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

[Pangloss]

No' date=' 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. [/quote']

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

 

That's not zero sum. Zero sum in this example would be if the farmer would have to lower the price he's charging the merchant in order for the merchant to increase the price he's charging customers. This is not the case. The farmer got the same thing he always asks for, and the merchant got more that he usually gets. Non-zero sum.

 

The relationship can also be described as transitive (Farmer > Merchant > Customer, not Farmer <> Merchant <> Customer). Just because the merchant charges more doesn't mean the farmer gets less. Of course, if the Farmer charges more then the Merchant may get less, if they don't increase the price to the Customer. Often in the real world merchants "eat" the difference in order to keep their customers happy, hoping the farmer's price will fall again later. It's funny how that never comes up in these kinds of "fair profit" discussions.

 

 

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.

 

Actually you explicitly tasked the Farmer with the job of setting a price and starting the chain, including both cost and profit.

 

I've explained why it's fair. The farmer could, upon seeing the merchant raise his price, raise his own profit margin and make more money. And in fact, since no competition exists in this example, he would probably do that -- it's just human nature. Farmers are not morally superior to Merchants.

 

So there is no unfairness in that example.

[Mr Skeptic]

Pangloss, if you can distribute 9 apples and 9 ears of corn so that they sum to more than 9 apples and 9 ears of corn, then you can come back and tell me how it's not zero sum. Zero sum does not mean someone loses out, it means that any increase in benefits received by one must be exactly equal to the decrease in benefits received by another. Distribution is an example of such. Perhaps I should have said a "constant sum game"? They're functionally equivalent to a zero sum game, you know.

[Sisyphus]

It just depends on how you're keeping score. If the score is in apples and corn, then it's zero sum. If it's in the utility or benefits gained by apples and corn, then there is a net gain across the board.

[bascule]

Sure, people shouldn't support murder because it's illegal, unethical, immoral, against religion, etc...

 

While I'm typically an opponent of capital punishment, I'd support it in the case of David Miscavige

[Pangloss]

It just depends on how you're keeping score. If the score is in apples and corn, then it's zero sum. If it's in the utility or benefits gained by apples and corn, then there is a net gain across the board.

 

Exactly. And that's what you gave us, Skep, a scenario in which produce is exchanged for money. The farmer didn't trade his apples and corn for peas and sauerkraut, he traded them for cash on the barrel-head. By converting his produce to money the farmer profited beyond his cost, and so did the merchant. Win-win.

 

And while that's true what you said about zero-sum games being an equal trade-off, your argument was that the farmer is harmed by the merchant's gouging. He isn't. The customer may be harmed (e.g. price-gouging after a natural disaster), but not the farmer.

[Mr Skeptic]

And while that's true what you said about zero-sum games being an equal trade-off, your argument was that the farmer is harmed by the merchant's gouging. He isn't. The customer may be harmed (e.g. price-gouging after a natural disaster), but not the farmer.

 

I very specifically said that the farmer profited from the trade, as did everyone else involved. What I said is that any increase in profits by one party comes at the expense of a decrease in profits of another. "Harmed" in that sense, as compared to a previous example. Can the apple farmer increase his profits without reducing the profits of the corn farmer and/or the merchant? Can the merchant?

[ParanoiA]

As an objective observer, it looks like you two are talking right past each other. Skeptic appears to be making a clinical argument of function whereas Pangloss appears to take that as value judgments.

 

Am I close?

[ecoli]

I very specifically said that the farmer profited from the trade, as did everyone else involved. What I said is that any increase in profits by one party comes at the expense of a decrease in profits of another. "Harmed" in that sense, as compared to a previous example. Can the apple farmer increase his profits without reducing the profits of the corn farmer and/or the merchant? Can the merchant?

 

Yes... by reducing his costs through gaining efficiency on the supply or distribution side. (assuming the demand and prices stay static).

 

If demand for corn falls and demand for apples rises the corn farmer might lose profit to apples. Though they aren't perfectly substitutible goods. Either way, this represents a net gain in utility, as far as the market's concerned.

 

I think the corn farmer could still maintain profit margins by reducing costs sufficiently to line up to market demands. So, not zero sum, again.

Edited April 30, 2010 by ecoli

[Mr Skeptic]

Right, but in the post Pangloss had replied to, I had separated wealth creation, value creation, and distribution. Distribution was the only part that I claimed was zero sum. So for example, if the farmers value the product they produce at 1 dollar and the product the other produces at 2 dollars, and the merchant values them all at 2 dollars, then so long as the merchant purchases the products and the farmers end up with none of their own product, there is no particular distribution that optimizes value.

 

Anyhow, even if the thing is not exactly zero sum, my point is that there is a range of possible distributions that satisfy the "voluntary action" requirement for voluntary trading, and that an increase in someone's share of distribution is going to cost some else.

[Pangloss]

Right, but in the post Pangloss had replied to, I had separated wealth creation, value creation, and distribution.

 

You did, pardon me for my comment earlier about cash.

 

My point is this, and if this is not what you're saying, let me know:

 

Person A: You can have my goods for $5. What will you charge Person C for them?

Person B: Thanks, here's your $5. Oh, I was thinking about $10.

(time passes)

Person B (to Person C): You can have my goods for $15.

Person C: Thanks, here's your $15.

Person B: Bonus!

 

It sounds like you're saying that Person A has been harmed, because he didn't realize additional revenue. Regardless of what additional transactions take place, it seems like you're saying that the overall situation has to be judged on some sort of arbitrary "fairness" value, in order to ensure that everyone makes money.

[Mr Skeptic]

You're forgetting that the merchant also profits. The increase in profits of the apple farmer between my first and second examples came entirely 100% out of the profits of the merchant, with no change for the corn farmer. My claim is that at least one of the two examples is an unfair distribution. I am not claiming any of the examples is a fair distribution -- they could all be unfair. The point is that at least one of the examples is unfair, and yet all are voluntary and beneficial for all regardless.

 

And relating it back to the subject of the thread, whoever is the one that gets the disproportionate portion of the profits, is getting rich at the expense of the others (even while all benefit and participate voluntarily).

[Pangloss]

My objection is to the use of the word "fair" (or "expense"). It's a moral judgment implying harm, but as you say, the merchant also profits. His margin decreased, but if he doesn't like it, he can stop, and everyone stops benefiting, which makes it a self-correcting problem.

 

"Fairness" is a term used to argue for government intervention in minutiae. You're beating around that bush, but raising the point nonetheless, so I'm more than happy to argue the point. But certainly the problem is intellectually interesting, which I imagine is why you raised it.

[The Bear's Key]

Just to weigh in here, if the OP were seriously promoting the killing, that message would be quite absurd, its sentiment failing the test of logic and basic humanity as well.

 

Many rich people are good, however that's besides the point. When you offer killing as a practical "solution", you not only begin to embark on a road shared by people who are the real problem, you're likely offering anti-solutions.

 

What do you think the rich and powerful would do if threatened by such a move, just take it sitting down?* What about their families, loved ones, and the less fortunate who might've had strong ties or directly benefitted from a rich person's help. What of the universities that received private grants and nonprofits who received funding? You'd quickly create lots of non-rich enemies against society.

 

It takes work to come up with great solutions. In other words not flimsy, whimsical suggestions.

 

So I'd be a little disappointed if you'd even consider beginning such a thread, Genecks, as my expectations from your posting quality is higher than what I see in the OP.

 

However, I'm actually not offended by your suggestions like others might be (and I wouldn't feel offense even if you had been serious in the killing aspect). The people who are offended might be sheltered from the not-so-rare expressions of "we just need to kill all the stupid people" or "..if we keep stupid people from voting" or "humanity is evil, it should be wiped out" or "kill off the poor, they're just a drain on society and/or parasites -- who keep breeding"

 

And though I'll (often enough) challenge the person's absurd "solution" with reality as a useful stumbling block -- directly contradicting their weak reasonings -- I still keep the presence of mind to know it's just frustration speaking...as it's likely most people wouldn't really mean the absurdities they say, if put to the test.

 

But was the OP even seriously considering the deed? Had anyone even bothered questioning if Genecks was seriously promoting killing the rich? Or was it simply just a mental exercise? In which case Genecks might've posted it under "Ethics" instead of politics. Simpy a mistake. Either way, chill out. Take the example of Mr Skeptic and others who didn't lose it, and instead rationally/calmly explored the OP's apparent fallacies.

[Mr Skeptic]

My objection is to the use of the word "fair" (or "expense"). It's a moral judgment implying harm,

 

The phrase "at the expense of" is simply accurate, no moral judgement required. 5 is smaller than 15 just like -5 is smaller than 5. Although since the transactions are voluntary, the transactions should all be profitable or at least neutral.

 

but as you say, the merchant also profits. His margin decreased, but if he doesn't like it, he can stop, and everyone stops benefiting, which makes it a self-correcting problem.

 

That doesn't in any way make the problem self-correcting. Self-limiting, yes, but suppose the trade is unfair due to a permanent imbalance in power. Eg if the merchant is the only one who can travel, and there are other apple and corn farmers, then the merchant is almost guaranteed to get the larger portion always, due to his superior bargaining position.

[ParanoiA]

But was the OP even seriously considering the deed? Had anyone even bothered questioning if Genecks was seriously promoting killing the rich? Or was it simply just a mental exercise? In which case Genecks might've posted it under "Ethics" instead of politics. Simpy a mistake. Either way, chill out. Take the example of Mr Skeptic and others who didn't lose it, and instead rationally/calmly explored the OP's apparent fallacies.

 

I just assumed this was an academic, mental exercise. That's why I had fun with it. I did notice others have been offended, and I'm not sure why. I never took it seriously from the moment I read the title.

[Cap'n Refsmmat]

I just assumed this was an academic, mental exercise. That's why I had fun with it. I did notice others have been offended, and I'm not sure why. I never took it seriously from the moment I read the title.

 

Indeed. Everyone knows we should really eat the rich.

[ecoli]

I actually really like this type of thought experiment. Difficult to do for social sciences, but I think we're doing pretty well.

 

What would happen if all the rich people died at the same time? Well, ignoring political and social chaos, first we have to define what happens to the rich people's money.

 

Is it redistributed to the people? left in banks or stocks? given to the government?

 

Before proceeding, we should probably define the scenario better.

[Mr Skeptic]

Well let's start off with two premises:

1) The very wealthy got to be that way by exploiting others. (the vast majority of their wealth was not generated by them.)

2) Said interaction is both voluntary and usually mutually beneficial. (we live in a free and moderately well-informed society, and want jobs, services, and products)

 

And to that I'd add:

3a) Some of the very wealthy are wealthy because they inherited a lot of money but are themselves equally able to increase or gain wealth than an average person

3b) Some of the very wealthy are wealthy because they inherited a lot of money but are themselves less able to increase or gain wealth than an average person

3c) Some of the very wealthy are wealthy because they are skilled at acquiring wealth, as in 1) and 2), whether or not they also inherited much wealth.

 

Now, some people might complain that I use the word "exploited" but it is entirely accurate (feel free to check). The more important point is that this interaction is voluntary and usually mutually beneficial -- they provide something that others want, whether it be a job, a product, or a service. It would therefore follow that people would be worse off without the interaction.

 

However, rich people by no means have a monopoly on the ability to provide jobs, products or services. However, since that is the means to get rich it would follow that they would likely be fairly good at it. If so, eliminating them (3c) would reduce the amount of jobs, products, and services available -- a bad thing.

 

Likewise, if they are equivalent to the average person (3a), eliminating them would make no difference (other than that you now have blood on your hands). It's only if they are pissing away their wealth (3b) that it would be beneficial to eliminate them -- but even so, it's only a matter of time before they run out of wealth anyways.

 

Here's a thought experiment: Give a rich person $1,000,000.00 and give a poor person (but one who has his basic needs met) $1,000,000.00. Come back a year or a decade later, and ask them what became of the $million.

[ecoli]

Well let's start off with two premises:

1) The very wealthy got to be that way by exploiting others. (the vast majority of their wealth was not generated by them.)

2) Said interaction is both voluntary and usually mutually beneficial. (we live in a free and moderately well-informed society, and want jobs, services, and products)

 

And to that I'd add:

3a) Some of the very wealthy are wealthy because they inherited a lot of money but are themselves equally able to increase or gain wealth than an average person

3b) Some of the very wealthy are wealthy because they inherited a lot of money but are themselves less able to increase or gain wealth than an average person

3c) Some of the very wealthy are wealthy because they are skilled at acquiring wealth, as in 1) and 2), whether or not they also inherited much wealth.

 

Here's a thought experiment: Give a rich person $1,000,000.00 and give a poor person (but one who has his basic needs met) $1,000,000.00. Come back a year or a decade later, and ask them what became of the $million.

 

cool idea, but it would depend on motivation and reference frame. I would expect rich people who are also skilled at making money would turn that 1 million into much more. They have advantage over most regular/poor people that they already have an established infrastructure for making the kind of investments that will give a high return on $1mill.

 

On the other hand, to a billionaire, an extra $1mill isn't going to mean very much.. perhaps they would donate it to charity directly or buy another classic car. They might not see potential gains from investing an extra million as counting for very much.

 

A poor person might be entrepreneurial enough to turn a million into much more (perhaps not in the year time limit we're restricted to), and that money would be more valuable than to an already rich person. However, even given an extra million, it takes a lot of elbow grease, good ideas and smart investing to turn a million into much more (consider, for example, the high rates of start-up failure).

 

Then there's the not so simple fact about Prospect Theory. People think of changes in prospect framed to a certain status quo reference point, they are more risk averse when it comes to potential losses than they are to potential gains (people will take more risks to avoid losses than to pursue gains, surely a losing strategy) and they overweight the probability of unlikely events and underweight the probability of common events.

 

You can use the theory to understand why many poor people will make lots of small bets of an improbable outcome (the lottery) rather than (more rationally) spending an equal amount on a more reliable investment. Someone who makes $400 a week will spend $5 a week on a lottery ticket (not a huge chunk of their budget) rather than putting an extra $250 in their savings account every year.

 

Suddenly you give that person $1 mill and their reference frame shifts radically when they're used to small steady gains. They're probably more likely to lose this money is some big, "sure thing" scam. And why not take a large risk like that... it's not their money! (compared to the old reference frame, anyway)