United States Heading towards a Depression?

Jeremy, this is where your lack of understanding kicks in. USSR was communist, not Socialist.

 

And I would argue that the basis of modern communism in Russia was derived primarily from the utopian socialists of the 19th Century including Karl Marx and Fredrich Engels.

You might want to look a little further back in Russia's history to understand the origins of modern communism. All of which was born out of a mixture of the socialist movement and the industrial revolution.

 

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

Created Linux. Finnish born, lives in U.S. and has worked for U.S. companies.

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

Not Scandinavian, but I count the Dutch as such because their language sounds just as funny. I also think the Netherlands could be considered one of the more socialist European countries, although I honestly don't know a lot about the nation so I could be wrong.
He created the Python programming language, he now ( I believe he still does) works for Google.

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

Greenland I guess technically isn't Scandinavia, but close.
He created PHP.

I'm sure the best and the brightest from whatever nation have a very good chance of being swept up by one of the American technology companies. Though 99% of them will not have famous names.
Google, Yahoo!, Amazon, Ebay, Sun, Apple, or 50 other technology companies, I'm sure employ the best around the world, including many socialist leaning nations that don't have companies to equal ours.

Aggregate wealth/income/gdp/whatever relative to other nations at the same point in history.
Do I really need to find a source to show how wealthy/successful the US has been?

Socialism isn't all bad. But the redistribution of wealth is not conducive to innovation and competition so the productivity of a country is limited. Hell even the Chinese have figured this out. They're not socialists, they're capitalists in communists clothing.

 

Communism is based upon socialism. It's a minor distinction you are making, in that communism is organized, state driven socialism.

Yes, there is a reason for this. But it is not free markets or laissez-faire capitalism. Even communists recognize that the state is the issue, although they advocate seizing control of the state. Laissez-faire capitalists want less state and more citizen driven activity.

No one owns anything. Good luck getting allodial title to property. Through taxation and violence, the state is the title holder of all property, everywhere.

Damn straight. Why do people think they can control the government? That has never happened. And why do people think that politicians listen to the individual citizen, or even a collective, more than the special interests who bribe them?

 

You're sorta right Mia. Taxes do not pay for anything. Inflation does. Taxes only pay the interest on the national debt. If people stopped paying taxes, the government would have to hyper-inflate or go bankrupt. Instead, they just moderately inflate as long as people are paying taxes. Pretty much all of the existing and promised social services are already being paid for by putting the burden on the next two or three generations. Today's retirees are living off someone else's future work, not their own contributions.

Which is funny when people advocate for more socialism, more services. The game is up, the bill just hasn't arrived in the mail yet.

Even in theory it doesn't work. Marx's theories relied on a "socialist man", an enlightened Proletariat who would emerge from the class wars, and be willing to work like a super-donkey, producing 3 or 5 times as much as he consumes, in order to maintain the socialist society. Obviously, we know that human nature doesn't produce people who want to work 5 times as hard as they should have to, we produce people who want to work 5 times less than we have to. That is why we strive for efficiency and automation.

Whenever you have some people producing for all people, you will have shortages. Whenever you have some people producing for all people, and the production is mandated, controlled, regulated and distributed by the state (central economic planning) you will have shortages and inefficiency.

This was what Mises was talking about with the calculation argument. Socialism cannot calculate proper market prices. You have many of the voters, and people dictating policy, not being the actual producers, ordering those producers what to make (whether it makes sense economically or not) and how much (again, whether or not it reflects needs and capacity).

Where socialism goes badly wrong, is that the highest producers are usually successful capitalists, who also see charity as an enterprise of efficiency. If they donate money, they expect it to have the max impact, and the max efficiency. Government, is never concerned with impact or efficiency. They simply confiscate (governments spend more on failed bureaucracies, not less), until they go broke, or the producers revolt. Then the state becomes authoritarian and the producers are enslaved or revolt. Eventually, the proles and plebes will join them, because they can not gain employment or produce for themselves, and no one is providing their free meal any longer.

Socialism is based upon silly ideals. It's well intentioned. But again, not sustainable, and not rational, and certainly not moral (if you are the person being forced by law to work to pay for others, and the government middlemen who rape the system).

The best system is one where we pay as we go. We share voluntarily the fruits of our labor to help our neighbors, friends and family.

Korr, if you get a chance, I'd love to read your comments/opinion on how socialism through inflation creates the welfare class.

 

The USSR is the ultimate strawman for socialism and a sensible detractor should be able to make their case without recurring to presenting the soviet as an example

 

Bjarne Stroustrup!!
I knew I'd forgotten somebody big.

 

Lerdorf was raised in Canada and Denmark, and received his training in Canada, if I'm not mistaken. But that's fine. I just need more than a sampling of 3 to seriously consider this notion of an exodus of programming talent. Not disputing - just honestly don't know and would like to see some sourcing.

No, you don't - but I don't believe the question was whether the U.S. system has produced wealth or has been successful, I believe it was whether we are, in fact, the "richest nation on earth," and so I felt it was important to clarify what you are using to evaluate the notion of "richest."

There are problems with any of these markers - for instance, per-capita GNI in the oil-rich states can be high, but would you call these "richest" under the argument you are making, namely, one of wealth achieved by innovation, etc.? (A check, by the way, on Russia's ascendancy, I would argue. Another topic). Income inequality is also grossly higher among these nations - are these, then, "richest" when compared to a nation that has a good deal more people living a sustainably middle-class life, with good measures across health, education, etc.? Additionally, wealth isn't the only piece of the pie - what people think is important to spend on should also be included in the comparative discussion.

Nevertheless, taking, say, GNI per capita, 2006, here is what I have, keeping only to the theme of the nordic social democracies, v. the U.S. economy:

Norway, 68,440;
Denmark, 52,110;
U.S., 44,710
Sweden, 43,580
Finland, 40,650

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

If socialism is the necessarily destructive independent variable it is assumed to be in our culture, when it comes to the health of political economies - why do we not see more destruction in those countries for whom it has been a running paradigm for close to, or over, a century?

Very interesting topic - innovation and capitalism. Something I'd be interested in picking up on more another time. Productivity is certainly no supportive proof of a causal relationship between free markets and manufacturing innovation; see: http://www.bls.gov/news.release/prod4.nr0.htm, which gives a 2006 picture of the U.S. being behind the nordic social democracies in output per hour: U.S., 2.0; Denmark, 5.1; Norway, 3.3; Sweden, 5.9. (Finland missing). The "mixed" paradigms of France (3.7) and Germany (7.1) do better as well.

 

You are wrong too. USSR was neither socialist or communist, it was state capitalism.

It is funny how much you know about Marx theories without ever reading one of his books.

Just because state owns an industry or institution, it doesn't mean it is a socialist institution or government. If this argument was correct then the most socialist institution would be the military.
For further discussion about this subject, those who are interested can read anti-doring by Engels.

 

Yep. One thing I've long felt we have: a crappy pre-college education system, and among the finest universities in the world, drawing the finest minds.

 

State capitalism is an oxymoron. Capitalism is the private ownership of the means of production.

Times change.

Now if only we could get you to read some Mises, who predicted the failures of Socialism, and explained exactly why it is incapable of sustaining itself.

If we adhere to Marx's definitions of socialism and capitalism, then it is.

Who says it isn't?

 

Economics is the study of human action and interaction. Why do people trade anything? Love, sex, money, food, property? What motivates them? How do they figure out prices of exchange?

This is getting very basic, but man acts to receive incentives. He wants to get a result from his effort and energy. He does not till the soil or work in a factory, to go home with empty pockets and no food. Not without coercion.

So we can say, that man by nature is driven by a profit motive. This doesn't mean he is greedy, but that he expects at least an equal or greater return for his effort. If he works 8 hours, he wants 8 hours pay. Not 6 or 4. 8. If he can get 12 hours pay for 8 hours work, this also satisfies his motivation for profit. He might even work less now that he knows he can get 1.5 times the result of his labor. He might work 6 hours for 9 hours pay and profit 2 hours of free time.

When you remove the profit motive, through taxation and regulation, when a man has to work 20 hours to make 10 hours wages (Bogart and I have discussed this as it relates to globalization, crisis and trade) it is a disincentive to work. He's not getting a good deal, and he will avoid a bad deal, or a loser deal whenever possible.

This is just normal, rational economic behavior. We do stupid things, but we generally, do not intentionally do stupid things.

And this is why socialism fails. Now a man may be driven to work to support his family, and thus will work 8 hours, when he only consumes 2 hours worth of wages. But the sense of a national or global consciousness, where man works and the surplus of his consumption is taken and dispersed to people he does not know, may never meet, and for purposes he cannot fathom, is antithetical to the profit motive.

When the government bails out FRE and FME, that's fascism. Or as gworld wrote, state capitalism. The government socialized the losses of these PRIVATE corporations, by spreading the cost to millions and millions of citizens. Instead of raising taxes, and enraging the producer class, they inflate the money supply to pay for it, prices everywhere go up, and standards of living fall. Private citizens are being forced to give wealth (not money, big difference) to companies and the state is facilitating it.

Socialism, is what is going to happen with FRE and FME and maybe some other institutions as well. The government will nationalize them, make them part of the government, appoint directors, and then tax to fund their operations. Those companies no longer will have a profit motive, and they will no longer function efficiently or competitively as a result. They will be state monopolies, driving out private competitors who do not have the power of the IRS or law to facilitate their operation.

We all know that competition is good. It means more goods, more variety and lower prices in the market. The opposite, a monopoly is very bad, because everyone believes that monopolies are anti-consumer and operate heavy handedly.

So if competition is good (which means the best and cheapest producers survive) then why would we want socialize things like medicine and education? Don't we want more for our money? Don't we want choices, different price levels, and efficiency?

The problems with these institutions, is that for the last 50 years, they have become increasingly fascist, socialistic and statist. They have moved further from the realm of free enterprise and public ownership and almost exclusively into state monopoly. And that is why we no longer have charity hospitals or schools. It's impossible to get by on donations, when your donors demand accountability, but the state enterprise can tax and be inefficient/corrupt all day long.

 

It may seem like a cop out on my part, but it's really common sense. The best technologists in the world tend to work for American companies because this is where most of the best ones are(I can't really prove we have the best, that's sort of common sense too when you look at the landscape of companies).
Also the fact that a lot of the companies were started here but have really become international, so employees don't even necessarily have to live here.
A list of employees for these companies isn't readily available so I can't really prove it. But let's just say it would be shocking to find that Google, Apple, Microsoft, etc, weren't recruiting the best from all over, including Scandinavia.
My point was that we produce the best, innovative companies, and if you're born somewhere like Denmark, like Bjarne Stroustrup , and you're in the top 1% of programmers, you probably deserve and want to work for one of the technological powerhouses, which is very likely in the U.S.

An insect may be stronger than a human per body mass but its strength doesn't scale.
Also, I'm not an economist so I don't know if this analogy applies.
For example, to move an object faster requires more kinetic energy, but the velocity variable in the formula is squared, so a 1:1 relationship isn't maintained. The faster you want to go, the more energy required, and disproportionately so. (This is one of the reasons why you burn more fuel when you drive like an idiot)
There may be a model with similar rules in economics but I wouldn't know.
So I'm not sure a per capita comparison is fair, but I'm not an economist, so it may be.

Because it's not necessarily bad? If I've called it bad, I was speaking loosely. But it hasn't been shown to scale, has it? If the US were a socialist country I really don't think we would have produced the wealth that we have. And the wealth that has been produced has both been shared and used as a catalyst to create wealth in other nations.

 

Yeah, I'm not sure our education system is that crappy. It might be, I'm not an expert on it. But from my own experience in the system and my observation of things around me, it seems that the system allows you to fail or succeed, just like I said of the U.S. earlier, this place lets you fail or succeed. Maybe the reason the universities are so good is because they mainly get students that are willing to do what it takes to be successful? I think most of our pre-college educational failures is the fault of bad parenting.

 

Not for those who know what capitalism is.

Mises was so far off from reality that it is not even funny.

It shows how little you know about Marx theories.

Just a guy by the name of Fredric Engels, I suppose he knew a little bit more about socialism and communism than you do.

 

Also the fact that a lot of the companies were started here but have really become international, so employees don't even necessarily have to live here.
A list of employees for these companies isn't readily available so I can't really prove it. But let's just say it would be shocking to find that Google, Apple, Microsoft, etc, weren't recruiting the best from all over, including Scandinavia.
My point was that we produce the best, innovative companies, and if you're born somewhere like Denmark, like Bjarne Stroustrup , and you're in the top 1% of programmers, you probably deserve and want to work for one of the technological powerhouses, which is very likely in the U.S.[/QUOTE]

OK, fair enough. Certainly spurs me to want to look into this more. I'll jump on Skype to call my euro-friends (most, considerably more high-rollers than I'll ever be - I'm the "renaissance" curiosity ami). (Skype: nod to my wife's side, Estonian lads, with HQ in Luxembourg - ) to discuss.

OK, so you are talking raw numbers, national measures, etc.; fair enough. One of the reasons I go to per capita is because I find that it's a useful marker, to some extent, for making comparisons.

To paint it grossly overbroad, if a nation of 700,000,000 produces X$ in GNI, per capita GNI of $40,000, has 70% of the populace destitute and on the streets, with horrible life expectancy, morbidity and mortality rates, mass illiteracy, and another nation of 300,000 produces $X in GNI, with 100% advanced degrees, no one with a net income of less than $1M yearly, and twice the life expectancy of the first nation - well, you get my point. I find that it helps to provide a common unit of comparison, per capita.

We might also be looking at different things - I guess by the "success" I've mentioned among the nordic democracies, it was part of my scholarly interest while in grad school to see how different social structures came together to form different systems in comparable moves towards the modern nation state (say, Germany's federalism, Italy's unitary system; or, the differences in the labor movement in Germany, Spain, the nordic countries, France and Britain, all resulting from the differing extant structures in place prior to industrialization). A big part of this picture for me was the relationship between producer and labor collectives (unions), their structural makeup, and how these manifested in parties and systems of mass alignments. In the nordic socialist democracies, pretty astounding to me that a relative detente took place that was absent in many other developing, modern industrial polities.

But I digress. I like "per capita" and other micro-measures, as it helps me to get a bit of a bead on how the individual lives in the society; also, how the individual feels about living in that society, their perception of whether they are or are not well enough off in things that matter to him or her.

Sorry if I intimated that you were, because I don't think you were (and I'd be fine with your view if you did). Interestingly, you talk of scale, and I know the subject has been brought up before when talking about the potential for direct democracy. It's a worthy subject.

 

Funny - until moments ago (my last post), tonight I was reading the poems of Wilfred Owen. Coming across his young artist's questions, at 18 - just prior to the outbreak of WWI - I was talking to my wife on how our basic educational system has lost its humanism, that which was inherent to the "classical" education of well-enough off European children, "in another time," as I said; growing up reading Hardy and speaking Shakespeare as a matter of course, pursuing natural history field studies in groves, fields, marshes surrounding the schoolmaster's room. Here's what this 18 year old wrote in a letter, in part, to his family:

Now, Owen was a ridiculous genius, born with an artist's keenly observing soul. But some of what I am talking about is the mad rush in our system to prepare nations of young ratiocinators solely, and not fully-fleshed out people steeped in true humanism. My lament, or so it so often feels, against so much of modernity. Also another thread to be sure.

 

Capitalism is the opposite of socialism. The private ownership of the means of consumption, or capital goods. The opposite is state or public (commune, nee communal) ownership of the means of consumption or capital goods.

Well, that's news to the world because his theories on socialism debunked Marx, and his student Hayek debunked Keynesian economics.

As far as I know, no one has refuted Mises yet on his economic calculation, which debunked socialism.

In fact, it has intentionally been marginalized, because it exposes the state as a debt parasite, and this is not popular in the academic world which relies heavily on state accreditation and funding.

But, today Austrianism is more and more creeping into the mainstream economic debate, because you can't predict the Great Depression, the end of Bretton Woods, 70s stagflation (which pretty much killed off any classic Keynesian theory), the hi-tech bust, the housing bust, and the dollar collapse. That's probably the best predictive record based on empirical evidence in all of economic history. And people are starting to acknowledge that these Austrian guys tend to be ahead of the curve based on observation and monetary theory. The theory is simple, honest, transparent, and has been deadly accurate when applied to current and past historical events (see Rothbard's many books on money and crisis).

Been working on Das Kapital for some time now. And reading criticism, and history of Marx. I don't think Marx was a bad man, in fact, he's important because he really made the property argument the forefront of 20th century economics. But his theories don't form a complete doctrine or methodology.

Consider this. A central bank is a plank in the communist manifesto. It is incredibly difficult for a country not to go bankrupt, in the absence of a central bank during war time. One could argue, that without a central bank to inflate the currency, wars would have to be funded on taxes, and eventually you would run out of adults to fight, or adults to fund war.

Btw, it's no trophy for Engels to know more about failed or flawed theories.

I thought about this during the evening. I have two things I want most in this world. More peace and more prosperity. I want less destruction of life and property, and less poverty and economic hardship. In that regard, I am non-partisan. If socialism could provide this, even if not perfectly, but better than capitalism and laissez-faire, then I would be 100% socialistic. I would wear red, march in the square, hand out pamphlets and hang a poster of Marx on my wall.

But here is the problem. Economically and rationally, socialism has been debunked, and I not only know of that, I am able to understand it. The theory put forth in it's place, is laissez-faire and capitalism. This to me seems to be a massive improvement over socialism towards achieving my goals of more prosperity and more peace. To me, and at my current level of understanding, it is rational, it is doable and it is moral.

So the challenge is, please defend socialism and/or please debunk laissez-faire if you want to change my mind, or prove your perspective is sound. Who Marx was, what he wrote, whether or not Engels was his sidekick, attacking Mises without knowing his arguments, is pointless and doesn't advance the discussion.

PS, re: my earlier comment about why man acts, and how he figures out the price of exchange, is such.

When I and another make a trade, we both agree upon the price, when we feel we are getting a better deal by making the trade.

For example, if I have a pencil and another person has money, I will only accept money for the pencil when I feel I am getting more money than the pencil is worth, and likewise the buyer will pay only as much as he feels the pencil is worth, and not a cent more. This doesn't mean the price is "fair" in the sense the word "fair" is abused today (that the price is ok with a third party who isn't even involved), but rather it is fair because both participants in the exchange participated voluntarily and without coercion, and BOTH feel they are better off by making the trade.

This is how price is mutually agreed upon in the (free) marketplace. Since Mises pointed out that decisions are ordinal, not cardinal,

example, we don't want pizza 20% of the time, burger 50% of the time, and a sandwich 30% of the time (cardinal) but rather we want burger, then sandwich, then pizza in that order (ordinal). Our order may change if we had burger 2 days straight, but we do not select goods in the marketplace randomly based on probability (which means we could eat pizza 20 days (random probability) in a row when it is our least favorite food.​

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the more of a good we acquire, the more our needs are satisfied, the less we are willing to pay for additional goods of the same sort. For example, if we are thirsty, we may pay $1 for a bottle of water, but we won't buy 30 bottles at $1 each. As we consume the water and our thirst decreases, we're likely to buy the second bottle for $1 or less, the third for say, $0.90, the fourth for $0.85 etc. We desire it less, and thus are willing to give less money (which we value more) for additional units. And likewise, the store owner is less likely after the first sale to discount each additional sale, so a mutually agreed upon price is not reached, (I want to pay less, he wants me to pay the same or more), and we stop trading water.

 

Since the first paragraph of your lengthy post is totally WRONG, I don't think there is really any need to discuss the rest.

I can own 5 Ferrari and I won't necessary be a capitalist. Try to figure out why before discussing Marx.

 

Because Ferraris are not capital goods.

Since the second paragraph of your lengthy post is totally WRONG, I don't think there is really any need to discuss the rest.

Actually, it is facile for you to accuse me of not studying Marx when you haven't studied Mises. Since our last discussions, I have been reading up on Marx. But you haven't advanced your knowledge on Mises.

The petty little games about who read what, or definition games are meaningless. You could read and understand Mises' economic calculation argument in 15 minutes. Refute it if you can.

Honestly, I do not want to adopt a philosophy that is flawed, so if you truly believe in socialism, you should be able to defeat it, and enlighten me. As I said, I will be the best damn socialist you will ever find, if it is a superior path to peace and prosperity.