3 myths about capitalism

[wufwugy]

I'm really surprised to see you post these videos. They do not conform to the kinds of things you have been posting, but apparently you have been researching the subject.

Strange. I've been posting this sort of thing for some time. It's mainly about just repeating what those with the most credibility on the issue say. I think many people make the mistake of confusing political activists with academics who actively teach. Those who actively teach say the kinds of things in the videos far more than those who have left academia in pursuit of political influence.

I think that the confusion is that my views are mainly market monetarist, which agrees with the Austrians on this sort of thing, but very much disagrees on monetary policy

 

[wufwugy]

I'm too lazy to watch right wing drivel. Did they try to blame the depression on FDR? I love it when they claim FDR caused the depression.

Sometimes I wonder why I even bother. This is supposed to be a community of rational thinkers. On the one hand you say this is "right wing drivel", but on the other hand, if you were taking a Harvard economics course, apparently you wouldn't do so hot. If you think the words of active professors are drivel, it is you who is making the mistake, not them. Go examine the sources of the idea that it is right-wing drivel. What you'll find is a bunch of political activists that don't have much academic role anymore. Robert Reich is a great example. This board adores him, but he has very little credibility on the topic. Don't listen to people on book tours; listen to those with competitive teaching positions

 

[laughing dog]

As usual, I couldn't find it again.

I can understand that - it happens. I am interested in that data, because I have not seen data that shows what you claim.

The topic bounces around the econ blogosphere on a regular basis though. I don't bookmark links to show others. I merely state that to be up on what the credible arguments are, you have to be up on the econ blogosphere. I already know from the past that nobody reads the links I have posted, so I don't bother anymore. I thought maybe some short videos by active professors for this thread would interest people, but I guess not

I watched Jeffrey Miron's video. He overstates his case and uses nebulous terms like "excessive regulation" (which, for many libertarians like Miron, means any regulation). I think he redefines capitalism, and he ignores the evidence that when business compete for consumers when there are externalities, that his version of capitalism does not work out like he claims. In addition, the idea that there is an economic definition of a "fair" distribution of income is ludicrous. Fairness is in always in the eye of the beholder, and reasonable people can have strong, compelling and different views on the "fair" distribution of income).

 

[boneyard bill]

Strange. I've been posting this sort of thing for some time. It's mainly about just repeating what those with the most credibility on the issue say. I think many people make the mistake of confusing political activists with academics who actively teach. Those who actively teach say the kinds of things in the videos far more than those who have left academia in pursuit of political influence.

I think that the confusion is that my views are mainly market monetarist, which agrees with the Austrians on this sort of thing, but very much disagrees on monetary policy

What is a "market monetarist?" I've never heard of such a thing unless you're referring to Friedman, and his monetarist school, but I don't think you've said much that Friedman would agree with.

I find it hard to disagree with the Austrians that interest rates should be set by the marketplace. The simple law of supply and demand would tend to dictate that. Whether you need a gold standard to achieve that its another story.

But as far as I can see, you have defended the Federal Reserve and their wild-ass policies every step of the way. If you think unsuccessful businesses should be allowed to fail, how can you defend the Fed's never-ending bail-outs of the Wall Street Banks?

 

[wufwugy]

What is a "market monetarist?" I've never heard of such a thing unless you're referring to Friedman, and his monetarist school, but I don't think you've said much that Friedman would agree with.

I find it hard to disagree with the Austrians that interest rates should be set by the marketplace. The simple law of supply and demand would tend to dictate that. Whether you need a gold standard to achieve that its another story.

But as far as I can see, you have defended the Federal Reserve and their wild-ass policies every step of the way. If you think unsuccessful businesses should be allowed to fail, how can you defend the Fed's never-ending bail-outs of the Wall Street Banks?

The wiki is good http://en.wikipedia.org/wiki/Market_monetarism Then check out Sumner's blog http://www.themoneyillusion.com/ Market monetarism is basically an extension of Friedman, the need for which became highlighted after the establishment abandoned what they had always taught in academics. It agrees that policy should be set by the marketplace, but since it isn't set by the marketplace, there's a whole lot that goes into what the Fed should and shouldn't do.

I "defend the never-ending bailouts of banks" for two reasons: (1) I don't agree that they are never-ending bailouts in the first place. The whole issue is far above my level, but I'm going to take the leading money experts' word for it that classifying central banking policy actions as "never-ending bailouts" is not accurate. (2) The system itself is structured in such a way that financial institutions can't be allowed to fail. The solution to this is not to let them fail when it would devastate everybody, but to change the laws so that if they do fail, it doesn't hurt much. As long as the federal government has a monopoly on money, we're stuck with not being able to let major financial institutions fail

Watch this. It's one of the few times market monetarism has been on TV.

 

[boneyard bill]

The wiki is good http://en.wikipedia.org/wiki/Market_monetarism Then check out Sumner's blog http://www.themoneyillusion.com/ Market monetarism is basically an extension of Friedman, the need for which became highlighted after the establishment abandoned what they had always taught in academics. It agrees that policy should be set by the marketplace, but since it isn't set by the marketplace, there's a whole lot that goes into what the Fed should and shouldn't do.

I "defend the never-ending bailouts of banks" for two reasons: (1) I don't agree that they are never-ending bailouts in the first place. The whole issue is far above my level, but I'm going to take the leading money experts' word for it that classifying central banking policy actions as "never-ending bailouts" is not accurate. (2) The system itself is structured in such a way that financial institutions can't be allowed to fail. The solution to this is not to let them fail when it would devastate everybody, but to change the laws so that if they do fail, it doesn't hurt much. As long as the federal government has a monopoly on money, we're stuck with not being able to let major financial institutions fail

Watch this. It's one of the few times market monetarism has been on TV.

I saw the video, and I agree with almost everything Peter Schiff said. We do have price inflation. If you use the method employed in the '70's we have the same kind of inflation we had when Gerry Ford was handing WIN buttons (Whip Inflation Now). I don't agree with Ford trying to fight inflation with PR, but that's another story. We have probably had inflation in the 7% range since QE started. Is it never ending? Of course not. That was hyperbole. If nothing else, it will end itself by imploding the economy. But we are also sending our inflation overseas, as Schiff noted, and we have asset price inflation which isn't counted in the CPI. All of these are points I have made before.

Schiff also pointed to declining energy consumption as a good sign that we are still in recession. And Sumner's claim that job growth is too to assume that was countered by the fact that were gaining part-time jobs while losing full-time.

Frankly, I didn't see where Sumner made any good points except that the Fed should be targeting nominal GDP. I don't know that that is the best thing for the Fed to be targeting, but it is surely better than having the Fed target interest rates.

 

[wufwugy]

Schiff is the odd one out on those opinions. Multitudes of very credible academics do not agree with what amounts to a conspiracy. Sumner did a fine enough job stating counter-factuals. If inflation really was as high as Schiff thinks, lots of other things would look different than they currently do

I'm not sure what the fascination is with the conspiracy theory that scientists in aggregate are wrong about a really simple measurement tool

 

[ksen]

As usual, I couldn't find it again. The topic bounces around the econ blogosphere on a regular basis though. I don't bookmark links to show others. I merely state that to be up on what the credible arguments are, you have to be up on the econ blogosphere. I already know from the past that nobody reads the links I have posted, so I don't bother anymore. I thought maybe some short videos by active professors for this thread would interest people, but I guess not

"credible arguments"

 

[laughing dog]

Schiff is the odd one out on those opinions. Multitudes of very credible academics do not agree with what amounts to a conspiracy. Sumner did a fine enough job stating counter-factuals. If inflation really was as high as Schiff thinks, lots of other things would look different than they currently do

I'm not sure what the fascination is with the conspiracy theory that scientists in aggregate are wrong about a really simple measurement tool

The CPI was a fixed-basket price index and there were a number of well-known structural biases with a fixed-basket price index that caused inflation to be over-estimated. But change bothers some people even when the change is clearly for the better.

 

[boneyard bill]

Schiff is the odd one out on those opinions. Multitudes of very credible academics do not agree with what amounts to a conspiracy. Sumner did a fine enough job stating counter-factuals. If inflation really was as high as Schiff thinks, lots of other things would look different than they currently do

I'm not sure what the fascination is with the conspiracy theory that scientists in aggregate are wrong about a really simple measurement tool

I don't know what you mean by a conspiracy theory. Who is claiming a conspiracy? The simple fact is that the CPI used in the '70's is a completely objective method. No one with an agenda has devised it to measure inflation. You have a very clear comparison with the '70's, and the level of price increases that we have today was considered an unacceptable level of inflation in the '70's. It's just that simple. Anyone who is producing a figure of under 2% for current inflation is using a very suspect method because the CPI of the '70's, while it may have been off-base to some extent, surely wasn't that far off base.

The difference that today, if someone complains about high prices they are told the inflation is only 1.7% or whatever.

But there is more that I have to say about the video. Sumner says that near-zero interest rates are associated with low inflation. So he is making an empirical argument. But he doesn't say why that association exists. If you have an association, but you can't explain why, then you don't know if the association is going to hold in the current situation. That is why theory trumps empirical evidence. Ultimately, you have to explain why, and that is the role of theory. (This holds for any science).

Now, we have $3 trillion created by the Fed. (Actually, I think the figure is higher than that, but that's the figure they were throwing around. You have $1.5 trillion in excess reserves (all of which is increase because excess reserves are normally negligible). So that means you still have $1.5 million unaccounted for. Where did it go? Obviously, it had to go into circulation somewhere. Prior to meltdown, the Fed's balance sheet was about $800 billion. (That's all the money created by the Fed from 1914 to 2008). So, discounting the money held in excess reserve we still see the money supply expanding by about 3 times? That money has to be putting pressure on prices somewhere.

- - - Updated - - -

The CPI was a fixed-basket price index and there were a number of well-known structural biases with a fixed-basket price index that caused inflation to be over-estimated. But change bothers some people even when the change is clearly for the better.

I've already pointed out that the problem with the new CPI is its subjectivity. There may have been better ways to calculate CPI, but the new method certainly isn't one of them. I've also point out in my above response to Wufugy that the '70's CPI gives us an objective measurement that can't be adjusted to meet someone's pre-determined criteria, and under the '70's CPI calculation we are having a level of price increases that was deemed unacceptable in the '70's although it isn't as bad as the late '70's.

 

[arkirk]

2nd video is unmitigated BS.

The reason Europe was recovering faster was higher Government spending on the military buildup leading up to the war.

You need to stop hanging out with Libertarian Econ bloggers, wuf, they're bad for you.

Duke: The first video has as much B.S. as the second.

The first video treated our economy completely without regard for the environment. A healthy or sustainable economy must be planned and consented to by something close to social consensus. It cannot rely on lies to sustain itself. Capitalism short circuits democracy and puts decision making power in increasingly fewer and fewer hands. It has the inputs of fewer and fewer people. It stifles actual creativity. Capitalism actually in practice becomes simply a system of social bifurcation. The results are not pretty.

 

[arkirk]

Neither video makes any specific recommendations on de-regulation so I don't know where you get that idea. In the first video he did specifically explain the effects of existing regulations although not in any detail, of course, in a 3-minute video.

Any idiot can figure out that war is destructive, not productive, and a moron can figure out that if you conscript 11 million men into the military that unemployment will decline. But the claim that WW II got us out of the depression is about as non-sensical as you can get. Have economists made such claims? Yes. But they don't make any more sense just because a few economists happen to be idiots.

Regulations were described as interfering with the normal flow of development. Believe me, it is just BS. Looks like wuf and I have parted company. You cannot deal with the economy without dealing with the environment in which you expect that economy to operate. If it has deleterious effects on the environment or on people the capitalists have little regard for, it becomes a risky proposition. Capitalists like taking risks for society and when they don't pan out, they move on and society has to live with their risky behavior. Our environment and indeed our persons are being infiltrated with profit making chemicals many of which are inimical to human life. You have to understand the human economy has to understand it must be considered as a sub system in a wider geophysical system.

Now that took longer to write than the video did to watch and barely scratched the surface.. I must admit a certain contempt for stuffed shirt talking heads in conservative videos about the economy. Uncle Miltie was equally bad.

 

[Canard DuJour]

Sometimes I wonder why I even bother. This is supposed to be a community of rational thinkers.

The first video is near pure ideology. Propaganda. Rational thinkers will take whatever the speaker has to say about economics (and he says precious little here) with scepticism.

 

[SimpleDon]

I believed it until I researched it. The correlation with recovery and fiscal expansion you want to see doesn't exist

In general the depression in Europe wasn't as serious as it was in North America. In general the recovery in Europe had more to do with how quickly the individual governments ditched the gold standard than anything else. The UK didn't ditch it until 1935.

 

[SimpleDon]

Totally wrong. Most of Europe had recovered from the Great Depression before the military build-up began.

And the rest of the video is also spot on. Hoover specifically condemned laissez-faire in those exact words, and he intervened aggressively. Roosevelt doubled-down on most Hoover's policies just as Obama has doubled down on most of Bush's policies.

Hoover certainly didn't intervene aggressively. I would be interested to see your numbers on this assertion. Hoover ran some high budget deficits but the primary reason for this was the drop in tax revenue, not some planned stimulus by increasing government spending. Going into the depression the federal government's budget was only about 3 to 4% of GDP. A large budget deficit still would only be drop in the bucket compared to drop in GDP.

 

[Nice Squirrel]

Sometimes I wonder why I even bother. This is supposed to be a community of rational thinkers. On the one hand you say this is "right wing drivel", but on the other hand, if you were taking a Harvard economics course, apparently you wouldn't do so hot. If you think the words of active professors are drivel, it is you who is making the mistake, not them. Go examine the sources of the idea that it is right-wing drivel. What you'll find is a bunch of political activists that don't have much academic role anymore. Robert Reich is a great example. This board adores him, but he has very little credibility on the topic. Don't listen to people on book tours; listen to those with competitive teaching positions

Okay, so let's take a look at what he is saying in the first video:

Video 1: He begins by praising big business and talking bout how big business raised people out of poverty. He then states that everything will get even better if we get rid of regulation.

Myth 1: being pro-capitalism is the same as being pro-business. The point of capitalism is to make sure businesses compete vigorously against each other to sell products to consumers. Businesses don’t like competition so they try to get government to pass regulations that are favorable to the business. Thus pro-capitalism is good for consumers.

So he naively defines capitalism as having a purpose: to feed consumerism. And he also makes a value judgement that cut-throat competition is good and other forms of competition are bad. Nowhere does he bring up examples or elaborates.

Myth 2: Capitalism introduces an unfair distribution of income. It rewards “people who are productive”. Working long hours, working harder, and more creative, etc.. People who don’t do these things get less. Anti-poverty spending is completely different than capitalism. Burdening business with regulation makes it harder for us to help out the unfortunate “because they were less lucky”.

This is about as ideologically pure as you can get. It is a religious belief, not grounded in reality. We could bring up millions of examples where this is utterly untrue. Capitalism does not reward people for anything as it is just a economic system and working smarter of harder does not guarantee success or necessarily reward an individual. Also, what does his last point have to do with the first? So I will agree that he is producing drivel.

Myth 3: Capitalism was responsible for the Great Recession. Nobody believes we had unbridled capitalism before the recession hit. It was government intervention that subsidized risk and allowed over-investing in housing. It is obvious that government interference causes financial crises. Bailouts encourage excessive risk.

Which programs is he speaking about (FHA?), or is he referring to a vague government that he "feels" is true because it supports his religious belief.

On the one hand you say this is "right wing drivel", but on the other hand, if you were taking a Harvard economics course, apparently you wouldn't do so hot. If you think the words of active professors are drivel, it is you who is making the mistake, not them.

His words are drivel. There are no real world examples. Only his beliefs not backed up by examples. I can bring up numerous examples of where government regulation was a net benefit to society far greater than the cost.

 

[funinspace]

Sometimes I wonder why I even bother. This is supposed to be a community of rational thinkers. On the one hand you say this is "right wing drivel", but on the other hand, if you were taking a Harvard economics course, apparently you wouldn't do so hot.

Did you start at Harvard now? I did fine with 2 econ classes while getting my BS in Electrical Engineering, but they were boring low level classes. The funny thing is that if one tours a couple dozen major and respected universities across the US, I'll bet you'll find that the Economics Dept. PHD people have a range of opinions...

If you think the words of active professors are drivel, it is you who is making the mistake, not them. Go examine the sources of the idea that it is right-wing drivel. What you'll find is a bunch of political activists that don't have much academic role anymore.

I'm not really into videos, as they tend to dumb things down from the get go, so I didn't even bother watching. From the comments so far, I figure I made a good choice.

Robert Reich is a great example. This board adores him, but he has very little credibility on the topic.

My what a broad brush you have... I think he is a political hack for the most part.

Don't listen to people on book tours; listen to those with competitive teaching positions

I don't. Barry Eichengreen is one professor of economics I like & and he teaches at Berkeley. I'm in the middle of reading one of his books, Globalizing Capital. What book are you now reading?
http://emlab.berkeley.edu/~eichengr/reviews.html

 

[ksen]

Okay, so let's take a look at what he is saying in the first video:

Thanks for posting the myths. Sorry you had to take one for the team and actually watch it though. :hug:

Myth 1: being pro-capitalism is the same as being pro-business. The point of capitalism is to make sure businesses compete vigorously against each other to sell products to consumers. Businesses don’t like competition so they try to get government to pass regulations that are favorable to the business. Thus pro-capitalism is good for consumers.

What is it about capitalism that makes sure businesses compete vigorously? I remember reading about when things were more laissez-faire and many monopolies and trusts were created and those are not conducive making sure businesses stay competitive.

Myth 2: Capitalism introduces an unfair distribution of income. It rewards “people who are productive”. Working long hours, working harder, and more creative, etc.. People who don’t do these things get less. Anti-poverty spending is completely different than capitalism. Burdening business with regulation makes it harder for us to help out the unfortunate “because they were less lucky”.

People who don't do these things like trust fund babies? Paris Hilton worked hard for her grandparents bajillions. I mean she even fucked some black dude on video.

Myth 3: Capitalism was responsible for the Great Recession. Nobody believes we had unbridled capitalism before the recession hit. It was government intervention that subsidized risk and allowed over-investing in housing. It is obvious that government interference causes financial crises. Bailouts encourage excessive risk.

"Government intervention . . . allowed over-investing"

Huh, sounds like when the government leaves businesses alone they tend to make decisions that fuck things up for everybody. That sounds like a call for more regulation not less.

 

[funinspace]

People who don't do these things like trust fund babies? Paris Hilton worked hard for her grandparents bajillions. I mean she even fucked some black dude on video.

That is so unfair. Just because Romney was born with a solid sterling silver set up his ass doesn't mean he didn't work harder than some people

 

[ksen]

Robert Reich is a great example. This board adores him, but he has very little credibility on the topic.

Uh, he has taught at Harvard and currently teaches at Berkeley. Maybe you meant to say that the professors you don't like have very little credibility?

Don't listen to people on book tours; listen to those with competitive teaching positions

You mean like Krugman and Stiglitz?