Why do most people have no clue about economics?

Economics is hard because it's a complex system.

There are several irregular features, one of which is the mechanism of "valuation"; humans value things differently and for different reasons: viz Richard III's " . . ., my kingdom for a horse!".

Economics is cultural, for instance. It's also necessarily unfair, because if it was fair it wouldn't work. Same with democracy; people believe it means they have a voice and can influence the lawmakers. Is that really true, though? Collectively, people who think their government isn't listening can vote for a new lot. Suppose you go to your bank and tell them you think they aren't listening, you want to vote for another bank. . .?

 

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Well the OP wanted to discuss economics, but it seems it is hardly possible to do so without bringing up politics. They are practically inseparable, it would seem. So here's my two cents.

If you make over $250,000 a year and own land, and you're not a Republican, why then, you're a ninny. If you're a working man or woman, just trying to feed the family and live a decent life and you're not a Democrat, why then, you're a ninny. If you're unable to work or support yourself and your family for whatever reason, and will soon or already are living on the street, and you're not a communist - you're a ninny!

 

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I don't think Capitalism ONLY maximizes the profits for an elite class. Walmart, McDonalds, etc.. etc.. etc... even Apple ONLY became successful by servicing the poor and/or middle class. And it is their service which must be the public good... or they go bust in the community they try to service. Outside of rent-seeking, private businesses have to work their asses off pleasing the public. They should be applauded and given our gratitude not our indignation.

I think socialism does create equality but that society is overall less prosperous because it's so utterly inefficient. To increase efficiency you must reduce variables and in this case that means reducing social freedoms. What's the good in being equal (which actually never happens even in Communist countries) if your quality of life is poorer and your freedoms are eroded? For me it's not worth the trade.

The only answer I can think of is the mental happiness that's inherent in feeling equal to one's peers. Which is powerful emotionally and that's what we need to overcome because in the real world it's much better to be less equal but more wealthy as a private individual.

 

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If you are simply going to assume that their service is a public good, based on their success, then naturally you have no need for evidence or reasoning.

Those of us who do, find very little evidence that - for example - upper level executives of US corporations are worth ten or twenty times as much money per year now as they were worth in 1980. Neither is the public good supplied by Walmart at all obvious to the outside observer, any more than the ability of local Walmarts backed by the national chain to not go bust signifies any visible contribution to local economies.

Capitalism does not prevent rent-seeking, or fraud, or piracy, or organized criminal endeavor. It rewards them.

Why not? Isn't that what three centuries of recorded experience has shown you?

 

Let me see if I understand YOUR reasoning correctly.

Apple provides a service or product. It is greatly enjoyed and loved by 100s of millions of people around the world and in the USA. This we agree to. You seem to think that this success is not, itself, evidence of public good.

Well iceaura, if the public volunteering to conduct an exchange with Apple in the purchase of their items is NOT evidence of public good - what the hell IS evidence of public good?

What? Maybe your idea of what is good and what is bad? Maybe iceaura can sit atop a throne and tell the Little People of the world what is good and not good for them?

Do tell me. Because the way I see things is this is a voluntary two way exchange between one party and another. BOTH parties must be happy or else the exchange is not going to take place. It's purely voluntary. No one is going to force you to do anything you do not want to do. Apple isn't forcing anyone to purchase an item from them. People do so because they WANT to. They are HAPPY with the exchange and so they enter into anh agreement and do so freely. That's a little something called the Free-Market. Maybe you heard of that?

So Steve Jobs becomes wealthy? Big f*cking whoopie doopie. Oh, but it bothers you doesn't it? You just can't stand to see people succeed can you? It must gnaw at you thinking of the good success and fortune of Jobs. The first thing you're going to do is start thinking about WHY some of that money belongs to YOU aren't you? I mean "I'm American". "Steve uses the god damn roads!" Therefor he needs TAXED and TAXED GOOD!!! For the Glory of God and the Nation!

So? You were saying iceaura.... how is it YOU determine what is and is not a public good if NOT by free exchange and association? Go on, have at it.


Steve Jobs was the Saint yet "Mother" Teresa, who left India as poor as the day she found it, is nearly defied. Yes, I think it's interesting the way people view what is and is not reality.

 

This planet. Go look at the Wikipedia pages for McDicks, Wal Mart, or basically any other major corporation. They all started out as small operations, and through the ingenuity of certain entrepreneurs, they grew to be multi-nationals doing billions of dollars of business a year. My argument is not that I agree with the practices of Wal Mart or McDonalds, but that it's in the best interests of society to be economically better off, and the level playing field causes natural selection to take it's course. If you start a department store in a free-market capitalist society, and it fails, you have yourself to blame for that, no one else. If you've been legislated out of business, that's a different matter altogether, as it is not a true capitalist society.

Oh, really? This has happened to you? Oh right, you're just sitting on top of a political soap box trying to convince me of your point arbitrarily. Give me one example of a huge multinational closing down a school in the USA. Oh right, schools are public.

When your job gets moved to China, it means there was someone who was willing to work for a lower wage than you were (or, as is the case in the US, the labour laws were too stringent to allow you to accept a lower wage). The fact of the matter is if you don't start producing, you starve and die. That's a great motivator. The only job security you have is the job security you create. People who refuse to accept that (like the myriad of OWS members) are going to be left behind in our changing world, and frankly, we'll be better off for it.

I'm assuming you're living in the USA, based on your allusions to the politics there, so I'm going to clarify something for you right now; you have never lived in scarcity. We could wipe every man made device off of the USA right now, and you still wouldn't know scarcity, because the amount of fertile land, fresh water, and other general resources make it absolutely offensive for an American citizen to complain about poverty while there are children starving in Somalia. Even if you're homeless you can still gain access to clean water, shelter, and (generally) food all on your own, or with charitable help. But then people start redefining poverty, saying that charity is humiliating, but accepting a disproportionate number of tax dollars from the rich (and let's face it, that's what you want, not a flat tax) is somehow righteous, and not at all humiliating?

I live in Vancouver. We had Occupy members shitting and pissing on police officers and costing millions of dollars worth of tax payers money to fix and clean the art gallery once they left. We are one of the most expensive cities in the world, so that should put it in context as to how founded their complaints are. Anyways, one day on the radio I heard them talking to one of the OWS "leaders" asking him what they wanted. This was four months in, so they had finally waved away the thick cloud of pot smoke and psilocybin that had obscured their original intentions. About half way into the guy's rant (during which he complained about having lived in Van for 6 months and being unable to find employment), a logger called in from Squamish and said "Hey, you want a job? Get over here, bring six friends, I've been hiring all year."

And do you know what that fucker said, after sitting silent for a few seconds? "Yeah, well, I don't want to have to commute to Squamish everyday..."

And after that, I just stopped reading the papers whenever they mentioned OWS, because that was all I needed to know about the cause of the world's economic disparity.

 

I can see that in theory (in that I suspect socialists would want to do that), in practice I cannot name a single example of pure socialism that has ever maximized social good. Take even the Scandinavian examples...they still have private property, so despite sometimes being referred to as "socialist" they are clearly not. They are "slightly more regulated capitalism than other countries in Europe."

Regulation of markets is not socialism.

The reason socialism fails to maximize social good is that it presumes that everyone knows what actions to take to reach that good place (or can work it out when needed), and most of the time we can't. Worse, socializing property leads to new distortions that are every bit as prone to misallocation of assets as the "greedy" impulses the socialization is supposed to correct.

 

I don't care if it's pure or not. It's still what is commonly called "Democratic Socialism". It doesn't have to involve abolishing public property. It doesn't have to involve knowing perfectly what constitutes the public good. We can arrive at common sense decisions through a democratic process and if it doesn't work, we try something else. We do know that people need medical care, a secure retirement, clean air and water, public safety, and attractive public spaces in which to live and work.

 

Oh please, Walmart does not compete on an equitable level with small business, which it devours. For one thing, they do not pay state sales taxes. Oh, they collect them alright, but they keep them, thanks to cozy deals with local politicians, who they can now support with as much money as they want.

There is no such thing in America as a right to total freedom to operate any kind of corporation you wish. For one thing, we could raise tariffs on Chinese made products, so that there would really be a level playing field, and companies like Walmart couldn't outsource pollution and slave labor.

 

It started as a small business. If a small business cannot compete with Wal-Mart, it was not efficient. That means that you were more than likely paying more money for a product because of the small business's inefficiencies.

Did I say that?

You're insurmountably ignorant about economics. Honestly, go read ANY literature about economics that isn't Marxist and you might have a clear indication of why raising tariffs would just make the economy worse.

Wal Mart has 2 million employees. Are you seriously suggesting that it would be a good idea to put those 2 million people out of work just because you can't operate a business inefficiently? That seems like a lot of people to fuck over based on principle.

It's a level playing field as it is now. If you want to outsource your production to China, you can feel free to do that. Also, as I recall, WalMart doesn't manufacture a whole lot but usually buys from brands and outsources manufacturing altogether (IE they just retail).

 

Alexander Hamilton was a Marxist???

http://en.wikipedia.org/wiki/Alexander_Hamilton


"Hamilton helped found the United States Mint; the first national bank; and an elaborate system of duties, tariffs, and excises. Within five years, the complete Hamiltonian program had replaced the chaotic financial system of the Confederation era with a modern apparatus that gave the new government financial stability and investors sufficient confidence to invest in government bonds."

 

Jean-Baptiste Colbert was a Marxist???

http://en.wikipedia.org/wiki/Jean-Baptiste_Colbert


"Colbert worked to develop the domestic economy by raising tariffs and by encouraging major public works projects. Colbert also worked to ensure that the French East India Company had access to foreign markets, so that they could always obtain coffee, cotton, dyewoods, fur, pepper, and sugar. In addition, Colbert founded the French merchant marine."

 

It started OK, they used to only sell American made products but then later on, under new management and with it's Chinese products, it deliberately undercut local business by lowering prices even lower sometimes then they paid for them! That's extremely unethical, not survival of the fittest. It's survival of the most corrupt.

Yes, you equated the operation of a corporation with free speech.

Of course, NOW, all those businesses that sustained main street are gone. It might be too late to curtail the excesses of Walmart and other similar business models, but we will live to regret it when the 10,000 mile supply lines become impractical due to peak oil and we will have to start manufacturing domestically. Besides the fact that congress has to be pro-corporate due to reelection funding.

The playing field is far from level because the only reasons prices are low is that China can pollute with relative impunity and they pay slave wages which lead workers to suicide.

 

That's only a by-product of profit taking. I notice you didn't mention Microsoft and their scandalously horrible old windows products. They should go to jail for that. Is McDonalds really a public good? They are killing us.

Is that why Germany is the most successful country in Europe? You might consider their health care system inefficient, but it gets the job done, something American can't do. I see their socialist public transport system, and it is the envy of the world (as well as punctual). Their quality of life is unsurpassed. The US is nothing to brag about in comparison. I'm not talking about communism, but European style Democratic Socialism.

I recognize the differing potential of individuals, and so do socialist countries. You are really creating a strawman. There is no barrier in a country like Germany or Switzerland to personal success. They only ask that you pay somewhat higher taxes in order to fund socialist institutions like free public school to the graduate level, public transportation, and universal health care. Are those things really too much for the most prosperous nation of the planet to achieve?

 

Your description is of far more than commercial success, and I have said nothing about Apple anyway.

That would be your schtick, here, with the fantasy capitalism.

So how long does that level playing field, if it ever existed, last without government enforcement? Six months? A year? Because Walmart sure isn't playing on one now, is it. And Exxon hasn't been in market competition with anyone in almost a century.

Meanwhile "society" in the US becomes economically worse off, by ordinary measures, when a Walmart moves in. Or a Bernie Maddof operates for a while. Or an Enron gets a grip on everyone's power supply. Or a Goldman Sachs takes over the banking. Or a pack of oil corporations need the US army to secure its supply and stabilize its demand.

No more than the good of society "overall" being more prosperous when a small elite has most of that wealth.

The difference is that "everyone equal" is an unrealistic fantasy no one here wants anyway, whereas the elite garnering most of the wealth is an oppressive and threatening and growing feature of the current situation.

 

Listen to what you're saying. In economics, corruption is a payment to a party which is not due to that party. Outsourcing to China is not corrupt, since Wal Mart is providing a market for Chinese goods and the Chinese are providing the goods to be sold. There is no corruption involved in free trade.

Furthermore, when you talk about undercutting, that's the nature of economics. If I have a lemonade stand and I want more people to come to me, I either offer better lemonade or I offer cheaper lemonade. Clearly the stores which were undercut did neither, and were forced out of business.

Taking a hit on a product is no different than Costco giving away free samples, and frankly, even Mom and Pop stores do it. "Buy one, get one free". Sure, they might lose money on the transaction, but then you're in the store and buying other products. It's a legitimate sales tactic.

The fact of the matter is, if it was a mom and pop store being restricted from purchasing goods from another municipality, you would think it ridiculous. Your only reason for being anti-WalMart is an irrational hatred of a company which is really really efficient.

I did no such thing. I said the principle was the same. In law, you can't have special circumstances. For instance, if we live in a society where the constitution outlaws the death penalty, we can't make a special legislation for a murderer who's crimes are particularly heinous.

Likewise, we cannot deny free speech to those who have stupid ideas, because if we do, it's easy for a politician to pass off an idea as "stupid", and censor it.

To continue the metaphor, if we begin legislating Wal-Mart, it means we can legislate anyone who is successful enough. Ambiguity and manipulation of law is the most disgusting trespass of governance on a society.

To reiterate; I hate Wal Mart. I don't believe in their products because I think they're shit. From an entrepreneurial standpoint, I would never want to be involved with them. That said, however, I would never wish for special legislation that gave me an unnatural edge against them, because if using this edge, I succeed, then I am liable to be legislated in a similar manner for other metaphorical underdogs.

You can't fight globalization. You will never be able to build a grassroots movement strong enough to convince people to pay more money for products of inferior quality (IE go google specialization to explain why globalization exists).

You're not arguing about economics here. It's the same reason the OWS movement didn't achieve anything; it was based on political rhetoric that didn't affect anyone in the slightest.

FYI, that wasn't an insult, you just really don't seem to have any knowledge of basic economic concepts. It would be the same thing as you saying that I don't know how to fix a car. It wouldn't insult me. It would be true.

Again, political rhetoric. Your words are based on absolutely nothing.

 

I don't think any of those quotes were mine...

Edit; Ooops, found one; you said;

If Enron isn't in competition with anyone (I disagree with you, but let's assume you're right), and they are doing so without any special legislation, then they are providing a product or service in the best possible way. That's how a natural monopoly forms.

That's assuming it's natural. If it's not, they were legislated into a monopoly. In that case, that's government involvement, and it's not a true capitalist system. If Enron started abusing their monopoly to start charging thousands of dollars per barrel just for arbitrary profit, then it would be much easier for someone to start a new company and undercut them. At that point, whichever business proved to have more efficient practices would prevail.

You seem to be confusing the US as being a purely capitalist market. It is not. The government intervenes all the time (less so with something like Wal-Mart, more so with something like Enron).

 

There is a condensation of murk around the phrase "through the ingenuity of certain entrepreneurs". Ingenuity is practiced in many ways, utilizing a variety of means - not all of which bear close scrutiny.
But you're right. Somebody cunning, decisive and ruthless enough will probably displace each of them, eventually.
Just don't pretend that the field is open to all would-be contenders.

You don't? Then why advocate for them?

That appears to be two premises that fail to support each other.
Between 1970 and 2010 , what are the social and economic trends? Pick any country.
Do corporate profit increase or decrease?
Does the general standard of living - % employment, buying power, population health, infrastructure and public services - increase or decrease*?
(* No weasel tactics of presenting this in total $ spent: it has to be in results achieved, either per capita expenditure or net change. If you think that's unfair, use %GDP for the other values, rather than $ figures.)
Can the graphic presentation of corporate income, median income and social advancement be superimposed to present a unified picture?

In other words, do you believe that your statement above is accurate?

As long as funding lasts. And that's only as long as anybody who can't get tax breaks earns a salary. When everyone in town either worked for Chrysler or serviced it in some way and Chrysler closes the plant, there is no tax base left. No tax - no public school. I see ads on Detroit tv for open auction of seized properties. Bids on a house start at $500. What do you figure the previous occupant paid into his mortgage before he was evicted?

What do you figure he should be able to produce?

You're getting raptured soon?

And i'm not mad keen on the Harpoons, either.
I'm assuming your economic epiphany consisted on a four-page pamphlet and some recent media hype.
But we may both be equally mistaken in these assumptions.

 

I just have to jump in here; three hundred years ago it took months to get a letter around the world. Now, it takes a matter of days (or seconds if you use email). The point is everyone in the developed world has been positively effected by the rising standard of living. Your claim that the elite garnering wealth is oppressive is based on nothing. Societies become more democratic as they become wealthier.

And let's look at the richest guys in the world. Sure, I'm no fan of Bill Gates' take on copyright law, but the guy has spent a huge portion of his love trying to eradicate disease in Africa. Even the guys running Wal Mart have been known to kick around a few million dollars to philanthropy here or there.

Show me instances of Bill Gates trying to oppress you, or Warren Buffet trying to tear the American constitution to shreds, and then I'll believe that the wealthy are somehow oppressive.

Incidentally, I read Britain has a huge issue with middle class families who bring in illegal Arab immigrants and use them as slave labourers... I wonder if the Forbes' top 5 have ever been convicted of slave labour... hm.

 

I like this too much to pass up

From the guy who, half a page ago, said

ie: if you're unwilling to do slave labour, you don't deserve to live.

Yeah, okay, i'm, going...