, neuroeconomics or four decades of related research having dismissed it out of hand in your first post and never supporting your glib dismissal with anything . At least having a first hand insight will allow you to avoid all the logical fallacies you have made in this thread,

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51RTI56706L.__BG0,0,0,0_FMpng_AC_UL320_SR254,320_.jpg
 
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The tone this conversation is taking isn't really adding to my interest, and I'm sure you're getting bored of talking to me as well so this is likely the last response you're going to get on this subject:

What are the premises of the Austrian school?

Nevermind. You said that the Austrian school's (and the neo-classical school's) model of human behaviour is wrong, I was just trying to see what you understood of that model and why you think it's wrong. If you're not going to do that much, that's cool.

I just gave you tonnes of specific examples of how all specific aspects related to the crisis were radically de-regulated so falling back on the claim that the its 'heavily regulated industries" is completely meaningless, irrelevant and doesn't address any of the evidence

...

So no, 'over-regulation' literally had nothing to do with the financial crisis. The investment houses and mortgage lenders wanted this de-regulation, they lobbied and got it.
Its hard to believe you are intending to argue in good faith

There's a question one of my history teachers used to like: "What caused the First World War?" If you answered the assassination of Franz Ferdinand, you'd get a C. Not wrong, but not quite right either. You're playing in C territory right now. I like to make this mental distinction between 'causes' and 'triggers'. Causes are the underlying institutional factors that create the conditions for a certain event, and triggers are the black swan events that expose the conditions and start the catastrophe.

So we're kind of having different conversations, you're focused on the trigger (over-leveraged derivatives), and I'm trying to account for the system we created that gave these companies an insulation from the risk they took on (actually encouraged it).


Do you believe in the efficient market hypothesis?

Yes.

Well we know the free market doesn't provide that left to its own devices because the goal of any for-profit healthcare company is to maximize profit. We know the free market isn't concerned with universal coverage as covering the poor is not profitable. We know for-profit health care left to its own devices doesn't prevent medical bankruptcies or middle class/poor families losing life savings to medical expense.

You claim, "profit is literally the only thing that's aligned with getting the best coverage" but that is far from proven and has counter evidence in both experiments and observations of reality.

Edit:
Its pretty clear that by most human centered metrics every universal healthcare country is superior to the US privatized both in per capita cost across the population and in the preventing the worst health care outcomes like medical bankruptcy, loss of savings due to outrageous medical costs, and bad medical conditions and death due to lack of money.

This really should be emphasized. When you say "best and most efficient coverage for all of society' is. Those words mean wildly different things to different people."

To some people quality of health care should be based on how rich someone is. To some people they don't care if tens of millions of poor go without coverage or go bankrupt or lose life savings negating class mobility.

The problem is that your conclusion seems to be, well some people don't care about others so letting the free market decide is the best way to solve it. But we know for a fact that isn't the case. That was proven in history 100 years ago during the industrialization era and the the human costs of factories from unsafe working conditions to pollution. That is the human cost of laissez-faire market fundamentalism.

The problem is when 400 people literally have more wealth and political influence the bottom 50% there is a massive human cost to this wild west version of capitalism. This is why we cannot allow free reign of the "free market" because what it really means in practice is Wealth Makes Right.

We've just spent a week talking about how I believe the US healthcare system is terrible. So you'll forgive me if I'm not impressed by comparisons between one shitty state controlled system versus another.[/quote]

We're going to have to leave this healthcare thing to one side because in your head, the US healthcare is a good example of a free market system, in everyone else's, it is not.

One of the funniest bits of cognitive dissonance I always notice from people of your ilk is that a few posts ago you were at pains to show an 'experimental economics' study that showed that people are willing to be self-sacrificial for the rest of the group, and yet not long after you're saying that if we let them do what they want they'll stop caring about each other and turn into a near cannibalistic state of nature - make up your mind.

On a separate note I'm getting the vibe you haven't ever read any research actually related to behavior economics, neuroeconomics or four decades of related research having dismissed it out of hand in your first post and never supporting your glib dismissal with anything . At least having a first hand insight will allow you to avoid all the logical fallacies you have made in this thread,

41QDiIfNf6L._SX331_BO1,204,203,200_.jpg


51RTI56706L.__BG0,0,0,0_FMpng_AC_UL320_SR254,320_.jpg

Yawn, thanks for the book recommendations, see you in another thread! Toodles.
 
The tone this conversation is taking isn't really adding to my interest, and I'm sure you're getting bored of talking to me as well so this is likely the last response you're going to get on this subject:

You started the conversation with a snarky dismissal of entire fields being equivalent to election polling then never backed up your claims. You came in on a hard polemic but didn't support your claims, evaded and then fell back on snide little insults.

Nevermind. You said that the Austrian school's (and the neo-classical school's) model of human behaviour is wrong, I was just trying to see what you understood of that model and why you think it's wrong. If you're not going to do that much, that's cool.

Put the premises of the Austrians into your own words and I will debate your understanding on your own terms. I already said at the start the problem is none of the varieties of market fundamentalism (Austrian, Chicago, Randians, hybrids) are based on what we actually know about human behavior and decision making but rather based on assumptions from a much earlier era.

There's a question one of my history teachers used to like: "What caused the First World War?" If you answered the assassination of Franz Ferdinand, you'd get a C. Not wrong, but not quite right either. You're playing in C territory right now. I like to make this mental distinction between 'causes' and 'triggers'. Causes are the underlying institutional factors that create the conditions for a certain event, and triggers are the black swan events that expose the conditions and start the catastrophe.

So we're kind of having different conversations, you're focused on the trigger (over-leveraged derivatives), and I'm trying to account for the system we created that gave these companies an insulation from the risk they took on (actually encouraged it).

Your flippant dismissal of "banking as an industry is heavily regulated" was debunked when I listed examples of how many specific links in the chain reaction were the result of no regulation.

Radical de-regulation and changing of business models (ratings agencies directly profiting from securitizers) and greed that people like Greenspan and market fundamentalists assumed could never have happened were the underlying institutional causes. All of these factors are what weakened the institutions and created all the underlying conditions for the financial crisis.

Without all this de-regulation and pursuit of excessive greed the Fed's low interest rates couldn't have endangered the entire global economy the way it was endangered.

2. The Commodity Futures Modernization Act of 2000 removed all oversight from derivatives which included reserve requirements, exchange listings and disclosures. This was a massive de-regulation.
"Due to the deregulatory effect of the CFMA, OTC derivatives were not sufficiently monitored during the run-up to the financial crisis in 2008. 114 Regulators were stripped of their ability to monitor systemic risk or implement appropriate prophylactic measures.115 Christopher Cox, former chairman of the SEC, noted in October 2008 that the OTC derivatives market (in particular, credit default swaps) had become a “regulatory black hole.”

3. From 1975 to 2004 there was a 12 to 1 leverage rule. The five biggest investment houses lobbied to remove that limit. Leveraging up to 35-1 without the old rule was a big problem for Bear and Lehman.

4. Removal of the Glass-Steagal barrier between commercial and investment banks. Another de-regulation scheme that many commercial bankers I know opposed at the time and believe that barrier should never be removed.

5. 84% of subprime lending was done through mortgage lenders not regulated by the Federal Reserve or the states they were located in. In other words most of the bad lending was not coming from banks but much looser regulated private mortgage lenders.

6. Greenspan called all these de-regulated financial service products "innovations" and didn't even want them regulated being a firm believer

7."The Office of the Comptroller of the Currency along with the Office of Thrift Supervision, “federally pre-empted” (blocked) state regulators from reining in lending abuses"

You can't change the facts by ignoring them.


Do you believe the EMH is a falsifiable hypothesis?

We've just spent a week talking about how I believe the US healthcare system is terrible. So you'll forgive me if I'm not impressed by comparisons between one shitty state controlled system versus another.

We're going to have to leave this healthcare thing to one side because in your head, the US healthcare is a good example of a free market system, in everyone else's, it is not.

So you don't believe examples of countries that are both more efficient per capita and better at avoiding the worst unnecessary outcomes have anything to learn from. Sounds very feelings based and biased but duly noted.

One of the funniest bits of cognitive dissonance I always notice from people of your ilk is that a few posts ago you were at pains to show an 'experimental economics' study that showed that people are willing to be self-sacrificial for the rest of the group, and yet not long after you're saying that if we let them do what they want they'll stop caring about each other and turn into a near cannibalistic state of nature - make up your mind.

Well done. You've managed to fit about half dozen logical fallacies into a single sentence while at the same time illustrating the very shallow depth of your understanding of the last 40 years of economics research.

First experimental economics (behavioral econ and neuroecon) study far more than just altruism. In fact studying "people willing to be self-sacrificial for the rest of the group" is not even relevant to any of the points I was making here. What 40 years of research show are the dozens of limits on rational self-interested assumptions or the vague "utility maximizing" assumptions out of market fundamentalist schools of thought. Proven concepts like loss aversion, risk aversion, endowment effect, reference-dependent preferences, systematic overestimating of low probability events, etc, etc have nothing to do with altruism yet they all challenge the assumptions made about people's behavior from the laissez-faire crowd.

For instance Ultimatum and Dictator games are superb illustrations of inequality aversion. From early Kahneman and Tversky experiments:
"Will subjects sacrifice money to punish a proposer who behaved unfairly to someone else? Yes by 74%"
Oh and before you make he common objection here, the Ultimatum game has been replicated in dozens of cultures and in some cases the monetary amounts were not trivial at all. Its been replicated enough times that its results are proven theory

So its just absurd to try to reduce dozens of proven phenomenon to intentional self-sacrifice for the rest of the group. This decades of research delves into a variety of different angles that challenge all the foundations of market fundamentalism. Another key factor is that all these experiments show that different people behave differently which is another problematic assumption from some corners of laissez-faire.

Some people do behave like homo economicus but some don't. Some people are more irrational but others are not. Discount factor is a good example of this. Its been replicated in numerous experiments that different people fall on a spectrum of discounting the future. People aren't the same here. This is also clear in the real world. One of the findings of behavioral economics is the very fact that people respond differently depending on circumstances, location, structural influences, emotions, prejudice and prior behavior from others.

Second, despite the hyperbolic phrasing of the second part, its important to note that nowhere have a I ever said that everyone has good intentions. This is clearly consistent with both history and experiments in economics - there are some people who are fair and equitable and there are some people that lack empathy and will screw over anyone and everyone for their own gain. Some people don't even care if people literally die in a fire as long as they profit from it (Enron's burn baby burn). This is part of why regulations are necessary because some people will take advantage in major ways.

Even Alan Greenspan had to admit he was wrong on the general assumption of market fundamentalism:
"I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms"
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,”
 
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https://www.peoplespolicyproject.org/2019/02/24/whats-the-point-of-modern-monetary-theory/

I'd add that my personal opinion is slightly different. Some of the academic arguments of MMT about orthodox econ models are worth thinking about, but that's fairly disconnected from any policy recommendation.

Yes I'm worried that Stephanie Kelton is/was indicating that she's close to Bernie. But he usually replies with some tax increase whenever he's asked "how will you pay for this?" so he doesn't seem to be using that MMT language.
 

I struggle with maths but that does seem to be a pretty shit graph to be honest. Shouldn't the increasing debt be more related to the deficit? Why is the dotcom surplus mentioned as the only relevant event, but not the banking crash of 2008, for instance? And the timeline isn't clear at all, to me at least.
 
A lot of problems with that:
-Long time unemployed Americans don't get counted, they go "off the grid"
-Illegal immigration unemployment isn't counted
-Being unemployed is pretty much a crime in the US at this point. It will lead to incarceration for many in the long term (because they simply need to survive). Yet he says incarcerated could easily get "gainfull employment" without offering any sort of data to back that up.
-German labour market isn't more flexible than most of the eastern european EU countries with far higher unemployment.
-Last but not least German labour market is a lot less flexible than the US's. Why isn't the US doing better in that comparison?


Happy for him that he won his bet but his conclusions aren't very convincing.
 
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A lot of problems with that:
-Long time unemployed Americans don't get counted, they go "off the grid"
-Illegal immigration unemployment isn't counted
-Being unemployed is pretty much a crime in the US at this point. It will lead to incarceration for many in the long term (because they simply need to survive). Yet he says incarcerated could easily get "gainfull employment" without offering any sort of data to back that up.
-German labour market isn't more flexible than most of the eastern european EU countries with far higher unemployment.
-Last but not least German labour market is a lot less flexible than the US's. Why isn't the US doing better in that comparison?


Happy for him that he won his bet but his conclusions aren't very convincing.


The point that he is making with this bet is, that labour market regulation is one important variable when it comes to unemployment.
There are certainly measurement problems but there are very few people who think that unemployment in the US > EU.
Countries with higher productivity, especially when the population has relatively homogeneous, can have higher levels of regulation without causing much employment.The unemployment in countries like Poland, Czech Republic, slowenia, Romania or slowakia is quite low. The euro has imo a strongly distorting effect in the current situation and germany is benefittinf from this with regard to unemployment (post financial crisis).
In my opinion the link between labour market flexibility and unemployment is unambiguous. The policy recommendations that follow front this depend on many other issues that he excludes from this blog post.
 
The point that he is making with this bet is, that labour market regulation is one important variable when it comes to unemployment.
There are certainly measurement problems but there are very few people who think that unemployment in the US > EU.
Countries with higher productivity, especially when the population has relatively homogeneous, can have higher levels of regulation without causing much employment.The unemployment in countries like Poland, Czech Republic, slowenia, Romania or slowakia is quite low. The euro has imo a strongly distorting effect in the current situation and germany is benefittinf from this with regard to unemployment (post financial crisis).
In my opinion the link between labour market flexibility and unemployment is unambiguous. The policy recommendations that follow front this depend on many other issues that he excludes from this blog post.
On a theoretical basis I agree, labour laws do have an effect on the unemployment rate, however I don't think that it's as straight forward as stricter laws = higher unemployment when comparing modern industrialized nations. The question for me is where does the effect of labour laws really make a difference (obviously companies that can't lay off workers at all will be very careful to hire new ones, however I'm less convinced that companies that can fire and hire at will create more jobs than a company that has to give it's long term employees a 3 month notice, as an example).

You would probably agree that the range of possible labour laws is far larger than the difference between the US and Germany? Let me try to visualize what I mean by drawing the 4 major economies on a scale with the extremes on either side:

(Completely free market) ---- China (private sector) --- USA -------------------------- Germany ----- Japan ------------------------------------------------------------------------------------------------------------------------ Complete Socialism.

I'd argue that the effect of labour laws only really starts to be measurable when the laws become a lot stricter than Japan's (there'll already be an effect before that, but one where the trade off of a few lesser jobs for better protection makes sense for the population).

Which brings me back to his example: I think the US labour market's benefits from cheap energy (fracking), massive tax cuts (since Bush), a much more flexible workforce (Americans are way more willing to change city / occupation for a new job than most Europeans by nature) and a more positive culture towards new companies/new ideas of how to do things than Europe. I think these effects outweigh the labour laws effects by a huge margin. Also American corporations only have to follow one set of regulations (the US regulation) while everyone else needs to follow their own regulations AND the US's (or their CEO/his daughter will be locked up by the FBI). I'd bet my bottom dollar that if google/facebook/amazon weren't US companies their CEO's would be in US prisons at this point (for copyright/interference/money laundering in that order). The international "system" we live in today was built by the US for the US's benefit (despite what the orange man says. To be clear being inside this "system" has been hugely beneficial for everyone in it in the past, the west, over the last 70 years. It brought stability and wealth unlike anything ever seen). The European Union is under attack because it created a (lightweight) counterpoint from inside.

As for the EURO's effect on the German employment rate, I don't agree with that either. A (theoretically) higher value German currency would only make domestic production for the domestic market less competitive, foreign trade would hardly be affected. German companies would charge less of whatever higher value currency they are getting, and pay less of it for the resources they procure from outside of Germany. The value added wouldn't become much more expensive because German workers would be paid less of that higher value currency (with which they would in turn buy the same amount for less of it). Having to hedge against currency fluctuations with all other countries around it would possibly have a larger effect in increasing costs than the increased labour costs. Energy imports etc. would all become much cheaper for Germany in comparison (to consume), and almost all of that is imported. The domestic companies that serve the domestic market with goods that are easily replaced with ones sourced outside would feel the impact though, but they already face fierce competition from low wage countries within the single market now.

Obviously these are just my opinions but they stem from my understanding and studies of macroeconomics. I know I'm making sweeping statements but the person who won the bet does too ;). I wouldn't have bet against him because I never thought the fine print in labour laws makes that much of a difference anyway, but I'm convinced it's a case of the correlation being much stronger than the causation. And when looking at other examples (within the Eurozone) I don't even think that correlation is particularly strong.
 
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"For many decades, the same two critical analysts of capitalism, Karl Marx and John Maynard Keynes, have continued to dominate the left’s economic imagination. Marx died in 1883, Keynes in 1946. The last time their ideas had a significant influence on western governments or voters was 40 years ago, during the turbulent final days of postwar social democracy. Ever since, rightwingers and centrists have caricatured anyone arguing that capitalism should be reined in – let alone reshaped or replaced – as wanting to take the world “back to the 70s”. Altering our economic system has been presented as a fantasy – no more practical than time travel.

And yet, in recent years, that system has started to fail. Rather than sustainable and widely shared prosperity, it has produced wage stagnation, ever more workers in poverty, ever more inequality, banking crises, the convulsions of populism and the impending climate catastrophe

This “democratic economy” is not some idealistic fantasy: bits of it are already being constructed in Britain and the US. And without this transformation, the new economists argue, the increasing inequality of economic power will soon make democracy itself unworkable. “If we want to live in democratic societies, then we need to … allow communities to shape their local economies,” write Joe Guinan and Martin O’Neill, both prolific advocates of the new economics, in a recent article for the Institute for Public Policy Research (IPPR) – a thinktank previously associated with New Labour. “It is no longer good enough to see the economy as some kind of separate technocratic domain in which the central values of a democratic society somehow do not apply.”


https://www.theguardian.com/news/20...etwork-of-thinkers-is-transforming-capitalism
 
"For many decades, the same two critical analysts of capitalism, Karl Marx and John Maynard Keynes, have continued to dominate the left’s economic imagination. Marx died in 1883, Keynes in 1946. The last time their ideas had a significant influence on western governments or voters was 40 years ago, during the turbulent final days of postwar social democracy. Ever since, rightwingers and centrists have caricatured anyone arguing that capitalism should be reined in – let alone reshaped or replaced – as wanting to take the world “back to the 70s”. Altering our economic system has been presented as a fantasy – no more practical than time travel.

And yet, in recent years, that system has started to fail. Rather than sustainable and widely shared prosperity, it has produced wage stagnation, ever more workers in poverty, ever more inequality, banking crises, the convulsions of populism and the impending climate catastrophe

This “democratic economy” is not some idealistic fantasy: bits of it are already being constructed in Britain and the US. And without this transformation, the new economists argue, the increasing inequality of economic power will soon make democracy itself unworkable. “If we want to live in democratic societies, then we need to … allow communities to shape their local economies,” write Joe Guinan and Martin O’Neill, both prolific advocates of the new economics, in a recent article for the Institute for Public Policy Research (IPPR) – a thinktank previously associated with New Labour. “It is no longer good enough to see the economy as some kind of separate technocratic domain in which the central values of a democratic society somehow do not apply.”


https://www.theguardian.com/news/20...etwork-of-thinkers-is-transforming-capitalism
I too dream of a better world every now and then, inhabited with better people. At least the Guardian doesn't write a massive story when I do, so the world is spared from observing my naiveté.

Also mainly, the entire idea ignores the benefits of scale, which don't accrue just to corporations but also to their consumers.
 
Also mainly, the entire idea ignores the benefits of scale, which don't accrue just to corporations but also to their consumers.

So its a variation of the 'WalMart consumers benefit from "low prices" (accrued from sweatshops to screwing their employees) just as much as the Waltons benefit from it' argument then?
 
So its a variation of the 'WalMart consumers benefit from "low prices" (accrued from sweatshops to screwing their employees) just as much as the Waltons benefit from it' argument then?
More like 'care to think what % of income food would consume if it were mainly sourced, processed and distributed locally as opposed to at least nationally?'
 
More like 'care to think what % of income food would consume if it were mainly sourced, processed and distributed locally as opposed to at least nationally?'
\

Sounds like a strawman you're making