Trickle Down Economics is Misunderstood and Straw-Manned

[Loren Pechtel]

You cut a majority of welfare (not saying all of it) and the economy will boom like never before.

Yeah, when you kill the disabled you free up all the effort that was being directed to their care.

Or are you talking about the economy booming as in falling into the crater a boom leaves behind?

 

[SigmatheZeta]

As a matter of fact, there are actually less developed regions, in the United States, that have seen relatively poor progress for centuries, and the inequality in those regions of the United States can be largely attributed to a lack of adequate opportunities and insurmountable social and political barriers to advancement.

What you are missing here

What a lovely way to start out a post. Don't do it again.

is that over the long run how an economy fares is a matter of culture and government, not wealth. Wealth is a result, not a cause.

If they quit fucking up their system they rapidly catch up. Redistribution isn't going to do much about them fucking up their system and in practice it's always redistribution to the cronies of those in power, the stuff that's taken never goes to the people in meaningful amounts. Places that go for large-scale redistribution fuck themselves up. Poster children: Zimbabwe, Venezuela. Places that simply get rid of much of the government problem do well. Poster children: Asian tigers.

Read the University of Würzburg study. Here is the abstract, citation, and link:

Evidence from a current panel of harmonized worldwide data highlights a robust
negative effect of income inequality on economic growth that we trace back to its
transmission channels. Less equal societies tend to have less educated populations
and higher fertility rates, but not necessarily lower investment shares. The first two
effects are harmful for growth and reinforced by limited credit availability. Higher
public spending on education attenuates the negative effects of inequality. In addi-
tion to the inequality-growth relationship, we examine the direct influence of effective
redistribution. When net inequality is held constant, public redistribution negatively
affects economic growth. Redistribution hampers investment and raises fertility rates.
Combining the negative direct growth effect and the indirect positive effect operat-
ing through lower net inequality, the overall impact of redistribution is insignificant.
Whereas this result stems mainly from advanced economies, redistribution is beneficial
for growth in low and middle-income countries.

Klaus; Scheuermeyer, Philipp (2015) : Income inequality,
economic growth, and the effect of redistribution, W.E.P. - Würzburg Economic Papers, No. 95,
University of Würzburg, Department of Economics, Würzburg

^https://www.econstor.eu/bitstream/10419/114736/1/833477102.pdf

Read and understand at least the abstract, and do not speak to me again until you have done so.

I have handled horses for a living at one time in my life. Do you know how far you can drag a horse by pure force? The answer is "not very far at all." That experience broke me of the habit of attempting to force people to change their opinions. You are not going to change your opinion just because I shouted facts at you. I get that.

However, I am justified in refusing to engage with you until you have demonstrated evidence that you are going to take the discussion seriously instead of spraying canned rhetoric at me. The University of Würzburg study was performed recently enough to be relevant.

The University of Würzburg study demonstrates why there is such conflicting evidence regarding supply-side economics, and furthermore, the study also demonstrates that supply-side economics actually do work but only in advanced economies.

Please, do not argue further until you have read the study. I refuse to go around in circles trading lies with you. I will speak to you about this again not a moment sooner than I have evidence that you are actually interested in a good faith discussion.

 

[Trausti]

What you are missing here is that over the long run how an economy fares is a matter of culture and government, not wealth. Wealth is a result, not a cause.

Singapore - small with no natural resources - would be the exemplar. But then you'd have to account for human capital, which is icky.

 

[Jarhyn]

This thread leads to many important but difficult questions. For examples:

(1) How hard would it be to institute a "fair" nation-wide real estate tax? This would be a clean way for the government to raise revenue and set priorities but the details would be fraught with peril. If the thread turns to this question I may have nothing to contribute; my response would be "Wise in principle perhaps, but implementation would be too chaotic to contemplate."

(2) How about a wealth tax imposed on the super-rich? Wise in principle perhaps, but as the super-rich themselves point out, they'll convert their wealth into untaxed real estate, paintings, private businesses. Again I have no simple answer.

Why do Democrats always seem to want to constantly tax the the people into oblivion?

And now a comprehensive list of wealthy people taxed into poverty (or even a lower income bracket).

*start list*
*end list*

It's literally impossible to be taxed into a lower income bracket. Only the income in the new bracket is taxed as that rate. If the bracket divided at 10 and you make 15, you make "whatever the guy who made made net, plus (5 more/x)"

 

[Generation55]

Why do Democrats always seem to want to constantly tax the the people into oblivion? This isn't good. Do you realize taxes on estates are paid multiple times throughout a person's life? If a person has a house and has been taxed on it all their life and wants to give it to their kids, why should the government tax it again? This is way too authoritarian.

In the long run what counts is spending, not the tax rate. Look at what each side spends.

I feel like both parties are bad, but I feel like the Republicans at least care about the average worker and the middle class. The Democrats keep taxing, which makes the middle class and poor suffer. Look at how the Democrats policies led to inflation and the average middle class family is spending $175 more a month compared to when trump was in office. Gas has also risen over $1 a gallon since Trump. Do the rich care about gas price increases? No, but the middle class and poor people care about it, and that's who it affects the most. Do Democrats care? Not much. Jen Psaki was laughing at a reporter who asked her what the administration plans to do about inflation crushing the middle class and poor. Who gets hurt the most when prices go up by a few dollars? Not the rich, that's for sure.

Hardly. The average worker fares a lot better under Democratic control than Republican. The Republicans make a big issue out of supposed tax cuts--never mind that the cuts for the average worker are going away, only the cuts for the rich will remain. Never mind that the Republicans are gutting worker protections. Never mind they are gutting consumer protections.

And I'm not at all sure we are truly seeing inflation. Rather, we are seeing supply chain shocks. Gas was ridiculously cheap in the pandemic because people weren't buying as much--I saw it below $2/gallon. It's just rebounded to normal.

Republicans want to tax less so people keep more of their money. Do you realize we have spent 22 trillion dollars (almost the price of our national debt) just to combat poverty since the 1960's? It's not working. People are still stealing from stores all over, despite the fact that we have one of the most generous welfare systems in the world. There's people who have $2,000 balance on their food stamp cards and people are still saying that we can't feed the poor? Ridiculous. If we brought any poor person here from another third world country, they would be in shock and awe and say that the poor live like kings in this country. We need to get everyone back to reality. Taxing the people and putting the incompetent government in charge of the money has done absolutely nothing to help the poor and middle class. The only time they get relief is when a Republican is in office. Why do you think so many Biden voters disapprove of him now and he's at an all-time low? Republicans warned of massive inflation if Biden got in office. Democrats laughed. Now, here we are. Do you think this inflatiion would've happened under Trump? All those ships stuck in ports, he wol've been on TV every day screaming at them to unload and lighting a fire under them to mvoe quickly. What does Biden do? Nothing. Tells us to, "wait it out." Say what you want about Trump, but he held people accountable. If you weren't doing your job, he fired you. That's it. Done.

I need to be convinced that the very authoritarian government rule via crushing taxation does anything to help the people. If you look up corporate donations, Democrats take more dark money than Republicans do by a long shot. Democrats are the party of big government and they also have corporate America in their pockets. Corporate America hates Republicans.

There would have been more "inflation" under His Flatulence because he would have been exploiting it for profit rather than trying to fix the supply chain problems.

And the really authoritarian government would be from the Republicans. You have all the freedom to do exactly what they want you to do, nothing else.

We are not seeing inflation, just supply chain shocks? Did you hear Dollar General raised their prices to $1.25 now? This hurts poor people the most. Rich don't care. Are you saying once the supply chain shock stops, Dollar General and every other store will lower prices again just because they are so nice? I won't hold my breath for this.

I will repeat: Rich people don't care about price increases. The poor and middle class care.

Biden concedes his COVID stimulus checks fueled spike in inflation

President Biden insisted inflation is at a three-decade high because “people have more money now” as a result of his $1.9 trillion COVID-19 stimulus legislation.

nypost.com

"President Biden on Wednesday conceded that inflation is at a three-decade high because “people have more money now” as a result of his $1.9 trillion COVID-19 stimulus legislation, recognizing a central point made by people who are arguing against a nearly $2 trillion sequel."

This is exactly what Republicans predicted would happen. There was an article in the post from a year ago that warned the Middle class that if Biden is elected, inflation will rise. Democrats laughed. Now, they aren't laughing about it. Why does the Post constantly get dismissed as fake news? It's usually spot on.

People need to realize thatback in the 50's we had less money in the economy, so the money was worth more. This is why people were able to afford things easier. But, once the tax and spend policies started coming, government kept printing more money, which pumps more money into the economy, thus making the money more and more worthless. The more money you have circulating, the less it is worth. The less money you have circulating, the more it is worth. This is basic economics 101 but I don't know why the Democrats don't seem to learn this and always yell at the Republicans telling them they hare actually the ones who have no idea what they are doing. If the government gave everyone in America 1 million dollars, the cost of living would skyrocket. Democrats would act like giving everyone a million dollars would be great for the economy, though. It would not. It would tank, and the Democrats would look at me like I had 20 heads if I tried explaining this to them.

Why do they keep pushing for government spending when it doesn't work?

 

[ZiprHead]

A lot of the French aristocracy believed that in 1789 as well. Your attitude can be quite problematic when you play it out to its logical conclusion.
Also, you are looking at it extremely wrong. Funninspace hit the nail on its head with their response but I would add how much of the tax burden you provide is nowhere near as important as how much of your disposable income is going to the government. And going by your answer here, I'm pretty certain you understand that.

And note that the French revolution set France back 30 years.

A repeat would come close to making us a third world nation.

Incidentally, the greatest period of economic growth and prosperity for most Americans was during the 50s and 60s. Take a wild guess what the tax brackets for the richest 5% was like during those times. I'll give you a hint; they were counter intuitive to your fantasy of piss down economics.

Take a wild guess as to the economic situation at that point:

1) We had a huge backlog of demand left over from WWII. All that war economy now showed up in the civilian market.

2) Every other industrial power in the world had been pretty heavily trashed and had to rebuild. No meaningful damage had been done to US industry. That means we were in the position of importing raw materials and exporting finished goods with little competition. We could export the bad jobs.

3) We also could export the bad jobs to the blacks and women. It was good times for white males, not for everyone.

4) The tax rates had loopholes you could drive an 18-wheeler through. They didn't mean much.

Putting the tax rates back to the levels they were then would do nothing about the real factors driving the boom times.

Not to mention that much of it was a matter of expectations--conditions were good by the standards of the times, but the standards have gone way, way up since then.

Effective Income Tax Rates Have Fallen for The Top One Percent Since World War II

While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent.

 

[Canard DuJour]

The University of Würzburg study demonstrates why there is such conflicting evidence regarding supply-side economics, and furthermore, the study also demonstrates that supply-side economics actually do work but only in advanced economies.

I don't see that it does. Such actual data as they adduce show positive correlation of redistribution with economic growth in developing economies. The claim that "redistribution hampers investment" in advanced economies cites Barro, i.e. "Ricardian equivalence" - almost trickledown theory itself - which is contradicted by a ton of evidence in advanced economies.

And the claim that "When net inequality is held constant, public redistribution negatively affects economic growth" should ring alarm bells for anyone who speaks English. Inequality held constant means no redistribution, unless they're implying that "public redistribution" is self-defeating - i.e. trickledown theory again.

 

[SigmatheZeta]

*alights on a vantage point and gestures grandly with her wing* And furthermore, I propose that we fuck the property-owners!

Bloomberg - Are you a robot?

*cackles wickedly* Good old Adam Smith was so right. The property tax is still king after all these years.

Unsurprisingly, the so-called "3rd Rail" in California's politics has been the idea of raising the property tax. They have one of the lowest property taxes in the entire country, yet they suffer from rampant homelessness. How very poetic.

 

[funinspace]

"President Biden on Wednesday conceded that inflation is at a three-decade high because “people have more money now” as a result of his $1.9 trillion COVID-19 stimulus legislation, recognizing a central point made by people who are arguing against a nearly $2 trillion sequel."

This is exactly what Republicans predicted would happen. There was an article in the post from a year ago that warned the Middle class that if Biden is elected, inflation will rise. Democrats laughed. Now, they aren't laughing about it. Why does the Post constantly get dismissed as fake news? It's usually spot on.

Whatever inflation that is now present was probably already 90% baked into the economy prior to Biden becoming President. Biden is no more at fault for the current inflation than Trump 'created a great stock market'. The Post is peddling its partisan BS...little else. The multiple stimulus payment packages under Trump, Trump's tariffs, and the rebounding economy are far more responsible for the current inflation than much of anything else. I should hope you prefer a rebounding economy?

And Biden's $1.9 trillion stimulus legislation isn't causing jack, cuz it isn't anything yet...you are blowing partisan smoldering dung incense.

 

[SigmatheZeta]

The University of Würzburg study demonstrates why there is such conflicting evidence regarding supply-side economics, and furthermore, the study also demonstrates that supply-side economics actually do work but only in advanced economies.

I don't see that it does. Such actual data as they adduce show positive correlation of redistribution with economic growth in developing economies. The claim that "redistribution hampers investment" in advanced economies seems to be based on Barro - "Ricardian equivalence" - almost trickledown theory itself - which is contradicted by a ton of evidence in advanced economies.

And the claim that "When net inequality is held constant, public redistribution negatively affects economic growth" should ring alarm bells for anyone who speaks English. Inequality held constant means no redistribution, unless they're asserting that "public redistribution" is self-defeating - i.e. trickledown theory.

*covers her face with one wing and rubs her temple with the claw* At least you read it. It's a pretty cool article, though, isn't it?

I understood the research a little bit differently, so if you are not reading it the same way, then please try to help me, here.

However, here is a paragraph from the conclusion that gives me the impression that they are saying that the level of a country's development impacts the consequences of redistribution.

Finally, this paper shows that the growth effects of inequality and redistribution vary with
the development level. A negative impact of inequality prevails in developing and middle-
income countries, where the negative potential of inequality is severe due to capital market
imperfections and an insufficient provision of public goods. In high income countries, where
opportunities are on average distributed more equally, no significant correlation between
inequality and growth occurs. Likewise, the paper reveals that redistribution by taxes and
transfers is beneficial for growth in poor countries, but rather harmful in rich economies.

Am I just misinterpreting what that means?

However, one of the most important conclusions, from that paper, was that it affirmed the role of education in mitigating the negative economic effects of inequality:

For economic policy our results suggest some scope of action: a highly developed public
education system seems to mitigate the negative growth effect of inequality. Hence, govern-
ments should be able to simultaneously promote equity and efficiency by working towards
providing free and high quality education for poorer families.

I am a champion of the idea of making improvements to the education system, especially for people from disadvantaged communities. It damaged me deeply that I did not get treated fairly by the education system where I lived. It was worse if a kid was neurodivergent. My husband used to work for Disability Rights, and he said that the education system where I grew up had gotten famous for the high number of lawsuits they had gotten into over their abuses against neurodivergent kids. He said, "They're HORRIBLE!" and I said, "You mean you are telling ME that?"

I was dealing with that on top of being transgender and queer in an area that was infested with homophobic violence...in the 1990's.

But this is also why I am insistent that there is a dire need for us to make solid investments in the education systems of areas that are suffering economically, especially if there is evidence that this could be due to dysfunctions in their education systems, and this needs to include rural areas. If the kids in an area are distressed throughout their development, then we are fucking insane if we expect them to be able to get their shit together as adults. It's not fair, and it's wrong.

I think that I am being reasonable, from both a personal and scientific standpoint, if I choose to be focused primarily on advocating for improving the education standards of the country's most benighted areas.

 

[Canard DuJour]

The University of Würzburg study demonstrates why there is such conflicting evidence regarding supply-side economics, and furthermore, the study also demonstrates that supply-side economics actually do work but only in advanced economies.

I don't see that it does. Such actual data as they adduce show positive correlation of redistribution with economic growth in developing economies. The claim that "redistribution hampers investment" in advanced economies seems to be based on Barro - "Ricardian equivalence" - almost trickledown theory itself - which is contradicted by a ton of evidence in advanced economies.

And the claim that "When net inequality is held constant, public redistribution negatively affects economic growth" should ring alarm bells for anyone who speaks English. Inequality held constant means no redistribution, unless they're asserting that "public redistribution" is self-defeating - i.e. trickledown theory.

*covers her face with one wing and rubs her temple with the claw* At least you read it. It's a pretty cool article, though, isn't it?

I understood the research a little bit differently, so if you are not reading it the same way, then please try to help me, here.

However, here is a paragraph from the conclusion that gives me the impression that they are saying that the level of a country's development impacts the consequences of redistribution.

Finally, this paper shows that the growth effects of inequality and redistribution vary with
the development level. A negative impact of inequality prevails in developing and middle-
income countries, where the negative potential of inequality is severe due to capital market
imperfections and an insufficient provision of public goods. In high income countries, where
opportunities are on average distributed more equally, no significant correlation between
inequality and growth occurs. Likewise, the paper reveals that redistribution by taxes and
transfers is beneficial for growth in poor countries, but rather harmful in rich economies.

Am I just misinterpreting what that means?

No, you're just repeating it. But I don't see where the "rather harmful in rich economies" bit is supported except by reference to Barro (a supply-side theorist contradicted by a ton of evidence).

 

[Derec]

Cool. But space should not be monetized and that's exactly what Musk, Bezos and Branson have in mind.

Why exactly do you think space should not be monetized?
Going to space costs a lot of money. That's the reason manned space exploration has pretty much stalled since the 70s. After the Sputnik/Gagarin scare, the US government showed USSR who's the boss by landing on the Moon a few times and then largely lost interest.
To open up space to more than major governments, you need the profit motive.

 

[Derec]

Just wanted to say, as a reminder: NASA is us: you, me, all Americans abs to some extend, the entire world’s contribution.

NASA is first and foremost a government agency. Yes, they have and are doing much good, but that does not mean that space should be a government monopoly, no matter how much you hate billionaires who start space companies. And by the way, SpaceX is providing NASA with a lower cost option to actually launch stuff into space.

Both public and private sectors have their place in space.

 

[laughing dog]

Cool. But space should not be monetized and that's exactly what Musk, Bezos and Branson have in mind.

Why exactly do you think space should not be monetized?
Going to space costs a lot of money. That's the reason manned space exploration has pretty much stalled since the 70s. After the Sputnik/Gagarin scare, the US government showed USSR who's the boss by landing on the Moon a few times and then largely lost interest.
To open up space to more than major governments, you need the profit motive.

No you don't need a profit motive. It is helpful but it is neither necessary nor sufficient.

 

[Derec]

(1) How hard would it be to institute a "fair" nation-wide real estate tax? This would be a clean way for the government to raise revenue and set priorities but the details would be fraught with peril. If the thread turns to this question I may have nothing to contribute; my response would be "Wise in principle perhaps, but implementation would be too chaotic to contemplate."

Nigh impossible, I would say. Just like with federal income tax, you would not be able to have a federal property taxes without a constitutional amendment. Shy of that, given that property taxes are a local issue, coordinating among all those locales would be practically impossible.

(2) How about a wealth tax imposed on the super-rich? Wise in principle perhaps, but as the super-rich themselves point out, they'll convert their wealth into untaxed real estate, paintings, private businesses. Again I have no simple answer.

Fraught with problems, including constitutional ones. Most developed countries who tried to go that route in the past have abandoned it.

(3) Corporate taxes should be increased. The recent international agreement on corporate income taxes was a good step in the right direction. (Are small businesses exempt from those mandatory taxes?)

Note that before the 2017 tax cuts, US had highest corporate tax rate in OECD. And today they are middle of the road.

Profit motives are Good. But absolute generalizations which are FALSE are annoying.
Tim Berners-Lee invented the "World Wide Web" and deliberately forwent any patent rights. Jonas Salk did the same thing with his vaccine for polio. How many examples do I need?

Do you think Internet would be what it is today if not for the profit motive? From semiconductor manufacturers to content providers, there is a lot of profit being sought. And sure, something like the HTTP protocol and a lot of software can be open, but nobody is going to invest in say a chip factory or lay down megamiles of fiberoptic cable without looking to make money in the deal.

Mr. Generation overlooked that there are taxes other than personal income taxes, but funinspace dealt with that. Another error by Mr. Generation is more interesting, where he asserts something about Musk's $250,000,000,000.00 wealth not being "real." I'd like to ask him — just for starters so we can get a good handle on his confusion — whether Musk's wealth would be "real" if it were all in the form of $100 banknotes or gold bullion.

Cash is more liquid than gold, and both are more liquid than stocks. If he tried to sell all his Tesla stock, he would not be able to get anything like face value for it because the price would drop.

Just as shares of TESLA do not equal a super-yacht — you'd first call up broker and say "Sell" — so the banknotes or gold wouldn't provide a super-yacht directly either: The banknotes would got soggy, and a boat built from gold would sink. In what sense is one form of wealth "real" and another form not?

Liquidity, at least for cash. You have cash in your account and you can directly pay the boat builder and any other contractors (like interior customizers). You'd have to sell the stock first.
Also, you could certainly build a boat out of gold (steel does not float either). You probably could build a helium balloon out of gold foil as well, if you really wanted to.

It's possible Mr. Generation referred to the fact that suddenly liquidating a large portion of TESLA stock would cause that bubble to burst. Sure. And for that reason Mr. Musk may only be able to afford a dozen new palaces or super-yachts per month. Poor Elon?

So you got the reason why. What were the charades about soggy banknotes in aid of then?

... But by the way, does anybody still use "long" billions and trillions? (Merriam-Webster shows the long billion as "British"; Cambridge dictionary shows it as "UK Old-fashioned." But Larousse.fr shows ONLY the long billion!)

It is very common in non-English speaking countries. It's one of the thing one has to be careful with when translating.

 

[Derec]

No you don't need a profit motive. It is helpful but it is neither necessary nor sufficient.

Travelling to space is not like writing an internet protocol and a markup language. Or writing open source software.
It requires billions in investment. It's either private business with a profit motive or else government spending. Government spending on space travel has stalled, so private investment is certainly a welcome development.

 

[Derec]

it's really not similar to the other debts with which we may be familiar in any important way.

You still have to pay it back, with interest. US spends $300G per year just on interest.

 

[Derec]

Whatever inflation that is now present was probably already 90% baked into the economy prior to Biden becoming President. Biden is no more at fault for the current inflation than Trump 'created a great stock market'.

No he is not for the most part, you are right. The pandemic has been a major shock to the system that disrupted the whole economy. He should have ended the expanded unemployment and eviction moratorium sooner, and that last stimulus check was probably unnecessary though.

What Biden does from now on is on him though. And he wanted to spend $3.5T in new entitlements. It has been whittled down somewhat, but mostly through accounting gimmicks of having the bill funded over the full 10 years but pricing most of the spending over a shorter timeframes.

And Biden's $1.9 trillion stimulus legislation isn't causing jack, cuz it isn't anything yet...you are blowing partisan smoldering dung incense.

But why pour fuel on the fire of an already inflationary economy though?

 

[Swammerdami]

(2) How about a wealth tax imposed on the super-rich? Wise in principle perhaps, but as the super-rich themselves point out, they'll convert their wealth into untaxed real estate, paintings, private businesses. Again I have no simple answer.

It's a horrible idea.

I'd make it an alternate tax, to be applied ONLY if it exceeded, and in lieu of, personal income tax. And fair value of non-stock wealth would be included. The idea still has severe drawbacks but at least it's progressive (some other possible taxes I mentioned were regressive).

(3) Corporate taxes should be increased. The recent international agreement on corporate income taxes was a good step in the right direction. (Are small businesses exempt from those mandatory taxes?)

Corporate taxes are regressive. In an ideal world (which I don't think we can get with tax haven nations out there) there would be no corporate income tax, but rather high personal income tax on the profits they get from those corporations.

The QOP frequently whines that producers will leaved the USA if "over-taxed." That's why I thought an international agreement on corporate income tax was a good idea. A few hold-out countries don't matter: they can be tariffed or otherwise sanctioned into submission!

We have other threads discussing how super-shareholder wealth can persist, be spent by, and perhaps even passed on to grandchildren without ever being taxed as income.


I was thinking of "invention" as individual creative genius, but big development projects have also been funded without private profit motive:

Tim Berners-Lee invented the "World Wide Web" and deliberately forwent any patent rights. Jonas Salk did the same thing with his vaccine for polio. How many examples do I need?

"Some inventors would not invent if there were no profit motive." Sure; I'll vote for that. "Nobody would invent"? This sort of over-generalization is an obstacle to intelligent debate.

For basically small things that can work. A person's labor for some years, sometimes you'll see that given away for the greater good. It's utterly impractical at large scale, though. What's the R&D budget for SpaceX? (Hint: the turbopumps on the Falcon 9 are $3 million a pop. Probably more on the Starship. They've blown up a lot of them in their testing and a lot more to go--now they're looking at a full-up flight verification--but with no recovery system. That's upwards of $100 million in pumps alone.) You don't fund that sort of thing without an expectation of profit.

In the 1960's the U.S. Government placed a man on the Moon, and brought him safely back to Earth. In the 2020's a super-billionaire placed a man into sub-orbit. Compare the dates and difficulties of those achievements. And you use this as an example of how profit motive is needed for big projects? Pull the other one!

Apollo Project is not an isolated example. The Panama Canal, Hoover Dam, Golden Gate Bridge are just a few examples of big successful projects with no direct corporate profit motive. The Manhattan Project, the Interstate Highway System; do I have to go on?

And I'm not at all sure we are truly seeing inflation. Rather, we are seeing supply chain shocks.

Yes, a brief past episode of price hikes is of less concern. On-going future inflation would be a problem. QOPAnon seizes on price hikes, anything on Biden's watch, to say "Teh communist DemonRats is teh bad" but of course QOP commentary is worthless except for use as a contrarian indicator.

 

[SigmatheZeta]

The University of Würzburg study demonstrates why there is such conflicting evidence regarding supply-side economics, and furthermore, the study also demonstrates that supply-side economics actually do work but only in advanced economies.

I don't see that it does. Such actual data as they adduce show positive correlation of redistribution with economic growth in developing economies. The claim that "redistribution hampers investment" in advanced economies seems to be based on Barro - "Ricardian equivalence" - almost trickledown theory itself - which is contradicted by a ton of evidence in advanced economies.

And the claim that "When net inequality is held constant, public redistribution negatively affects economic growth" should ring alarm bells for anyone who speaks English. Inequality held constant means no redistribution, unless they're asserting that "public redistribution" is self-defeating - i.e. trickledown theory.

*covers her face with one wing and rubs her temple with the claw* At least you read it. It's a pretty cool article, though, isn't it?

I understood the research a little bit differently, so if you are not reading it the same way, then please try to help me, here.

However, here is a paragraph from the conclusion that gives me the impression that they are saying that the level of a country's development impacts the consequences of redistribution.

Finally, this paper shows that the growth effects of inequality and redistribution vary with
the development level. A negative impact of inequality prevails in developing and middle-
income countries, where the negative potential of inequality is severe due to capital market
imperfections and an insufficient provision of public goods. In high income countries, where
opportunities are on average distributed more equally, no significant correlation between
inequality and growth occurs. Likewise, the paper reveals that redistribution by taxes and
transfers is beneficial for growth in poor countries, but rather harmful in rich economies.

Am I just misinterpreting what that means?

No, you're just repeating it. But I don't see where the "rather harmful in rich economies" bit is supported except by reference to Barro (a supply-side theorist contradicted by a ton of evidence).

*wing-shrugs* Ah, I understand, now. So there is a reference to Barro that you disagree with. You might have mentioned that in your last post to me, and I might have failed to understand. When you have time, I would like to see the primary studies to which you are referring. I can do some research of my own over the long weekend.

Thank you.

 

[SigmatheZeta]

@Canard DuJour

Okay, I decided to do some digging of my own.

I found this:

In this paper, we utilise data from a German population survey to test the validity of the
Ricardian equivalence theorem (RET). In 2013, 2,000 representatively chosen people
were asked whether they have altered their consumption and saving behaviour in

response to the significant increase in public debt that occurred between 2008 and 2012.
Our findings suggest that, in general, RET does not hold. Only 7% of our respondents
reported consuming a smaller proportion of their income, and saving a larger proportion,
in response to public debt accumulation. In the case of respondents required to pay social
security contributions, we can control for their expectations about the future and find
that 36% behave in line with RET. We interpret our findings as microeconomic evidence
in support of the ‘rule-of-thumb’ consumer assumptions employed in macroeconomic
models. Moreover, using multinominal logit regressions, we find that individuals’
consumption responses are significantly related to their economic situation, time
preferences, education, and age.

Suggested Citation: Hayo, Bernd; Neumeier, Florian (2016) : The (In)Validity of the Ricardian
Equivalence Theorem – Findings from a Representative German Population Survey, ifo Working
Paper, No. 233, ifo Institute - Leibniz Institute for Economic Research at the University of
Munich, Munich

https://www.econstor.eu/bitstream/10419/149555/1/wp-2016-233-hayo-neumeier-ricardian-equivalence-theorem.pdf

However, there have also been cases where a Ricardian equivalence actually was discovered in real world scenarios, and here is one example:

Abstract: Two of the most common measures adopted by the government to stimulate the economy
are increasing government borrowings and implementing tax cuts. These tax cuts are financed
through increased debt. According to the Ricardian equivalence theory, the consumers will not
change their current spending when they anticipate a tax increase in the future. In order to pay
high taxes in the future, the government should increase its present savings. However, the extent of
applicability of Ricardian equivalence could vary across nations. In this context, the present study
explores the long-running relationship between domestic borrowing and private savings in Turkey.
For this purpose, the researcher collected the data for key variables, gross domestic savings, and
government debt, for the period of 1980–2017. The researcher used unit root, cointegration, VECM,
and the Granger causality test to examine the relationships among the variables. Apart from this,
ARDL regression was used in order to examine the long-term relationships among the variables. The
empirical results indicate that there is presence of bidirectional causality, indicating that Ricardian
equivalence is applicable in the economy. Households display a rational behavior by increasing their
savings during the periods in which high government expenditure is incurred.

İkiz, Ahmet S. 2020. "Testing the Ricardian Equivalence Theorem: Time Series Evidence from Turkey" Economies 8, no. 3: 69. https://doi.org/10.3390/economies8030069

Now, my question to you is this: is there really a scientific consensus regarding RET? I see what seems to be legitimate research that both supports and refutes RET. Is it possible that Ricardian equivalence actually does occur in some cases but does not occur in others?

This is one of the reasons why I have come to believe that I do not really know enough about economics to really make vast sweeping opinions about the subject. It sometimes seems like I have found a well-supported theory, but then I run across evidence that it might not be so very well-supported.

As far as I can decipher from all of the research, though, it seems like redistribution of wealth actually works best in undeveloped cultures where the wealth is not currently controlled by people that are able to make the most efficient use out of it.

The place where I grew up, for example, was controlled by a large number of inbred degenerates leftover from decayed Southern gentry. They are clinging to land that they do not need for reasons more related to pride than to any intention of ever making use of it. They intentionally undermine the advancement of the area because they see any kind of progress at all as a threat to their way of life, which is based primarily upon idleness, animal-murder, and alcoholism. I have seen this phenomenon first-hand. In a situation like that, I think that the forcible redistribution of wealth really could awaken an economy that has utterly failed to develop.

From the University of Würzburg study, they explain it thusly:

In early stages of development, op-
portunities for investments in human capital are unequally distributed among households.
In the presence of underdeveloped financial markets, weak public education systems and
high opportunity costs for education, budget constraints are binding and the initial wealth
endowment of the family determines the education level of the children. In this case, re-
distribution as a policy measure to increase equality of opportunities exerts positive effects
on growth.

I am glad to find that what I observed with my own eyes is validated by somebody. In fact, it says pretty much the same thing I said.

At minimum, @Canard DuJour, I believe that I am justified in saying that the redistribution of wealth is disproportionately beneficial to economies that have failed to develop, due to the, due to the little capital in those economies being controlled by economically and culturally sedentary families.

Therefore, even if the evidence in support of RET is all complete bunk, which I am not sure about but open to depending on what kind of evidence you were to bring forward, the paper still has value. The paper demonstrates very apt arguments for how undeveloped economies really should consider redistribution of wealth in order to get capital into the hands of people that are intent on exerting effort to develop their economies.

*blows smoke-rings* tell me I'm adorable, and feed me more science.

 

[Swammerdami]

possible Mr. Generation referred to the fact that suddenly liquidating a large portion of TESLA stock would cause that bubble to burst. Sure. And for that reason Mr. Musk may only be able to afford a dozen new palaces or super-yachts per month. Poor Elon?

So you got the reason why. What were the charades about soggy banknotes in aid of then?

My main goal was to encourage Mr. Generation to improve his English usage. "... is not wealth" and "... is not easily liquidated in its entirety" have different meanings in my dialect. Perhaps I'm too much the nitpicker but gibberish — even when a possibly intended meaning can be guessed — grates on my nerves like nails on a chalkboard.

... But by the way, does anybody still use "long" billions and trillions? (Merriam-Webster shows the long billion as "British"; Cambridge dictionary shows it as "UK Old-fashioned." But Larousse.fr shows ONLY the long billion!)

It is very common in non-English speaking countries. It's one of the thing one has to be careful with when translating.

I learned something, from you and Larousse.fr. I'd thought that the "long" numbers were obsolete.

Thai language has a lackadaisical approach to numbers. ล้าน ล้าน ('million million') is the word for a (French) billion, but colloquially usually means '(several) millions.' (Unlike English with its -s suffix, Thai has no simple plural marker.)

 

[Canard DuJour]

@Canard DuJour

Okay, I decided to do some digging of my own.

I found this:

In this paper, we utilise data from a German population survey to test the validity of the
Ricardian equivalence theorem (RET). In 2013, 2,000 representatively chosen people
were asked whether they have altered their consumption and saving behaviour in

response to the significant increase in public debt that occurred between 2008 and 2012.
Our findings suggest that, in general, RET does not hold. Only 7% of our respondents
reported consuming a smaller proportion of their income, and saving a larger proportion,
in response to public debt accumulation. In the case of respondents required to pay social
security contributions, we can control for their expectations about the future and find
that 36% behave in line with RET. We interpret our findings as microeconomic evidence
in support of the ‘rule-of-thumb’ consumer assumptions employed in macroeconomic
models. Moreover, using multinominal logit regressions, we find that individuals’
consumption responses are significantly related to their economic situation, time
preferences, education, and age.

Suggested Citation: Hayo, Bernd; Neumeier, Florian (2016) : The (In)Validity of the Ricardian
Equivalence Theorem – Findings from a Representative German Population Survey, ifo Working
Paper, No. 233, ifo Institute - Leibniz Institute for Economic Research at the University of
Munich, Munich

https://www.econstor.eu/bitstream/10419/149555/1/wp-2016-233-hayo-neumeier-ricardian-equivalence-theorem.pdf

However, there have also been cases where a Ricardian equivalence actually was discovered in real world scenarios, and here is one example:

Abstract: Two of the most common measures adopted by the government to stimulate the economy
are increasing government borrowings and implementing tax cuts. These tax cuts are financed
through increased debt. According to the Ricardian equivalence theory, the consumers will not
change their current spending when they anticipate a tax increase in the future. In order to pay
high taxes in the future, the government should increase its present savings. However, the extent of
applicability of Ricardian equivalence could vary across nations. In this context, the present study
explores the long-running relationship between domestic borrowing and private savings in Turkey.
For this purpose, the researcher collected the data for key variables, gross domestic savings, and
government debt, for the period of 1980–2017. The researcher used unit root, cointegration, VECM,
and the Granger causality test to examine the relationships among the variables. Apart from this,
ARDL regression was used in order to examine the long-term relationships among the variables. The
empirical results indicate that there is presence of bidirectional causality, indicating that Ricardian
equivalence is applicable in the economy. Households display a rational behavior by increasing their
savings during the periods in which high government expenditure is incurred.

İkiz, Ahmet S. 2020. "Testing the Ricardian Equivalence Theorem: Time Series Evidence from Turkey" Economies 8, no. 3: 69. https://doi.org/10.3390/economies8030069

Now, my question to you is this: is there really a scientific consensus regarding RET? I see what seems to be legitimate research that both supports and refutes RET. Is it possible that Ricardian equivalence actually does occur in some cases but does not occur in others?

This is one of the reasons why I have come to believe that I do not really know enough about economics to really make vast sweeping opinions about the subject. It sometimes seems like I have found a well-supported theory, but then I run across evidence that it might not be so very well-supported.

As far as I can decipher from all of the research, though, it seems like redistribution of wealth actually works best in undeveloped cultures where the wealth is not currently controlled by people that are able to make the most efficient use out of it.

The place where I grew up, for example, was controlled by a large number of inbred degenerates leftover from decayed Southern gentry. They are clinging to land that they do not need for reasons more related to pride than to any intention of ever making use of it. They intentionally undermine the advancement of the area because they see any kind of progress at all as a threat to their way of life, which is based primarily upon idleness, animal-murder, and alcoholism. I have seen this phenomenon first-hand. In a situation like that, I think that the forcible redistribution of wealth really could awaken an economy that has utterly failed to develop.

From the University of Würzburg study, they explain it thusly:

In early stages of development, op-
portunities for investments in human capital are unequally distributed among households.
In the presence of underdeveloped financial markets, weak public education systems and
high opportunity costs for education, budget constraints are binding and the initial wealth
endowment of the family determines the education level of the children. In this case, re-
distribution as a policy measure to increase equality of opportunities exerts positive effects
on growth.

I am glad to find that what I observed with my own eyes is validated by somebody. In fact, it says pretty much the same thing I said.

At minimum, @Canard DuJour, I believe that I am justified in saying that the redistribution of wealth is disproportionately beneficial to economies that have failed to develop, due to the, due to the little capital in those economies being controlled by economically and culturally sedentary families.

Therefore, even if the evidence in support of RET is all complete bunk, which I am not sure about but open to depending on what kind of evidence you were to bring forward, the paper still has value. The paper demonstrates very apt arguments for how undeveloped economies really should consider redistribution of wealth in order to get capital into the hands of people that are intent on exerting effort to develop their economies.

*blows smoke-rings* tell me I'm adorable, and feed me more science.

The key premise of 'RET' (that so-called "govt debt" must be paid back with taxes) is wrong as a matter of fact, so I'm not sure what a "scientific consensus" about it could mean.

Re the Würzburg thing, I think the consensus is, if anything, the opposite - i.e. that income inequality is beneficial to economic growth in poor countries, but that it is detrimental to economic growth in advanced economies. I'd be skeptical of anything based on economists' models (mostly ideology posing as science) but it's now pretty clear that inequality is detrimental in advanced economies.

 

[funinspace]

Whatever inflation that is now present was probably already 90% baked into the economy prior to Biden becoming President. Biden is no more at fault for the current inflation than Trump 'created a great stock market'.

No he is not for the most part, you are right. The pandemic has been a major shock to the system that disrupted the whole economy. He should have ended the expanded unemployment and eviction moratorium sooner, and that last stimulus check was probably unnecessary though.

First, I should correct myself, there was one stimulus check group in March of 2021, that is under Biden...and was $1.9 trillion. So my last comment to Generation55 was partly incorrect, as I thought he was referring to what just passed the House. But the idea that Pres. Biden's/Democrats $1.9 trillion spending somehow causes inflation, is comical in that it has to ignore the roughly $3.6 trillion of spending on relief passed under Trump? And just how much jawboning did Clownstick do towards the FR to kick up quantitative easing and lowering rates? If Clownstick had gotten his way, inflation would be far worse.

As to your comments Derec, I am sort of neutral as to what should have been done. Tons of people were and are still struggling. The aid for housing was a mess at the state level, so the eviction moratorium was sort of a continuation of poor triage...

What Biden does from now on is on him though. And he wanted to spend $3.5T in new entitlements. It has been whittled down somewhat, but mostly through accounting gimmicks of having the bill funded over the full 10 years but pricing most of the spending over a shorter timeframes.

And Biden's $1.9 trillion stimulus legislation isn't causing jack, cuz it isn't anything yet...you are blowing partisan smoldering dung incense.

But why pour fuel on the fire of an already inflationary economy though?

Yeah, I'm not really for even more spending w/o a real plan to get increased deficit spending under control. It would be nice if the Democrats got back to being the one fiscally responsible party. The Repugs are so irresponsible, that it is an insult to drunken sailors to make that comparison anymore...

 

[SigmatheZeta]

@Canard DuJour

Okay, I decided to do some digging of my own.

I found this:

In this paper, we utilise data from a German population survey to test the validity of the
Ricardian equivalence theorem (RET). In 2013, 2,000 representatively chosen people
were asked whether they have altered their consumption and saving behaviour in

response to the significant increase in public debt that occurred between 2008 and 2012.
Our findings suggest that, in general, RET does not hold. Only 7% of our respondents
reported consuming a smaller proportion of their income, and saving a larger proportion,
in response to public debt accumulation. In the case of respondents required to pay social
security contributions, we can control for their expectations about the future and find
that 36% behave in line with RET. We interpret our findings as microeconomic evidence
in support of the ‘rule-of-thumb’ consumer assumptions employed in macroeconomic
models. Moreover, using multinominal logit regressions, we find that individuals’
consumption responses are significantly related to their economic situation, time
preferences, education, and age.

Suggested Citation: Hayo, Bernd; Neumeier, Florian (2016) : The (In)Validity of the Ricardian
Equivalence Theorem – Findings from a Representative German Population Survey, ifo Working
Paper, No. 233, ifo Institute - Leibniz Institute for Economic Research at the University of
Munich, Munich

https://www.econstor.eu/bitstream/10419/149555/1/wp-2016-233-hayo-neumeier-ricardian-equivalence-theorem.pdf

However, there have also been cases where a Ricardian equivalence actually was discovered in real world scenarios, and here is one example:

Abstract: Two of the most common measures adopted by the government to stimulate the economy
are increasing government borrowings and implementing tax cuts. These tax cuts are financed
through increased debt. According to the Ricardian equivalence theory, the consumers will not
change their current spending when they anticipate a tax increase in the future. In order to pay
high taxes in the future, the government should increase its present savings. However, the extent of
applicability of Ricardian equivalence could vary across nations. In this context, the present study
explores the long-running relationship between domestic borrowing and private savings in Turkey.
For this purpose, the researcher collected the data for key variables, gross domestic savings, and
government debt, for the period of 1980–2017. The researcher used unit root, cointegration, VECM,
and the Granger causality test to examine the relationships among the variables. Apart from this,
ARDL regression was used in order to examine the long-term relationships among the variables. The
empirical results indicate that there is presence of bidirectional causality, indicating that Ricardian
equivalence is applicable in the economy. Households display a rational behavior by increasing their
savings during the periods in which high government expenditure is incurred.

İkiz, Ahmet S. 2020. "Testing the Ricardian Equivalence Theorem: Time Series Evidence from Turkey" Economies 8, no. 3: 69. https://doi.org/10.3390/economies8030069

Now, my question to you is this: is there really a scientific consensus regarding RET? I see what seems to be legitimate research that both supports and refutes RET. Is it possible that Ricardian equivalence actually does occur in some cases but does not occur in others?

This is one of the reasons why I have come to believe that I do not really know enough about economics to really make vast sweeping opinions about the subject. It sometimes seems like I have found a well-supported theory, but then I run across evidence that it might not be so very well-supported.

As far as I can decipher from all of the research, though, it seems like redistribution of wealth actually works best in undeveloped cultures where the wealth is not currently controlled by people that are able to make the most efficient use out of it.

The place where I grew up, for example, was controlled by a large number of inbred degenerates leftover from decayed Southern gentry. They are clinging to land that they do not need for reasons more related to pride than to any intention of ever making use of it. They intentionally undermine the advancement of the area because they see any kind of progress at all as a threat to their way of life, which is based primarily upon idleness, animal-murder, and alcoholism. I have seen this phenomenon first-hand. In a situation like that, I think that the forcible redistribution of wealth really could awaken an economy that has utterly failed to develop.

From the University of Würzburg study, they explain it thusly:

In early stages of development, op-
portunities for investments in human capital are unequally distributed among households.
In the presence of underdeveloped financial markets, weak public education systems and
high opportunity costs for education, budget constraints are binding and the initial wealth
endowment of the family determines the education level of the children. In this case, re-
distribution as a policy measure to increase equality of opportunities exerts positive effects
on growth.

I am glad to find that what I observed with my own eyes is validated by somebody. In fact, it says pretty much the same thing I said.

At minimum, @Canard DuJour, I believe that I am justified in saying that the redistribution of wealth is disproportionately beneficial to economies that have failed to develop, due to the, due to the little capital in those economies being controlled by economically and culturally sedentary families.

Therefore, even if the evidence in support of RET is all complete bunk, which I am not sure about but open to depending on what kind of evidence you were to bring forward, the paper still has value. The paper demonstrates very apt arguments for how undeveloped economies really should consider redistribution of wealth in order to get capital into the hands of people that are intent on exerting effort to develop their economies.

*blows smoke-rings* tell me I'm adorable, and feed me more science.

The key premise of 'RET' (that so-called "govt debt" must be paid back with taxes) is wrong as a matter of fact, so I'm not sure what a "scientific consensus" about it could mean.

Re the Würzburg thing, I think the consensus is, if anything, the opposite - i.e. that income inequality is beneficial to economic growth in poor countries, but that it is detrimental to economic growth in advanced economies. I'd be skeptical of anything based on economists' models (mostly ideology posing as science) but it's now pretty clear that inequality is detrimental in advanced economies.

The University of Würzburg study actually uses the Galor and Zeira study as part of their synthesis. *purrs* It would seems that Oded Galor has cast a long shadow with his Unified Growth Theory. It constitutes some of the most exciting economics research that I have read about in a while, and its heavily empirical roots are heartening to me. It might take me a while to dig through the references used by the University of Würzburg Study, but this will be one of the most charming that I have had the pleasure of reading about.

*puts on some Light in Babylon and begins tapping one hindpaw and swishing her tail in time to it*




I tend to be sympathetic toward chimeras and hybrids, though. It's a dragon thing. It constitutes one of the reasons why I am such a raving fan of Knut Wicksell. There was just something sexy and salacious about that three-way that he conceived, between Lauseanne school, Austrian school, and Ricardian economic theory. It excited me on such a visceral level.

This fetish also extends to why I simply adore New Keynsianism, just as a matter of principle. It occurred due to the most delightful synthesis between Keynesian and neoclassical economics. While a complete and comprehensive understanding of it is truly beyond the understanding of a parrot-size dragon with a head only about the size of a small tangerine at the most, it nonetheless tickles my intellectual miscegenation fetish.

Anyhow, I don't think that you are really bringing anything new into the discussion by citing the Galor and Zeira study simply because of its assumed validity in the University of Würzburg study. The University of Würzburg study was actually a synthesis study that included Galor and Zeira. Thank you for drawing my attention to Galor and Zeira, though. I have spent a little while brushing my eyes over Galor's ideas, in particular, and I find him to quite enchanting.

*nods her head appreciatively* Thank you, my tovarish. I am not quite certain, yet, that the University of Würzburg was wrong to include Barro's conclusions in their synthesis.

It was quite late at night when I went off on that wild goose chase regarding RET, but it is apparently not relevant to the the University of Würzburg study at all. It was nonetheless interesting to read about, and I shall investigate it with greater depth later. However, Barro has apparently not spent his career focused on promoting RET to the exclusion of all other ideas. He does other stuff. Here is what the study really has to say about Barro's ideas.

We use a standard approach in specifying our empirical model, considering the growth rate
of real per capita GDP to be a function
d
dt = F(yt−1,ht,Xt,Ψt,Rt) (1)
where yt−1 denotes the log of initial production per capita, ht is human capital endow-
ment per person, and Xt comprises an array of control and environment variables. When
holding constant these country specific potentials for economic growth, we study to what
extent inequality Ψt and redistribution Rt contribute to income increases.
It is crucial to specify the basic system accurately, as the disregard of covariates could lead
to inconsistency in the estimated coefficients, particularly as redistribution and inequality
may depend on the political and institutional environment of the countries. For this reason,
we apply the basic system specification of Barro (2000, 2003, 2013), which has been proven
to explain empirical growth patterns quite accurately in a number of studies.

In spite of the fact that Barro's fame is based on the fact that right-wing politicos have been exploiting his old views on RET to fuel their polemic, it would be a tragic oversimplification to assume that all he really does for a living is to provide fuel for right-wing polemic. I disagree with that sort of pigeonholing unless there is actually justification for it. I am not really sure that he is at fault for how some of his findings have been abused.

Here are the actual studies they were referring to, there:

Barro, R. J. (2000). Inequality and growth in a panel of countries. Journal of Economic
Growth, 5(1):5–32.
Barro, R. J. (2003). Determinants of economic growth in a panel of countries. Annals of
economics and finance, 4:231–274.
Barro, R. J. (2013). Education and economic growth. Annals of Economics and Finance,
14(2):301–328

Therefore, here is what they have to say about the Barro, R. J. (2003):

Instead, we follow Barro (2003) by assuming
that higher levels of yt−1 and ht reflect a greater stock of physical capital. Initial production
is measured by the logarithmic value of real per capita GDP, denoted by log(GDPpc). Hu-
man capital is gauged by average years of schooling (SCHOOLING) and by the logarithm of
life expectancy at birth (LIFEEX) to proxy education and health of the population, respec-
tively. Yet, whereas higher life expectancy reflects better health, an increase in log(LIFEEX)
simultaneously raises effective depreciation. In order to disentangle these effects, we also
include the logarithm of the fertility rate log(FERT) in the empirical system, thereby isolat-
ing the negative effect of population growth predicted by the standard growth model. The
model also includes investments in physical capital, gauged by the investment share (INVS)

So many Frith-forsaken acronyms. Damn math. Lord Frith, in his infinite wisdom, chose to bless me with greater aptitude in other areas. However, I understand basically what shape a logarithmic function represents. It's like a half a pancake, right? Sharp on one side and flat on top? Durrrrrr.

*materializes a beanie hat and a marijuana cigarette* I don't know, man, I just don't know!

/beanie
/marijuana cigarette

Anyhow, the synthesis study does not seem to me to be focused on Barro's views on RET. I was incorrect to let myself get distracted by that.

You should really consider moving past your prejudices and embracing the fact that the University of Würzburg study actually validates your views regarding the Unified Growth Theory. They are merely saying that the effectiveness of redistribution alone might turn out to be logarithmic, simply due to the harder-to-alter effects of individual skill level and personal preference.

Our findings strongly support the implications of the unified growth theory. Provided
that human capital accumulation has already become the prime engine of growth in most de-
veloping countries, the effect of inequality and redistribution changes over the development
process due to variations in the equality of opportunities. In early stages of development, op-
portunities for investments in human capital are unequally distributed among households.
In the presence of underdeveloped financial markets, weak public education systems and
high opportunity costs for education, budget constraints are binding and the initial wealth
endowment of the family determines the education level of the children. In this case, re-
distribution as a policy measure to increase equality of opportunities exerts positive effects
on growth. The development process of the economies is typically accompanied by a sub-
stantial expansion of the financial system, international capital inflows, and improvements
in the public education systems. All of these effects lead to a decline in the influence of
inequality by improving families’ prospects of achieving a higher education level for their
children, which is mirrored by a decline in intergenerational income elasticity (see Corak,
2013). Once the distribution of human capital endowment is due much more to preferences
and individual skills rather than to initial wealth, high education rents may even lead to
a growth-enhancing effect of inequality. In this case, redistribution may be an impediment
to growth. The reason is that incentives for human capital investments, labor supply, and
entrepreneurship rise if income gaps increase. Our results yield tentative implications in this
direction, but the effects are far from significant.

All that the study really means is that it is really more imperative to address inequality in those countries where the causes of inequality could not possibly be related to personal preference or individual skill level alone. There are both just and unjust reasons why one person might be more poor than another. In the most economically desolate countries, though, this research suggests that the cause of inequality cannot really be explained adequately by differences in individual skill level or personal preference. Unless you want to get a little bit more detailed about attacking their underlying assumptions, I think they might be correct to find a logarithmic relationship:

In addition, we introduce an interation term between
redistribution and the initial income level, denoted by REDIST×L.log(GDPpc).20 The figure
highlights that redistribution contributes positively to economic growth in earlier stages of
development. However, once the economies reach an average income level of approximately
13,000 USD, the negative incentive effects triggered by redistribution prevail, which is why

34

the effect on growth tends to be negative.

Nonetheless, I still believe that the United States could be broken down into subsets. Instead of imposing redistribution primarily at the national level, we could consider breaking up dysfunctional power structures in immature local economies that hinder development. This could include either economically desolate rural areas or blighted areas in the inner cities. By targeting our reforms at a local level, we could restore the incentive structures that tend to help produce the world's more advanced economies.

However, I am quite frankly a little skeptical of 13,000 break-point, to be fair. The University of Würzburg study seems to dismiss "individual skill level" and "preference" as immutable absolutes, and I believe that one of the flaws in the University of Würzburg study is that they fail to address factors other than education alone.

*gestures to herself with one wing* For example, @Jarhyn and I are both examples of people that are neurodivergent. Just raw investment in the education system, alone, cannot remedy the internal injustices of the education system that affect us that are neurodivergent. We are often hindered grievously from reaching our full potential due to the fact that we are not provided with adequate accommodations. While I would not be so overweening as to self-describe as "gifted," I nevertheless believe that the paucity of accommodation for me, throughout my education, has had a distinctly negative impact on my ability to make a sound contribution to my society. This is only one of perhaps an endless number of examples of how economic injustice is really more complex than what the University of Würzburg study implies.

I know that it makes a difference how we are treated because after I relocated to an urban area where I survived for a while as semi-homeless, I found out that many workplaces in urban areas are actually substantially friendlier toward people that are neurodivergent. I was actually shocked at the difference. I had never been able to get myself hired in the place where I had come from. I had been been laughed out of interviews with essentially a "don't call us, we'll call you." I'm quite the opposite of a lazy person, though. I work my ass off once I get started. I am highly focused. I do not waste time with gossip. I move at a frantic pace when fulfilling duties that have clear objectives. I am a valuable and highly dependable employee, so it did not make any sense that I was not being given a shot in the place where I came from. Turning away a potentially valuable employee because of an absolutely futile prejudice ended up being costly to everybody, not just to me. Those bigots did not gain a damn thing from ruining my life, and the cost to them was dear.

The primary shortcoming I find in the University of Würzburg study, then, is a simple lack of imagination. If we were to examine more diverse methods that could be used for promoting economic justice, I believe that the 13,000 USD mark could be moved upward. We could engineer means of making redistribution efficient in economies that have higher average incomes. I think that the routes for redistribution ought to metamorphose as we approach economies that have higher average incomes, for I think that in advanced economies, people that otherwise would have barely had a chance to survive could be groomed as unusual talents. Without negating the general validity of the study, I do not believe it can stand on its own. I think that more research is needed.

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential. I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory. Good for him. Let him have his billions. It's not important how much wealthier he is than I am. What I actually should be worried about is the wasted potential of rural and inner city areas that have failed to reach even the most basic level of economic development, much less self-sufficiency. Those constitute things we could fix.

 

[Trausti]

What I actually should be worried about is the wasted potential of rural and inner city areas that have failed to reach even the most basic level of economic development, much less self-sufficiency. Those constitute things we could fix.

By changing the demographics?

 

[SigmatheZeta]

What I actually should be worried about is the wasted potential of rural and inner city areas that have failed to reach even the most basic level of economic development, much less self-sufficiency. Those constitute things we could fix.

By changing the demographics?

You will find at least part of your answer in that study that @Canard DuJour and I have been talking about. Consider reading that first, and once you have, I look forward to entertaining your insights.

 

[Loren Pechtel]

As a matter of fact, there are actually less developed regions, in the United States, that have seen relatively poor progress for centuries, and the inequality in those regions of the United States can be largely attributed to a lack of adequate opportunities and insurmountable social and political barriers to advancement.

What you are missing here

What a lovely way to start out a post. Don't do it again.

is that over the long run how an economy fares is a matter of culture and government, not wealth. Wealth is a result, not a cause.

If they quit fucking up their system they rapidly catch up. Redistribution isn't going to do much about them fucking up their system and in practice it's always redistribution to the cronies of those in power, the stuff that's taken never goes to the people in meaningful amounts. Places that go for large-scale redistribution fuck themselves up. Poster children: Zimbabwe, Venezuela. Places that simply get rid of much of the government problem do well. Poster children: Asian tigers.

Read the University of Würzburg study. Here is the abstract, citation, and link:

Evidence from a current panel of harmonized worldwide data highlights a robust
negative effect of income inequality on economic growth that we trace back to its
transmission channels. Less equal societies tend to have less educated populations
and higher fertility rates, but not necessarily lower investment shares. The first two
effects are harmful for growth and reinforced by limited credit availability. Higher
public spending on education attenuates the negative effects of inequality. In addi-
tion to the inequality-growth relationship, we examine the direct influence of effective
redistribution. When net inequality is held constant, public redistribution negatively
affects economic growth. Redistribution hampers investment and raises fertility rates.
Combining the negative direct growth effect and the indirect positive effect operat-
ing through lower net inequality, the overall impact of redistribution is insignificant.
Whereas this result stems mainly from advanced economies, redistribution is beneficial
for growth in low and middle-income countries.

Klaus; Scheuermeyer, Philipp (2015) : Income inequality,
economic growth, and the effect of redistribution, W.E.P. - Würzburg Economic Papers, No. 95,
University of Würzburg, Department of Economics, Würzburg

^https://www.econstor.eu/bitstream/10419/114736/1/833477102.pdf

Read and understand at least the abstract, and do not speak to me again until you have done so.

Why should I read it? From what you're quoting it utterly does not address my point. Showing that inequality is a problem says nothing about the cause of inequality.

 

[Loren Pechtel]

We are not seeing inflation, just supply chain shocks? Did you hear Dollar General raised their prices to $1.25 now? This hurts poor people the most. Rich don't care. Are you saying once the supply chain shock stops, Dollar General and every other store will lower prices again just because they are so nice? I won't hold my breath for this.

They were at a $1 for a long time. Inflation made that harder and harder. The slow creeping up, not what's happening now.

People need to realize thatback in the 50's we had less money in the economy, so the money was worth more. This is why people were able to afford things easier. But, once the tax and spend policies started coming, government kept printing more money, which pumps more money into the economy, thus making the money more and more worthless. The more money you have circulating, the less it is worth. The less money you have circulating, the more it is worth. This is basic economics 101 but I don't know why the Democrats don't seem to learn this and always yell at the Republicans telling them they hare actually the ones who have no idea what they are doing. If the government gave everyone in America 1 million dollars, the cost of living would skyrocket. Democrats would act like giving everyone a million dollars would be great for the economy, though. It would not. It would tank, and the Democrats would look at me like I had 20 heads if I tried explaining this to them.

And while they're at it they need to realize 2 + 2 = 3.

The amount of money in the economy is irrelevant. What counts is the change in the amount of money--and that only matters when it's out of sync with economic growth. "People" could afford more in the 50s because we weren't counting all people. It's just the shit went to people we didn't care about.

Why do they keep pushing for government spending when it doesn't work?

Ask the Republicans. They talk about cutting the budget but spend worse than the Democrats.

 

[SigmatheZeta]

As a matter of fact, there are actually less developed regions, in the United States, that have seen relatively poor progress for centuries, and the inequality in those regions of the United States can be largely attributed to a lack of adequate opportunities and insurmountable social and political barriers to advancement.

What you are missing here

What a lovely way to start out a post. Don't do it again.

is that over the long run how an economy fares is a matter of culture and government, not wealth. Wealth is a result, not a cause.

If they quit fucking up their system they rapidly catch up. Redistribution isn't going to do much about them fucking up their system and in practice it's always redistribution to the cronies of those in power, the stuff that's taken never goes to the people in meaningful amounts. Places that go for large-scale redistribution fuck themselves up. Poster children: Zimbabwe, Venezuela. Places that simply get rid of much of the government problem do well. Poster children: Asian tigers.

Read the University of Würzburg study. Here is the abstract, citation, and link:

Evidence from a current panel of harmonized worldwide data highlights a robust
negative effect of income inequality on economic growth that we trace back to its
transmission channels. Less equal societies tend to have less educated populations
and higher fertility rates, but not necessarily lower investment shares. The first two
effects are harmful for growth and reinforced by limited credit availability. Higher
public spending on education attenuates the negative effects of inequality. In addi-
tion to the inequality-growth relationship, we examine the direct influence of effective
redistribution. When net inequality is held constant, public redistribution negatively
affects economic growth. Redistribution hampers investment and raises fertility rates.
Combining the negative direct growth effect and the indirect positive effect operat-
ing through lower net inequality, the overall impact of redistribution is insignificant.
Whereas this result stems mainly from advanced economies, redistribution is beneficial
for growth in low and middle-income countries.

Klaus; Scheuermeyer, Philipp (2015) : Income inequality,
economic growth, and the effect of redistribution, W.E.P. - Würzburg Economic Papers, No. 95,
University of Würzburg, Department of Economics, Würzburg

^https://www.econstor.eu/bitstream/10419/114736/1/833477102.pdf

Read and understand at least the abstract, and do not speak to me again until you have done so.

Why should I read it?

Because I only debate with people that I am prepared to acknowledge as my equals.

Prove yourself to me, and I will entertain you.

 

[Canard DuJour]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

 

[ZiprHead]

We are not seeing inflation, just supply chain shocks? Did you hear Dollar General raised their prices to $1.25 now? This hurts poor people the most. Rich don't care. Are you saying once the supply chain shock stops, Dollar General and every other store will lower prices again just because they are so nice? I won't hold my breath for this.

They were at a $1 for a long time. Inflation made that harder and harder. The slow creeping up, not what's happening now.

People need to realize thatback in the 50's we had less money in the economy, so the money was worth more. This is why people were able to afford things easier. But, once the tax and spend policies started coming, government kept printing more money, which pumps more money into the economy, thus making the money more and more worthless. The more money you have circulating, the less it is worth. The less money you have circulating, the more it is worth. This is basic economics 101 but I don't know why the Democrats don't seem to learn this and always yell at the Republicans telling them they hare actually the ones who have no idea what they are doing. If the government gave everyone in America 1 million dollars, the cost of living would skyrocket. Democrats would act like giving everyone a million dollars would be great for the economy, though. It would not. It would tank, and the Democrats would look at me like I had 20 heads if I tried explaining this to them.

And while they're at it they need to realize 2 + 2 = 3.

The amount of money in the economy is irrelevant. What counts is the change in the amount of money--and that only matters when it's out of sync with economic growth. "People" could afford more in the 50s because we weren't counting all people. It's just the shit went to people we didn't care about.

Why do they keep pushing for government spending when it doesn't work?

Ask the Republicans. They talk about cutting the budget but spend worse than the Democrats.

I think you folks are confused. Dollar General was never a "dollar" store. They're more of an expanded convenience store.

 

[Harry Bosch]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

 

[SigmatheZeta]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Depends on the wages he's offering, to be honest. If he's not paying extremely well, then I'm certainly not moving to that dumb rock.

 

[Canard DuJour]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

What I said.

Does he, or his descendants, then own the natural resource and have the right to charge all of humanity rent upon it for all eternity or until it's exhausted? Simply because he got there first?

States could get there sooner on behalf of humanity, and already went further 50 years ago.

 

[SigmatheZeta]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

What I said.

Does he, or his descendants, then own the natural resource and have the right to charge all of humanity rent upon it for all eternity or until it's exhausted? Simply because he got there first?

States could get there sooner on behalf of humanity, and already went further 50 years ago.

I'm on the side of that, myself, but if you want that to happen, you'll have to get at least some of the country's billionaires on-board as allies. I strenuously disagree with the idea of treating "the rich" as if they inherently must be hated enemies. I like powerful friends, especially when I am dealing with powerful enemies.

Your most effective argument, to the wealthiest Americans, is that if we don't get the government involved as an arbitrating authority, then what's going to happen is that Jeff Bezos is just going to build himself a militarized empire there and declare himself to be its emperor-god.

I respect the man's ambition, but I think it's a little crazy to let him get away with it.

 

[Canard DuJour]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Depends on the wages he's offering, to be honest. If he's not paying extremely well, then I'm certainly not moving to that dumb rock.

But it's more likely to be about he's charging for whatever comes off that dumb rock. Otherwise he wouldn't be determined to get there first and own it.

 

[Canard DuJour]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

What I said.

Does he, or his descendants, then own the natural resource and have the right to charge all of humanity rent upon it for all eternity or until it's exhausted? Simply because he got there first?

States could get there sooner on behalf of humanity, and already went further 50 years ago.

I'm on the side of that, myself, but if you want that to happen, you'll have to get at least some of the country's billionaires on-board as allies.

Why?

 

[SigmatheZeta]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

What I said.

Does he, or his descendants, then own the natural resource and have the right to charge all of humanity rent upon it for all eternity or until it's exhausted? Simply because he got there first?

States could get there sooner on behalf of humanity, and already went further 50 years ago.

I'm on the side of that, myself, but if you want that to happen, you'll have to get at least some of the country's billionaires on-board as allies.

Why?

Okay, let's just neglect to win them over as allies, so Bezos can fulfill his lifelong dream of becoming emperor-god of Luna.

I neglected to ask you something. Just so that we are clear on our identities, what school of economic thought do you view the most favorably?

I have a favorable view toward New Keynesianism, currently, but I am not inflexibly attached to it. I do not have adequate knowledge of economics to have hard and fast attachment to any given philosophy, and my loyalty is impermanent and temperamental.

Your turn.

 

[Canard DuJour]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

What I said.

Does he, or his descendants, then own the natural resource and have the right to charge all of humanity rent upon it for all eternity or until it's exhausted? Simply because he got there first?

States could get there sooner on behalf of humanity, and already went further 50 years ago.

I'm on the side of that, myself, but if you want that to happen, you'll have to get at least some of the country's billionaires on-board as allies.

Why?

Okay, let's just neglect to win them over as allies, so Bezos can fulfill his lifelong dream of becoming emperor-god of Luna.

What I said.

I neglected to ask you something. Just so that we are clear on our identities, what school of economic thought do you view the most favorably?

I have a favorable view toward New Keynesianism, currently, but I am not inflexibly attached to it. I do not have adequate knowledge of economics to have hard and fast attachment to any given philosophy, and my loyalty is impermanent and temperamental.

Your turn.

Oh, anything left of trickledown. "New Keynesianism" is trickledown, which means it isn't really Keynesian - "Bastard Keynesianism" as Joan Robinson called it.

 

[SigmatheZeta]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

What I said.

Does he, or his descendants, then own the natural resource and have the right to charge all of humanity rent upon it for all eternity or until it's exhausted? Simply because he got there first?

States could get there sooner on behalf of humanity, and already went further 50 years ago.

I'm on the side of that, myself, but if you want that to happen, you'll have to get at least some of the country's billionaires on-board as allies.

Why?

Okay, let's just neglect to win them over as allies, so Bezos can fulfill his lifelong dream of becoming emperor-god of Luna.

What I said.

I neglected to ask you something. Just so that we are clear on our identities, what school of economic thought do you view the most favorably?

I have a favorable view toward New Keynesianism, currently, but I am not inflexibly attached to it. I do not have adequate knowledge of economics to have hard and fast attachment to any given philosophy, and my loyalty is impermanent and temperamental.

Your turn.

Oh, anything left of trickledown. "New Keynesianism" is trickledown, which means it isn't really Keynesian - "Bastard Keynesianism" as Joan Robinson called it.

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

 

[SigmatheZeta]

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

It is not impossible for a person to have an abundance of wealth and also agree with my views regarding the dignity of the human race, and if they can also be convinced of the possibility that excessive inequality could lead to serious political instability, assuming that we can furnish convincing evidence for that hypothesis, then I think it is fully possible to win them over to the concept of holding inequality to within safe limits.

I have a pet hypothesis, which I have not built to my satisfaction but which I have a certain affection for, that inequality might work like an excitatory neurotransmitter. If that analogy holds true along certain parameters, then it is also true that excessive excitation can lead to excitotoxicity, which can cause serious damage to the brain.

I have risk factors for bipolar disorder, for instance: if I can hold the mania on the short leash, then I can succeed at maintaining long-term unipolar hypomania without any serious trouble, but if I loosen that lead too much, then that hypomania can escalate into a full-fledged mania, which leads to symptoms similar to an MDMA trip and the comedown that follows. The comedown can cause me such serious disorientation that I can take months to recover, and I suspect that it might cause damage to delicate microstructures in my central nervous system. I have to hold the hypomania on a short leash, and I have to be firm with myself about moderation.

Therefore, I suspect that the competitive energy that results from inequality could be overclocking us in a similar manner, and if the analogy holds in actual practice, we could be destined for a similar crash.

It is an attractive hypothesis, but I do not have adequate information to advance it as a finished product.

 

[Loren Pechtel]

Why should I read it?

Because I only debate with people that I am prepared to acknowledge as my equals.

Prove yourself to me, and I will entertain you.

It's talking about redistribution--which says nothing about corruption and I'm saying corruption is the big problem.

 

[bilby]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

Nuclear power has been widely available in the US for most, if not all, of your life, unless you are in excess of one hundred years old.

 

[SigmatheZeta]

Why should I read it?

Because I only debate with people that I am prepared to acknowledge as my equals.

Prove yourself to me, and I will entertain you.

It's talking about redistribution--which says nothing about corruption and I'm saying corruption is the big problem.

Dude, is this part of some lame ideology that you've used to replace religion or something?

Look, if I want a new religion, I'll take up ancient Orphism or something.

Shoo.

 

[SigmatheZeta]

@Loren Pechtel

I really strongly prefer to approach economics from a robustly scientific standpoint, and I get easily irritated when I am dealing with people that think of their political views in terms of which ideology they identify with.

As far as my ideology if you really want to know it, I have sympathies with the basic intentions behind the views of Pyotr Kropotkin, but I honestly think he had a long way to go before he had a functional economic system. I admire his intentions and the spirit in which he thought. I like the fact that he had a moral conscience that was guided by a sense of kindness and a sense of respect for human dignity. What he wanted to do appeals to me at a visceral level. While I really do not think that we could really make the world run on his way of thinking, what I do believe that is that he was one of the most pure human beings that ever lived.

However, I am also conscious of the fact that there is a difference between an empirically supportable theory and an ideal that tugs at my heartstrings. They are two different subjects. If I could construct a perfect fantasy world where everything was wonderful, then it would be not terribly unlike Pyotr Kropotkin's vision of paradise, but I cannot force the world to really work that way. It's a beautiful pipe dream, but it's still a pipe dream.

I prefer to keep my fantasy life separate from my perception of reality. Having a fantasy life helps me deal with reality. I know that working with an accurate perception of reality is how I keep myself fed and safe, so I can protect that beautiful fantasy world that I carry around in my head.

If you want to talk about economics, then cite something substantial, please.

 

[Canard DuJour]

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

Just as a matter of arithmetic, slower growth with more inequality means most people worse off than they'd otherwise have been. Then there's the precarity, wage stagnation, unaffordable housing and all the other socially corrosive shit that has come with neoliberalism. If it was just some folks getting rich, few would care.

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

Like how? Galt's Gulch or something? Their power rests on a thin veneer of beliefs - e.g. trickledown economics - which we could just stop believing. That's why they spend fortunes pushing them.

 

[Harry Bosch]

Regardless of my reservations about the University of Würzburg study, though, I believe that it is adequate to justify us in taking a needs-based approach to addressing economic injustice. Rather than concentrating on economic injustice between the "1%" and the middle-class, we should actually be profoundly alarmed about local economies that have failed to realize their indigenous potential.

I don't see anything suggesting that "a needs-based approach" shouldn't start by "concentrating on economic injustice between the 1% and the middle-class," since it is that which is slowing growth.

I honestly do not care a rodent's rectum either way if Jeff Bezos wants to build a moon factory.

Then I'd suggest that you should care, given what you've said. If it's profitable to build a factory there, then there is something there that humanity needs or will need. Something that he didn't put there in the first place, which we should not allow him or his descendents to charge rent via ownership upon everyone elses' descendants.

Why? If he finds a need (helium 3 for example) that solves a problem that people want to pay for (cheap clean power), what's the harm? It will be one of the happiest days of my life when I can pay a company that allows me to power my home without fossil fuels. And I'd gladly pay a profit for it.

Nuclear power has been widely available in the US for most, if not all, of your life, unless you are in excess of one hundred years old.

Well I'll be the first to say that you know far more about nuclear power than I. I was using harvesting Helium 3 as an example of the kind of profitable production that could be had as an incentive to get into space. And in my view, I just don't see us permanently going into space and solving problems until there is a strong incentive to go there.

 

[SigmatheZeta]

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

Just as a matter of arithmetic, slower growth with more inequality means most people worse off than they'd otherwise have been. Then there's the precarity, wage stagnation, unaffordable housing and all the other socially corrosive shit that has come with neoliberalism. If it was just some folks getting rich, few would care.

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

Like how? Galt's Gulch or something? Their power rests on a thin veneer of beliefs - e.g. trickledown economics - which we could just stop believing. That's why they spend fortunes pushing them.

New Keynesianism is not "trickle-down," but it is a synthesis of Keynesianism and neo-classical economic theory. The trouble with it is that the mathematics are actually accurate, and they actually predict what they are supposed to predict.

What they are not taking into account are sociological consequences that can ultimately threaten the stability of the surrounding civilization. I was at the Black Lives Matter protest, and while it was, on one hand, the most fun that I had had since playing paintball when I was a kid, I cannot help but think that it is not really a sustainable way to run a country or to hold a civilization together.

Now, with disinformation about masks helping COVID-19 spread, I think that we might have a bit of a problem.

My opinion--and this is only my opinion--is that we are incorrect to look upon economics, mathematics, and political science as three different subjects. They are really different aspects of the same subject.

When you talk about an economic theory that can energize the economy, that sounds good right up until you start noticing an upwelling of political extremism. It sounds good right up until people have started misguided moral crusades that are going to lead to a dangerous Puritanical state. It sounds good right up until the riots start, and at some point, you start questioning your decision-making process.

New Keynesian economic theory actually does work, but the problem is that it works too well. It overheats the system, and if we don't want to get cooked alive, we have got to figure out a way to regulate the heat.

Oh, I have an idea! Let's just cap inequality permanently at right where it was BEFORE we started breaking out in riots, and when inequality starts to rise above that ceiling, we increase taxes and start paying down the debt with the revenue.

That sounds good, but you would have to get a team of sociologists, political scientists, and economists together, so they can actually confirm whether or not that would actually work. There is a possibility that I could be wrong. It feels right, but I would want to see how the empirical evidence for it matches up with the math.

I suspect that the riots and the insurrection are not a coincidence, but they are happening for the same reasons why we were having labor riots and revolutions in the early 20th Century. Oh, and we had these two little wars I heard about. The early 20th Century was kind of nuts.

By comparison, people were actually protesting AGAINST war in the 1960's and 1970's, and we abolished the draft a little while later.

I think it is probably true that inequality DOES make people competitive, but competitiveness also makes people want to go to war.

That is what I think that New Keynesian theory is probably missing, and that kind of phenomenon simply cannot be taken into account by economic theory alone.

The historical economist that admire the most is Knut Wicksell. The reason why I admire him is that he merged multiple different theories that nobody, at the time, saw as being even fully the same subject. Some believe he created the underpinnings of Keynesian economics.

In the same spirit, we need to break the myth that economists are not responsible for what happens in our society or our politics. They are only looking at one side of the same system, which is like looking at someone's ass and assuming it gives you an idea of what their face looks like or making believe they are not both part of the same organism. I think we ought to put them under pressure to start having serious and open discussions with sociologists and political scientists, so they can work out a system that harmonizes these different facets of collective eudaimonia.

Just trying to tie a blindfold around our eyes and pretending the neoliberal theories don't exist would, I think, be misguided. They actually do get the effect that their proponents claim they do. They are just assuming incorrectly that an overheated system can only be a good thing, and they are not looking at the fact that one way that people demonstrate their social energy is by rioting and murdering each other.

 

[Canard DuJour]

*wing-shrugs*

I don't really think of myself in terms of whether I am left or right. My current notions are either accurate or inaccurate, and my priority is upholding the dignity of human life by the most efficient possible means. I am indifferent to inequality, per se, except insofar as it might be politically harmful in certain situations or beyond a certain threshold.

I am open to the possibility that the current extremes of inequality, in the present-day United States, might be damaging our democratic institutions and eroding our political stability, but that is not because I disagree with inequality, in principle: it is because I suspect that, beyond a certain threshold, inequality might contribute to fueling sociopolitical problems that could otherwise be avoided. If it could be demonstrated, to my satisfaction, that inequality were not causing such problems, then I would not be bothered by it, but that has not been demonstrated, to my satisfaction.

If there is any research that clearly proves that inequality could cause attrition in democracies, then I am not aware of it, but it just occurred to me in this moment that I might explore that for a while. I will get back to you on it, but in the meantime, feel free to fill me in on what you currently have at your disposal.

I am predisposed to being skeptical of the idea that an infinite expansion of inequality is either desirable or sustainable. There is a long history of supposed "god-king" dynasties being burned to ashes. If there is a possibility of such a threshold where this course of development would become inevitable, then it would behoove us to take that threshold into account.

We can produce evidence for that hypothesis, or we can fail to produce evidence for that hypothesis.

Just as a matter of arithmetic, slower growth with more inequality means most people worse off than they'd otherwise have been. Then there's the precarity, wage stagnation, unaffordable housing and all the other socially corrosive shit that has come with neoliberalism. If it was just some folks getting rich, few would care.

As far as your denial that we could possibly need a political alliance with billionaires, @Canard DuJour, the truth is that we currently are barely able to maintain a Democratic majority for even short lengths of time. They have made it abundantly clear that if we treat them as hated enemies, rather than as potential allies in the cause of preserving human dignity and advancing the human race, then they can fuck us from three different directions if they want to do so.

Like how? Galt's Gulch or something? Their power rests on a thin veneer of beliefs - e.g. trickledown economics - which we could just stop believing. That's why they spend fortunes pushing them.

New Keynesianism is not "trickle-down," but it is a synthesis of Keynesianism and neo-classical economic theory.

That doesn't make it not trickledown. It strips out the demand-side logic of Keynes and retains all the "micro-founded" bits of neoclassical with supply-side logic baked in.

The trouble with it is that the mathematics are actually accurate, and they actually predict what they are supposed to predict.

Like what?

What they are not taking into account are sociological consequences that can ultimately threaten the stability of the surrounding civilization. I was at the Black Lives Matter protest, and while it was, on one hand, the most fun that I had had since playing paintball when I was a kid, I cannot help but think that it is not really a sustainable way to run a country or to hold a civilization together.

Now, with disinformation about masks helping COVID-19 spread, I think that we might have a bit of a problem.

My opinion--and this is only my opinion--is that we are incorrect to look upon economics, mathematics, and political science as three different subjects. They are really different aspects of the same subject.

When you talk about an economic theory that can energize the economy,

New Keynesianism has not "energised" the economy. Growth rates have fallen. Housing bubbles and the stock market are not the economy.

that sounds good right up until you start noticing an upwelling of political extremism. It sounds good right up until people have started misguided moral crusades that are going to lead to a dangerous Puritanical state. It sounds good right up until the riots start, and at some point, you start questioning your decision-making process.

New Keynesian economic theory actually does work, but the problem is that it works too well. It overheats the system, and if we don't want to get cooked alive, we have got to figure out a way to regulate the heat.

Oh, I have an idea! Let's just cap inequality permanently at right where it was BEFORE we started breaking out in riots, and when inequality starts to rise above that ceiling, we increase taxes and start paying down the debt with the revenue.

That sounds good, but you would have to get a team of sociologists, political scientists, and economists together, so they can actually confirm whether or not that would actually work. There is a possibility that I could be wrong. It feels right, but I would want to see how the empirical evidence for it matches up with the math.

I suspect that the riots and the insurrection are not a coincidence, but they are happening for the same reasons why we were having labor riots and revolutions in the early 20th Century. Oh, and we had these two little wars I heard about. The early 20th Century was kind of nuts.

By comparison, people were actually protesting AGAINST war in the 1960's and 1970's, and we abolished the draft a little while later.

I think it is probably true that inequality DOES make people competitive, but competitiveness also makes people want to go to war.

That is what I think that New Keynesian theory is probably missing, and that kind of phenomenon simply cannot be taken into account by economic theory alone.

The historical economist that admire the most is Knut Wicksell. The reason why I admire him is that he merged multiple different theories that nobody, at the time, saw as being even fully the same subject. Some believe he created the underpinnings of Keynesian economics.

In the same spirit, we need to break the myth that economists are not responsible for what happens in our society or our politics. They are only looking at one side of the same system, which is like looking at someone's ass and assuming it gives you an idea of what their face looks like or making believe they are not both part of the same organism. I think we ought to put them under pressure to start having serious and open discussions with sociologists and political scientists, so they can work out a system that harmonizes these different facets of collective eudaimonia.

Just trying to tie a blindfold around our eyes and pretending the neoliberal theories don't exist would, I think, be misguided. They actually do get the effect that their proponents claim they do.

They actually don't.