The Social Welfare State, beyond Ideology

[Merko]

I suspect there's disagreement about the definition of freedom too.

I'd define freedom as the absence of domination of man by man.

 

[Ziggurat]

I'd define freedom as the absence of domination of man by man.

Is domination of man by government somehow different?

 

[Francesca R]

I have no problem with IKEA's Ingvar Kamprad becoming one of the world's richest men. He gave people something they wanted, and he proved himself very competent in building something that improved society. IKEA can be blamed like most companies for abusing Chinese workers today, but I do not believe that this has been the case historically for IKEA as a Swedish company. Additionally, Kamprad paid his taxes.

Actually the IKEA empire is owned by a Dutch tax-exempt "non-profit" foundation which is "dedicated to innovation in the field of architectural and interior design". The Kamprad family is able to get money out of the business by some masterfully complicated scheme of (legal) tax avoidance. The Economist did an article about this last year. I could find a link but it is sub-only.

 

[shanek]

http://www.sciam.com/article.cfm?chanID=sa006&articleID=000AF3D5-6DC9-152E-A9F183414B7F0000&colID=31

From the article:

One of the great challenges of sustainable development is to combine society's desires for economic prosperity and social security.

Yes, the two do tend to be mutually exclusive...

Most of the debate in the U.S. is clouded by vested interests and by ideology. Yet there is by now a rich empirical rec-ord to judge these issues scientifically. The evidence may be found by comparing a group of relatively free-market economies that have low to moderate rates of taxation and social outlays with a group of social-welfare states that have high rates of taxation and social outlays.

That is about the most unscientific way to do it, as there's no way to deal with differences in culture, size of the economy, economic levels, available resources, etc. This source focuses solely on the Nordic countries, and may thus be guilty of cherry-picking.

The proper way to analyze such a policy is to examine the conditions before and after the implementation of a certain policy, and do a regression analysis.

Poverty rates are much lower there,

Poverty rates are BS. When you look at objective measurements of poverty, the "poor" in the US do as well as the average in Europe. I covered this extensively in this archived thread:

http://www.shanekillian.org/jref/poor-and-fat.html

and national income per working-age population is on average higher. Unemployment rates are roughly the same in both groups, just slightly higher in the Nordic countries. The budget situation is stronger in the Nordic group, with larger surpluses as a share of GDP.

All of these statistics, GDP, unemployment, etc., do not track well from country to country. And again, there are just too many different factors in different countries and cultures to account for.

[quote[I've agreed with the author's points for a long time. Investments in health-care, education, and infrastructure boost economic growth, or at the very least, are merit goods which mostly pay for themselves because of their effect on production.[/quote]

Then we won't need a government to do it for us. People on their own will invest in areas with profitable returns.

Most damning of all is the fact that over 60 years now, there has been extensive data collected of the effects of taxation, and there is no correlation between economic downturns and high taxation.

Why over 60 years? Why only since WWII? Why don't you want to consider the Great Depression? Cherry-picking again?

And besides, it's just untrue. The supply-shock and stagflation of the 1970s can be directly linked to government tax policy. Richard Nixon himself, in his memoirs, mentioned that he knew at the time that it was a harmful policy, but that "the politics of economics outweighs the economics of economics."

Both Austrian economics and, to a lesser degree, supply-side economics are pseudoscience.

How is Austrian economics pseudoscience? Especially given that no other branch of economics has made such reliable predictions--Austrian economics predicted both the Great Depression and the fall of Communism while the Keynesians and other economists were poo-poohing the predictions.

If anything, it's Keynesian economics that has been shown to be pseudoscience.

 

[shanek]

Now as to how to interpret this I have no clue. The population of the originating country is of course an important factor, but so is the population (and the corresponding size of the economy) of the destination country.

The proper way would be to examine the rate of immigration by the population of the source country and the rate of emigration by the population of Norway. I don't think it would be proper to control for the size of the economy as the whole idea is that it is the economy and quality of life that is spurring the move.

Now, there may be other factors that would need to be accounted for via regression analysis. I couldn't think of what those factors might be, but once you eliminate those then the ones that remain are the ones who went due to economic/quality of life factors.

 

[shanek]

You don't feel poverty rates is an important metric by which to judge how well a society is doing?

I don't. Poverty rates are completely arbitrary, being based on a poverty level that is selected by a government by no scientific means. As the thread archive I linked to above shows, the tendency (at least in the US) is to set the poverty level arbitrarily high to increase the number of handouts.

How might this be relevant? You just said that controlling immigration was a way to reduce poverty. Denmark is fairly good at controlling immigration, i.e. keeping other people from moving here. Now you want to hold this against us?

Good point. It's also true that immigration can be a big drain on the welfare state since it generally results in increased payouts being more than increased tax revenues.

 

[shanek]

Meteorologists consistently make better-than-chance predictions, while these types of macro-economists do not. They merely offer after-the-fact 'explanations' (and when they actually make predictions, they are usually dead wrong).

Not so. For example, Austrian economics predicts that increases in the Minimum Wage will increase unemployment. This has been shown to be true time and time again (once other factors are accounted for, of course) in study after study. Now, it's so well established that it's taught in beginning macroeconomics courses and really isn't disputed among economists.

The purpose of that article is not to prove that the Nordic welfare states are superior in terms of economic growth, but to prove that welfare states do not preclude economic growth.

But how do you know the growth didn't occur in spite of the welfare programs? How do you know it wouldn't have been greater without the welfare programs? How do you know there aren't economic forces that kick in to compensate for the damage welfare programs cause? How do you know that those on welfare are not in poverty for a greater amount of time than they would be without the program? Without a regression analysis, you really don't know anything.

Considering this scope, cherry-picking is an allowable method.

No, it absolutely is not, especially without a regression analysis.

This I wholeheartedly agree with, and I think the reason for this enormous improvement is in fact the shift towards greater equality. In the old days, the vast majority was poor and any surplus would end up in the hands of a small elite.

That was due to taxation, fiefdom, and things like that.

The modern welfare states gave the common man (women are men, too, btw) an incentive to do more than just earn enough to stay alive. Science and economic growth became a concern not just of the elite, but of the majority.

But that's actually more true of a free market system. In a free market system, the common folk can earn and own property and increase their own wealth. There is data that shows that someone on welfare has less incentive to work.

Capitalism ruled the world for centuries with relatively small improvements.

HUH????? Support this, please.

Only with the advent of today's more equal societies--and indeed of socialism--did science and economy really take off.

In the US, science and economy really took off during the 19th century and early 20th, when we had a relatively free market. After the welfare state was enacted starting in the 1930s, this growth slowed.

 

[Beerina]

I'd define freedom as the absence of domination of man by man.

Is domination of man by government somehow different?

Isn't government...just men, too?

I recall Ayn Rand's almost sarcastic definition of a statist: someone who wants Man to dominate no other animals...except men.

 

[Merko]

Is domination of man by government somehow different?

Not really. But as with any simplified definition, it has its limits of course. If I want to drive on the left side of the road, and most people prefer driving on the right side, they might 'dominate' me and force me to drive on the right side, or not at all. This appears unavoidable because when people want mutually exclusive things, someone ultimately has to yield. Since in a working democracy, the government is a reflection of the will of the majority, it is often a good arbiter. But of course, that assumes it is arbiting something which is truly a case of mutually exclusive wishes. In too many cases, governments and majorities impose restrictions on minorities that are not necessary.

 

[Merko]

Actually the IKEA empire is owned by a Dutch tax-exempt "non-profit" foundation which is "dedicated to innovation in the field of architectural and interior design". The Kamprad family is able to get money out of the business by some masterfully complicated scheme of (legal) tax avoidance. The Economist did an article about this last year. I could find a link but it is sub-only.

Has this been set up already? I know that Kamprad, who doesn't believe in giving away such an empire to his heirs, has voiced plans to set up something like this.

 

[Merko]

Not so. For example, Austrian economics predicts that increases in the Minimum Wage will increase unemployment. This has been shown to be true time and time again (once other factors are accounted for, of course) in study after study. Now, it's so well established that it's taught in beginning macroeconomics courses and really isn't disputed among economists.

Problem being that it isn't just Austrian economics that predict this. Obviously, when minimum wages are low, people will be forced to take unproductive jobs, often as servants for the rich.

For a Swede such as myself visiting the US, this is very obvious. You see so many people in the US being employed in jobs such as holding signs, watching public lavatories, or other things which would be completely unthinkable in a high-minimum-wage country such as Sweden. Going by a New York airport coach there was one driver, one ticket salesman, one person to check the ticket, and finally one person just to follow the ticket controlling person around. Nope, the coach service was not government-run, even though the USSR would no doubt have admired this efficiency in 'creating jobs'.

But how do you know the growth didn't occur in spite of the welfare programs? How do you know it wouldn't have been greater without the welfare programs?

I can't tell that from this data. You missed the point of the study. It shows that a strong welfare state does not preclude strong economic growth. Of course it is entirely possible that if the Nordic countries had not had a strong welfare state, they would not only be among the wealthiest countries in the world, but in a league on their own high above other countries. It doesn't seem plausible, but yes, it's possible. That is not what the study aims to disprove.

Because we now know that strong welfare programs are perfectly compatible with strong economic growth, we can discard the old argument that welfare ruins the economy.

This means that those of us who like strong welfare can vote to strengthen such policy without having to worry that it will ruin the country.

But that's actually more true of a free market system. In a free market system, the common folk can earn and own property and increase their own wealth.

I agree. A market economy is a good tool for many purposes, and it brings advantages such as the ones you mention. It also brings disadvantages and problems, but I believe those can be countered well enough that it is still advantageous to use market forces for many sectors, such as nearly all production and many services.

There is data that shows that someone on welfare has less incentive to work.

Of course. But work opportunities do not arise from incentive alone. A person on welfare will survive, and survive well enough to be able to be productive when the opportunity arises. Additionally, welfare increases minimum wages, and thus keeps people out of unproductive jobs.

With today's mass unemployment, created by followers of Austrian economics, it is never hard to find people willing to work. It is sometimes, though rarely, difficult to find people with the right qualifications, and so it is beneficial to have a strong welfare state that allows people to educate themselves even if they do not have the means privately.

The conservative idea that people need more motivation to work has absolutely no base in reality.

In the US, science and economy really took off during the 19th century and early 20th, when we had a relatively free market. After the welfare state was enacted starting in the 1930s, this growth slowed.

Nonsense. In the 1930s, people in the US were indeed starving. Today, as you point out on your page, they are not. In every area, the improvements made from 1930 to now far surpass the improvements made, I would say, from the dawn of man, until 1930.

The explanation is simple: The creation of a middle class, that was not kept at wages barely enough to survive, but which actually got their share of the economic growth. This class had both the motivation and the opportunity to contribute to economic, scientific and cultural progress. Before, the talent pool to do so had been extremely limited.

 

[Ziggurat]

A person on welfare will survive, and survive well enough to be able to be productive when the opportunity arises. Additionally, welfare increases minimum wages, and thus keeps people out of unproductive jobs.

On the theory that a no-productivity job (welfare) is better than a low-productivity job? Since when is that beneficial? And if welfare keeps people out of jobs, then it does EXACTLY what you claimed it didn't do when you denied that anyone ever needed more motivation to work.

With today's mass unemployment, created by followers of Austrian economics, it is never hard to find people willing to work.

Speak for yourself. Unemployment is quite low in the US - much lower than it was when the government tried to opperate under Keynesian principles.

 

[shanek]

Problem being that it isn't just Austrian economics that predict this.

It was von Mises and Hayek who predicted the Great Depression and described how Communism would inevitably fall. The other schools dismissed it.

Obviously, when minimum wages are low, people will be forced to take unproductive jobs, often as servants for the rich.

For a Swede such as myself visiting the US, this is very obvious. You see so many people in the US being employed in jobs such as holding signs, watching public lavatories, or other things which would be completely unthinkable in a high-minimum-wage country such as Sweden.

Why aren't the sign-holders, lavatory guards, etc. doing other jobs already? Maybe because they can't demand the salary? Raise the MW, and these people are unemployed and unemployable.

You missed the point of the study.

No, you missed the point of my response.

It shows that a strong welfare state does not preclude strong economic growth.

Yeah, like attaching a 5,000-lb weight to the back of your car doesn't preclude it driving forward. It just makes it much more difficult.

Because we now know that strong welfare programs are perfectly compatible with strong economic growth, we can discard the old argument that welfare ruins the economy.

"Because we now know that 5,000-lb weights are perfectly compatible with cars driving forward, we can discard the old argument that 5,000-lb weights impede driving."

(Unless you count all the inflation, with the dollar being worth less than 5% what it was in 1930...oh, and the fact that more than 50% of the National Income is taken in taxes, most of which is lost to bureaucratic overhead and therefore isn't producing anything...oh, and the fact that people spend money less efficiently when it's given to them than they do when they earn it...I can keep going if you want.)

I agree. A market economy is a good tool for many purposes, and it brings advantages such as the ones you mention. It also brings disadvantages and problems,

Like?

Of course. But work opportunities do not arise from incentive alone. A person on welfare will survive, and survive well enough to be able to be productive when the opportunity arises.

Charity does that much more efficiently and effectively than welfare does. Charities have an incentive to get people back to work.

Additionally, welfare increases minimum wages, and thus keeps people out of unproductive jobs.

Yes, much better that they be unemployed and living on handouts using money taken involuntarily from other people who actually worked to earn it...

With today's mass unemployment,

There is no mass unemployment.

created by followers of Austrian economics,

Support this, please.

it is never hard to find people willing to work. It is sometimes, though rarely, difficult to find people with the right qualifications, and so it is beneficial to have a strong welfare state that allows people to educate themselves even if they do not have the means privately.

Ah, yes, because we didn't have any education at all before the Welfare State came around...

The conservative idea that people need more motivation to work has absolutely no base in reality.

Again, evidence?

Nonsense. In the 1930s, people in the US were indeed starving.

Only due to the government-induced Great Depression. The free market had actually conquered the problem of starvation in this country decades earlier.

You really need to learn what you're talking about.

 

[shanek]

Speak for yourself. Unemployment is quite low in the US - much lower than it was when the government tried to opperate under Keynesian principles.

Ain't that the truth! Like, when we had runaway inflation and increasing unemployment, something the Keynesians insisted was impossible! (But the Austrians predicted, thank you very much...)

 

[Merko]

On the theory that a no-productivity job (welfare) is better than a low-productivity job? Since when is that beneficial?

It is beneficial because it sets a standard. I suspect you're trying to argue that if one person would do something of low productivity rather than nothing, that will increase productivity. However this fails to take into account the global effects of being content to have a large part of the workforce in low productivity jobs, instead of making them aim for higher productivity jobs (and giving them the opportunity).

And if welfare keeps people out of jobs, then it does EXACTLY what you claimed it didn't do when you denied that anyone ever needed more motivation to work.

Nope, they have plenty of motivation to work. But they are now aiming for high-productivity jobs. They are also given the opportunity to pursue such jobs (eg by educating themselves). So the person may not be productive this month, but the result is that she thereby ends up in a reasonably productive job instead of getting stuck into something which is barely more productive than doing nothing forever.

Speak for yourself. Unemployment is quite low in the US - much lower than it was when the government tried to opperate under Keynesian principles.

When I speak of mass unemployment, I mean that there is always a mass of unemployed people available for work. There is no shortage of workers. Whether you have 4% or 20% is of little consequence here because you still have millions of people ready and willing to take a job.

It was von Mises and Hayek who predicted the Great Depression and described how Communism would inevitably fall. The other schools dismissed it.

Eh, you might as well argue Marx was right all along then, using the same kind of cherry picking and twisting of prophecies. What von Mises claimed was that a communism could not sustain an economy. That was patently false. The USSR could sustain an economy. True, it was quite inefficient compared to our economies, but it was still vastly more efficient than any system that existed in von Mises time!
There are widely different opinions on what caused the collapse of the USSR, but most would agree that the reason was a comparative difference in productivity between the USSR and the west. Note: a comparative difference, rather than an absolute inability, as von Mises argument goes.

Additionally, von Mises simultaneously argued the very same prediction for mixed economies.

Why aren't the sign-holders, lavatory guards, etc. doing other jobs already?

Because they are busy holding signs all day, DUH.

Yeah, like attaching a 5,000-lb weight to the back of your car doesn't preclude it driving forward. It just makes it much more difficult.

Speaking like a true woo. When evidence doesn't fit the theory, screw evidence!

(Unless you count all the inflation, with the dollar being worth less than 5% what it was in 1930...oh, and the fact that more than 50% of the National Income is taken in taxes, most of which is lost to bureaucratic overhead and therefore isn't producing anything...oh, and the fact that people spend money less efficiently when it's given to them than they do when they earn it...I can keep going if you want.)

So you are arguing that in real value, people have less now than they had in 1930? Are you for real?

Like?

Competition is per default destructive, and unless properly regulated, will mainly bring destructive behaviour. Eg, by default, the easiest way to compete is to kill or physically disable your competitor, or burn down his factories etc. Countering this tendency is never easy, but it is often possible.

Charity does that much more efficiently and effectively than welfare does. Charities have an incentive to get people back to work.

Welfare gives society an incentive to get people back to work, charity does not. The main purpose of charity is to give better-off people an opportunity to ease their bad conscience. Donors to charity are dependent on the needy, just as the needy are dependent on the donors.

Moreover, since charity is never guaranteed, it is always completely arbitrary. People may be denied charity for no good reason, such as having an unpopular stance on religion or politics, personal appearance, race, sexual orientation, or any other factor. This is antithetical to freedom.

Additionally, people are less likely to take a risk in order to reach a likely success in the absence of a strong welfare contract. Consider this example.

Ann has the opportunity to invest everything she has to start a new company. She is able to calculate that there is an 80% chance that she will succeed, which will then make her twice as productive than she is with the company she presently runs. However, if she fails, she will be broke and unable to work, and thus not be productive at all. We can see that the expected productivity if she starts the company here is 0.8*2+0.2*0 = 1.6, whereas if she does not, it is 1. So from society's point of view, we should want her to take the risk.

However, assume that she is living in a society without a general welfare system. If she fails, she will be dependant on charity to survive. However, Ann is not thrilled by the prospect of having to live as a beggar. Although she would like to start the company, she is not suffering in her present occupation, and so decides to stay safe.

On the other hand, if she is living in a society with a strong welfare system, she knows that in the very worst case, she will be entitled to a fair standard of living.

Yes, much better that they be unemployed and living on handouts using money taken involuntarily from other people who actually worked to earn it...

It is not involuntary. We are offered a deal: either we take part in society, or we don't. We have no right to keep the cake and eat it. If we want to take part of the protection offered by society in the form of courts for example, we cannot decide that we do not want to take part in paying welfare just because we do not like that part. No less than someone else can decide to take welfare handouts, but ignore the orders of the courts!

If we don't like it, we should be free not to pay taxes, but of course that will not give us any benefits of society, either. In practice, this is possible in some countries (it is possible in Sweden), in other countries one may be forced to emigrate.

In a democracy, the set of laws is a compromise between different opinions. It is not so easy as the majority deciding, because a minority with a strong will may make great sacrifices in one area to get their will through in another. But overall, when a society decides to adopt strong welfare, this is because most people consider it to be a good investment.

There is no mass unemployment.

And the Earth is flat, too?

Support this, please.

Sure. My argument rests on the premise that Milton Friedman, who advanced the theory, was a follower of Austrian economics. Agree/disagree?

Ah, yes, because we didn't have any education at all before the Welfare State came around...

Huh? There was some education, yes. There was just far, far less of it.

Again, evidence?

The evidence is that it is always easy to find people willing to be employed.

Only due to the government-induced Great Depression. The free market had actually conquered the problem of starvation in this country decades earlier.

Government-induced? Yeah, and the starvation in the USSR was also caused by capitalist saboteurs and a not strict enough adherence to the True Economic Theory of communism. Sorry, but you're displaying severe signs of fundamentalist behaviour here.

There were regular periods of starvation all through history up until the development of the welfare state. Since then, it never happened. Coincidence?

 

[shanek]

It is beneficial because it sets a standard. I suspect you're trying to argue that if one person would do something of low productivity rather than nothing, that will increase productivity. However this fails to take into account the global effects of being content to have a large part of the workforce in low productivity jobs, instead of making them aim for higher productivity jobs (and giving them the opportunity).

So, no one in low productivity jobs wants to aim for higher productivity jobs? Sorry, but the data shows that you're just wrong. People in low paying jobs move to higher paying jobs much more quickly than people get off of welfare.

When I speak of mass unemployment, I mean that there is always a mass of unemployed people available for work.

Define "mass."

Besides, you're always going to have a certain amount of unemployment. Some jobs are naturally like that, like contractors. In between contracts, they're technically unemployed, even if they won't be like that for long. But if the Bureau of Labor Statistics happens to survey them at that time, down as "unemployed" they go. You also have people who just say, "Take this job and shove it!" (as the old song goes). They then get more work, but again, if the BLS surveys them at that time, they're considered unemployed.

Something else the Austrians predicted that's now a standard part of introductory economics classes...

There is no shortage of workers. Whether you have 4% or 20% is of little consequence here because you still have millions of people ready and willing to take a job.

But not just any job. Someone looking for professional office work would turn down an offer to flip burgers. And that's the way it should be.

Eh, you might as well argue Marx was right all along then, using the same kind of cherry picking and twisting of prophecies.

Nope, no cherry-picking or twisting, just the truth.

What von Mises claimed was that a communism could not sustain an economy. That was patently false. The USSR could sustain an economy.

No, that is not what he predicted. He predicted that, as there was no market for capital goods, there's no price system to calculate profit and loss. And that was exactly the problem.

True, it was quite inefficient compared to our economies, but it was still vastly more efficient than any system that existed in von Mises time!

That's complete balderdash. Mises lived at a time when the US had a very strong economy.

Because they are busy holding signs all day, DUH.

It's impossible to look for another job while you're working a job? Strange, millions of Americans don't seem to have a problem doing that...

What were they doing working those jobs in the first place?

Speaking like a true woo. When evidence doesn't fit the theory, screw evidence!

It's called an "analogy," a logical construct used to show how your argument is complete bunk. And like all woos, you decided to insult me instead of dealing with the problems with your logic.

Again, you have no evidence that the success isn't in spite of the welfare state. And there's plenty of evidence to the contrary.

So you are arguing that in real value, people have less now than they had in 1930? Are you for real?

Do you not understand even the BASICS of economics? A change in monetary value is nominal, not real, value. Inflation is basically a very subtle tax.

Competition is per default destructive,

Wrong, wrong, wrong, wrong, wrong! Shall I start calling you "Sylvia"? Capitalism is very constructive. Look at the innovation in the computer industry, for example, where things are very competitive, as opposed to any industry that has a government monopoly. Or the difference in innovations in the competitive cell phone industry (which in just a few short years gave us video phones, etc.) while the local government-monopoly phone companies all but stagnate.

and unless properly regulated, will mainly bring destructive behaviour.

Prove it.

Eg, by default, the easiest way to compete is to kill or physically disable your competitor, or burn down his factories etc.

Yeah, there's a big problem with Microsoft burning down Apple's buildings...

Welfare gives society an incentive to get people back to work,

No, it doesn't. It gives them an incentive to stay on welfare.

charity does not.

Then why do people on charity spend so much less time on it than welfare recipients?

People may be denied charity for no good reason, such as having an unpopular stance on religion or politics, personal appearance, race, sexual orientation, or any other factor. This is antithetical to freedom.

Completely ridiculous. Look at any given report from Giving USA.

Ann has the opportunity to invest everything she has to start a new company. She is able to calculate that there is an 80% chance that she will succeed, which will then make her twice as productive than she is with the company she presently runs. However, if she fails, she will be broke and unable to work, and thus not be productive at all.

Wrong: She won't be unable to work by any stretch of the imagination. And 80% is tremendously good odds with starting a business.

It is not involuntary.

Tell that to Ed Brown.

We are offered a deal: either we take part in society, or we don't.

We're not talking about "society"; we're talking about government. This may surprise you, but societies existed for centuries before there were any welfare states.

We have no right to keep the cake and eat it.

We do if it's our cake, and we worked for it.

If we want to take part of the protection offered by society in the form of courts for example, we cannot decide that we do not want to take part in paying welfare just because we do not like that part.

What does welfare have to do with the courts? So, then, the abolitionists should have just gone along with slavery because they couldn't decide that they didn't want to take part in that but still have the courts?

I really hate these anything-the-government-does-is-automatically-good people...

In a democracy,

This isn't a democracy. Democracy is a form of tyranny. (And before you chime in, Earthborn, he is using this term specifically to mean forcing what the majority wants on a minority. So I'm not using it in any wrong or outdated way.)

It is not so easy as the majority deciding, because a minority with a strong will may make great sacrifices in one area to get their will through in another. But overall, when a society decides to adopt strong welfare, this is because most people consider it to be a good investment.

No, it's because a bunch of politicians have rammed it down our throats.

And the Earth is flat, too?

Unemployment is as low as it's been in decades. Stop with the insults and start arguing the facts.

Sure. My argument rests on the premise that Milton Friedman, who advanced the theory, was a follower of Austrian economics.

Friedman was a Chicagoan monetarist. And how did Friedman create "mass unemployment"?

Huh? There was some education, yes. There was just far, far less of it.

Actually, no; there is much less real education today. Look at how many high school students are functionally illiterate. And take a look at those examples of 8th grade tests from the 1800s and how difficult it would be for most people to pass them today.

The evidence is that it is always easy to find people willing to be employed.

WTF kind of evidence is that???

Government-induced?

Yes. It was directly due to the Federal Reserve pulling out money from the economy in 1929 which led to the stock market crash, and their failure to act as Lender of Last Resort for the banks which resulted in the Banking Crisis of 1933, the worst in American history.

There was a much worse crash in 1921; why did that not result in a depression? Or even much of a recession that wasn't over in under a year? Maybe because of Harding's hands-off-the-economy policy?

There were regular periods of starvation all through history up until the development of the welfare state. Since then, it never happened. Coincidence?

You're just wrong. Starvation in this country was all but vanished by 1900.

 

[Earthborn]

Yeah, there's a big problem with Microsoft burning down Apple's buildings...

You're right. Merko is wrong. The easiest way to deal with competition is to play buddy-buddy with your 'competitors' and pretending like you are still competing...

No, it doesn't. It gives them an incentive to stay on welfare.

I think what Merko means to say is that gives the government a financial incentive to get people back to work. That of course assumes a government that has any interest in keeping a budget.

The most extensive welfare states in the world do have extensive programs to push people back to work, and do make it mandatory for people to apply for work when they are on benefits. So the argument isn't all that ridiculous.

This may surprise you, but societies existed for centuries before there were any welfare states.

Are you now suddenly able to understand the concept of society and use the word correctly?

I really hate these anything-the-government-does-is-automatically-good people...

Don't hate. Hatred will consume you. Use love instead.

I'll set the example:
I really love these anything-the-free-market-does-is-automatically-good people...

And before you chime in, Earthborn, he is using this term specifically to mean forcing what the majority wants on a minority. So I'm not using it in any wrong or outdated way

Of course his own words clearly state the exact opposite: "It is not so easy as the majority deciding, because a minority with a strong will may make great sacrifices in one area to get their will through in another."

 

[shanek]

You're right. Merko is wrong. The easiest way to deal with competition is to play buddy-buddy with your 'competitors' and pretending like you are still competing...

Just because you're partnering with a company in some areas doesn't mean you aren't competing in others. This was a good deal for everyone (especially Apple), including the consumers. This deal got Microsoft Office fully supported on Apple and got (IMO) the only good version of IE (the Mac version).

I think what Merko means to say is that gives the government a financial incentive to get people back to work. That of course assumes a government that has any interest in keeping a budget.

Well, yeah, what it really does is encourage the government to put more and more people on welfare. People who get money from the government are obviously a lot less likely to oppose it. And when you've got the combination of an Income Tax and a fiat currency letting you basically spend whatever you want, there's no reason not to give as many people handouts as possible.

The most extensive welfare states in the world do have extensive programs to push people back to work, and do make it mandatory for people to apply for work when they are on benefits.

Some states have tried that--"workfare" they call it--and the programs themselves had success in that they did get people off of welfare, but they also found out that it resulted in decreased budgets and downsizing of welfare workers. Which, of course, is a good thing and naturally what would happen when the process becomes more efficient, but again the political incentives work the other way. They want more workers and greater budgets.

Are you now suddenly able to understand the concept of society and use the word correctly?

Oh, I understand the word perfectly; it's the collectivist use of it--as if it were somehow an independent entity capable of acting on its own--that I object to.

Don't hate. Hatred will consume you. Use love instead.

Yeah, well, I hate Sylvia Browne, too. And drunk drivers. Life's like that. Besides, you can't know love without hate anyway.

Of course his own words clearly state the exact opposite: "It is not so easy as the majority deciding, because a minority with a strong will may make great sacrifices in one area to get their will through in another."

Well, that just sounds like the biggest reason a democracy becomes a tyranny--it often devolves into minority rule and you end up with an oligarchy!

 

[Earthborn]

People who get money from the government are obviously a lot less likely to oppose it.

Maybe you can explain why in the Netherlands the Socialist Party is so popular with welfare recipients, while it opposes pretty much everything the government does.

And when you've got the combination of an Income Tax and a fiat currency letting you basically spend whatever you want, there's no reason not to give as many people handouts as possible.

Having an income tax and fiat currency does not necessarily mean the government wants to spend it on giving people hand outs.

Which, of course, is a good thing and naturally what would happen when the process becomes more efficient, but again the political incentives work the other way.

If welfare workers are guaranteed a temporary income when they are between jobs, they are less likely to resist being fired.

Oh, I understand the word perfectly;

You don't always show it.

it's the collectivist use of it--as if it were somehow an independent entity capable of acting on its own--that I object to.

Basically the way you view the government, is it not?

Besides, you can't know love without hate anyway.

Bollox.

Well, that just sounds like the biggest reason a democracy becomes a tyranny--it often devolves into minority rule and you end up with an oligarchy!

There exists no form of government that can avoid both majority and minority rule at the same time, as far as I know.

 

[Merko]

People in low paying jobs move to higher paying jobs much more quickly than people get off of welfare.

Yes, but that doesn't tell us anything about this issue, because we have no comparison base. Eg, we do not from this data know what would be the results of a system where less people would be employed in low-productivity jobs.

Define "mass."

Again: I mean that there is at all times a large pool of people willing to take work, if the opportunity is given.

No, that is not what he predicted. He predicted that, as there was no market for capital goods, there's no price system to calculate profit and loss. And that was exactly the problem.

There is just no evidence that this would have brought the downfall of the USSR, or even that it would have been true.

Mises lived at a time when the US had a very strong economy.

Sure, he lived until 1973. But I believe these theories were formulated in the 1920's and 30's, which was what I meant to compare with, sorry if this was a bit unclear. Or, we could compare the standard of living in Russia prior to the communist takeover, and towards the end of that period. It had clearly improved drastically. My point is that this proves that the economic failure of the USSR was a failure in relative terms, not an absolute failure. The USSR did not 'collapse' economically.

It's impossible to look for another job while you're working a job? Strange, millions of Americans don't seem to have a problem doing that...

They have less opportunity, and less incentive, to do so. Additionally, they have a much lower opportunity to aquire training and education that would qualify them for a high-productive job.

Again, you have no evidence that the success isn't in spite of the welfare state.

I have presented no such evidence, that is true. You keep missing the point again and again, which is that this research proves that a strong welfare state does not preclude strong economic growth. That is the scope of the article. Nothing more.

And also nothing less.

And there's plenty of evidence to the contrary.

I doubt that, and you have not provided any.

(Unless you count all the inflation, with the dollar being worth less than 5% what it was in 1930...oh, and the fact that more than 50% of the National Income is taken in taxes, most of which is lost to bureaucratic overhead and therefore isn't producing anything...oh, and the fact that people spend money less efficiently when it's given to them than they do when they earn it...I can keep going if you want.)

Could you explain what you meant by this passage, if it was not a tirade about how much better everything was in the 1930s?

Capitalism is very constructive.

I was discussing the market economy, not capitalism. Like I said, I believe the destructive tendencies of the market economy can be countered in many cases. I am not so optimistic about capitalism.

Yeah, there's a big problem with Microsoft burning down Apple's buildings...

No, because we have government regulation that prevents that. If Microsoft and Apple had been based in Somalia, do you believe their buildings would still stand?

Carefully crafted regulation can counter the destructive tendencies of market forces, in many cases. Computer software development is one area where I believe this is possible. However, it is a poor example, because the level of competitiveness when it comes to computer operating systems is currently very poor, and largely destructive. Governments have failed to regulate this properly, and they have applied a barrage of uneffective sanctions to combat Microsoft's destructive behaviour rather than applying meaningful (and often less intrusive) countermeasures, such as making open document format standards a requirement for government documents, for example.

Look at any given report from Giving USA.

Can't even open their website because they rely on a proprietary file format that is held secret by a single company.

Wrong: She won't be unable to work by any stretch of the imagination. And 80% is tremendously good odds with starting a business.

Given today's mass unemployment, yes, there is a very significant probability that she will be unable to find a reasonably paying job. So, even given these, by your admission, tremendously good odds for success, she has perfectly good reasons not to take the chance.

We're not talking about "society"; we're talking about government. This may surprise you, but societies existed for centuries before there were any welfare states.

Yes, and it was generally accepted that if you didn't like the chieftain, you could slay him, which would likely impress the other members of society who would then accept you as the new chieftain. Today, most societies are democracies, which theoretically means that the government is a function of the general will. Certainly, there are many practical flaws with this system, but it is still patently erroneous to speak of government as some sort of outside force.

We do if it's our cake, and we worked for it.

No. You select to either have it, or eat it.

What does welfare have to do with the courts?

They have both been instituted by our democratically governed societies, and so, they are equally valid.

So, then, the abolitionists should have just gone along with slavery because they couldn't decide that they didn't want to take part in that but still have the courts?

No. I am not saying that you do not have the right to advocate an end of welfare, just as someone else has the right to advocate the end of private property rights. However, given that we have at present chosen to adopt private property rights and welfare, you can't pick and choose.

No, it's because a bunch of politicians have rammed it down our throats.

This is just plain wrong. Here in Sweden, there is not just a majority supporting strong welfare, but strong welfare is actually supported by all seven parties represented in parliament, although to some varying degrees. Even the conservatives realised, before the latest election, that they needed to acknowledge their support for the strong welfare system. Before then, they had not actually advocated removing it, but some of the rhetorics used by them gave that impression. That was hugely impopular, and they unabashedly announced 180 degree turns on many related issues, which eventually gained them many new voters and allowed them to narrowly win the latest elections (together with three coalition parties).

Unemployment is as low as it's been in decades. Stop with the insults and start arguing the facts.

When did I say it has been getting worse?

Friedman was a Chicagoan monetarist. And how did Friedman create "mass unemployment"?

Friedman founded the Chicago school, and I argue that he is a follower of Austrian economics. At any rate, he advanced the theory of a 'natural rate of unemployment'. This theory has since been adopted by many states, including Sweden. Before this adoption, the unemployment rates in Sweden were extremely low, and largely consisted of people switching jobs etc. Friedman's theory argues that it is 'necessary' to keep a certain percentage of the population unemployed who are actively seeking work, in order to counter inflation.

Actually, no; there is much less real education today. Look at how many high school students are functionally illiterate. And take a look at those examples of 8th grade tests from the 1800s and how difficult it would be for most people to pass them today.

And you think that most people would have passed them in the 1800s?!?

WTF kind of evidence is that???

The best kind of evidence possible, eg when the conclusion follows immediately from observation.

Observation: It is always possible to find people willing to work, when the opportunity is given.
Conclusion: People do not need more motivation/incentive to accept work.

Yes. It was directly due to the Federal Reserve pulling out money from the economy in 1929 which led to the stock market crash, and their failure to act as Lender of Last Resort for the banks which resulted in the Banking Crisis of 1933, the worst in American history.

Ok. So you think it is wrong when government gives welfare to hungry people, but you advocate using tax money to bail out bankers who of their own free will made bad business decisions on a free market?

There was a much worse crash in 1921; why did that not result in a depression? Or even much of a recession that wasn't over in under a year? Maybe because of Harding's hands-off-the-economy policy?

I would of course argue that this hands-off-the-economy approach during the 1920's was in fact the cause for the subsequent disaster. I don't expect to convince you, neither will you convince me of the contrary, so let us leave that issue for now.

Something we should be able to agree upon, however, is that the reaction to the depression of the 1930's was a massive increase in government intervention into the economy, which continues to this day.

Since the 1930's, we have not had any comparable economic depression, and certainly no period of starvation. I would argue that while this is no absolute proof that strong government intervention can be beneficial to the economy, it very strongly supports that theory.

Starvation in this country was all but vanished by 1900.

Uh. Malnutrition as a result of starvation, eg people being forced to eat 'trash' or not eating enough, caused serious health problems in the 1930's in the US. I could google some studies if you're unable.