Economic schools of thought.

[Mohamed1993]

So I work in economic research and I've often found that the things you hear about in the news, such as most Americans being unable to fund a sudden expense of $1000, and over half of Americans being unable to afford the cheapest car in the market gets ignored by economists. You look at real GDP rising, unemployment falling and stock markets booming and people interpret that as the economy being well on its way to recovery. However, if you look at why unemployment rates fall, it's because a lot of people have taken up multiple part time jobs, and many people now take on contract jobs where they are overworked, underpaid and receive hardly any benefits. This squares up with the fact that real wage growth in the US has been abysmal since the 1970's. In fact even though unemployment rate is falling, the amount of people that are now outside of the labour force is quite high, and you're not considered unemployed if you're too discouraged to look for a job because of meager prospects of getting one or the lack of benefits in many jobs. 

When you look at the reasons for this, many economists will argue it is because productivity growth isn't high among workers. This is a predominant view in the US and I would probably say in most of the West, where the predominant economic school of thought that prevails is the neoclassical one, where wages are a product of market forces, exploitation of labour is ignored, it is just assumed that firms that overexploit workers will not attract as much demand. However, we know that's not true and if productivity determined real wages then are CEOs 50 times more productive than employees? That's absurd.

I think the Marxian school of thought is the only one that can explain this trend in inequality and wages. However, that often is completely ignored in universities in the West. But a huge problem with Marx in my view is that he often ignored human nature, so while he talked about the working class getting fed up of the greedy capitalists and overthrowing them, he also left-out the fact that many of the working class would try to oppress their fellow working class members. I think this is a fundamental flaw in the way he thought about how people organize themselves economically. And in places like Venezuela, we see immense levels of poverty and people would rightfully argue that this is because of lack of diversification, and too much reliance on oil. This is partly true, however if you look at the Maduro government and its supporters, many of them are not suffering like much of the working class is, and there is a great deal of corruption among Venezuelan officials. I would bet they have large sums of money saved in some offshore accounts. Often socialist governments or governments that claimed to be socialist, ended up producing state tyrannies that massacred millions of people.

So then the question is if Marx got it wrong and if Friedman got it wrong, what is the right approach to economics? Is the best we can achieve given human nature the Scandinavian model, which in some cases is more capitalist than even the US but has a very well broad-based welfare state which at least tries to level the playing field for people to succeed. But in that case which economic school of thought would you think would have more merit? Should economics the way it is taught in the West be reformed? 

@hasanhh, @King you guys might be interested in discussing this. 

Edited May 24, 2018 by Mohamed1993

[Wholehearted Shi'a]

In what cases is the economic models of countries like Norway, Sweden, Denmark etc more Capitalist than the U.S.? 

Personally I would love to see an economy based on the Libertarian Socialist ideology. You hear so much from people like Noam chomsky speaking about what positives could come from such reform but now I really want to see it in practice. 

[Mohamed1993]

On 5/24/2018 at 12:36 AM, Wholehearted Shi'a said:

In what cases is the economic models of countries like Norway, Sweden, Denmark etc more Capitalist than the U.S.? 

Corporate tax-rates are lower than in many US states I believe. The problem is corporations find many loopholes to hide their profits.

On 5/24/2018 at 12:36 AM, Wholehearted Shi'a said:

 Personally I would love to see an economy based on the Libertarian Socialist ideology.

Yeah theoretically it sounds like the best model I can think of, however I just don't know if human nature will ever make this possible in reality. Granting power to the working-class is awesome, but you can't guarantee that the working class will not just start to exploit and take advantage of other members of the working-class then. 

[hasanhh]

First, economic models need some revision. This was always true for socialism because it is based on 1850s perceptions of the World. What passes for capitalism ignores the fact if poor don't earn money, they get rich people's tax monies to support themselves. Henry Ford knew this, but Wall Street moguls fantasize they know more because they acquire their money by fees, commissions and interest rates. Not production.

Since you do economic research @Mohamed1993, then you are aware that how the gov't calculate things and then report them changes. This manipulation is called "revised".

Good example. After the last economic crash in 2000-2002 Tech Wreck and the stock market lost $7 Trillion in face value l decided to do an 'impact comparison'. So l needed an economic statistic that wasn't 'revised' since then. l found this in "National Income" --calculated and reported the same way since its inception (1911 l think it was). So, the face-value losses in 1929 were 15% of National lncome. Yet, the face value losses in March 2000 to Sept 2002 were 35% of National lncome. Note, those are the exact numbers l got because they are easy to remember. To continue, so in September 2002 l posted this on another forum. About two weeks later, a reporter who was one of my followers on that forum repeated this --l guess after checking it out(l hope)-- in a New York  publication.

ln October, 2002,  the Federal Reserve announced it was revising how National lncome will be figured and reported.

In sum, these numbers are so revised and confusing that unless the Fed keeps a secret set of books, nobody knows what the real situations are.

[Mohamed1993]

1 hour ago, hasanhh said:

nobody knows what the real situations are

This I think is the fundamental problem, why do people pretend like economics can function in the same way Chemistry does, it's not a science. 

[hasanhh]

2 hours ago, Mohamed1993 said:

This I think is the fundamental problem, why do people pretend like economics can function in the same way Chemistry does, it's not a science. 

Bro, here is something that got me worrying this week. Last month, my financial services company sends me a letter stipulating that any money not invested --id est cash-- is to either invested or withdrawn. Then l read this week that large cash depositors will be charged "negative interest rates" at banks and savings & loans.

l maybe wrong, but what l think this is, as before,  is that the Money Markets are going to "break the buck" again and this time the banks and all see it coming. Also, that these institutions cannot make enough (they'll say) to pay positive interest rates. Yeah, l know they just reported the "best quarter ever", but as Goldman showed with Greece -twice- is that banks are very good at cooking books.

The FED yesterday, the 23rd, said they are going to let inflation go above the 2% "target".

[Mohamed1993]

Oh, also a very good article by Yanis Varoufakis, he is a marxian economist, but in this article, he talks about the short-sightedness of marx; https://www.theguardian.com/news/2015/feb/18/yanis-varoufakis-how-i-became-an-erratic-marxist. 

[Ali Heidar]

On 5/23/2018 at 9:13 PM, Mohamed1993 said:

Over half of Americans being unable to afford the cheapest car in the market

Where did you get that statistics from?

Quote

However, if you look at why unemployment rates fall, it's because a lot of people have taken up multiple part time jobs, and many people now take on contract jobs where they are overworked, underpaid and receive hardly any benefits.

This simply isn't true. Go to China, India or other parts of developing countries to get a sense of what it means to be overworked and underpaid.

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This squares up with the fact that real wage growth in the US has been abysmal since the 1970's.

Where did you get that information? What is your definition of real wage?

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If productivity determined real wages then are CEOs 50 times more productive than employees? That's absurd.

It looks like your definition of productivity means people working hard. That's not how economists define productivity.

"Productivity is commonly defined as a ratio between the output volume and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output."

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I think the Marxian school of thought is the only one that can explain this trend in inequality and wages. However, that often is completely ignored in universities in the West.

Everyone should advocate for equal opportunity, not equality. Kenya has one of the highest percentage of economic equality. But most people in the world would rather live in California than Kenya. Economic inequality is simply a result of different choices that people make. The world would be an awful place to live if everyone becomes a doctor or engineer.

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But a huge problem with Marx in my view is that he often ignored human nature, so while he talked about the working class getting fed up of the greedy capitalists and overthrowing them, he also left-out the fact that many of the working class would try to oppress their fellow working class members.

The "huge problem with Marx" is that he failed to realize that human beings innovate based on incentives.

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Often socialist governments or governments that claimed to be socialist, ended up producing state tyrannies that massacred millions of people.

Its funny how so many people talk about how Socialism is great if implemented properly... in different forms. Look buddy, socialism simply doesn't work. Free market economics prevails.

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So then the question is if Marx got it wrong and if Friedman got it wrong, what is the right approach to economics?

Its actually pretty simple. Encourage entrepreneurship and innovation by giving people incentives. Government should be concerned with their duty - to protect their citizens from outside forces and to build great roads and highways. Leave the rest to Elon Musks and Bill Gates. They'll do a much better job. 

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So then the question is if Marx got it wrong and if Friedman got it wrong, what is the right approach to economics?

"Economy" is the study of allocation of scarce resources that have alternate uses. The question you should be thinking about is: How can we accomplish this? The answer is simple: Free market!

[Mohamed1993]

1 hour ago, Ali Heidar said:

This simply isn't true. Go to China, India or other parts of developing countries to get a sense of what it means to be overworked and underpaid.

Quote

Oh, there's no denying there's grotesque levels of inequality in China and India, but I'm talking about on a relative scale, the US is way richer than those countries in terms of its GDP per capita, so I don't think you should compare the US with India, an appropriate comparison would be countries that are similar on GDP per capita terms, Canada, the EU, Scandinavian economies, Australia etc.

1 hour ago, Ali Heidar said:

 "Productivity is commonly defined as a ratio between the output volume and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output."

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Productivity=units of output/units of input. But that still doesn't address my question, are average CEOs producing that much more to earn 140 times more than their employees on average? Actually its 140 times not 50.  http://www.chicagotribune.com/business/ct-biz-ceo-worker-pay-disparity-20180201-story.html. Now you could make the claim that the idea, and the craft is unique, I can agree with that in some instances, however 140 times more? And you could argue that they take risks and that if they fail, everyone gets laid off, so they take on more stress and what not, and so they deserve a higher compensation, but this isn't the case for some companies. The big giants like the huge financial institutions rely heavily on taxpayers to bail them out as what we saw in 2008, so their success cannot simply be attributed to their risk, because they are protected by the state in ways that many startups aren't, In fact this is the anti-thesis of free-market capitalism. 

1 hour ago, Ali Heidar said:

Kenya has one of the highest percentage of economic equality

Not true actually. https://www.oxfam.org/en/even-it/kenya-extreme-inequality-numbers.

1 hour ago, Ali Heidar said:

Where did you get that information? What is your definition of real wage?

Quote

Real wage= average hourly earnings adjusted for inflation. http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/.

1 hour ago, Ali Heidar said:

Encourage entrepreneurship and innovation by giving people incentives.

I actually agree with you on this, but then you're harming people's ability to do so, when many people drown in student debt and their only way to afford health insurance is through a job that will offer them this. You could argue tht the US has produced entrepreneurs, but I would say that I don't think there's an equal opportunity for people in this regard, if you come from a privileged background, you have a much better shot, because you can afford to take risks in ways that other people simply can't.

1 hour ago, Ali Heidar said:

Look buddy, socialism simply doesn't work

A lot of people define Norway and Finland to be socialist because of how extensive their welfare system is, so it depends how you define socialism. A lot of Americans think Norway is socialist. Free-market economics would tell you the free-market would produce the optimal outcome when it came to health and education, which are fully funded in a lot of countries. I agree that state ownership of means of production just empowers the state, and enriches corrupt officials. However, you could argue that the intersection of corporations and the politicians, corrupts officials too in different ways. 

1 hour ago, Ali Heidar said:

Where did you get that statistics from?

Quote

I found it on the Federal Reserve website for loans, I'll link it once i locate the source, but here's something else, many Americans can't afford an emergency expense; https://www.bankrate.com/banking/savings/financial-security-0118/. Would you attribute this purely to poor-spending habits? Or do you think there's fundamentally something wrong with how the system works? I think if you combine this with the fact that real wages have stagnated, I think you'd say the issue was probably more systemic than individualistic. 

Edited May 28, 2018 by Mohamed1993

[Sumerian]

Marxists allege communism is the natural evolution of economics.

Feudalism -> Capitalism -> Socialism -> Communism.

I think with the way automation will take over jobs, humans will live in a post-job communist-like society with universal base income which means it will be classless - mostly.

Edited May 28, 2018 by Sumerian

[hasanhh]

4 hours ago, Sumerian said:

Marxists allege communism is the natural evolution of economics.

Feudalism -> Capitalism -> Socialism -> Communism.

I think with the way automation will take over jobs, humans will live in a post-job communist-like society with universal base income which means it will be classless - mostly.

l noticed last year, several futurists, economists sociologists are now 'thinking' about the same thing.

As l wrote similarly somewhere else on SC, they'II be people who do work in advanced fields, owners of robotics (means of mass production), blue collar jobs and the rest will live not in a "bread and circus" world, but in a "bread and video gaming" world.

[Ali Heidar]

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

Productivity=units of output/units of input. But that still doesn't address my question, are average CEOs producing that much more to earn 140 times more than their employees on average? Actually its 140 times not 50.  http://www.chicagotribune.com/business/ct-biz-ceo-worker-pay-disparity-20180201-story.html. Now you could make the claim that the idea, and the craft is unique, I can agree with that in some instances, however 140 times more? And you could argue that they take risks and that if they fail, everyone gets laid off, so they take on more stress and what not, and so they deserve a higher compensation, but this isn't the case for some companies.

If you're a founder of a $10B company and want to bring in a CEO to manage billions of dollars, you're going to look hard to find that person. There simply aren't too many talented CEOs in the world. I'm sure you wouldn't mind paying that CEO millions of dollars to manage billions of dollars. Sure millions of dollars can be a thousand times more than what an engineer at the company might make -- but the engineer also had a choice to pursue a different path to become a CEO.

Wages are simply an indirect result of productivity + supply and demand. In America (and perhaps the world), there are way more janitors, secretaries, engineers, and etc than great CEOs. So to hire that CEO you're gonna have to pay a lot of money. But since your company needs a world class talented business guy to handle large amount of money, you're willing to throw the guy tons of money.

As a software engineer at a startup, I'm making 5x more money than the technician that fixes our computers. He works a lot harder than I do. Is that fair? Well there simply are a lot more technicians than software engineers -- so the hiring team is willing to give me 5x more money to do the job.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

Not true actually. https://www.oxfam.org/en/even-it/kenya-extreme-inequality-numbers.

I was just throwing out a random example to demonstrate that economic equality doesn't - and shouldn't - exist. It's simply a result of different choices that people make.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

Real wage= average hourly earnings adjusted for inflation. http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/.

Household income stagnation is nothing but a myth. The average number of people living in one more 50 years ago was a lot larger than today. You can't compare the two. You gotta look at other factors to determine the progress of a nation. On average, Americans have a much higher standard of living than 15+ years ago. Most countries have better standard of living than 15 years ago. Income stagnation is a myth that liberals like to throw out to make the world look depressing. None of the economists believe in that theory.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

I actually agree with you on this, but then you're harming people's ability to do so, when many people drown in student debt and their only way to afford health insurance is through a job that will offer them this.

Why is the student debt so high? Because the government wants to help students go to universities without having to worry about paying fees. What's the result of that? Universities receive cash from the government all the time. So what's the incentive for universities to compete, innovate, and bring down the costs? None. The government has their back. Same applies to health insurance.

So what's the solution? Government should stay out and let the people decide. People aren't stupid. Socialism is the idea that people are too stupid to make good decisions. In reality it's a lot better for individuals to decide for themselves than the government deciding for them. Look what happened in Soviet Russia.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

You could argue tht the US has produced entrepreneurs, but I would say that I don't think there's an equal opportunity for people in this regard, if you come from a privileged background, you have a much better shot, because you can afford to take risks in ways that other people simply can't.

My parents grew up in poverty. They had to work hard to get here. When my dad came to the States, he had nothing but $500 in his pocket. He worked hard, sent his kids to school, and now he's benefiting in retirement. Believe me, hard work pays. In a developed country like United States, there's really no excuse. Sure, there are many cases where people genuinely get poor and have no way out. But for most people living here, that's not how it works. Nowadays you can rent out your room or drive Uber or work at  McDonalds to eat. That's actually a big deal because 20 years ago you couldn't do that. 

You can argue and say that the money you get from Uber or McDonlands doesn't contribute to a "livable wage" (whatever that's supposed to mean). But again, hard work counts.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

A lot of people define Norway and Finland to be socialist because of how extensive their welfare system is, so it depends how you define socialism.

Norway and Finland's population combined < 11 million. That's around 27% of California's population. Ask an average American if he wants to live in Norway or Finland. They won't hesitate but to say here. You can have the best welfare system in the world, but quality always triumphs "free stuff". I rather pay for great service than get crappy products. It gets better in a free market. You pay a little for a great product.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

Free-market economics would tell you the free-market would produce the optimal outcome when it came to health and education, which are fully funded in a lot of countries.

Unfortunately because of pot head liberals in America its really difficult to have great health and education. They want the government to pay it all. United States - although the best example of a free market - is still not implementing what it can because of these liberals that don't understand economy. Politicians like Bernie Sanders just want more votes from the left so they're willing to destroy to economy to get their votes.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

However, you could argue that the intersection of corporations and the politicians, corrupts officials too in different ways.

I agree. That's why we shouldn't let the government get so powerful. There would be no need for corporations to sleep in bed with the government if the government is so powerful. Government should stay focused on what they're good at doing. Protection their people and build beautiful roads. The US government has become so fat that it's really hard to start a business now compared to 15 years ago.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

Would you attribute this purely to poor-spending habits? Or do you think there's fundamentally something wrong with how the system works?

Again, I'm not sure where you got that from. Most American families own a car. A lot of people have bad spending habits too. They want to buy a fancy car they can't afford so they rack up their credit card bills and cry about it.

On 5/28/2018 at 3:27 AM, Mohamed1993 said:

I think if you combine this with the fact that real wages have stagnated, I think you'd say the issue was probably more systemic than individualistic. 

Again, household income stagnation is nothing but a myth.

--

I know I sound like someone obsessed with America but believe me I'm not. I have a big picture of Rahbar in my home and always chant "Marg bar Amrica" after my prayers (a habit I developed while living in Iran as a Howzah student). I used to think that capitalism is a poison. In some ways it is. But if you extract the economic aspect of capitalism then it's actually wonderful. Look how it transformed poor countries. Look at Hong Kong and other Asian places.

[Mohamed1993]

15 hours ago, Ali Heidar said:

There simply aren't too many talented CEOs in the world. I'm sure you wouldn't mind paying that CEO millions of dollars to manage billions of dollars. Sure millions of dollars can be a thousand times more than what an engineer at the company might make -- but the engineer also had a choice to pursue a different path to become a CEO.

CEO pay in the US is much much higher than it is in many Western developed economies. Are there just way fewer CEOs in the US? Are they just a lot more productive? Also not all of the CEO pay is a result of talent and demand supply, often government integration with businesses implies that bailouts end up going into the pockets of executives; https://www.cbsnews.com/news/16b-of-bank-bailout-went-to-execs/. 

15 hours ago, Ali Heidar said:

On average, Americans have a much higher standard of living than 15+ years ago. Most countries have better standard of living than 15 years ago. Income stagnation is a myth that liberals like to throw out to make the world look depressing. None of the economists believe in that theory.

The data is there for you to see. Many economists thought the financial crisis wasn't going to happen and it did. Not all economists though believe that wage stagnation is a myth; https://www.epi.org/publication/charting-wage-stagnation/.

15 hours ago, Ali Heidar said:

You gotta look at other factors to determine the progress of a nation.

Sure, but that doesn't negate the effect of real wage stagnation. Consumption may have increased, people have bigger houses, but how much of this is reflected across all income levels among the population?

15 hours ago, Ali Heidar said:

In reality it's a lot better for individuals to decide for themselves than the government deciding for them. Look what happened in Soviet Russia.

Soviet Russia is very different from the type of economies I'm referring to, I'm just saying you should give people the bare minimum they need and then from that point on you should let the people decide for themselves. At the moment you don't have a system like that.

15 hours ago, Ali Heidar said:

Norway and Finland's population combined < 11 million. That's around 27% of California's population. Ask an average American if he wants to live in Norway or Finland. They won't hesitate but to say here. You can have the best welfare system in the world, but quality always triumphs "free stuff". I rather pay for great service than get crappy products. It gets better in a free market. You pay a little for a great product.

Quote

Really, is there a poll for this? Global opinion polls show people in Scandinavia are among the happiest in the world, Americans come in 18th; https://www.weforum.org/agenda/2018/03/these-are-the-happiest-countries-in-the-world/. What does the population have to do with provision of basic services by the state? No one is stopping people from using private insurance if they want, but for those that cannot afford it, there should be a public system they can access. 

15 hours ago, Ali Heidar said:

They want the government to pay it all. United States - although the best example of a free market - is still not implementing what it can because of these liberals that don't understand economy.

Almost every other industrialised country has some form of public-funded education and healthcare, do they not understand the economy either? They seem to be doing fine, barring the UK and the NHS, after they rapidly cut-back funding. Tell me why can't the government stop spending so much on the bloated military budget and fund some programs for its own people at home? So often the money ends up being wasted on projects that lead nowhere, trillions of dollars get wasted by the pentagon on nothing. These programs don't seem to have destroyed other countries' economies. In fact, some countries escaped the financial crisis better than the US did. 

I went to a pretty good private university, where I got almost a full scholarship because I was a good student, so perhaps I am saying this against my own interests, because I knew a lot of lazy people that really shouldn't have been at university, but at the same time I think the government has the ability to pay for education if it can fund a bloated military budget and waste trillions of dollars on regime-change ops everywhere.

15 hours ago, Ali Heidar said:

I know I sound like someone obsessed with America but believe me I'm not. I have a big picture of Rahbar in my home and always chant "Marg bar Amrica" after my prayers (a habit I developed while living in Iran as a Howzah student). I used to think that capitalism is a poison. In some ways it is.

Lol, don't worry I'm not judging you. It's an interesting debate, and I'm not saying I have all the answers either, I often struggle to understand the economy myself. Btw, I also live in the US and I don't like the slogan, I understand its directed at the political system but I think there are more productive ways of addressing conflicts between nations than wishing death upon a nation.

15 hours ago, Ali Heidar said:

Look at Hong Kong and other Asian places.

Japan and South Korea experienced a lot of growth because they expanded their manufacturing industries but the government protected these businesses, it wasn't exactly "free-market" capitalism, I don't know if there has ever been a case where the government hasn't protected businesses, the US and Britain became the powerhouses they are because of state-protected companies. In the West unfortunately, particularly since the 1970's/1980's the banking sector has grown so much, and what we have is an industry that is the very anti-thesis of free-market capitalism accounting for a large chunk of the economy. Banks are centred around risks and so the cost of that risk is not just taken on by the bank itself but is felt by the entire economy (systemic risk) and that's a market failure, in much the same way unregulated industrial practices lead to pollution and create climate change catastrophes. 

Edited May 30, 2018 by Mohamed1993

[Sumerian]

@Mohamed1993 classical fiscal conservatives are against current military spending, see Rand/Ron Paul. They view it as "left-wing" to spend so much on the military because it is a government program.

[Mohamed1993]

42 minutes ago, Sumerian said:

@Mohamed1993 classical fiscal conservatives are against current military spending, see Rand/Ron Paul. They view it as "left-wing" to spend so much on the military because it is a government program.

Yeah I am aware, but then the money can be put to better use, no? 

[Sumerian]

36 minutes ago, Mohamed1993 said:

Yeah I am aware, but then the money can be put to better use, no? 

Most of that "money" comes from taxes, in which a system advocated by the likes of Ron Paul would be very low. In fact I think he said the income tax should be 0% at one point. His ideal government is this;

https://en.m.wikipedia.org/wiki/Night-watchman_state

Basically just regular policing and a court system, and leave everything to free-market capitalism.

Edited May 30, 2018 by Sumerian

[Ali Heidar]

11 hours ago, Mohamed1993 said:

CEO pay in the US is much much higher than it is in many Western developed economies. Are there just way fewer CEOs in the US? Are they just a lot more productive?

You cannot compare salaries of two different nations. Not even two different states within the same nation. Engineers in California, for example, get paid a lot more than Engineers in Oklahoma. Location, location location. There are several factors that determine salaries of an occupation. Productivity, supply and demand, and many more factors. Again, if a billion dollar corporation needs someone to manage their assets, they're going to hire someone that can do the job - and they're willing to pay that person a lot of money. How come surgeons get paid so much more than nurses? The owner of the hospital is not stupid to throw away cash for nothing. They're making calculated decisions.

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Also not all of the CEO pay is a result of talent and demand supply, often government integration with businesses implies that bailouts end up going into the pockets of executives; https://www.cbsnews.com/news/16b-of-bank-bailout-went-to-execs/.

As I mentioned in my previously, government shouldn't be super powerful for a good free market model to exist. This isn't corporation's fault. It's the government's fault. If you allow government to make every kind of decision, then obviously the guys with a lot of money will use government's power to get things done. You should be pointing fingers at corrupt politicians and powerful governments - not corporations that simply take advantage of status quo (why wouldn't they?).

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The data is there for you to see. Many economists thought the financial crisis wasn't going to happen and it did. Not all economists though believe that wage stagnation is a myth; https://www.epi.org/publication/charting-wage-stagnation/.

Brother, this article fails to answer the fundamental point:

Total number of people in a given household has been decreasing over time. Let's suppose that an average family of 6 (household) were making $100,000 (adjusted for inflation) 20 years ago. Let's suppose that today a family of 3 (household) make $70,000. That seems worst than income stagnation! Thats $30K less than 20 years ago! But guess what? You're counting the entire household. Individually, people are making much more today than ever. People have more purchasing power today than 20 years ago. It makes much more sense to compare individual income than to compare household income. Don't fall into these potheads that want to make the world look gloomy.

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Sure, but that doesn't negate the effect of real wage stagnation. Consumption may have increased, people have bigger houses, but how much of this is reflected across all income levels among the population?

The fact is - most people move up and down from the income brackets over time. It's rare that an entire population stays in the same income bracket forever. Young and inexperienced people typically start in the lower income bracket and then increase as they gain more experience in the workforce. People living in poverty line today are much better off than people living in poverty line 20 years ago. You're pessimistic about our economy. Cheer up - the world has never been better off economically!

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Tell me why can't the government stop spending so much on the bloated military budget and fund some programs for its own people at home?

I used to ask myself that all the time until I read an intro to economy book that changed my perspective. Theoretically it sounds great to give out free education and healthcare to everyone. But intention does not always result in the expected outcome. When you fill the belly of schools and healthcare system to provide free services for everyone, why would they care to innovate? I know this is off-topic but take a look at Nasa vs SpaceX. The amount of accomplishment that SpaceX has done in the short period of time is unbelievable.

 

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So often the money ends up being wasted on projects that lead nowhere, trillions of dollars get wasted by the pentagon on nothing. These programs don't seem to have destroyed other countries' economies. In fact, some countries escaped the financial crisis better than the US did. 

What about failed non-military projects like Solyndra? Anything that governments do sucks compared to what private corporations can do. If they're going to do anything, let them do what private corporations can't - and shouldn't - do.

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I went to a pretty good private university, where I got almost a full scholarship because I was a good student, so perhaps I am saying this against my own interests, because I knew a lot of lazy people that really shouldn't have been at university, but at the same time I think the government has the ability to pay for education if it can fund a bloated military budget and waste trillions of dollars on regime-change ops everywhere.

The government has been giving student loans and etc to these morons that major in useless topics like "gender studies" or "international culture". They end up flipping burgers at McDonalds. Half of these majors are utterly useless and don't necessarily provide jobs to graduates. First, why should the government fund people to study something that will have no impact on the economy what-so-ever? Second, these universities will never lower the price simply because they are guaranteed money from the government. Why should they lower their price due to competition if they know that everyone will get free money from the government?

Now what will happen if these loans turn into free money? Well... instead of students paying for the money after 20 years of flipping burgers and driving Uber, the government will pay for it. That still means that Universities will continue milking money from the government. That's still a waste of money.

Solution: Government should stop giving out loans, period. They should stay out of education. Then see what happens. Universities will be forced to lower their fees because students can no longer ring Uncle Sam's doorbell to pay for the education. Then Universities will start competing and will actually change their programs to provide practical education for people to enter workforce. You'll have a lot less potheads in the world.

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Lol, don't worry I'm not judging you. It's an interesting debate, and I'm not saying I have all the answers either, I often struggle to understand the economy myself. Btw, I also live in the US and I don't like the slogan, I understand its directed at the political system but I think there are more productive ways of addressing conflicts between nations than wishing death upon a nation.

Sorry buddy, but Marg bar Amrika. I love the corporations that provide high quality iPads and beautiful laptops. I hate the government that makes people stand in terrible DMV lines and submit a thousand documents to start a small business - and bombs innocent people in Iraq and Afghanistan.

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Japan and South Korea experienced a lot of growth because they expanded their manufacturing industries but the government protected these businesses, it wasn't exactly "free-market" capitalism,

India protected their automobile industry for a long time and look what happened. Their cars sucked. Then when they opened foreign companies to compete thats when innovation took off. Tata is now one of the most powerful companies in the world. They sell just about anything.

The best way for the government to help people is to stop sleeping with the corporations. Let'm compete yo.

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I don't know if there has ever been a case where the government hasn't protected businesses, the US and Britain became the powerhouses they are because of state-protected companies.

For every one company that bloomed due to government's protection I can name a thousand other companies that doomed because of that. Look at the sugar industry in America. It's so expensive to buy real sugar because of price floors. No wonder why all these companies use High Fructose Corn Syrup in their drinks. If governments stopped protecting these sugar people then it would've been dirt cheap.

I agree that there hasn't been cases that governments did not protect businesses. But that still doesn't make it right - economically. That's wrong.

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In the West unfortunately, particularly since the 1970's/1980's the banking sector has grown so much, and what we have is an industry that is the very anti-thesis of free-market capitalism accounting for a large chunk of the economy. Banks are centred around risks and so the cost of that risk is not just taken on by the bank itself but is felt by the entire economy (systemic risk) and that's a market failure, in much the same way unregulated industrial practices lead to pollution and create climate change catastrophes. 

I'm not going to comment on that because it's going to lead us to another long discussion but read this.

[Mohamed1993]

On 5/30/2018 at 2:44 PM, Ali Heidar said:

You cannot compare salaries of two different nations. Not even two different states within the same nation. Engineers in California, for example, get paid a lot more than Engineers in Oklahoma. Location, location location. There are several factors that determine salaries of an occupation. Productivity, supply and demand, and many more factors. Again, if a billion dollar corporation needs someone to manage their assets, they're going to hire someone that can do the job - and they're willing to pay that person a lot of money. How come surgeons get paid so much more than nurses? The owner of the hospital is not stupid to throw away cash for nothing. They're making calculated decisions.

There's quite a difference when a gap between a CEO and a median worker's pay is 400-500:1 and it is 20:1 in other developed countries. Is this solely due to location? Location would explain maybe 20:1 in one place and perhaps, 40:1 in another. 

On 5/30/2018 at 2:44 PM, Ali Heidar said:

This isn't corporation's fault. It's the government's fault.

Corporations like bigger governments, they actively enact policies that favor them. You think they don't like the fact that a taxpayer can bail them out and they can keep their profits privately among the unaccountable few? So you're suggesting we should have smaller government, how do we get there? The very reason it's so hard to take down the political establishment is because it's controlled by corporate wealth that's very hard to get rid of, no other party apart from the republican and Democratic Party can even hope to get anywhere because of the structure of the system. Liberterianism is all about liberty, so isn't bribing officials also part of this "liberty"?   

On 5/30/2018 at 2:44 PM, Ali Heidar said:

Total number of people in a given household has been decreasing over time. Let's suppose that an average family of 6 (household) were making $100,000 (adjusted for inflation) 20 years ago. Let's suppose that today a family of 3 (household) make $70,000. That seems worst than income stagnation! Thats $30K less than 20 years ago! But guess what? You're counting the entire household. Individually, people are making much more today than ever. People have more purchasing power today than 20 years ago. It makes much more sense to compare individual income than to compare household income. Don't fall into these potheads that want to make the world look gloomy.

I showed you real average hourly earnings as well that stagnated not talking about households.

On 5/30/2018 at 2:44 PM, Ali Heidar said:

People living in poverty line today are much better off than people living in poverty line 20 years ago. You're pessimistic about our economy. Cheer up - the world has never been better off economically!

Really? How is it then that the UN stated that Alabama had third world like conditions? Why do they have hookworm an easily preventable disease in Alabama? How is it that they can't get clean drinking water in Michigan? This is a first-world country, the richest country in the world, that is abysmal and shameful.  

On 5/30/2018 at 2:44 PM, Ali Heidar said:

What about failed non-military projects like Solyndra? Anything that governments do sucks compared to what private corporations can do. If they're going to do anything, let them do what private corporations can't - and shouldn't - do.

Often private companies have just developed what was developed by the state to begin with. Private corporations would never allow smaller government, they would use their influence and wealth to lobby so the state would enact policies in their favor. 

On 5/30/2018 at 2:44 PM, Ali Heidar said:

Solution: Government should stop giving out loans, period. They should stay out of education. Then see what happens. Universities will be forced to lower their fees because students can no longer ring Uncle Sam's doorbell to pay for the education. Then Universities will start competing and will actually change their programs to provide practical education for people to enter workforce. You'll have a lot less potheads in the world.

What happens then when rich folk can get their parents to pay for college and colleges collude to limit the number of people they admit so that they can all charge higher prices and still admit students because there are enough wealthy people that will pay for it if they each limit their applicant pool? Bankers do it what stops colleges?

On 5/30/2018 at 2:44 PM, Ali Heidar said:

Sorry buddy, but Marg bar Amrika. I love the corporations that provide high quality iPads and beautiful laptops.

A lot of the apps you see on your iPad were developed by the state to begin with, GPS, the internet were developed by the department of defense. A lot of the biotechnology and pharmaceutical companies you see have benefited from R&D that the government invested in. 

On 5/30/2018 at 2:44 PM, Ali Heidar said:

India protected their automobile industry for a long time and look what happened. Their cars sucked. Then when they opened foreign companies to compete thats when innovation took off. Tata is now one of the most powerful companies in the world. They sell just about anything.

Tesla, one of the most prominent car companies, their battery technology and solar panels came as a result of a grant from the department of energy. The idea that many of these car companies are independent to begin with just isn't true. The government's contributions in developing some of the technologies that they use is vital.

On 5/30/2018 at 2:44 PM, Ali Heidar said:

agree that there hasn't been cases that governments did not protect businesses. But that still doesn't make it right - economically. That's wrong.

Except that if you look at a lot of businesses, they couldn't have succeeded without the technology or research developed and funded by the state.

On 5/30/2018 at 2:44 PM, Ali Heidar said:

I'm not going to comment on that because it's going to lead us to another long discussion but read this.

Libertarians like to blame the Federal Reserve for everything. The inflation rate over the early 2000's was never that high. And the fact remains that had the Fed not printed money post crisis, we'd be in a deep depression today. Other countries were not as devastated from the crisis because they regulated their financial institutions better than the US/Europe did. Canada, for example, hardly had a banking crisis to begin with. 

[hasanhh]

6 hours ago, Mohamed1993 said:

 

Corporations like bigger governments, they actively enact policies that favor them.

 

Tesla, one of the most prominent car companies, their battery technology and solar panels came as a result of a grant from the department of energy. The idea that many of these car companies are independent to begin with just isn't true. The government's contributions in developing some of the technologies that they use is vital.

 

Interesting premise.

And correct, many companies survive on corporate welfare.

[Ashvazdanghe]

A healthy economy should be designed to thrive ,not grow | Kate Raworth (Female speaker without hijab.)

https://www.youtube.com/watch?v=Rhcrbcg8HBw

[hasanhh]

On 6/4/2018 at 12:45 AM, Mohamed1993 said:

Tesla, one of the most prominent car companies,

lt was announced Tuesday the 24th that E-Musk is now the 2nd richest person in the World at $124/125BBillion.

[Laayla]

Bismehe Ta3ala 

Assalam Alikum 

The richest country in the world can afford never ending wars, but can't take care of its own citizens.

Almost 18 million views.  A must watch documentary, from Deutsche Welle News.

 

M3 Salamah, FE AMIN ALLAH 

[hasanhh]

On 5/24/2018 at 12:13 AM, Mohamed1993 said:

what is the right approach to economics?

Here is another wrong approach:  https://www.dw.com/en/indian-weavers-turn-to-old-tech-to-protect-the-environment/a-56453224 

Rather than do pollution controls, recycle instead of dumping (for textiles in lndonesia, l posted a sickening video a while back) and so forth, we see menial work rising again at the behest of gov't.

[hasanhh]

Globalization and the Pandemic

While watching this 42minute video, l was reminded of electrical power blackouts over the years. Particularly the one when a tree hit a powerline in Pennsylvania (?) and it blackout the entire Northeast and parts of Canada. A real comparison to this video. [ADDED: as is the Suez blockage; https://www.aljazeera.com/economy/2021/3/30/suez-crisis-creates-winners-and-losers-in-the-global-supply-chain ]

The video itself has info worth pondering. Especially at minute 21ff.

lt is a little pinko and activist, but is still worth your time. Like while eating a long lunch or when TV is usually bad.

The "lL0" in the video is the lnternational Labor 0rganization.

https://www.dw.com/en/coronavirus-how-the-pandemic-is-changing-globalization/av-56890710 

Edited March 31, 2021 by hasanhh