Progressive Philosophy

So many claims of "You're wrong" but so little to back them up...

Many (most?) of those 3rd world dictatorships were put in place by multi-national corporations, or were created in response to prior dictatorships emplaced by those corporations.

Examples?

Honduras - "The quintessential " banana republic" Honduras became a foreign enclave as a result of Anglo-American control over it's railroads, mining industry and banana production in the 1800's. U.S. banana companies were to dominate the country for many years. After the turn of the century, The United Fruit Company and the Standard Fruit and Steamship Company expanded their control over the rich alluvial plains of Honduras' Atlantic coast. By 1929, the United Fruit Company owned or controlled 650,000 acres of the best arable land, along with railroads and ports. The banana operations were run like private cheifdoms, in which the companies kept order and crushed labor organizing with their own security forces or by calling in U.S. troops. "
Costa Rica - "In Costa Rica alone, United Fruit leased 148 kms of railway and was granted a concession for 334,000 hectares of land, when it acquired the business concerns of U.S. entrepreneur Minor Keith."

In other cases, the dictatorships you refer to arose as European empires withered, and the ruling class fled leaving nothing to fill the void. Look to Africa and Asia for examples of this.

America is the closest thing to "pure" capitalism you will find. Capitalism moves naturally toward monopoly (just as in the game). If you have played the game, then you know that he who wins is he who concentrates ALL of the wealth.

The history of the term is most relevant, since to apply it retroactively would create an anachronism. Further, we have not defined our terms (what exactly are we talking about when we say "Capitalism"?)

In 1580 Francis Drake returned a 4700% ROI for those that had "invested" in his voyage. Queen Elizabeth's take was larger than the entire income to the Royal Treasury that year. Capitalism?

"Merchant Capitalism" is generally agreed to have developed in 1400-1700 period, roughly coinciding with the expansion of global European trading. Think of the East Indian Trading Co. or Hudson Bay Company.

Certainly there were contemporary "capitalists" that Jefferson was familiar with.

No, if properly applied they preserve individual freedom while constricting corporate exploitation.

In our perverse world it is often reversed. Congress will pass a law mandating that individuals carry health insurance (inhibiting personal freedom and choice) but will not regulate the insurance industry by capping premiums or taking other steps to make those policies affordable - thereby facilitating the exploitation of individuals by the "capitalists". Wealth will be shifted from the common man and further concentrated in the hands of the few. This because we have largely forgotten Jefferson's admontion that, "The mass of the citizens is the safest depository of their own rights," while accepting Rand's position that, "If one wishes to advocate a free society--that is capitalism--one must realize that its indispensable foundation is the principle of individual rights, one must realize that capitalism is the only system that can uphold and protect them."

 

I have investments that lost over 60% of their value and have barely recovered at all.

When wealth is shifted some lose while others gain.

All a matter of perspective.

$5.8 BILLION in bonuses to Merrill Lynch Execs is hardly an example of a "lot of loss". Need more examples?

For you and I the loss has only just begun. But, our loss will be another's gain. Don't like it? Then work to change the system, because the current one is not looking out for your interests, or mine.

 

@ Willy:

having read your comments here I'm not sure where you are coming from.

As for me, I'm no longer interested in political commentary. I find most of it illusionary.

I've been a business person for several decades now. Of course our system isn't perfect, and in fact has innumerable flaws. It seems as if existing and potential corruption infiltrating government is ever more present.

Regardless, I'm a big supporter of the US. I'd also like to think I'm somewhat left of center, though far from liberal.

As far as losses. Nobody gained from the large losses across the world. The wealth didn't transfer from one source to another. Unlike the huge increases in oil prices which saw enormous transfer of wealth from some sources to others, this was simply loss on a gargantuan level.

Having worked through a couple of recessions, having suffered loss from them, and having taken advantage of depressed prices to purchase assets at low prices, I maintain confidence that as with other periods the US economy will recover and over a long term values will rebound. Its definitely long term, though.


To get a feel for time frames, I like the graph on office space from a large submarket in the US here ...http://www.fairfaxcountyeda.org/site...ns/ye08rer.pdf

I like it for a number of reasons.

1. Its a real picture of the impact of demand and supply. That after all is the basis on all of the economic discussions that take place here.

2. Its a long view perspective covering 28 years.

3. Several phenomena within the graph mirror the impact of recessions in the US.

A)At the end of the 1980's and the start of the 90's the high vacancy factors mirror the recession of that period.

B) The slow down in expansion of the 1990's reflect the impact of that recession. Recovery is slow. It takes years.

C) The growth in vacancy in the early 2000's reflected the telecom/dotcom induced recession of the early 2000's.

Some of the supporting information reflect the changes in values over time.

Now there is little here that reflects back on progressive philosophy. Nevertheless this thread like others seems to be covering a lot of territory.

 

Willy, your response about third world countries is interesting and perhaps true in some or even most cases. You may consider America closest to "capitalism", however you define capitalism, but it is not anywhere near true free-markets. I think what you're referring to is corporatism, and I agree with you there.

My point on free markets is that the rich few wouldn't really exist, even though I don't believe the system would be as sustainable as some think. But to be technical, it is government interference to a degree that creates the few, rich powerful men in the first place.

Ultimately, we share the same goal but my point is don't spit in the face of capitalism/free-markets, when the corruption you see is not always all capitalism to blame.

And earl I agree, most theory is crap. People get carried away with it and think Somalia is their dreamland. I just think this backlash against capitalism is as emotionally based as the right wingers who vehemently oppose all of Obama's policies/actions simply because he's Obama.

 

Well, actually I came into this thread commenting on:

...which exemplifies the shallow and dogmatic thinking of much of today's conservative movement.

So, I thought I would point out that regulation within a democratic republic such as the US is not only appropriate, but necessary in order to protect individual rights.

As far as shifting of wealth vs individual losses, I stand by my points. You and I (through our government) have assumed in the neighborhood of $6.7 trillion of debt to various bailout packages. That is a huge shifting of national wealth to corporate America.

Serious, if not catastrophic inflation will insure that the wealth shifted ultimately comes from your pocket, and mine. The easiest way to pay back $6 trillion is to let inflation do the work. A decade of 7% inflation will effectively cut the value of $6 trillion debt in half (think of the stagflation of the 1970's). Don't forget, the Prime Rate in 1974 went as high as 12%.

Everyone wins, right? I think not! The Gini coefficient in the US sat at .408 in 2007 (most recent data I have) and had been on an upward trend for a decade or more. That puts the US about even with such progressive societies as Sri Lanka, Ghana and Senegal and well above (below?) Russia, Israel, Jordan Pakistan or any European country. The middle class in the US is disappearing, as has been widely reported for a decade, and that perhaps is the most telling support for the idea that wealth is shifting, not being lost.

 

I can accept the terminology, although I think that the distinction is far more theoretical than anything I see in the current reality.

 

But see you're just making generalized statements based on biases. Give me facts, examples. This thread is a great opportunity to move away from rhetorical arguments and get at the core of what we believe. That statement is so generalized it would be easy for me to dismiss it as trivial rhetoric. You're basically saying any time the government gets involved the American people suffer. Sounds good as a bumper sticker slogan but let's try to be bigger than that just this once.

Or at least have the fiber to address the examples I gave. If not you're just some guy reciting the same old tired talking points from over in the corner at the kiddie table while the grownups are talking.

 

I wish some more libertarians and/or conservatives would come in to debate you willy (as well as the rest of you), you seem to know your stuff and I look forward to seeing more of you in P&R.

 

That's the thing, most neo-cons I come in contact with don't care about the individual rights of anyone except their own.

These are the people who literally complain when tax dollars are spent on anything but something that benefits them individually. It's an odd yet fascinating social dogma I've been trying to get my head around. "Don't spend 'my' tax dollars on someone else..." It's as if they would like to see the government put their tax dollars into a special account and only spend their tax dollars on them.

Most of you with a shred of moral or patriotic fiber will probably look at that and think it's absurd. But I guarantee you that by this time tomorrow at least one or 2 conservatives will read this and think to themselves that would be a GREAT way to run our country.

Never mind the fact that we pay taxes as a nation to benefit our nation as a whole. Never mind the fact that we are the United States of America.

Don't get me wrong, there's nothing wrong with looking out for one's self and family. But it's getting to the point that I'm starting to believe conservatives are just as much against the whole "liberty and justice for all" thing as atheists are against the under God part. I just wish they had the balls to come out and admit it...

 

No. Wealth didn't shift. The bailouts were to keep a financial system afloat which had been built on artificial wealth for years. Wealth was not shifted, wealth simply evaporated, it was never real wealth to begin with.

This is something that Peter Schiff and those types had right years ago. When the bubble busted -- meaning when people realized so many assets were so highly overvalued -- the markets froze and trust in the system was lost. They were overvalued primarily because of cheap credit.

The bonuses going to the execs are a drop in the bucket.

The Gini coefficient only measures the evenness of the distribution of income. It doesn't say anything about what the result means. A high coefficient doesn't mean "the middle class is disappearing". It could simply mean that rich people get a lot richer in the US when they do get rich, than when they get rich in other countries. It could also be because(and I believe this is true) the central state applies less control which allows values(the wealth of individuals) to deviate more from the mean.

The fact that the rich are getting richer does not necessarily indicate that they are stealing from the poor or the poor are getting poorer. In fact, if the rich are getting richer it could be a good sign, since wealth is dynamic, more can be created and most of it is probably created by the guys at the top. Wealth is not like a finite sized pie that gets chopped up. When the richest guys get richer it does not mean someone got poorer, instead their prosperity could in fact help spur an overall increase in prosperity.

According to this the US has the second highest median income in the world. The high Gini coefficient implies a lot of outliers, so the median is probably the best measure of central tendency.

Did you just get back from Michael Moore's new movie or something? Is it already out?

 

Ah, you confuse real wealth with money. Nothing could be further from the truth.

Tangible assets do not evaporate.

Paper assets are always illusory.

As a good conservative, you should know that "market corrections" do not cause wealth to evaporate. No, they re-establish market values. The loss is on paper. The assets remain, although revalued.

If you lose your home it doesn't evaporate. It changes hands. The company you hold shares in doesn't evaporate (unless forced into liquidation).

In 1970 the average CEO compensation was about 30 times that of a worker. Today it is closer to 500 times the compensation of the average worker.

Perhaps more telling, the top 1% of income earners account for roughly 25% of total income - the highest since 1929.

Real wages (adjusted for inflation) have been declining even as productivity has been increasing. Even non-wage compensation (e.g. health insurance) does not account for the difference.

By any account, there has been a huge shift in wealth in the United States. And by most accounts, the middle class has taken the brunt of the shift.

You are correct that the Gini coefficient does not say define what its results mean. You have to look at other data (real wages, disparity, etc.) to derive meaning.

Given the data I see, wealth is being created by workers who are more productive than ever, and being enjoyed by Executives at historical high levels.

A rising tide does not necessarily float all boats, nore does wealth "trickle down". It is "sucked up".

 

I knew you would accuse me of being a conservative. It's OK the other side accuses me of being a liberal.

I'm not sure what your point was. The wealth that was created in the early 2000s wasn't real, it was on paper. Many of the biggest investment banks that played the biggest part in this wealth creation don't exist anymore. And a lot of rich people involved lost a lot of their wealth.

Liquidation. You mean like what happened at Lehman Brothers?

I think CEOs are overpayed too but who cares what I think? Show me a system that's worked better than letting the market determine prices and wages.

Where are you getting your numbers?




And for the record I don't believe in Laissez-faire capitalism. I think those people are as recklessly idealistic as you are. I believe in intervention in extraordinary circumstances, in areas that pose systemic risk and in cases where the public welfare is of greater concern(like health care) than optimal functioning of markets. I also think lack of good regulation had a lot to do with the financial meltdown.

To me the US has proven to have the most robust, durable system, maybe ever. At any particular point in history(in the past century or so) you could cite other countries that were doing better in important metrics, but the US is almost always at the top in all the most positive important metrics that indicate economic strength and has been consistently for a long time. And it's done through a modulated mixed market(that's pretty free relative to most).

The way we do things isn't perfect, of course, but it's proven to work.

 

Willy:

I agree with your perspective on protection of individual rights and the need for government intervention to protect those rights against abuses that come from private sources. In a vacuum of govt. powerful private forces tend to grow and abuse the rights of the individual.

On the other hand, the govt. can surely abuse individuals rights. Ultimately it takes a balancing act. It is not easy or simple. The one thing it is not is a reflection of dogmatic simplistic statements as typically expressed by radical groups on Right or Left.

On the other hand I don't see the loss of "paper wealth" as being switched from individuals to corporations. I own and have owned assets for a couple of decades now. On the real estate side those assets are worth dramatically less. (I assume something like 30-40% less in "paper value). I can't be sure though. I haven't had them on the market for sale. I used to get unsolicited offers to sell. Haven't had one in a while. Valuation is difficult today. There are far fewer comparable sales on a product basis and on a return basis.

No corporation has picked up the lost value. The paper value has decreased. That happens during periods of deep recession.

Meanwhile, has increased debt by the government shifted value from households to corporations? I don't think so at all. That is a big jump. Its shifted debt into the government and long term payments on that debt will be via the govt. and of course taxpayers, businesses, fees, and individuals. How it is played out over years is a function of how taxes are accumulated by the government and how it spends it's money on various aspects of America's interests.


As to "paper assets". My experience is that they "float" between real and illusionary. With a lot of "paper assets" an individual can use that asset base to make large purchases, borrow money to buy a house or investments, etc.

When the "paper value" decreases dramatically that ability is limited or removed. There is nothing "illusionary" about that capacity.

Logic: Looking at hard facts in conjunction with the financial meltdown, its clear that a lack of regulation led to the problems. Having worked in the commercial real estate field for 2 decades, worked intimately close with lenders, the 2 businesses; real estate and finance; are always on the verge of screwing up and screwing people.

Low interest rates and excess liquidity by the Fed may have contributed to the excesses but are not even close to the real hard facts that caused this meltdown. Foreign capital flowed into these areas like crazy over the early 2000's. The aggregate value of funds flowing into residential real estate provided by securitized mortgage debt far exceeded that provided by Fannie and Freddie. In addition its enormous growth over a couple of years totally screwed up the market with a crazy mountainous "bump" of liquidity that hadn't been there before.

That had nothing to do with excessive US liquidity. Similarly, the low interest rates simply gave the financial institutions a tool with which to pull extraordinary short term profits from the residential real estate markets over other investments.

It was a classic financial bubble.

 

If it (wealth) wasn't real then how could it be lost?

Remember, money symbolizes wealth. All the way back in grade school I had it explained to me that it was easier to carry around coinage than a basket of tomatoes to trade at the market for corn and meat.

The intrinsic "value" of goods does not evaporate when the market adjusts prices, although the market value may well change.

Great example of the transfer of wealth. While certainly not to the advantage of Lehman Brothers creditors or shareholders, beneficiaries of the liquidation included Barclays, who got a billion dollar New York high rise for $960 million (and two data centers for another $330 million) and Nomura Holdings, which took over Lehman's Asian, European and Middle East operations at rock bottom prices.

Cooperatives? They are even able to compete within the capitalist system when properly managed, and provide far more equitable treatment of their shareholders.

Pretty picture. Not sure if those are inflation adjusted numbers or not.

Try looking at real wages and productivity rather than household income.

"The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity — the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standards — has risen steadily over the same period."

Or, this (old numbers I admit):

"While productivity rose 11.7 percent between 2001 and 2004, median household income grew a mere 1.6 percent. "Simply put, workers aren't reaping the rewards of their labor: real wages are trailing productivity gains because profits are taking the lion's share of economic growth," EPI said."

Or this for more recent numbers:

"Real average weekly earnings fell 0.2 percent over the month, as a result of the decrease in real average hourly earnings and no change in the average work week. Since reaching a recent high point in December 2008, real average weekly earnings have fallen by 1.5 percent."

Regulation, properly applied, might well prevent the extraordinary circumstances you refer to. The problem is, regulation tends to be applied in the wrong places for the wrong reasons. Insurance is a prime example - a place where the individual is "regulated" (more accurately mandated) while the industry remains largely unregulated as far as profits are concerned.

I would agree, but that does not mean there is not room for improvement, nor does it indicate that the system is sustainable ("Past performance may not indicate future results"). I suspect that a system based on consumption will prove to be unsustainable, but time will tell.

My major points have been raised to counter the rather dogmatic, "Get out of my life and let me produce" mantra we here so often, usually from people that are not actually producing anything at all and have no idea where their beliefs originated or where we as a society might end up if they as individuals are allowed to run amok.

 

Shucks, I was worried about the real estate market as early as 1996. Prices were already outpacing the value at that point (at least on the West Coast). I made real estate purchases in 1990, 1996 and 2005 and it became increasingly difficult to negotiate what I considered fair and "safe" prices each time. That said, I did succeed and all of those properties are still valued well above their original purchase price (though the 2005 one is barely above).

On the other hand, I have stocks that remain almost 60% below their highs, and other tangible assets (livestock) that are currently as much as 90% below their highs (with no bottom in sight ).

It has been a rough ride for most of us, hasn't it?

 

I highly recommend the Ken Burns documentary on the national parks that is playing on PBS right now to anyone who asks (ridiculous to anyone who knows a lick about history) questions like "what has big government ever done to improve anything?"

If it was up to the Mia's of the world, we wouldn't have any of the national parks that we enjoy today.

The government (at it's best) protects the interests of the average person against the interests of the very rich. A government at it's worst protects the interest of the very rich (corporations) against the interest of the average person. That's what our government has become more and more so over the years. And I agree that kind of government is a bad thing. But the "big government" of Theodore Roosevelt, FDR, & LBJ is a very very good thing that has been massively important in moving our country in a positive direction. The programs they implemented have been very important in improving the lives of the average person.

 

Let's add this (from today's news) to the mix.

"The recession has hit middle-income and poor families hardest, widening the economic gap between the richest and poorest Americans as rippling job layoffs ravaged household budgets...Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997." NY Times

 

Because when bubbles collapse, or the markets "correct", they overshoot. One of the problems at the core of the liquidity crisis was the dramatic fall in value of the so called toxic assets.

So you include wealth changing from the hands of one group of rich people to another as a transfer of wealth? Instead of a liquidation should they just have had a raffle and given all the assets away? Of course if you're selling assets worth a lot it's going to be bought by groups of people with money.

Yes I believe they are.

Here's a historical table that show median income since '47: http://www.census.gov/hhes/www/income/histinc/f07ar.html

Do you not expect these values to go up and down over time? At any given point in time if a particular metric is going in a negative direction, it is not proof that the system is broken.

Once again, I compare us to the rest of the world. We have the second highest average PPP wages in the world: http://en.wikipedia.org/wiki/List_of_Average_Wages_per_Country

We're less than $200 per person from being #1.

 

And here is a look at real wages vs productivity over the longer term:



A little digging will show the relative changes in GDP related to real wages and corporate profits:



Except for the dot com blip in 2001, things look to be on a long term trend.

You are right about values going "up and down over time". Profits and productivity are up and real wages are down.

Finally, and perhaps most telling, this shows income disparity over time ("Share of pre-tax household income received by the top 1%, top 0.1% and top 0.01%, between 1917 and 2005."):



This graph only covers thorugh 2005. Right now (2009) the disparity is the greatest it has been since 1929.

All of these support the claim that wealth has shifted significantly.

Wealth does not trickle down, it is sucked up.

 

You should give the source of those graphs. The real median wage graph I posted is from the census bureau. I got it from here: http://en.wikipedia.org/wiki/Median_household_income .
To me the whole argument is summed up by one question: regarding these figures, how do we compare to the world?

We near or at the top on the ones that we want to be at the top of.

Even if wages have dropped, we're still $200 shy from being at the top of the list. There's a million variables that could be a factor in the drop of wages. Inflation is obviously part of it. What about the number of women who've entered the workforce in the past half century, especially since the women's lib movement? For all we know that's driven down wages simply because there's more competition for jobs. How much is and has illegal immigration driven down wages?