"Recovery!" WHAT Recovery??

[The True Scotsman]

Human cost or not, I find it doubtful that a "purely laissez-faire" solution would allow for recovery to previous levels of prosperity. This is mainly because purely laissez-faire solutions don't result in the levels of prosperity that were present before (or after) the downturn.

It's hard to say. That's still a hotly debate topic among economists.

 

[The True Scotsman]

I Disagree. The founding fathers didn't know about evolution, of course, but they knew human nature very well. You don't have to know why human nature is the way it is to know what it is like. So it was no accident they realized human nature is more compatible with capitalism than with communism.

I'd say it had more to do with them being accustomed to Mercantilism as well as what the most prominant economists of their time were saying (such as Adam Smith, David Richardo, Thomas Matthus, Jean-Baptiste Say, etc) than anything else.

 

[The Central Scrutinizer]

Is the US economy in recovery or is it entering a Depression?

'Update on America's Second Great Depression (Part 1)':

http://www.avaresearch.com/article_details-519.html

If you're referring to the "US" on the planet known as "Earth", the answer is "recovery".

Next.

 

[Steven Howard]

Capitalism seems to be more compatible with how human nature happened to have evolved. (Though, it was only discovered to be compatible by accident. I don't think the founding fathers knew much about the science of human evolution.)

The who, now? Which "founding fathers" do you mean?

 

[Wowbagger]

The who, now? Which "founding fathers" do you mean?

It doesn't have to be anyone specific. Anyone who could be said to be a founder of modern capitalism.

 

[JihadJane]

So we've escaped a second Great Depression then?

 

[Chaos]

So we've escaped a second Great Depression then?

Looks like it. I´m sure you´re crying bitter tears now that your dreams have not come true?

 

[TraneWreck]

I'm a bit confused as you seem to be taking an argumentative tone towards me while stating things that it is nowhere apparent I disagree with.

With that said, I would recommend that you look at the trade-off of your positions. While a mixed economy may be more stable, it is less useful for creating wealth than a free market economy. While a mixed economy may provide basic needs for people, it provides less incentives to work hard than a free market economy does. I'm not going to give any normative statements about which system is preferable, but simply hope you look at the pros and cons of each system.

Well, if it seemed like I was overly combative, I apologize.

Once again, there aren't really any pure economies to study.

That being said, this last economic disaster was largely a result of allowing a massive sector of the economy (the financial) to operate in a manner more closely related to pure free market than at any time since the 30's. Those financial people were highly incentivized to gain wealth, and they sure did.

Yet look at how much wealth they destroyed with their liberated market behavior.

I would also argue that "incentives" are more complicated than merely making as much money as you can. Are you seriously arguing that one of these Goldman a-holes making $500 million a year would just stop working if they could only get $250 million?

Also notice that individual financial gain was not an incentive for the Apollo program and it did quite nicely.

 

[The True Scotsman]

Once again, there aren't really any pure economies to study.

I would agree with that, but in order to study economic systems, we need to create models. The same would be true if a physicist, while attempting to determine the rate at which a marble falls on Planet Earth, were to exclude the forces of wind resistance.

That being said, this last economic disaster was largely a result of allowing a massive sector of the economy (the financial) to operate in a manner more closely related to pure free market than at any time since the 30's. Those financial people were highly incentivized to gain wealth, and they sure did.

Yet look at how much wealth they destroyed with their liberated market behavior.

I can agree with most of that, though financial firm are a bit different from firms that produce goods/services. Financial firm are more like the directors of the economy, in that they finance to wealth creators, those being firms that produce goods/services. I wouldn't say they destroyed wealth so much as they dis-aligned the economy's financial sector and made it harder for firms that produce goods/services to get financed. I suppose what I'm saying is they destroyed potential wealth, not existing wealth.

I would also argue that "incentives" are more complicated than merely making as much money as you can. Are you seriously arguing that one of these Goldman a-holes making $500 million a year would just stop working if they could only get $250 million?

No, I'm rather stating that people put in more effort when they have more to lose (which would mostly apply more to smaller firms and wage earners).

Also notice that individual financial gain was not an incentive for the Apollo program and it did quite nicely.

No, but I'd argue that the sciences and mathematics offer different incentives which are irrelevant to the economic system, such as desire for prestige and desire for discover and learn.

 

[quarky]

In a test of systems, one need take into account the friction of opposition. With all in the same system, commie or capitalist, there would be a different outcome.

 

[Mark6]

He did touch on a good point though, that after the cold war, America had little in the way of competition in the global market, so prosperity came easy.

I would say anyone who DOES NOT realize this, and why it could only be a temporary condition, is a moron. This time, Moore is stating the obvious.

Now that the rest of the world has caught up, maybe we are incorrectly assessing the situation?

I am not sure what you mean by "assessing the situation"?

 

[TraneWreck]

I would agree with that, but in order to study economic systems, we need to create models. The same would be true if a physicist, while attempting to determine the rate at which a marble falls on Planet Earth, were to exclude the forces of wind resistance.

Fair enough. I just wouldn't want to be the party in power that says, "sorry, you're on your own. The market will work things out."

I can agree with most of that, though financial firm are a bit different from firms that produce goods/services. Financial firm are more like the directors of the economy, in that they finance to wealth creators, those being firms that produce goods/services. I wouldn't say they destroyed wealth so much as they dis-aligned the economy's financial sector and made it harder for firms that produce goods/services to get financed. I suppose what I'm saying is they destroyed potential wealth, not existing wealth.

It's all sort of baffling on some level. They inflated a housing bubble that made it look like we were much wealthier than we were. After the crash, all of that wealth dispeared, but housing prices were still higher than they were a decade before.

But anyone who had their retirement in the market lost the majority of their money. There was a very real loss of wealth to many, many Americans.

No, I'm rather stating that people put in more effort when they have more to lose (which would mostly apply more to smaller firms and wage earners).

I'm not sure I agree with that. I think people can be far more productive when they have a secure social structure behind them.

Just consider health care costs. The fear of losing health care forces people to stay in jobs they would otherwise leave and drastically increases the economic risk of starting a business. Free markets, as they apply to health insurance companies, operate in direct contrast to small entrepeneurs.

If health care costs were taken out of the equation, there would be more liberty for employees and more small businesses would become possible.

I agree that the rewards of capitalism are a great incentive, that's why I'm not a communist, but it isn't black and white. Allowing laissez-faire in certain parts of the economy restricts freedom in others. These are choices we should make consciously.

I would rather limit insurance companies' motive for developing more creative ways to deny coverage and allow small businesses to flourish than the reverse in the name of capitalism.

No, but I'd argue that the sciences and mathematics offer different incentives which are irrelevant to the economic system, such as desire for prestige and desire for discover and learn.

The only industries worth promoting have incentives beyond mere financial gain.

 

[Mark6]

It's all sort of baffling on some level. They inflated a housing bubble that made it look like we were much wealthier than we were. After the crash, all of that wealth dispeared, but housing prices were still higher than they were a decade before.

But anyone who had their retirement in the market lost the majority of their money. There was a very real loss of wealth to many, many Americans.

True, but I see nothing baffling about it. In effect, people whose houses are now worth MORE than when they bought them (say, in 1997) had that wealth transferred to them. I am not saying this is fair (even if people who lucked out did nothing to bring it about), but it's not like wealth disappeared

 

[TraneWreck]

True, but I see nothing baffling about it. In effect, people whose houses are now worth MORE than when they bought them (say, in 1997) had that wealth transferred to them. I am not saying this is fair (even if people who lucked out did nothing to bring it about), but it's not like wealth disappeared

Well, the housing prices were only one aspect of the process.

It started with a presumption that prices would go up forever. This justified the reliance on sub-prime mortgages, they just assumed they could continually refinance.

Then those mortgages were packaged into exotic financial instruments, like credit default swaps, and were sold and borrowed against.

The trading of those instruments bolstered the stock market causing people to move money from safe, low yield savings into the market.

Thus anyone who decided to invest based on the promise of large mutual fund returns instead of leaving money in the bank or buying CDs, really did have actual wealth disapear when everything crashed.

Again, that's just one simple aspect of the monstrosity.

The World Economic Forum estimated that 40% of worldwide wealth was lost in the collapse:

http://www.telegraph.co.uk/finance/...risis-has-destroyed-40pc-of-world-wealth.html

But like you said, some of that was imaginary in the first place. It's all a mess.

 

[The True Scotsman]

I'm not sure I agree with that. I think people can be far more productive when they have a secure social structure behind them.

Just consider health care costs. The fear of losing health care forces people to stay in jobs they would otherwise leave and drastically increases the economic risk of starting a business. Free markets, as they apply to health insurance companies, operate in direct contrast to small entrepeneurs.

If health care costs were taken out of the equation, there would be more liberty for employees and more small businesses would become possible.

I agree that the rewards of capitalism are a great incentive, that's why I'm not a communist, but it isn't black and white. Allowing laissez-faire in certain parts of the economy restricts freedom in others. These are choices we should make consciously.

I would rather limit insurance companies' motive for developing more creative ways to deny coverage and allow small businesses to flourish than the reverse in the name of capitalism.

Hmmm...I'd say that people are willing to accept a certain level of personal risk in order to obtain a reward that they deem worth the risk. I'd also say that it is hard to decrease the risk without decreasing the reward. Of course, I realize that there are acceptions of almost every rule, so I will say to my statements are more on a general basis than an absolute bases.

 

[quarky]

Hmmm...I'd say that people are willing to accept a certain level of personal risk in order to obtain a reward that they deem worth the risk. I'd also say that it is hard to decrease the risk without decreasing the reward. Of course, I realize that there are acceptions of almost every rule, so I will say to my statements are more on a general basis than an absolute bases.

Have you considered running for office?

 

[dudalb]

Well, the housing prices were only one aspect of the process.

It started with a presumption that prices would go up forever. This justified the reliance on sub-prime mortgages, they just assumed they could continually refinance.

Then those mortgages were packaged into exotic financial instruments, like credit default swaps, and were sold and borrowed against.

The trading of those instruments bolstered the stock market causing people to move money from safe, low yield savings into the market.

Thus anyone who decided to invest based on the promise of large mutual fund returns instead of leaving money in the bank or buying CDs, really did have actual wealth disapear when everything crashed.

Again, that's just one simple aspect of the monstrosity.

The World Economic Forum estimated that 40% of worldwide wealth was lost in the collapse:

http://www.telegraph.co.uk/finance/...risis-has-destroyed-40pc-of-world-wealth.html

But like you said, some of that was imaginary in the first place. It's all a mess.

I got a feeling the you grudingly accept that a profit motive is necessary for an economy to function, but really,really, deep down you think it is immoral.

 

[daenku32]

So the only way to save the country is by letting the sick and elderly die off ASAP.

Let's get to it then.

 

[Chaos]

I got a feeling the you grudingly accept that a profit motive is necessary for an economy to function, but really,really, deep down you think it is immoral.

Capitalism is the worst form of economy there is, except for all the others that have been tried. (with due apology to Winnie Churchill)

 

[JihadJane]

'The big crash – America plunges into Depression

Alexander Cockburn: Young Americans have given up watching the news. It’s too depressing'