The ever widening gap between rich and poor

[cladking]

 

 

The creation of derivatives that can be used as currency.

 

 

 

 

I have a unique view of economics as simply being the sum total of all all supply of demand which is derived from human nature. As such my understanding of markets and market forces might not apply in any given situation and specoialists are far more able to make predictions in such specific situations where I'm better able to predict longer terms trends and understand overall forces. I'm not competent to have an opinion on some of your suggestions.

 

But this point is one I've long called for. Basing money on precious metals is madness due to the fact their percieved values oscillate causing massive disruptions in economies. By the same token "full faith and credit" is very much a matter of faith and subject to sudden revision in the estimation of the value. For this reason I've long advocated basing money on the productive capacity as weighted by actual economic activity such that the value of the currency is stable. It should pay a dividend as well and increase in the size of government spending controlled to avoid more than marginal inflation.

 

There is nothing in nature stable enough to underlie currency so we should use something made by man. With such a system it would be easy to control currency speculation and the sytem itself would tend to check speculation on many commodities. Another benefit would be to equalize the value of every "dollar". A rich man's dollar woudn't be worth more than a poor man's and a Chinese "dollar" wouldn't be worth more than an American's. There would be no need to even maintain currency markets since new currencies could be added to such a system.

"before government interference it was very difficult to generate cash through destruction of wealth."

 

Can you clarify this statement?

 

How a company fared used to be determined principally by its market segment and its abilty to compete with other companies in that segment. Now it is largely determined by government regulation and law. As such investors and owners have not only shifted to faceless investment funds but their demands are expressed by those who operate these funds, retirement plans, etc. "Stockholders" no longer have a say in things like management compensation. Dividends generated by companies that strove to make a better mousetrap and potential to capture more market used to the primary determinant of stock price. Now income generated by ruining products and destroying future potential is treated equally with profits and stock price is determined by projected government actions. Profits are funneled as wages and bonuses to the few and PE's are sky high because any company might succeed in these situations.

[swansont]

How a company fared used to be determined principally by its market segment and its abilty to compete with other companies in that segment. Now it is largely determined by government regulation and law.

Really? Explain how Apple's success is "largely determined by government regulation and law" rather than innovation resulting in the ipod, iphone, and ipad, etc. and efficient manufacturing. They are the one of the most profitable companies ever, so surely they have an outsized benefit from your purported cause.

[John Cuthber]

In particular, please explain how they succeeded while others failed- even though the government regulation and law were the same for both of them.

[cladking]

Really? Explain how Apple's success is "largely determined by government regulation and law" rather than innovation resulting in the ipod, iphone, and ipad, etc. and efficient manufacturing. They are the one of the most profitable companies ever, so surely they have an outsized benefit from your purported cause.

 

Obvioously Apple is the exception in the field of computers which is itself largely the exception. Some might argue that the government hounding Microsoft at a critical juncture led to Apple's success but I doubt that really played a major role. Microsoft has had a major problem since its inception and that is that computer users are considered a nuisance for programmers. Apple didn't suffer this handicap and has succeeded where Microsoft can't. There are relatively few players in the entire field and start-up costs are most assuredly part of the reason. Start-up costs are quite nominal in this area but they are still huge compared to the amount of money that one man might raise. Even small ventures require a lot of capital in most cases. Many people who would otherwiuse strike out on their own will simply hire on to work for an established company.

 

You can't do this in oil, steel, coal tar products, concrete, or automotive. You pretty much can't do it anywhere other than the restaurant business.

In particular, please explain how they succeeded while others failed- even though the government regulation and law were the same for both of them.

 

 

In any given situation a new law will help one company at the expense of another. Laws simply don't affect existing companies equally. Monopolisdtic business practices are allowed to prevent new competition while government effectively selects among existing business.

[iNow]

my understanding of markets and market forces might not apply in any given situation and specoialists are far more able to make predictions in such specific situations <...> I'm not competent to have an opinion on some of your suggestions.

This has turned out to be your most accurate prediction yet.

 

Basing money on precious metals is madness

I agree. It is, but not for the reasons you cite: http://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/

 

By the same token "full faith and credit" is very much a matter of faith and subject to sudden revision in the estimation of the value.

Perhaps we're talking about different things, but this again appears very trivially wrong. Full faith and credit generally refers to the fact that the US government agrees it will never default on its loan obligations and this confers risk-free status to things like treasuries. You seem to just be tossing around a bunch of word salad, I'm sorry to say.

 

For this reason I've long advocated basing money on the productive capacity as weighted by actual economic activity such that the value of the currency is stable. It should pay a dividend as well and increase in the size of government spending controlled to avoid more than marginal inflation.

This seems to miss the point that different currencies exist in different regions of the globe.

 

There is nothing in nature stable enough to underlie currency so we should use something made by man.

Because man-made objects and institutions are known for being stable? This doesn't follow...

 

How a company fared used to be determined principally by its market segment and its abilty to compete with other companies in that segment. Now it is largely determined by government regulation and law.

This has been addressed. While regulations and laws play a critical role, that role is effectively negated when making within industry comparisons such as you're doing here.

[John Cuthber]

Obvioously Apple is the exception in the field of computers which is itself largely the exception. ...

Would you like me to list lost of successful companies so you can claim they are all "the exception"?

[Wolfhnd]

The alternative to Government regulations is government by corporations, think East Indies Corporation. Anti monopoly laws are there to prevent corporations that have a head start from monopolizing the entire economy which is paradoxically the logical out come for free trade. Pure capitalism is as absurd as from each according to there ability, to each according to their need. At least communism is a logical possibility if you assume complete altruism.

 

The one dollar one vote idea is wonderful until you realize that your vote isn't worth much if the other guy has a billion votes. Of course all democracies require compromises so the Government is there to shift the balance slightly back in favor of the average citizen. Those citizen still have to vote responsibly with their dollars but at least they have the option to do so if the Government is not controlled by corporations.

 

The limits of government regulations are equally obvious if your realize you need a regulator for ever other person in society. Societies must be based on the majority of the people behaving ethically. There is no parallel in nature that points to social animals being anything but primarily cooperative. The argument that that makes people sheep implies that their must be a wolf hiding out there. The wolf will not live long if he eats all the sheep. It is obviously more practical if there are no wolves and all sheep in any case. The sheep compete amongst themselves but as long as they follow the rules of their society it does no harm. A wolf on the other hand has no other option that to do harm if he is to survive. The wolf in our case is anyone who doesn't earn what they receive in compensation. Which is part of the reason the money lenders were thrown out of the temple.

 

The neocon fascist seem to be incapable of realizing that societies are first based on cooperation and then on ethical competition. The self evidence of these truths make you wonder if they have ever really been part of a society or if they have always been selfish out laws. The suggestion that you need no laws to regulate a part of society to me implies a desire to be outside the law or above it. The thought that they think of themselves as Darwinian makes me shudder. It is obvious they have no skill for science and that leads be to believe they don't have the logic for managing an economy.

 

Ronald Reagan was an idiot but people loved him because he told them what they wanted to hear. The failure of the economy before he was elected had as much to do with irresponsible financial institutions as the Government. When the wolf is not happy he kills indiscriminately until you give him what he wants. It's not good for the sheep but it stops the chaos for a short while until the wolf eats more than he can swallow, think enron. This cycle of greed and collapse happens over and over but no one studies history.

[Wolfhnd]

In a previous post I listed a couple of reforms I thought may be helpful. I have a few more but I'm not an expert so they may be dangerous but it seems like it is worth exploring some positive steps.

 

Reform international monetary policy's so currency cannot be treated as a commodity and end all speculation on currency.

All trade in derivatives must be converted to currency to be exchanged tying them to monetary policy.

Tie interest rates to interest payments.

Raise the minimum wage to $25

 

Reform inheritance laws to close loopholes and raise the rates while exempting small businesses and family farms.

 

Banking reform for more regulatory transparency.

 

Labor reform to encourage unions and place federal and state inspectors on every union executive board.

 

Incorporate the federal reserve as a government agency.

 

Raise taxes on upper incomes and close loopholes.

 

Place federal regulators on the boards of all large corporations.

 

Regulation to tie CEO compensation to performance by reference to profits.

 

Decriminalize drugs, gambling and prostitution.

 

Create tariffs tied to foreign labor compensation.

 

Invest heavily in research.

 

Reform the United Nations.

 

Reform education.

[cladking]

 

 

The one dollar one vote idea is wonderful until you realize that your vote isn't worth much if the other guy has a billion votes. Of course all democracies require compromises so the Government is there to shift the balance slightly back in favor of the average citizen. Those citizen still have to vote responsibly with their dollars but at least they have the option to do so if the Government is not controlled by corporations.

 

 

One dollar one vote wouldn't be as bad except the poor man has no political power at all any longer. Both parties pander to him but the poor man's dollar has no value at all. Even though the 99% still have more money than the 1% our dollars have no value for tipping the playing field so it continues to be tipped in only one direction; toward the 1%.

 

What we need is a tax payers union. We could easily outbid the paltry sums being paid by the 1%.

 

 

Reform international monetary policy's so currency cannot be treated as a commodity and end all speculation on currency.

All trade in derivatives must be converted to currency to be exchanged tying them to monetary policy.

Tie interest rates to interest payments.

Raise the minimum wage to $25

 

Reform inheritance laws to close loopholes and raise the rates while exempting small businesses and family farms.

 

Banking reform for more regulatory transparency.

 

Labor reform to encourage unions and place federal and state inspectors on every union executive board.

 

Incorporate the federal reserve as a government agency.

 

Raise taxes on upper incomes and close loopholes.

 

Place federal regulators on the boards of all large corporations.

 

Regulation to tie CEO compensation to performance by reference to profits.

 

Decriminalize drugs, gambling and prostitution.

 

Create tariffs tied to foreign labor compensation.

 

Invest heavily in research.

 

Reform the United Nations.

 

Reform education.

 

I'm in general agreement with all your points except I believe government needs to be kicked out of research except for limitedly as it applies to military research. Research should be funded by corporations, individuals, universities, and trusts. CEO's pay should be capped at around 10 million through onerous taxation or whatever is required except where the founder of a company runs it. This will likely require SEC reform to get individuals back into corporation ownership. Taxes on stock sales will be a big step toward this goal. Any system where participants skim off the creme by having nanosecond headstarts is corrupt and broken. It needs to be stopped. The changes in the FED should begin immediately.

 

I'd suggest very extensive changes and very draconian changes in education starting immediately. The system should be run by the teachers for the benefit of the teachers and based on the attainments of the students. I'd cut the budgets 50% and fire the school boards. Let the teachers hire them back as they are needed. It will take 40 years after education is fixed to get this country back on track. This needs to start now. Schools need to teach metaphyics from a very early age and continue through the doctorate programs. Indeed, there need to be new specialties such as generalists and metaphysicians.

[iNow]

Even though the 99% still have more money than the 1%...

Barely, and not for long.

 

http://www.marketwatch.com/story/richest-1-is-about-to-own-more-than-everyone-else-put-together-oxfam-2015-01-19-910384

In 2014, the richest 1% of people in the world owned 48% of global wealth, leaving just 52% to be shared between the other 99% of adults on the planet, said development organization Oxfam in its report. <...> And then heres the depressing kicker: If this trend continues, of an increasing wealth share to the richest, the top 1% will have more wealth than the remaining 99% of the people in just two years ... with the wealth share of the top 1% exceeding 50% by 2016, said Oxfam.

[cladking]

Barely, and not for long.

 

 

 

 

They get their government for almost nothing. Very few senators and Congressmen are worth more than about 3,000,000 but this represents less than $10 per citizen. If every person in the 99% contributed just $10 per month (a tiny fraction of their tax dollars) we could retilt the playing field away from the 1%. Call it the "Citizens Lobby". We get rich government employees and we should get cheap office space as we take over Washington DC. Indeed, we can even let them raise their pay to astronomical levels so the rich people have to contribute to the 99%. Everyone wins since the destruction of wealth will stop.

[Bignose]

If every person in the 99% contributed just $10 per month

Yeah, and I'm sure there will be no problems in getting all 99% to agree what we want each Congressperson to do.

[Wolfhnd]

Yeah, and I'm sure there will be no problems in getting all 99% to agree what we want each Congressperson to do.

 

 

Maybe we can get 25% to agree it's time for the guillotine

[cladking]

Actually the American public is in far closer agreement than the parties purporting to represnt them. Most Americans are fiscally conservative and socially liberal and favor less government intrusion in private and public affairs. Very few Americans support huge bonuses for bankers destroying the economy or shutting factories and moving the jobs to China.

 

Of course consensus can't be achieved but a working platform should be possible.

[Wolfhnd]

"I'm in general agreement with all your points except I believe government needs to be kicked out of research except for limitedly as it applies to military research. Research should be funded by corporations, individuals, universities, and trusts." cladking

 

This is one area in which I strongly disagree. One look at the sorry state of antibiotic research should dissuade anyone of the validity of this position. This is only a practical objection however and there is a more serious consequence of privatizing research.

 

Science is a democratic, cooperative enterprise by nature. When information is not shared and goals not aligned progress is likely to be significantly slowed. The commercial exploitation of science has traditionally been a by product of government funded projects. While funding has shifted toward the private sector the balance of "new" ideas as opposed to refinements still lies with the publicly funded research.