Trickle down economics is a lie, the proof !

[F3SS]

the trouble with Capitalism is that, in its unrestrained form

That gets brought up so much yet I never hear it argued for.

[Einsteinium]

the trouble with Capitalism is that, in its unrestrained form, it's actually anti-free market and freedom of choice, isn't it. What it's all about is the biggest companies becoming dominant and swallowing up or driving competitors out of business. The natural result is a monopoly, and no one's really better off, are they (apart from the shareholders). I think the best system would be a free market but with some way of preventing monopolies and dominant positions from emerging.

The very act of 'preventing dominant positions from emerging' creates the ultimate dominant position. Whatever entity that is given the ability to prevent other entities from establishing a dominant position has become the de-facto ultimate dominant position in the marketplace. Everyone must bow before this dominant entity.

I am all for breaking up monopolies, but companies must be allowed to rise and fall by their own merit. Some will become dominant in their industries, but they will become dominant because they are the best in some way at what they do. As soon as someone comes along that does it better, they will lose that dominant position (as they should). As soon as you legislate an entity to always be dominant and at first to be the 'benevolent' overseer of the market, that entity will always become corrupt over time, even if it starts out working for the good of the people. The stakes are simply too high, the money is simply too much, corruption follows. And the worst part about corruption in an entity that is dominant by virtue of law is that there is no other entity to challenge it. The incentive to not become corrupt in free market capitalism is that corruption is punished by consumers, and taken advantage of by competitors. It is extraordinarily hard to remove corruption from government, which is why government must never be allowed to attain too much market power, because once attained, that power often takes violent bloody revolution to take away.

[Space Commander Travis]

Preventing dominant positions won't be an exercise in freedom. It would be punitive to both demand and success.

So do you suppose that this preferred system of yours would work to the benefit of the people as a whole, or do they not really matter as long as the laws of Capitalism are allowed to flourish unrestrained?

[Space Commander Travis]

The very act of 'preventing dominant positions from emerging' creates the ultimate dominant position. Whatever entity that is given the ability to prevent other entities from establishing a dominant position has become the de-facto ultimate dominant position in the marketplace. Everyone must bow before this dominant entity.

I am all for breaking up monopolies, but companies must be allowed to rise and fall by their own merit. Some will become dominant in their industries, but they will become dominant because they are the best in some way at what they do. As soon as someone comes along that does it better, they will lose that dominant position (as they should).

Will they really? Look at a few companies that have become vast monopolistic giants in their field; let's say Microsoft and Google for example. Do you still believe that they're the best at what they do? Perhaps they were originally, which was how they became dominant; but surely it's very obvious that when they do become dominant, they get bloated and complacent. Or look at defense contractors which (Lockheed or Boeing for example) were certainly innovative and the best in their field originally, but they become vast and monopolistic so that they have power even over governments, because they're all there is in the market now because they've bought up all the others that were in the market.

[Frank Merton]

Did you ever stop to consider that in ANY economic system, the rich will get richer, and there will be poor people? Any and every system ever invented by mankind has led to a class of extremely wealthy politically influential individuals, and a poor class of people. The middle class sometimes exists as well, and capitalism leads to a robust and strong middle class.

There is no free lunch, and life is not fair. If you have a lot of money invested, you will get a lot of money in interest and dividends and grow your wealth increasingly more and more. This is due to the magic of compound interest. Hence- the rich get richer.

Again, you are not seeing the full picture. There is vastly more to this story than what the author with his questionable timing (releasing a book about inequality right when it is a hot issue) has put together. My last point stands, trickle down economics is only part of a much bigger story that goes back to the beginning of civilization.

I think you have a balanced and intelligent view of things, at least on this issue. I don't think so some other times.

[Guest]

I do agree that there must be a balance. However, the system that has raised the majority of its citizens out of poverty better than any other system is capitalism. Capitalism must be regulated so as to prevent the concentration of power in the hands of a few, but over-regulation causes problems just as under-regulation does, and giving government too much power is no different than giving the rich/corporations too much power. Redistributionism in my opinion is NOT the way to equalize the balance of power, simply just too much room for corruption. The best way is to not allow any business to grow too big and become a monopoly, and encourage entrepreneurship and regulate in a way that incentivizes businesses to invest money back into their workers. We need equal opportunity, not equal sharing of wealth. We need incentive to work hard, remove tax breaks for dividends and capital gains and give those tax breaks to the people who actually work hard for their money. Communism does not work that has been proven time and time again. Socialism is a bit better, but does not create the technological innovation and entrepreneurship that capitalism does.

If you want jobs and opportunity to have a better life, then capitalism is for you. But it comes with risks, it means you have to be responsible for yourself, it means that along with the opportunity to succeed, comes the opportunity to fail.

I do not advocate communism so you can put that idea to bed. Arguably social democracy, like we have in Germany is a far better system of state organization than the Anglo-American system. It produces just as much if not more innovation and creates the sort of social stability where people and companies can give of their best knowing full well that they live in a society which will reward their efforts and secure their general welfare.

I tend to agree that incentives are the best way to achieve social progress, but there will always be a role for redistributive policies as well. The point of the original book is that when we allow society to become unbalanced by simply pandering to the lobbying of the rich, overall social productivity declines and we enter periods of social unrest which are hugely wasteful. It is societies primary role to ensure its stable continuity so to allow a society to become unbalanced in the way it has in America and the UK is a failure of the state to regulate itself into the future and will lead to social collapse (he demonstrates this empirically).

There are many things which can be learnt from looking around and seeing what actually works and attempting to implement them. A dogmatic ideological approach that one system (deregulated free markets) is the only way is hardly productive when it has shown itself to lead directly to social disasters on a regular basis.

Br Cornelius

[Guest]

In capitalism, the power to do something comes from capital. Do you have the money to do it? This isn't good enough for Br. He needs another entity with even more power and even more money to say it's okay first. Even then it's not okay as example after example have shown, yet he still defers to the same wet blanket of trust for the untrustworthy anyway.

Please don't put words into my mouth Yamato, especially words I would never say. The market is free to operate in whatever way it likes just so long as it is been socially responsible - but the State is also free to incentivize things which it considers to be of strategic value and then wait to see how the Market delivers on those objectives.

If you fail to understand the real relationship between private business and the state don't be surprised when you draw the wrong conclusions about what people believe.

[Guest]

Redistribution is not necessary to the survival of the middle class. Job availability is. I am and have been middle class all my life and I never once needed to take on debt to survive. What I have done is taken on plenty of debt for my wants and desires. All debts have been made from choice and not necessity. I understand life is circumstantial to each individual but it is a false statement to claim that the middle class can't get by without succumbing to massive debt that will throw us into poverty. I'll bet that 9/10 times those with massive debt and sorrow are there for the same reasons I am. We buy cars and frivolous material items that we really don't need. I enjoy those things and try to not take on more than I can handle but sometimes impulse gets me to do otherwise. I bought a house. A house is not necessary for survival. It's nice and all but there are cheap apartments abound if we're being frugal by necessity. Society owes me no debt for my choices. The middle class and many of those below enjoy having lots of things they don't need. I just don't see how someone can portray American capitalism as such an injust travesty. A fairly regulated capitalist market is the best system the civilized world has ever known. The poor here are well off compared to many many other places.

You maybe middle class and you may think you know what the middle class is, but it has a definite economic dimension beyond attitude. The middle class has been the worst hit in the move to a more liberalized economy and that is demonstrable with evidence. What I said is that there is a middle class lifestyle and people have held onto that lifestyle through borrowing in the face of a relative decline in income since the 1970's. Most middle class people have maintained their middle class lifestyle through debt. For many that has been about collateralizing their home through remortgaging, which has a real effect on their ability to spend since they will have a lower net income per week after servicing their mortgage for a longer part of their life.

A fairly regulated capitalist market is the best system the civilized world has ever known. The poor here are well off compared to many many other places.

I think we all agree about that, but the devil is in the detail, what constitutes a fairly regulated free market. I think the evidence shows that the market has not been regulated fairly and so it has failed to serve the society it exists within. What you do about that is the question.

Br Cornelius

Edited May 22, 2014 by Guest

[Guest]

Preventing dominant positions won't be an exercise in freedom. It would be punitive to both demand and success.

Monopolies stifle innovation and increase costs. They just fail to deliver what they should deliver - so do not defend them for ideological reasons. They are socially corrosive and so need to be prevented. Judge an outcome by its effects, not by arbitrary yardstick of allowing something to happen because it seems right in your own value system.

Br Cornelius

[Space Commander Travis]

That gets brought up so much yet I never hear it argued for.

Well, you just said it a moment ago..

. A fairly regulated capitalist market is the best system the civilized world has ever known.

[Leonardo]

"Trickle-down economics" is a synonym for "pour-up economics".

[F3SS]

Well, you just said it a moment ago..

How so? You keep brining up unrestrained capitalism as do a few others now and then as if anyone is asking for or arguing for it which is all the long version of what I said in yesterday's quite to you. So again, how is stating a fairly regulated capitalist market at all close to arguing for or against an unrestrained one? You don't have to answer because they're not close and I didn't say that.

[Space Commander Travis]

By unrestrained capitalism I mean what we have. The system that allows gigantic corporations like Microfoft and google to become dominant to the extent where you have no choice but to buy a Microsfot product if you buy a PC, and where Google has become the normal phrase meaning to look something up on the internet. Similarly in the music biz, TV and the media. You don't imagine that these companies compete with one another do you? No one may be asking or arguing for it but that's what we have. What do you mean by a fairly regulated capitalist market if it's not the same as a restrained one, then?

[F3SS]

By unrestrained capitalism I mean what we have. The system that allows gigantic corporations like Microfoft and google to become dominant to the extent where you have no choice but to buy a Microsfot product if you buy a PC, and where Google has become the normal phrase meaning to look something up on the internet. Similarly in the music biz, TV and the media. You don't imagine that these companies compete with one another do you? No one may be asking or arguing for it but that's what we have. What do you mean by a fairly regulated capitalist market if it's not the same as a restrained one, then?

First, we don't have unrestrained capitalism. We simply don't. You just feel that there should be a limit to growth at least from what I'm interpreting. Microsoft and Google are giants for sure but all someone has to do is do what they do in a better and innovative way and they'll fall by the wayside. You were using the word monopolistic earlier. You're either a monopoly or you're not. Google has plenty of competition but for now they're the best. Microsoft Windows and the PC go hand in hand but don't think for a second that PC manufacturers wouldn't ditch them if someone develops and properly markets another better product. There are other PC compatible OS's and word processors out there but Microsoft still does it best. You're not happy that corporations become gigantic but they are never too big to fail. I understand the dilemma in your thought but you can't force them to stop growing.

Why would I think or not think these companies compete against each other? They offer mostly different products for starters but they do compete. They both have web browsers and mobile OS's but that's all I know off hand. They'd love to take each other out of those respective markets. So bottom line, there are no monopolies. Some are just leaps and bounds ahead of any decent competition. I bet there was a time for decades when SEARS thought they were untouchable and people viewed them as "monopolistic". Well step into the future of big box stores of all types all over the place. Innovation happens and competition will rise. PC's and the Internet have barely been around for 50 years combined. Someone somewhere in time will become the next huge household names. It's inevitable.

Again, no one is asking for it. Some big companies may want it but they can't have it.

It is the same as a restrained one. I never said otherwise. Maybe you're confused. Go re-read the quotes on the previous page. You'll see. So yes, fairly regulated technically means restrained and yes by government. Don't mistake that wording for me eating my foot when it comes to my general outlook which I'm sure you're at least slightly familiar with. Regulation is necessary without a doubt. What I find unnecessary is the government having no limits to there ability to regulate. Sure, I know it's impossible to define when and where they must stop regulating. Times change and unknown scenarios happen. By fairly regulating I mean a common sense approach. Again, that too is hard to define. I think the generalities of this particular conversation between you and I are covered now and I hope you see clearer what I'm getting at. I felt a long post and possible rant coming on so to continue, if you'd like, we'll need more specific points. Or not. We can stop here. I'll go either way.

[Yamato]

Monopolies stifle innovation and increase costs. They just fail to deliver what they should deliver - so do not defend them for ideological reasons. They are socially corrosive and so need to be prevented. Judge an outcome by its effects, not by arbitrary yardstick of allowing something to happen because it seems right in your own value system.

Br Cornelius

Provide some real examples of this social corrosion through monopolies or I'll wind up thinking you're stuck in the muddy theories again. Don't just hand me another load of fluff. Show me.

[Guest]

But none of that addresses the point that wealth disparity is at an unhealthy level and is already causing social disruption and loss of overall productivity. How you regulate that is the real issue in question here and some don't want to intervene to ensure that society wealth doesn't get sucked to the top leaving the majority on the poverty line. i can live with and accept that markets do lots of things well (when they don't become monopolies) but allowing the bosses and capitol owners to reward themselves disproportionately to everyone else is just plain disastrous for the future of society.

Br Cornelius

[Guest]

Provide some real examples of this social corrosion through monopolies or I'll wind up thinking you're stuck in the muddy theories again. Don't just hand me another load of fluff. Show me.

You should read up on the mercentile age and how monopolies acted throughout that period. It is well demonstrated and documented that monopolies lead to higher prices and less innovation since they cease to have to compete or offer value for money. Monopolies simply buy up and shut down the competition and Microsoft are notorious for doing so.

Br Cornelius

[F3SS]

But none of that addresses the point that wealth disparity is at an unhealthy level and is already causing social disruption and loss of overall productivity. How you regulate that is the real issue in question here and some don't want to intervene to ensure that society wealth doesn't get sucked to the top leaving the majority on the poverty line. i can live with and accept that markets do lots of things well (when they don't become monopolies) but allowing the bosses and capitol owners to reward themselves disproportionately to everyone else is just plain disastrous for the future of society.

Br Cornelius

Well, how do you tell the boss and the people who own the company what to do? Should government decide what they do and how much they get paid? Some of you guys want wealth and growth limits but who gets to decide and how?

[Guest]

Well, how do you tell the boss and the people who own the company what to do? Should government decide what they do and how much they get paid? Some of you guys want wealth and growth limits but who gets to decide and how?

Unfortunately that is the role of the state by definition - it sets the rules to achieve the outcomes it seeks. The subjects of the state can attempt to influence that - but ultimately the state has greater responsibilities than to look after the interests of any one social sector.

No matter how you slice it - its the state which decides how the best outcome is achieved and it always will be. I just think that most states at the moment have made some very bad choices and placed the stability of society at risk as a consequence. That to me is the ultimate dereliction of duty.

Br Cornelius

[Yamato]

You should read up on the mercentile age and how monopolies acted throughout that period. It is well demonstrated and documented that monopolies lead to higher prices and less innovation since they cease to have to compete or offer value for money. Monopolies simply buy up and shut down the competition and Microsoft are notorious for doing so.

Br Cornelius

So Microsoft is the one example you've got of a Monopoly. Entertaining that claim, show me the corrosion. I've got a Mac at work and an Android phone and a PC with Windows; where's the monopoly? Microsoft was sued by Apple over its GUI if that's the socially corrosive problem, and Apple lost. So unless you're suggesting we throw the law out the window to adhere to your opinions on economic morality, I'm not sure what your Utopia is wanting for here.

[F3SS]

Even if you cap wealth at extremely high levels you will still stifle innovation. Say Richard Branson was not, by law, allowed to earn any money after his first billion how many more decades will it have been before privatized space flight,and all the other big things he's into, become working realities?

[Wendigo Wangs]

But none of that addresses the point that wealth disparity is at an unhealthy level and is already causing social disruption and loss of overall productivity. How you regulate that is the real issue in question here and some don't want to intervene to ensure that society wealth doesn't get sucked to the top leaving the majority on the poverty line. i can live with and accept that markets do lots of things well (when they don't become monopolies) but allowing the bosses and capitol owners to reward themselves disproportionately to everyone else is just plain disastrous for the future of society.

Br Cornelius

Man, you live with a huge chip on your shoulder, don't you. There is a reason that the Bible lists "thou shall not covet" as a sin, because it will destroy you. Stop worrying about what everyone else has and I bet you'll feel a little better.

[Einsteinium]

I do not advocate communism so you can put that idea to bed. Arguably social democracy, like we have in Germany is a far better system of state organization than the Anglo-American system. It produces just as much if not more innovation and creates the sort of social stability where people and companies can give of their best knowing full well that they live in a society which will reward their efforts and secure their general welfare.

I tend to agree that incentives are the best way to achieve social progress, but there will always be a role for redistributive policies as well. The point of the original book is that when we allow society to become unbalanced by simply pandering to the lobbying of the rich, overall social productivity declines and we enter periods of social unrest which are hugely wasteful. It is societies primary role to ensure its stable continuity so to allow a society to become unbalanced in the way it has in America and the UK is a failure of the state to regulate itself into the future and will lead to social collapse (he demonstrates this empirically).

There are many things which can be learnt from looking around and seeing what actually works and attempting to implement them. A dogmatic ideological approach that one system (deregulated free markets) is the only way is hardly productive when it has shown itself to lead directly to social disasters on a regular basis.

Br Cornelius

I completely agree that we need regulated markets, but we must allow the natural cyclical market motions to take place. That means we have to allow companies to rise and fall by their own merits. There will be losers and there will be winners. Individual freedom should be the highest value in a society, and whether you realize it or not the German market and just about all other markets around the world are incredibly dependent on the US economy. As the US economy goes, so goes the world. If our system is so terribly bad, then why is this so?

If our system is so bad, then why was I able to rise from a C average high school student to an A college student in engineering who now has a job that puts me squarely in the middle of the middle class with lots of potential upside and opportunity? If our system is so bad, then why did people in the US invent The computer? Mass assembly line production? The light bulb? The Iphone? on and on...why is China cyber-spying on us to steal our innovations instead of innovating for themselves?

I don't think the US system is bad, it has boom and bust cycles, and some companies get too big, but who cares? 50 years ago there was no personal computers let along Microsoft, now you are whining that we HAVE to buy Microsoft products? Nobody is forcing you to buy a computer, nobody is forcing you to buy cable TV. You are very much so welcome to live off the grid just as things were before those companies ever existed! The fact is that those companies made life easier/more productive/more interesting for you, and now you condemn them for capitalizing on it?

[Guest]

Even if you cap wealth at extremely high levels you will still stifle innovation. Say Richard Branson was not, by law, allowed to earn any money after his first billion how many more decades will it have been before privatized space flight,and all the other big things he's into, become working realities?

Plenty of countries intervene in the way you suggest (Germany for one) and it still hasn't stopped it been one of the most successful countries in the world.

Once you let the wealth balance get out of hand you stifle innovation since it is just as likely that a good innovation will come from someone without the contacts or resources to develop it - and when the top has all the money they just don't give a **** about the little mans ideas - since more of the same is just a profitable for them if they can keep everyone in their place.

Br Cornelius

[Guest]

Man, you live with a huge chip on your shoulder, don't you. There is a reason that the Bible lists "thou shall not covet" as a sin, because it will destroy you. Stop worrying about what everyone else has and I bet you'll feel a little better.

And you live in fantasy land if you think I care a **** for what you or anyone else has. I have enough and want little extra. I just want to live in a world that works for the benefit of everyone and gives my kids opportunities to prospect from their own talents. that is fast disappearing under current economic conditions.

I think it is only the covertous people who want to see the rich keep it all - because you want to be one of them.

Br Cornelius