Would killing the rich solve economics issues in times of crisis?

[ecoli]

My purchases are an exchange of wealth I created and sold to my employers for less than the worth of that wealth, for wealth others have created. I have not bought any houses with wealth created by others.

Ah... I see what you're getting at.

 

Should we not then penalize your parents for giving you food while in infancy?

[Mr Skeptic]

Ah... I see what you're getting at.

 

Should we not then penalize your parents for giving you food while in infancy?

 

Well, back in the day this would have been more like a loan. Parents feed kids, parents get old, kids feed parents. Now we have the government taking care of our old folks instead. If the government took care of all children, so everyone got an equal start in life that would be quite fair. Or fairly terrifying. Considering our public schools, I don't think the government could handle properly raising kids.

[ecoli]

Well, back in the day this would have been more like a loan. Parents feed kids, parents get old, kids feed parents. Now we have the government taking care of our old folks instead. If the government took care of all children, so everyone got an equal start in life that would be quite fair. Or fairly terrifying. Considering our public schools, I don't think the government could handle properly raising kids.

 

So there's the problem. We agree that government would be horribly bad at giving all kids an equal initial footing. Therefore, it makes little sense to penalize kids whose parents are, arbitrarily, too wealthy.

[Pangloss]

It would make more sense to kill the poor. They're the ones that mismanage money. They're the weak link. Killing the rich would be killing those who manage money and direct it the most efficiently as measured by the public's mass capital trade for their product.

 

The housing crisis would have been prevented if poor people didn't exist.

 

If you kill the rich, then we kill off the most successful, the talented, the ones who are best fit to give the population what it wants the most. How do we innovate, and create new products and technology if we keep killing the winners of our society?

 

Makes more sense to kill off the losers. The ones dragging us down.

 

It's simple really. All humans are greedy, except for a select couple here and there. Particularly the people who bitch the most about the rich. We all pay the least amount of money we can for a product - that's the same as paying the least amount you can get away with for labor. We cancel and scale down services and monthly obligations when they get to be too much, or if we just want "more money", just like a corporation when they downsize or cut costs.

 

 

We all do the same things. So killing the rich is goofy, because others will take their place - like you. And you are a greedy, selfish little human. I mean that, with love, of course.

 

Rofl! KILL THE POOR!!!!

 

Great post.

[Sisyphus]

My purchases are an exchange of wealth I created and sold to my employers for less than the worth of that wealth, for wealth others have created. I have not bought any houses with wealth created by others.

 

I can just say that the free marketer response to that would be that buying a house is doing the same thing your employer does. The house is worth more to you than the money you used to pay for it, otherwise you wouldn't have bought it. So if in your value system, house is worth more than money (the wealth you "created"), so you've accumulated more wealth than you've created, and you're doing the same thing as your employer.

 

In fact, literally every transaction is equivalent to this on both sides, and it all depends on the fact that goods and services have no inherent fixed value, but rather different value for each person dependent on perceived utility.

 

In theory, the Microsoft shareholders value their employees' labor more than the salaries they pay them. That much is straightforward - they use it to gain more profit than they spent on it. The other half is that it is the reverse for the Microsoft employees - they value their salaries more than the labor they expend in exchange, otherwise they wouldn't get jobs there. They too are receiving more wealth than they created, inasmuch as they receive more perceived value than they put in.

 

This is an seductively tidy, almost mathematical explanation, and an all-purpose answer, which means it is often an excuse for not thinking about our untidy and irrational reality.

[jryan]

Rofl! KILL THE POOR!!!!

 

Great post.

 

Couldn't we just eat their babies?

[Sisyphus]

It would make more sense to kill the poor. They're the ones that mismanage money. They're the weak link. Killing the rich would be killing those who manage money and direct it the most efficiently as measured by the public's mass capital trade for their product.

 

The housing crisis would have been prevented if poor people didn't exist.

 

If you kill the rich, then we kill off the most successful, the talented, the ones who are best fit to give the population what it wants the most. How do we innovate, and create new products and technology if we keep killing the winners of our society?

 

Makes more sense to kill off the losers. The ones dragging us down.

 

It's simple really. All humans are greedy, except for a select couple here and there. Particularly the people who bitch the most about the rich. We all pay the least amount of money we can for a product - that's the same as paying the least amount you can get away with for labor. We cancel and scale down services and monthly obligations when they get to be too much, or if we just want "more money", just like a corporation when they downsize or cut costs.

 

 

We all do the same things. So killing the rich is goofy, because others will take their place - like you. And you are a greedy, selfish little human. I mean that, with love, of course.

 

I know this is tongue in cheek, but it should be clarified that killing the poor is just as goofy. You can't have rich people without poor people, no matter what Ayn Rand insists. It might not be a zero-sum, but getting a good deal vs. a bad deal is still a big part of the difference between rich and poor.

[Zolar V]

You know what would be the most effective strategy to improving the our Lasses-faire free market economy?

 

Socialism.

[ParanoiA]

I know this is tongue in cheek, but it should be clarified that killing the poor is just as goofy. You can't have rich people without poor people, no matter what Ayn Rand insists. It might not be a zero-sum, but getting a good deal vs. a bad deal is still a big part of the difference between rich and poor.

 

I guess I'm going to have to read some Ayn Rand. From what I've read of her on Wikipedia she was an objectivist that wasn't particularly fond of libertarians.

 

Your last sentence though...it occurs to me that some of the deals I make with the rich leave me feeling better, like we both got a good deal - like Taco Bueno or 2x4's from Home Depot. Whereas all of my deals with government are bad ones - I never walk away with a damn thing, other than some piece of paper to complete a bureaucratic pie or a stickie to put on my license plate.

 

I would certainly say the rich, middle and poor are far sight better than government.

[jryan]

I guess I'm going to have to read some Ayn Rand. From what I've read of her on Wikipedia she was an objectivist that wasn't particularly fond of libertarians.

 

Your last sentence though...it occurs to me that some of the deals I make with the rich leave me feeling better, like we both got a good deal - like Taco Bueno or 2x4's from Home Depot. Whereas all of my deals with government are bad ones - I never walk away with a damn thing, other than some piece of paper to complete a bureaucratic pie or a stickie to put on my license plate.

 

I would certainly say the rich, middle and poor are far sight better than government.

 

 

All encounters with Government where you don't walk away in hand cuffs are good encounters!

[Mr Skeptic]

I can just say that the free marketer response to that would be that buying a house is doing the same thing your employer does. The house is worth more to you than the money you used to pay for it, otherwise you wouldn't have bought it. So if in your value system, house is worth more than money (the wealth you "created"), so you've accumulated more wealth than you've created, and you're doing the same thing as your employer.

 

In fact, literally every transaction is equivalent to this on both sides, and it all depends on the fact that goods and services have no inherent fixed value, but rather different value for each person dependent on perceived utility.

 

Note that I never said that I did not benefit from this. That by itself, however, does not make it fair. Consider this example:

A corn farmer and an apple farmer and a merchant are involved in an exchange. The corn farmer grows 10 ears of corn, and values 1 apple at 2 ears of corn each. The apple farmer grows 10 apples, and values 1 ear of corn at 2 apples. The merchant can trade between them, but on the way has to eat an apple and feed an ear of corn to his mule on the way back.

 

So the merchant goes to the corn farmer, and buys his 10 ears of corn, offering 6 apples in exchange. He then takes the corn to the apple farmer, and gives him 6 ears of corn in exchange for 10 apples. After eating an apple and feeding an ear of corn to his mule, he has earned 3 apples and 3 ears of corn.

 

In this example, the farmers have created wealth (10 apples and 10 corn), and traded for something they value more. The merchant has destroyed wealth, but has acquired more than he destroyed, and has increased the value of the already existing wealth. That is, the corn farmer has gained 2 corn-equivalents of value, and the apple farmer 2 apple-equivalents of value, and the merchant whatever he values his profits.

 

Now, lets say the apple farmer has realized that the merchant is profiting off them, and decides that he will sell his 10 apples for 9 ears of corn. Everyone still benefits from the overall transaction, but now more of the wealth ends up with the apple farmer. The merchant still earns 3 apples, and the corn farmer still earns 2 corn-equivalents, but now the apple farmer earns a whopping 8 apple-equivalents.

 

Basically, the moral of the story is that even voluntary transactions which everyone engages in willingly and where all involved profit, can still be unfair. This unfairness need not create or destroy any wealth, only affect how the wealth is distributed. Without creating any additional wealth, in the second case the apple farmer has quadrupled his income, by demanding much more than is necessary for him to profit. It doesn't make him any better nor more productive, only richer at the expense of others. And everyone involved has the right to resent that.

[Sisyphus]

I guess I'm going to have to read some Ayn Rand. From what I've read of her on Wikipedia she was an objectivist that wasn't particularly fond of libertarians.

 

I can't say that I really recommend it. I just mention her because your tongue in cheek modest proposal reminded me of her dead serious utopian ideals.

 

Your last sentence though...it occurs to me that some of the deals I make with the rich leave me feeling better, like we both got a good deal - like Taco Bueno or 2x4's from Home Depot. Whereas all of my deals with government are bad ones - I never walk away with a damn thing, other than some piece of paper to complete a bureaucratic pie or a stickie to put on my license plate.

 

I would certainly say the rich, middle and poor are far sight better than government.

 

Fair enough. As I in fact explained 2 posts above the one you quote, I get that. You don't make voluntary deals if you don't want what you get more than what you're parting with, by definition. And as I said, it's not a zero sum game. Both you and Home Depot benefit. And in all deals, there is at least the perception of benefit on both sides, which is definitely not the same thing as benefit, but "freedom to make mistakes, bla bla bla."

 

I do disagree about "feeling good"/"feeling bad" though. Just because it's better than the alternative doesn't mean I feel good about it. If you were dying of thirst in the desert and I showed up and offered you a gallon of water for $50000, you'd almost certainly take it, because your life is worth more than $50000, and you're probably delusional with thirst by then anyway. You do benefit, and I haven't forced you to do anything, but you probably wouldn't be happy with me.

 

As for the government, I don't feel bad about all my interactions with them, even if it isn't voluntary, though it might seem that way since there tends to be more separation between cause and effect. And if it was voluntary, I'd still make that choice, if the alternative was anarchy, as would almost everyone. (Though to many, it may seem like paying $50000 for a gallon of water in the desert.)

[ParanoiA]

So...how many apples and ears of corn would the respective farmers earn if they had to do the traveling?

 

Wouldn't wealth be destroyed by the expense incurred to trade? And how did they hear about the possibility of trade? Doesn't the merchant fulfill a role to bring the two traders together? And doesn't that work have value? I suppose "doing work" isn't creating wealth, but wealth isn't doing any work without him.

 

I do disagree about "feeling good"/"feeling bad" though. Just because it's better than the alternative doesn't mean I feel good about it. If you were dying of thirst in the desert and I showed up and offered you a gallon of water for $50000, you'd almost certainly take it, because your life is worth more than $50000, and you're probably delusional with thirst by then anyway. You do benefit, and I haven't forced you to do anything, but you probably wouldn't be happy with me.

 

Exactly. That's why I said "some of the deals I make with the rich". Believe me, I'm no Ayn Rand. When I'm not bitching about government, I'm bitching about capitalists.

[Pangloss]

It doesn't make him any better nor more productive, only richer at the expense of others. And everyone involved has the right to resent that.

 

Not at the expense of others, just richer. The others got the exact same thing they got before, if I read your example right. Nobody got hurt -- there is no harm to be found in there anywhere. If you resent the price the last guy is charging, you sell them for six, and now you're making a lot of money and the other guy's making none.

 

BTW, who says an apple is worth two ears of corn? The farmer? He's no more qualified to set a fair profit level (above cost) than the merchant.

 

You're not talking about fairness, you're talking about perception.

[Mr Skeptic]

Not at the expense of others, just richer. The others got the exact same thing they got before, if I read your example right. Nobody got hurt -- there is no harm to be found in there anywhere. If you resent the price the last guy is charging, you sell them for six, and now you're making a lot of money and the other guy's making none.

 

I gave two examples. If one was fair (the loot distributed proportional to the labor), then the other example cannot be. The difference between the two is not labor, wealth creation, nor value increase. One benefits at the expense of the other. All still benefit, but now one benefits more than before and one benefits less. So yes, at the expense of the others.

 

Creation of wealth, and trading wealth to increase value, are both good and not a zero sum game. How the created wealth and value are distributed, is a zero sum game. If one gets a larger share, it can only be at the expense of others.

 

BTW, who says an apple is worth two ears of corn? The farmer? He's no more qualified to set a fair profit level (above cost) than the merchant.

 

You're not talking about fairness, you're talking about perception.

 

Who do you think sets the value for something? Do you think anyone can tell you how much you value an ear of corn or an apple? What you value items is your own business, and completely subjective.

[Pangloss]

All still benefit, but now one benefits more than before and one benefits less. So yes, at the expense of the others.

 

Creation of wealth, and trading wealth to increase value, are both good and not a zero sum game. How the created wealth and value are distributed, is a zero sum game. If one gets a larger share, it can only be at the expense of others.

 

No, it's not. Distribution of value is not at the expense of others, and it's not a zero-sum game.

 

What you're saying is that because the merchant charges a higher markup for the end product, he's causing actual harm to the farmer. But that's not actual harm -- the farmer got exactly what he asked for. The farmer has lost nothing except, perhaps, an opportunity to make more than he normally would.

 

And I think when you change the definition of a word to make an ideological point you are making a statement about your commitment to that ideology, not a logical, well-reasoned argument.

 

 

Who do you think sets the value for something? Do you think anyone can tell you how much you value an ear of corn or an apple?

 

That's not what I said. What I said was that the farmer is no better qualified to determine what constitutes an appropriate or reasonable profit than the merchant. And he isn't. He can tell better than the merchant how much it cost him to make the food, but he isn't better qualified to say how much it should sell for. From what I can see, you've assigned him that task out of a purely moral belief, not logical reason.

 

 

What you value items is your own business, and completely subjective.

 

That's right (at least in terms of profit). And that statement is true not only for the farmer, but for the merchant as well.

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Merged post follows:

Consecutive posts merged

Put it this way, you're saying this would be unfair:

 

Person A sells their old clunker to Person B for $50.

Person B realizes that the "old clunker" is actually a classic car -- Person A didn't know what he had. So he turns it right around and sells it for $5,000 to a collector.

 

You're saying that would be unfair to Person A, yes?

[padren]

(farmer story)

 

Basically, the moral of the story is that even voluntary transactions which everyone engages in willingly and where all involved profit, can still be unfair. This unfairness need not create or destroy any wealth, only affect how the wealth is distributed. Without creating any additional wealth, in the second case the apple farmer has quadrupled his income, by demanding much more than is necessary for him to profit. It doesn't make him any better nor more productive, only richer at the expense of others. And everyone involved has the right to resent that.

 

The example shows favor, but is not intrinsically unfair. The apple farmer did his market research, and realized there was enough demand that he could charge higher, and it's fair that the transaction favored him.

 

Where it becomes unfair is when it is either an involuntary exchange or a voluntary exchange under duress. Selling life preservers to the drowning or the only source of food to the starving would constitute under duress.

 

Even then, everything becomes muddy real fast and subjective: nothing is ever "the only source of food" but may be the only source close enough to be practical. Or the only source nearby for optimal growth in healthy children. If someone buys the local "good food farm" and starts extorting huge prices, we'd generally consider that pretty parasitic. What if they brought in that food, and the locals would not otherwise even have the opportunity to buy it? Does the fact that it reduces the infant mortality rate in that area mean he's morally obligated to give it away at near-nonprofit prices? Would he be morally wrong to decide against that venture because he needs to increase his savings faster than he could selling the food at "fair" prices?

 

One problem is when we talk about "bad" people we often have to try and divine a person's intentions based solely on observing their actions. Maybe the apple farmer is a price gouging jerk. Maybe he saw an opportunity where he could make the two other parties happy, and still save enough money to get the medicine for his sick dying mom. Is it more fair to let his dear old mom die? Are you from one of Obama's death panels?

 

The simple fact of human nature is the more people are under duress, the more they feel the need to exploit advantages for personal gain. It's why we would feel sorry for the guy when he's trying to save his mom, but not when he's complaining about how much it'll cost to get that gold plated hot tub. (Those gold-plated hot tub merchants are so exploitative )

We have a society that values individual freedoms, which includes the freedom to be a bit of a jerk. If the apple merchant is a jerk and charging a ton, he risks being put out of business by new apple farmers.

Where we as a society need to intervene (which this thread is kinda about, albeit in a rather radical excess) is when something like monopolies exploit their position and create duress for the purpose of exploiting trade partners.

 

To be more technical, intervention as enforcement occurs when consumer protections are violated, and intervention as reform occurs when existing consumer protections are inadequate to fulfill the spirit of the law.

Of course there's always angry rhetoric and debate when reform occurs as no two people on this rock can seem to agree on what the spirit of the law is... but we mob it out and try some more and carry on. Considering how messy it all is though, we just can't legislate a person's intentions. For objectivity's sake, we have to stick to actions, even if a lot of jerks get away with more than we'd like.

[Mr Skeptic]

No, it's not. Distribution of value is not at the expense of others, and it's not a zero-sum game.

 

What you're saying is that because the merchant charges a higher markup for the end product, he's causing actual harm to the farmer. But that's not actual harm -- the farmer got exactly what he asked for. The farmer has lost nothing except, perhaps, an opportunity to make more than he normally would.

 

Duh. That's what I said. Zero sum game.

 

That's not what I said. What I said was that the farmer is no better qualified to determine what constitutes an appropriate or reasonable profit than the merchant. And he isn't. He can tell better than the merchant how much it cost him to make the food, but he isn't better qualified to say how much it should sell for. From what I can see, you've assigned him that task out of a purely moral belief, not logical reason.

 

I've not assigned that task to anyone, nor did I myself make a moral judgement as to who "deserves" more. I gave two different examples with two different wealth distributions but no other difference, and claimed that at least one of them must be unfair. How can both distributions be fair? If one is fair the other must be unfair. Just because it's all voluntary doesn't make it fair.

[ParanoiA]

Skeptic - I don't normally pester people about answering my posts. But, in this case, I'm intrigued by your wealth creation logic here and would like to understand it better. Could you entertain a fella?

 

So...how many apples and ears of corn would the respective farmers earn if they had to do the traveling?

 

Wouldn't wealth be destroyed by the expense incurred to trade? And how did they hear about the possibility of trade? Doesn't the merchant fulfill a role to bring the two traders together? And doesn't that work have value? I suppose "doing work" isn't creating wealth' date=' but wealth isn't doing any work without him.[/quote']

 

And after thinking about it some more, it appears you've assigned wealth creation to people who directly create a thing. Maybe that was just for simplicity's sake. So, what about servicers? They don't create anything either, like growing corn or apples, but rather perform a service to someone else that merely pleases them. Like a massage therapist, or a dentist. How do they create wealth?

 

Merchants would seem to perform a service - a consolidated point of trade; the ole trading post. Otherwise, I'd have to comb my neighborhood, or even the whole town looking for someone to trade the wealth I've created for some of the wealth they've created. This costs me work and time, and destroys some of my wealth. Doesn't the merchant provide a "service" then? In fact, is this not effectively the key to their genesis?

[Mr Skeptic]

Skeptic - I don't normally pester people about answering my posts. But, in this case, I'm intrigued by your wealth creation logic here and would like to understand it better. Could you entertain a fella?

 

Sure.

 

So...how many apples and ears of corn would the respective farmers earn if they had to do the traveling?

 

I dunno. But I assume it would cost them more than it would for a specialized person. That is, they'd be better off improving their bargaining skills than replacing the middleman.

 

Wouldn't wealth be destroyed by the expense incurred to trade? And how did they hear about the possibility of trade? Doesn't the merchant fulfill a role to bring the two traders together? And doesn't that work have value? I suppose "doing work" isn't creating wealth, but wealth isn't doing any work without him.

 

To the merchant I attributed the creation of value. Though he destroyed wealth (an apple and an ear of corn, his transportation losses), he still created value. That is, everyone values the end result more than the initial result, despite the destruction of wealth necessary to do so. Considering it is a preferable result, I would say that is a good thing.

 

In a more complex example, the merchant can create wealth (indirectly) by allowing for specialization and the efficiency that comes from that. In fact, all economies that are even vaguely modern depend on this.

[ParanoiA]

Cool. Ok, that clears up that part for me.

 

I'm still not sure about people that provide a service. Do we see them as adding "value" as opposed to wealth creation too? Makes sense, if I'm understanding you.

[ecoli]

Cool. Ok, that clears up that part for me.

 

I'm still not sure about people that provide a service. Do we see them as adding "value" as opposed to wealth creation too? Makes sense, if I'm understanding you.

 

The concept you'll want to familiarize yourself with is Pareto efficiency/optimality

 

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

[Mr Skeptic]

And after thinking about it some more, it appears you've assigned wealth creation to people who directly create a thing. Maybe that was just for simplicity's sake.

 

Yes. I only meant to show the difference between creating wealth, creating value, and how voluntary transactions could still be unfair (even while still being favorable for all).

 

So, what about servicers? They don't create anything either, like growing corn or apples, but rather perform a service to someone else that merely pleases them. Like a massage therapist, or a dentist. How do they create wealth?

 

Right, there are some services that blur the line between wealth, value, and waste. The dentist provides you with the ability to keep your teeth, which might be considered wealth. A massage therapist gives you something you value, but destroys wealth do do so (he needs to eat).

 

Then there's these other services. A tax specialist gives you something you value -- tax advice -- and as with all services, has to destroy some wealth to provide this service. However, now this is a more artificial situation. The tax specialist only exists because our tax laws are so very convoluted. His service is to negotiate a better distribution of wealth between you and the government, and the value of his service comes entirely at the expense of another party (the government). Of course the government just raises the tax rates, so really this service is at the expense of all your fellow people. Overall, the world would be a better place if the service he performed did not exist.

 

Let me make up another example. A thug points a gun at your head. The thug's buddy offers to purchase the bullets from his gun and give them to you in exchange for the contents of your wallet. He offers the thug half the contents of your wallet in exchange for the bullets. Now, you might voluntarily decide that it is in your best interests to do this transaction. You normally don't value bullets very much, but under these circumstances, those bullets have significant value to you. The thug's buddy plays the role of a merchant in this case, and all transactions are voluntary (they're not beating you to a pulp and taking your wallet by force), and everyone is better off for doing them. However, the situation was artificially created at your expense. You could say you are being coerced, and claim you have been forced to participate, even though the transaction was in fact entirely voluntary.

 

Of course, coercion can take many forms, legal or otherwise, known or unknown, direct or indirect, active or passive. If all the apple farmers got together and formed the apple guild, agreeing among themselves to charge much higher prices for apples for no other reason than to benefit themselves, technically everyone is free to trade with them but we have all agreed that this sort of thing is bad. When you threaten to leave a company if they don't give you a raise, it is a form of coercion and is most effective where the costs to the company for replacing you would be the highest. Likewise, and individual faces large costs in time and effort (and living expenses and medical insurance) of finding a new job and that can be exploited.

 

It is, of course, not possible to prevent all coercion. But generally one party is under less pressure to accept a trade than another, and that party can claim a larger portion of the benefits of that trade for that reason and that reason only.

[ecoli]

It is, of course, not possible to prevent all coercion. But generally one party is under less pressure to accept a trade than another, and that party can claim a larger portion of the benefits of that trade for that reason and that reason only.

 

Nice description Mr Skeptic.

 

It serves to demonstrate that one's utility function is not static, and possibly transitive. I may prefer not getting shot than eating lunch, prefer eating lunch to watching fox news, but prefer getting shot to watching Fox news.

[ParanoiA]

I may prefer not getting shot than eating lunch, prefer eating lunch to watching fox news, but prefer getting shot to watching Fox news.

 

Now that's a sig if I ever saw one. Good one.