patrick.net

Not that plenty of democrats won't have to answer to the founding fathers also. LBJ and Roosevelt at the top of the list. At least they believed they were trying to help is in their favor. No even semi reasonable person can see the abuses of Bush and company as anything but a total concerted assault on the bill of rights.

Honest Abe says

If I make more money than I did the year before, does that mean someone else has to earn less, so that we have a balanced equation?

Yes, that is exactly what it means.

Lets say you sell lemonade for a living, along with several other lemonade proprietors as your competition. Local lemonade demand is constant regardless of the number of market suppliers. If you make more money this year selling lemonade, then your competition made less. Not that it is a bad thing, but it is a fact of the market.

A free market and competition is what capitalism IS. The market picks winners and losers, so if you are winning someone else is LOSING.

gbenson says

Although I do stand by my statements that its is rather terrifying that leaders of the party have essentially stopped repudiating this kind of rhetoric, which in effect gives it tacit blessing.

You're being freaking very selective. The Dem's have been an abject embarrassment on the whole Zimmerman / Travon Martin situation. The lunatic fringe on into the more mainstream of their party has made some really stupid comments, and yet no sober talk from the leadership, Obama on down. Instead, it's been viewed as a great political opportunity to galvanize voters via race baiting, and if anything the leadership has fanned the flames of racialism.

Don't get me wrong: The republicans are opportunists, and many are idiots on the gay marriage thing. But let's not be blinded by home team fanboyism to ignore when the home team is equally full of shit.

david1 says

Yes, that is exactly what it means.
Lets say you sell lemonade for a living, along with several other lemonade proprietors as your competition. Local lemonade demand is constant regardless of the number of market suppliers.

Wrong. Local lemonade demand is not a constant. It is a function of cost preferences among potential consumers. Lemonade at $10 a glass may sell only among the very wealthy, $5 a glass among the wealthy, $2 a glass among the upper middle class, $1 a glass among the middle class, and so on, expanding the potential market for lemonade. And even at those various price structures, buyers will allot so much lemonade per year. As well, you will have grades of quality, where quality is cut to produce cheaper per-glass costs for those who can’t afford higher grade lemonade.

If you make more money this year selling lemonade, then your competition made less. Not that it is a bad thing, but it is a fact of the market.

Too confined a description of the dynamic nature of markets. Market opportunities are a function of existing market saturation and market efficiencies. A non saturated, inefficient market has lots of opportunities for new players.

A free market and competition is what capitalism IS.

I’m going to be a real stickler here and say WRONG.

Capitalism may involve free markets, or it may not. It’s like Democracy, which can be conceivably very liberty-oriented with proper restraints on power, or may support tyranny and authoritarianism as dictated by a majority at the expense of minorities.

Capitalism is a system that is geared around the most efficient use of available resources to generate profitable allocation of those resources. In an environment where liberty is a paramount value, where government is very limited, the capitalist is forced to compete via the markets to try to achieve profitable efficiencies. “Winning” comes by winning over consumers, who have the free market pick of the litter. In environments where governments are powerful and politics rules the day, Big Government and its politicians are just another resources to be considered in the process of deriving profitability. A capitalist will quickly shift to methods to protect profits and limit competition by molding politicians and government to its purposes, thus “winning” at the expense of consumers and competitors.

The market picks winners and losers, so if you are winning someone else is LOSING.

Too cynical of a description, and vastly oversimplified to the point of being misleading.

Economies are all about the allocation of resources. Free markets are free to allocate resources to their most pressing needs as determined by the pricing mechanism. Something that is scarce, but in high demand, commands a higher price vs other items, which in turn directs efforts and resources towards alleviating that shortage. The producers who achieve new efficiencies / improved quality are rewarded for their efforts by achieving more profits vs. their more resource-intensive / lower quality competition. The consumer is also rewarded by finding the cost of what it demands to be cheaper, which has a net wealth affect in that the monthly paycheck goes further – the excess is available for other items. As well, because the price is lower, consumers who previously could not afford something now can. With each new efficiency gained, prices are lowered, the market expands, and the cycles goes around until saturation, where all that is left is for new quality / efficiencies to be achieved. (The big screen / LED tv market is a good example of this.)

This is a win for consumers – who get less expensive and better quality goods over time as a natural function of the market process. It is a win in that it incentivizes producers to push for greater efficiencies / fewer and fewer resource inputs per good. It is a win that those who have the ability solve these problems are justly rewarded.

Now, you can say that to have a winner, you have to have a loser. I would only concede that the more resource-wasteful approaches are not rewarded and eventually pushed out of the marketplace. Rather than wasting resources, these players must rethink their approaches and contemplate other ways of providing value to consumers.

Now, that’s a far cry from the parasitic capitalism / corporatism we have in much of the world today, where corporations co-opt big government and politicians for the purposes of securing government protection of their profitability. They do this by pushing legislation that provides greater and greater barriers to competition, primarily related regulation and compliance, which in turn grant near monopolies / oligopolies to the most powerful players which effectively cartelize industries. While they compete among one another, the greater bulk of their competition lacks the critical mass to be capable of affording the legislated requirements of doing business.

An example of such would be when the crimes of Wall Street’s biggest players in the late 1990s resulted in the Sarbanes Oxley Act (SOA). On the surface it would appear to be a consumer protection act. However, the costs of complying with this piece of legislation are so prohibitively high to the point of forcing many medium and smaller sized companies out of the public financing markets, providing a dramatic competitive advantage to more established (and, typically because of size, less efficient)players.

Meanwhile critics argue that what is achieved by Sarbanes Oxley was entirely possible before the law with proper analysis and due diligence, that existing laws existed (but were not enforced) to punish the criminal behavior, and that SOA merely encourages more complacency with the assumption that “the government is on the job” of policing these things. (Similar to how Madoff’s investors were under the impression that the SEC and NASD regulator bodies were policing Madoff, to the point where due diligence wasn’t even an afterthought.)

But I digress. I think your comment misses the dynamic complexity of market economies achieving new efficiencies, and the benefits of disincentivizing waste and encouraging efficiency. The “losers” you describe need to lose and rethink how to become more efficient. It makes them better the next go around.

Unfortunately today's would-be losers (the Solandras, Citibanks and Chryslers of the world) get subsidized by politicians and supported by big Govt, and the truly entrepreneurial are forced to conform to that structure or worse, while the consumer is left with higher costs and lower quality than they would otherwise. (This is partially responsible for driving U.S. production offshore, although much of that is the byproduct of venting abroad the highly inflationary monetary policy in the United States since the late 1960s.)

Leopold, you need to learn to make your point more concisely.

In an already mature efficient market like lemonade retailing, demand remains constant. Each producer produces at the point where marginal revenue = marginal cost. Lowering price can only be achieved through economies of scale, where costs are lowered. If one producer is able to gain efficiencies to lower costs and his prices, he can expand the overall demand for lemonade. He does so at the deteriment of his competition, however who have not gained these efficiencies.

Your argument goes in so many tangeants - I don't know where to begin. Lets just stay concise and simple.

In a mature, efficient market, if one producer is able to gain efficiencies and/or increase market share, does he do so at the detriment of his competition, or does he not?

Cloud says

Our system is an expanding pie, not a Monopoly game.

To use your analogy, our system is a Monopoly game with productivity gains (in the form of passing "Go" and collecting $200).

Resources are finite. The earth is not expanding. Economies grow at a rate less than the growth of population.

A Republican spokesman, Jay Townsend, "Let’s hurl some acid at those female democratic Senators"

How many don't think this is TERRORISTIC THREAT?

Should our security forces use a drone on Townsend?

david1 says

Leopold, you need to learn to make your point more concisely.

Not everybody operates from the same foundation, so I try to provide perspective, otherwise it makes no sense. Sorry if it's too mundane for some.

In an already mature efficient market like lemonade retailing, demand remains constant. Each producer produces at the point where marginal revenue = marginal cost. Lowering price can only be achieved through economies of scale, where costs are lowered.

Which conceivably opens a newly attractive price to a new consumer or consumption level, right? That's all I'm saying.[Edit:] Wait. I don't buy this entirely. There are many examples where new technologies redefine mature markets. Not saying I expect tech to change the Cola market place. But it is conceivable that Coke could find an uber efficient method to produce, and drop the price further and expand its market share. Just sayin'.)

But, yes, that's a tangent from your core point, which is...

If one producer is able to gain efficiencies to lower costs and his prices, he can expand the overall demand for lemonade. He does so at the deteriment of his competition, however who have not gained these efficiencies.

Perhaps it was not your intent, but I've seen the "winners and losers" argument so many times making the point that the winning is "good", but the losing is a "bad". My point is only that this is not a negative, but a gain.

Your argument goes in so many tangeants - I don't know where to begin. Lets just stay concise and simple.

Again, not everyone understands the why's. And though my tangents might be wide, several of your points I contradicted or countered fairly thoughtfully vs. providing smack-ass dismissiveness that does little to encourage conversation, change opinions, or improve anyone's understanding. (Not saying you were doing this.) These are not simple subjects, especially when countering general assumptions many have.

In a mature, efficient market, if one producer is able to gain efficiencies and/or increase market share, does he do so at the detriment of his competition, or does he not?

Yes. And No.

Is the result better for consumers and the overall economy?

Is the "losing" competition forced to step it up and become a better player or just stop being inefficient?

And to my other points you didn't address... Is all capitalism "free market" as you asserted? The nuances of capitalism must be understood to make valid assessments IMO.

Look, you picked lemonade, a mature market by most standards. 1) Not all markets are mature, and 2) many thought to be mature are proven inefficient with technology pushing forward in unforeseen entrepreneurial ways. History is rife with examples, and that is the primary argument of free markets over central planning in all it's forms and shades.

Leopold B Scotch says

Is the result better for consumers and the overall economy?

In theory, yes. Not the overall point of this discussion though. There is also a fair amount of human "pain" in that process.

That is until one producer drives all competition from the marketplace and gains monopoly status.

Leopold B Scotch says

And to my other points you didn't address... Is all capitalism "free market" as you asserted? The nuances of capitalism must be understood to make valid assessments IMO.

In theory capitalism is by definition free markets with private ownership of the means of production. In practice of course there are few free markets.

I'm not sure what that has to do with our discussion about allocation of income in a closed economy.

david1 says

Is the result better for consumers and the overall economy?

In theory, yes.

Not just in theory. Although, other intervention-related factors can screw that up -- and very much so.

Not the overall point of this discussion though.

I've conceded as much, and clarified why I pushed the subject: the implication of the way you framed it is that to have a winner you must have a loser. It's more complex than simple black and white, and frankly, what more broadly wins far outweighs the losing.

There is also a fair amount of human "pain" in that process.

Failure is in most cases a painful lesson. It is also a valuable one. Most successful people have many failures experiences before they get it right. They nearly always say their failures were invaluable lessons.

That is until one producer drives all competition from the marketplace and gains monopoly status.

A monopoly cannot exist in a truly free market. If you study closely the history of "monopolies", you'll find they only exist by government edict. You'll find oligopolies / cartels banding together to try to drive out competition, but that is a history of smaller, dramatically more nimble players still running circles around the top heavy cartels.

Which is where you'll see the history of Anti-Trust regulation being written heavily by the cartels themselves as a way of guaranteeing a truce-like protected status, divying up territories, mandating fee structures. Combined with other regulation that serves as very costly hurdles to smaller, less capitalized competitors, the playing field was deliberately tilted to favor Big Corporations.

In theory capitalism is by definition free markets with private ownership of the means of production.

The universal definition of capitalism is something like this: An economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.

You'll find some definitions (Websters, for example) which will elaborate to state something like "...investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market"

In practice of course there are few free markets.

And by inference, few capitalists??

I was clarifying the reality of / capitalism in practice -- that the only consistency with capitalism is the objective of arranging available resources / capital for a profit. That can be done very consensually and respectful of individual's liberty via a free market, or completely parasitically by integrating the levers of government power as a resource to generate profits, where the government force / regulation is the primary input providing profits as opposed to actual business acumen and consumer choice / consent.

I'm not sure what that has to do with our discussion about allocation of income in a closed economy.

This:
david1 says

A free market and competition is what capitalism IS.

That's an inadequate description of capitalism *in practice*, e.g. what we're dealing with. Understanding the economic framework in which we're operating seems to me to be at the very heart of a conversation on "how income is allocated in a closed economy".

From what you're saying, I think you full well understand that we're not operating in a free market. Only, I think you'd still call it capitalism, although I'm not sure. I've heard folks often say we're not dealing with capitalism, but rather "corporatism" or "neo fascism", etc. To be honest, I don't think I'm really addressing someone like you who understands this pretty well, although I may be offering a different way of structuring your way of thinking about the problem. Others with less understanding in this may find our convo more valuable.

Whatever the case, we probably agree that our system as is, is complete and utter bullshit.

Apparently Butters has grown up to be a history professor of some sort....

I am not sure what the point of this discussion has become..you continually attempt to move it from the practical reality of market share allocation and its effects on income (which is my original point) to a formal definition of capitalism and the lack of practical application of such in our market system.

Agreed we do not have pure capitalism, we operate under a plutocract-engineered form of corporatism and neo facism. Wholeheartedly agreed.

Where we disagree is more of a chicken and egg type of discussion. It appears you believe that the state has created and empowered this system - I believe that the lack of state intervention created an environment in which capital has become centralized, and now these interests diligently work to ensure the status quo. I can write regulations that would give me an advantage in the marketplace - however I have little power to see this legislation become law. Power comes before influence.

We agree that monied interests dominate the marketplace - the real question is how did it happen this way and how do we reverse it? Using the power of regulation in this republic is the only bullet we have remaining - unfortunately propoganda is far too effective in convincing the population otherwise.

We have tyranny by the uninformed masses. Fortunately the masses only remain ignorant until they are hungry.

Personally I welcome Romney - Obama, despite the Right's attempt to portray him as a radical leftist, is far too much like his predecessor. If Romney gets the chance, and with the help of Paul Ryan, they will oveprlay the hand of the right, lowering taxes for the plutocrats to zero, and destroying the fragile economy with austerity.

That should move the country far enough left to allow real reform after 2016. The Clinton's are smart and they see this coming, which is why they are distancing themselves from Obama currently..

david1 says

Apparently Butters has grown up to be a history professor of some sort....

I am a consultant by trade.

you continually attempt to move it from the practical reality of market share allocation and its effects on income (which is my original point)

I've conceded it's a tangent on a separate subject, but I think it's relevance is in the foundation on which the rest of the discussion is based.

As for your original point, I countered with a more dynamic view of market share allocation that is not one in which if one wins, then one must lose, which comes across as if it offsets the win with a loss, net-even before and after.

I think theres' a deeper discussion here about 1)how wealth is generated, and 2) how we define increased wealth / income. Both on a personal level and a broader economy level.

Where we disagree is more of a chicken and egg type of discussion. It appears you believe that the state has created and empowered this system - I believe that the lack of state intervention created an environment in which capital has become centralized, and now these interests diligently work to ensure the status quo.

Nicely distilled. I would add that I believe that inherently it is human nature to live life as easily and as "wealthy" as possible. (e.g. with the least amount of work possible.) Humans will use whatever resources are at their fingertips to do this.

The least corruptible of all systems out there are those where the majority agree to protect the liberty of one another, where those who provide the most to society are rightly rewarded, those who anti-socially burden society are not, and those who are truly dependent receive charity (not entitlements).

Instead, we have pursued big government as a means to improving society. Yet government, distilled, is nothing but the power to coerce. Absent protections of liberty, coercion becomes the tool of human nature described above. While many well-meaning types try to fight this, they will never control it. Meanwhile, many of the well-meaning types don't realize the authoritarian / liberty violating ways they use government force to achieve whatever ends they're able to achieve. Ends that are never as intended, and always require exponential growth in more interventions to fix the errors of prior interventions; inefficiencies that become institutionalized because the nature of humans is to carve out fiefdoms and protect them with government force if available.

We agree that monied interests dominate the marketplace - the real question is how did it happen this way and how do we reverse it? Using the power of regulation in this republic is the only bullet we have remaining - unfortunately propoganda is far too effective in convincing the population otherwise.

That bullet has been tried, rehashed, and is a blank. It was pixie dust from the word go. The only bullet left is Détente on the use of government force to push others around in authoritarian ways, where we instead work to restore individual liberty, the right to say "no thanks", remove corporate privileged, etc. Unfortunately propaganda is far too effective in convincing the population otherwise.

Personally I welcome Romney - Obama, despite the Right's attempt to portray him as a radical leftist, is far too much like his predecessor. If Romney gets the chance, and with the help of Paul Ryan...

The economy is screwed either way. Obama and Romney are opposite sides of the same duopoly that's gotten us into this mess. Besides, we're past the point of no return. The question in my mind is what's to emerge from the rubble.

they will oveprlay the hand of the right, lowering taxes for the plutocrats to zero

Yes. Unfortunately the tax code treats those who actually generate wealth legitimately / honestly no differently than those who achieve it parasitically. You need to protect the former for they are the lifeblood of any economy. I have no sympathy for those achieving wealth by stealth inflation, corporatism, government schilling, lobbying, etc. Ill gotten gains is plunder, plain and simple.

, and destroying the fragile economy with austerity.

As for austerity, I fail to see how distrust of government finances can be resolved by governments incurring more debts. I fail to see how systems that are bloated and falling apart by too many parasites and not enough hosts can be saved without disincentivizing parasitism.

No doubt, austerity is painful. It is much like withdrawal from drugs. Those fighting austerity are arguing the druggie can get back on his feet with more junk. Maybe not as much as before, but don't cut off the junk.

Where we are today provides no easy answer. The only painless solution was to not get on the junk of endless monetary expansion and government redistributionism of wealth and liberty.

But here we are. The economy is massively dislocated away from productivity and useful wealth generation. The only way to restore order is a painful restructuring. Those who have a seat at the table control the laws regarding whose invited to dinner, they get the Grade A cuts on their plates while the rest of us are left to fight for the scraps to be dropped on the floor -- as they allot by dolling out favors in exchange for votes.

Prolonging this massive problem with more junk only makes withdrawal deeper and more painful.

That should move the country far enough left to allow real reform after 2016. The Clinton's are smart and they see this coming, which is why they are distancing themselves from Obama currently..

Shit will hit the fan either way, either sooner by allowing the system to just correct and get it over with, or later with yet more FDR like endless meddling that will extend our malaise to exceed FDR's record of intervention-extended depression.

Either way, the Clinton's will be in good positions to capitalize on the chaos. They are shrewd opportunists, but in the end, their snake oil is no different than any other politician trying to get elected by promising the eternal free lunch. But the masses, in all their economic and historical illiteracy and ignorance, will drink up.

I worry about who is in power next, as people in crisis are willing to sell themselves up the river on snake-oil promises. Look at Germany with their economic fiasco of the 1920s/30s. They went from civilized culture / center of Europe to a critical mass willing to support Hitler in 15 short years. Once the trap was sprung, the rest of the Germans were screwed. The die was cast. Rubicon was crossed. ETC.

Leopold B Scotch says

That bullet has been tried, rehashed, and is a blank. It was pixie dust from the word go.

When has it been tried? Under Teddy Roosevelt? The progressive era was one of general prosperity.

Under FDR? The policies laid in place by FDR and the New Deal laid the foundation for the 1950s and 60s. Only austerity (too little government intervention) prolonged the Depression and caused the caused the recession of 1937.

We have be living in a laissez-faire, low tax environment since the early 1980s.

So if we go by history, income inequality and laissez faire policies in the Guilded Age attributed to the Panics of 1873 & 1893. Progressive policies and trust busting by TR lead to the general economic prosperity without major malaise. Income Inequality and reduction in government spending post WWI lead to the roaring Twenties, a precursor to the Great Depression. New Deal policies shortened and reversed this, only to be stopped short by austerity in the mid-1930s leading to the Depression of 1937. It took WWII and high government spending (and low income inequality) to recover from that. Social programs after WWII (where government felt like it out it citizenry something after the war, with Keynesian policies like the GI Bill) lead to a period of prolonged economic expansion lasting until the collapse of Bretton Woods, the oil shocks, and Nixon's price controls. Since then, we are back to the same laissez-faire, supply-side Austrian ideas that have never been successful.

Only Austrians reject empirical data analysis. Why? Because the empirical analysis shows government intervention and policies do have positive effect on net economic growth?

Bigsby says

Er, my comment wasn't an issue of a no true Scotsman fallacy. I'm pointing out how ludicrous it is to make a sweeping generalization based on one person's comments. Republicans may well be psychotic. The truth or lack thereof of that statement is neither proven nor disproven based on the comments of one person.

Bigsby is correct in this. This article doesn't prove that Republicans in general are waging a war on women.

Although one should try to avoid both the No Trus Scotsman and the Hasty Generalization fallacies, it's important to realize that no argument can be forced into one or the other of these fallacies.

The question to answer in both of these fallacies is whether or not the example behavior is accepted by a significant portion of the group in question, say 20% or more. If so, the generalization is true to at least some extent. If the behavior is accepted by a majority of the population, the generalization is a reasonable one. If a vast majority, 80% or more, accept the behavior, then the generalization can be accepted as the rule rather than the exception.

I don't know how many of the rank-in-file Republicans would approve of throwing acid at female Democratic senators, but I wouldn't be surprised if it were over 20%. But, as Bibsby pointed out, this article doesn't demonstrate that. Let's see if the right-wing media defends this act or renounces it. That would speak more strongly on the war on women.

bob2356 says

Sorry to say many,many people with (R) next to their names will have much to answer for when they meet the founding fathers in the next world.

You mean all of the founding fathers? Or just the ones that owned slaves?

david1 says

When has it been tried? Under Teddy Roosevelt? The progressive era was one of general prosperity

Much like the periods immediately before and after. The progressive era reforms on business was driven by the Rockefeller's and Vanderbilt's of the era. HINT: IT ONLY HELPED THEM SOLIDIFY PROFITS.

But generally speaking, the progressive ERA was a gnat on the overall, true wealth-generating economy.

Under FDR? The policies laid in place by FDR and the New Deal laid the foundation for the 1950s and 60s.

True. You can get very far when your economic model simply hands out wealth to the masses... Until your sources of supply run dry.

Only austerity (too little government intervention) prolonged the Depression and caused the caused the recession of 1937.

Total mythology.

The GD was the first economic crisis that didn't clear within 18 mos to 2 years. The primary difference between it and the ones that preceded it was that Hoover and FDR intervened in the correction of the prior bubble distortions. Granted, thanks to interventions from both the USG and the Fed, that bubble was more distorted, all those economic miscalcluations made thanks to the intervention-induced bubble were not allowed to clear. And so rather than resulting in a short, albeit painful correction (a reminder to not intervene in the first place), we instead have a decade + malaise that never clears until post WWII.

We have be living in a laissez-faire, low tax environment since the early 1980s.

Hardly laissez-faire, and low tax only by socialist and uber-taxed standards.

So if we go by history, income inequality and laissez faire policies in the Guilded Age attributed to the Panics of 1873 & 1893.

Whuut? Whose history? Those panics were caused by the banking system having loaned out more in credit than they had in deposits to actually back that credit. That's Chronie banking committing an outright fraud that, when exposed, results in panics and collapse thanks to all the economic miscalculation it's caused on one hand (thanks to the easy money such fraud implies), and the depositors left to hold the bag when the Ponzi fraud is discovered on the other side. Yet perfectly legal by law, and further enshrined systematically by backstopping such fleecing frauds with the Federal Reserve System.

Progressive policies and trust busting by TR lead to the general economic prosperity without major malaise.

The economy was so robust then, you could do all sorts of things to it and it was fine. 100 years of that compounded later is a different story.

And the "official version" of trust busting is misleading. As I've stated a dozen times now, the legislated drove the legislation and turned it into a profit guarantee by allowing for cartelization at the expense of competition.

Income Inequality and reduction in government spending post WWI lead to the roaring Twenties, a precursor to the Great Depression.

Huh??!!? Monetary policies following WWI, with the Fed monetizing heavily to support banking interests in Great Britain (people were fleeing the pound due to all the WWI debts, and the Fed helped out) flooded the U.S. with liquidity. This lead to the bubble that collapsed in the early 20s, which was not bailed out and quickly cleared. But equally lose plicies in the 1920 flooded the country with liquidity, and so you get the roaring 20s as everyone confuses more $$ (supply) with actual wealth creation, resulting in folks overextending themselves, shifting their perspectives to get-rich-quick bubble mentalities, all of which collapses in 1929. But this series of malinvestments is NOT allowed to clear. Instead, you get policies focused on fossilizing prices at their bubble levels, redirecting resources towards that support. Voilà ! The VERY FIRST Great Depression.

New Deal policies shortened and reversed this, only to be stopped short by austerity in the mid-1930s leading to the Depression of 1937.

LOL. Pumping liquidity creates activity only so long as you continue to pump liquidity. Eventually you have to stop, and that which grew on the back of the easy money policies always then fails due to lack of monetary O2. And all the while you had Hoover's and FDR's price fixing schemes, hiring to fill ditches schemes, destruction of wealth schemes, etc. Those are what prolonged the depression and made it "Great".

It took WWII and high government spending (and low income inequality) to recover from that.

Again, totally wrong. You don't increase anybody's wealth by taking capital, turning into warfare items and blowing it all up. (No doubt, it's profitable for the military industrial complex, but not for society net-on-net.) If you disagree, try it on a family scale: Blow your shit up, and see how wealthy your family economy becomes in it's wake. You do have a huge hole to dig out of after the fact, though. But you will sure be "economically VERY active"! (which will please Keynesians and their GDP and employment obsession!)

The only thing that brought an end to the Great Depression was 1) the end of the war, where massive resources could be redirected back to wealth generating activities that were kept by the people, which made the economy dramatically better than during war time when they were blowing up all the wealth for years on end; and 2) all of our foreign competition was destroyed. Europe and Asia's manufacturing was in ruins, which put the U.S. in a economic catbird seat.

No doubt the U.S. had a economic postwar honeymoon period that was comparatively very profitable. It erred, however, where it structured its economy around that reality as if it would last forever, while subsidizing increasing amounts of wealth towards a quasi-socialist and increasingly more corporatist (jobs at any cost) agenda. U.S. business was exposed increasingly in the 1960s and 1970s as it favored a culture of unrealistic benefit promises, diminished quality of production, all coddled thanks to lack of competition and fairly strong anti-free trade legislation. The honeymoon ended in the LATE 1960s (after LBJ's Great Society bills were coming due, and the Vietnam War costs piled up) when the rest of the world cried bullshit on the U.S. dollar and started cashing it in for Gold, forcing Nixon to default, furthering a chain reaction of economic problems for the U.S. that had been building since the end of the war, if not earlier. (

Social programs after WWII (where government felt like it out it citizenry something after the war, with Keynesian policies like the GI Bill) lead to a period of prolonged economic expansion lasting until the collapse of Bretton Woods, the oil shocks, and Nixon's price controls.

Keynesian policies are nothing more than an economic raiding of the economic seed-corn. Afterwards, the harvests are smaller, yet the people are kept happy because you're giving them seed corn mixed in with each harvest, so they don't notice. Meanwhile, you've restructured the economy in ways that are not sustainable, and eventually your seed corn runs lower and lower, leading to economic famine. Which is what we now are suffering exponentially.

Since then, we are back to the same laissez-faire, supply-side Austrian ideas that have never been successful.

LOL. Hardly. As well, supply-side economics and Austrian theory are not the same, other than sharing a similar respect for Say's law, which itself undermines Keynesian theory. As to their success, elements of free markets have been tried, and where markets are most free, you have more wealth and higher universal standards of living than where they are less free. Otherwise, millions would not have fled the rest of the world for U.S. shores in the 1800s, and the Soviet Communism and Maoism (and a bazillion other shades of authoritarian economics) would be great models of economic success. Keynesian theory is a shade of such, and is a free lunch promise that has exacerbated dramatically the very business cycle it proposed it would tame, and in doing so has created nothing more than a fetid, zombie economy that requires the flesh of the living in order to keep what littles is left of its head above the water.

Only Austrians reject empirical data analysis. Why? Because the empirical analysis shows government intervention and policies do have positive effect on net economic growth?

Such intervention / policies have a positive effect on activity, and that's it. Often it is activity that is horribly counterproductive. Clearly there are beneficiaries, but ignored is what would have happened in an economy had the intervention not happened, and the wealth used to fund it was left to move around those who were able to earn it by consensually exchanging value for value. (Everyone should be required to read and understand Bastiat's "What's Seen vs. What's Unseen." A great piece. A chapter is devoted to it in Hazlitt's "Economics in One Lesson". A book that belongs on everyone's bookshelf that undermines the credibility of the prevailing economic and government policies that have us where we are, screwed as we are.

Austrian's reject the prevailing data analysis because it is horribly flawed and misused, while the empirical and outright experiential evidence offered by Austrians is ignored. Don't use Krugman as your source for an Austrian critique. He is always horribly misleading / wrong in his explanations, which reflects either a painful lack of understanding of Austrian theory, or a deliberate effort to obfuscate given Austrian theory directly counters and undermines the arguments for socialism, which is the chief priority / foundation of Krugman's (and Keynes's) overall belief system. If it does not support socialism as the highest goal, Krugster rejects it. Keynes was a Fabian Socialist through and through, and his theories were designed to promote as much.

Moreover, Keynes' theories were rebutted effectively by Mises, Hayek, etc., not to mention other schools of economic thought, leaving only those in denial clinging to what's left.

Christ Butters, I could have gotten that reply simply by poking around mises.org for awhile.

I respectfuly disagree with nearly every point.
Leopold B Scotch says

Monetary policies following WWI, with the Fed monetizing heavily to support banking interests in Great Britain (people were fleeing the pound due to all the WWI debts, and the Fed helped out) flooded the U.S. with liquidity. This lead to the bubble that collapsed in the early 20s

Isn't this ignoring the economic downturn immediately after the war in 1919? Lack of demand for goods = slow down of economic activity. You say countless times that pumping liquidity creates activity - so if the Fed pumped liquidity where was the activity in 1919 and 2008, for example?

Good discussion and you are obviously a smart guy. We just see this completely differently and I doubt anything is going to change that.

I don't have to reject empirical data analysis in order to sleep at night. You label that as Krugman's critique though it is certainly not original to him. I tend to agree with it because I am a data analysis guy. I'm not smart enough to follow Hayek in the abstract but I can follow the numbers.

Leopold B Scotch says

Keynesian policies are nothing more than an economic raiding of the economic seed-corn.

Keynesian policies are the utilization of economic seed corn. Laissez-faire low tax environments prevent stockpiling of economic seed corn and encourage capital hoarding.

We have been waiting for the rising tide to raise all ships since 1980.

Leopold B Scotch says

Keynesian policies are nothing more than an economic raiding of the economic seed-corn. Afterwards, the harvests are smaller, yet the people are kept happy because you're giving them seed corn mixed in with each harvest, so they don't notice.

Not that I believe strongly in Keynes but you really need to go reread General Theory. That is not what he advocates at all. The base of his work was the countercyclical theory. Part 1: Lower taxes and raise government spending during periods of economic contraction. Part 2: RAISE TAXES and CUT BACK SPENDING during economic expansion to rapidly pay back any debt.

Every one to date has ignored part 2. Any type of spend your way to prosperity scheme has nothing to do with Keynes theories at all. So let's not call this stuff keynesian. Calling Krugman a keynesian for example is a joke.

If you actually still believe Keynes was in favor of spending your way to prosperity read his work "How to Pay for War". He strongly advocates high taxation and forced savings, not borrowing.

bob2356 says

Part 2: RAISE TAXES and CUT BACK SPENDING during economic expansion to rapidly pay back any debt.

This is what I was alluding to just above with the laissez faire low tax environment preventing the stockpiling of economic seed corn. Raising taxes in times of economic prosperity would allow the government to stockpile - save for a rainy day - instead of borrowing...

It's Keynes vs. Hayek.

Fight!

But you're perfectly OK with the 0.1% taking your money?

They do it via bank bailouts, oligopolies, giant defense contracts, and making you pay their taxes for them.

It's far more money out of your pocket than food stamp programs or fireman salaries.

Just want you to be consistent.

They do it via bank bailouts, oligopolies, giant defense contracts, and making you pay their taxes for them.

Pretty much, yes. Both parties are "socialist", but one wants socialism for the rich...

I am consistent. What makes you believe I am not?

So, your argument as you present it is: EVERYONE should be picking my pocket?
What exactly is your 1. position on the subject of taking from me to give to someone else, 2. taking from anyone to give to someone else?
You may use the following legal documents for your sources:
Declaration of indepentence, Constitution and Bill of Rights.
You may have 20 minutes, I do not allow extra time for those who claim they have difficulty taking tests.
You guys don't know any rich people. I am not one of them but I sure as hell know some of them. The vast majority of them are not the bankers who were bailed out.

clambo says

You may use the following legal documents for your sources:
Declaration of indepentence, Constitution and Bill of Rights.

Those documents mean nothing. They never have. Ask any black person about that...

No .1% gets a dime of my money.
I don't keep money in the goddam bank.
I have only vanguard money markets, bond funds, stock funds, and AAPL stock. I don't like giving my money for welfare to anyone, anywhere. If that is too unclear for you guys I can't help you because this cannot be expressed any more clearly.

they mean everything.
you have also never lived in another country, obviously.

Would any pencil necked geek here have the balls to take my money from me in the street to give to his favorite charity of the day?
No fuckin way.
They need to have guys like Obama who believe that men who used balls, brains and sweat should be forced to give money to the sec. 8 people, food stamp and SSI people, firemen, govt. worker millionaires, illegal aliens, etc.
I believe in sink or swim, make it or not, and keep what is yours.

Difference between Dems & Republicans?

One wears a condom while violently raping America. The other doesn't wear a condom while violently raping America. It's your pick as to who's who. The false partisan dichotomy is nothing more than smoke and mirrors to keep us divided while the nation is pillaged right in front of us while we squabble over largely meaningless talking points.

It's not meaningless to some of us.
Nobody is raping me, but Uncle Sam and Obama are trying to pick my pocket to support Maricela for example.
You liberals will be pleased, the illiterate Maricela had her baby girl and soon she will be getting a free place to live courtesy of taxpayers.
Oh and the sperm donor seems to be narrowed down to two whites. The black dude from her candy factory on the west side seems to be eliminated based on the tint of the baby.

While I am all for being irritated at having to subsidize the irresponsible spawning habits of illegals from the third world, they are a minor problem compared to the terrorists on Wall Street. It is safe to say that far more of my money, and that of my grandchildren someday, will be stolen and put into the possession of these psychopathic white collar criminals, than will be given to walking uteruses attached to vaginas that when observed, mimic clown cars. It's just a LOT more emotionally irritating to see the dumb masses of breeders because they are right here for us to see, while the Wall Street criminals are off in their ivory towers and out of our daily sight while they rob us blind. We need to collectively set our priorities. Welfare entitlements and such are A problem, but at the moment they are not THE problem. I see getting upset over that sort of like getting upset that you left the bathroom light on and it is costing you money...while the house is on fire.

Cloud says

Socialism gives guarantees until the money runs out. Then you have Greece.

Greece's money ran out because banksters cooked the books to siphon off public wealth and wealthy special interests carved out so many tax exemptions that the tax code is meaningless. That's not socialism. That's crony capitalism at its most extreme.

The difference between the parties?

Republican - What's yours is mine
Libertarian - What's mine is mine
Democrat - What's mine is yours

Cloud, I couldn'd have said it better myself. Here's my take:

Democrats = The overwhelming desire to force and control others. The lack of common sense, concerned only with the intention, never the (often disasterous) results of their actions. Unconcerned with unintended consequences. Offering up the illusion of utopia for the masses.

Others = Seek freedom, independence, and self reliance.

Get out of my face, leave me alone, mind your own business.
End of line.

Honest Abe says

Others = Seek freedom, independence, and self reliance.

As much as I agree with your description of Democrats, many Republicans are equally authoritarian in their disrespect for your property, rights, liberty. All of what you said can apply to many R policies.

Bluezette says

The difference between the parties?

Republican - What's yours is mine
Libertarian - What's mine is mine
Democrat - What's mine is yours

FAIL. Your view of democrats, especially, given their as expert as anyone at squandering $ trillions on pipe dreams paid for by someone else. Not defending R's, though.

Why not look at these parties through the lens of authoritarian behavior (i.e. willingness to threaten you and confiscate parts of your life and liberty, incarcerate or kill you if you don't comply when you're otherwise minding your own business / living perfectly consensually)

Republicans: Quasi-Authoritarian (for some liberty where they allow, but not if you're gay, or will run a police state so that they can carry on empire-like behavior abroad); will gladly have you incarcerated or shot if you don't contribute.

Democrats: "My view of collectivized entitlement charity is better than yours, and I will kill you or incarcerate you if you don't pay to fund my theories on social economic justice. Oh, and we like wars and banking about as much as the R's. Your right to say "no thanks"? LOL! The state owns you." The D's: "Slavery is wrong.... But confiscating 50% or more of your efforts is good so long as it's on behalf of the state!"

Libertarians: Do as you like, just please do it on your own dime and ask me for my consent before you do something that might affect my life (past, present, future) and liberty, thank you. Implied: what's mine is mine to do with as I please, charity or otherwise.

Cloud says

Obama's F'ing Chief of Staff was on retainer by Goldman Sachs at 30K a year!!! His job was to get Goldman jobs in the administration. What a joke. Where's the NY Times? CBS NBC ABC MSNBC CNN and the rest of the Obama Sachs bum kissers. No RollingStone Magazine is the ONLY outlet I see running with this outrageous corruption story. A rock and roll magazine?

Amen. A+ post.

You need to find yourself a copy of Griftopia, if you have not already read it. Matt Taibbi, the guy that writes all of the stuff for Rolling Stone, wrote the book and he details all of these perverse sweetheart deals, perpetrated by various administrations. He is particularly damning of Obama's health care "reform" and how Obama stripped out anything that sought to limit McCarran-Ferguson in order to force it through.

bmwman91 says

Obama stripped out anything that sought to limit McCarran-Ferguson in order to force it through.

"Politics is the art of the possible".

Leopold, I agree with you in the fact that politicians of both stripes are not averse to taking your liberty, property and rights.

Thats why I used the word "others" as opposed to "Republicans".

PS. I liked your post from 9:57 am

Abe

clambo says

No .1% gets a dime of my money.

You're very naive.

The 0.1% gets a cut of pretty much all the money you spend on anything.

And they get a cut of money you don't even spend, by diluting it with a printing press to create loans to bankers at 0% interest.

But since they have you looking down at the $1 that went to the poor, you don't look up to notice the $100 they took from you to give to the rich. Which of course is the whole idea behind AM radio. It's brilliant in a sick way. Your fear and hate is their wealth.