government and the economy...

[kingpinnn]

does the government belong in the economy?

pleas don't put yes and no answers, explain your answer and if you want to rebut another person pleas use reasoning and don't just say the other peon is wrong.

i hope this will help all people understand different views on the subject.

[2D]

Are you talking about bailouts or something? I'm not clear as to the question.

[Jove]

This question is incredibly broad, and due to the nature of it i doubt you understand what happens in any economy

[eraser]

This question is incredibly broad, and due to the nature of it i doubt you understand what happens in any economy

this is what i think as well.

government intervention is necessary in situations where market forces are unable to produce an efficient outcome. this includes areas such as health and the environment.

it is also usually up to the government to correct market failure such as public goods, etc.

[INFERNO]

Yes and no but it depends on the circumstances and since none are given, I'm left simply by saying yes and no. I'd say yes to something such as health care but no to something such as booming businesses. Unfortunately, OP, you need to give details as to what in specific you're talking about, otherwise you'll find people are likely to sit on the fence due to the vagueness and broadness of your question.

[kingpinnn]

the question is broad, but so is the answer...if you look at history, when the government gets involved with the private sector of the economy, it screws everything up...even bailouts are bad...those businesses should have crashed and burned...we would have had hard times for a bit, but because we bailed them out we are facing years of hardship which would have been avoided in the first place if the government would have stayed out of the economy...it is the government's fault the recession happened.

[2D]

the question is broad, but so is the answer...if you look at history, when the government gets involved with the private sector of the economy, it screws everything up...even bailouts are bad...those businesses should have crashed and burned...we would have had hard times for a bit, but because we bailed them out we are facing years of hardship which would have been avoided in the first place if the government would have stayed out of the economy...it is the government's fault the recession happened.

I think that was the bankers fault. Lending money to businesses that couldn't pay it back.

[Whisper]

I think that was the bankers fault. Lending money to businesses that couldn't pay it back.
its more then that
its a social problem especially in the united states
"the american dream"
People are living well beyond their means as a whole and the government assisted that by lowering banking regulations and making it easier for new home owners to be approved for mortgages they have no hope in hell in paying, etc...

[quartermaster]

its more then that
its a social problem especially in the united states
"the american dream"
People are living well beyond their means as a whole and the government assisted that by lowering banking regulations and making it easier for new home owners to be approved for mortgages they have no hope in hell in paying, etc...

Well, artificially lowered interests rates and the expansion of the money supply did not help either...

Though you are correct in that we have been living beyond our means, I would argue that this is much less a social problem, as it is an inflationary and artificially boosted issue. The "too big to fail" mentality has ruled the day and thus what has occurred is moral hazard on a monumental scale. So, is that a social problem? (after all, moral hazard and tragedy of the commons happen all over the world) I'm not entirely sure, I believe this to be more of an institutional problem; the system is inherently bloated, artificially inflated and thus inherently flawed.

[kingpinnn]

i have seen this argument time and time again. people are living under the illusion that to little regulation has lead to the recession...it was not the banks. look up acorn and the sub-prime mortgage crisis. these were programs set up by the government to get lower class people into middle class houses. they pushed the banks to give out bad loans...the government caused the housing bubble, not the private sector...i have written a short essay on this subject for people such as 2D and Whisper...i will post it if anyone asks

[quartermaster]

i have seen this argument time and time again. people are living under the illusion that to little regulation has lead to the recession...it was not the banks. look up acorn and the sub-prime mortgage crisis. these were programs set up by the government to get lower class people into middle class houses. they pushed the banks to give out bad loans...the government caused the housing bubble, not the private sector...i have written a short essay on this subject for people such as 2D and Whisper...i will post it if anyone asks

True, but such legislation was only a part of the problem; artificially low interests rates and an increased money supply is ultimately what causes malinvestment on such massive levels. In the end, we know that the government was directly responsible for this recession and then conveniently played the banks and private sectors as the "boogeymen," while dodging the blame. Most egregiously, they told the American people that they were living outside of their means while they themselves were building up massive debts and creating the "bubble" economy that made Americans think that being in debt and subservient to credit was actually good. Again, it's too easy to blame the people, what needs to be looked at is the system and the institution that was creating the conditions for that system.

I haven't seen you around, glad to see a fellow classical liberal!

[redcar]

does the government belong in the economy?

pleas don't put yes and no answers, explain your answer and if you want to rebut another person pleas use reasoning and don't just say the other peon is wrong.

i hope this will help all people understand different views on the subject.
I dont think you understand what you have just asked.

Government is always a big player in an economy. They are generally the largest employer, the richest organisation and the organisation with the largest purchasing power.

Now in relation to a bailout. You need to understand that if the banking sector were to ever collapse it would mean the collapse of a country. Simple as that. Banking is so very important.

So when Governments (and I use plural here because a lot of national governments are "bailing" out the banks) bail out the banks they are bailing out the country.

They have to do it. Now what we should be doing now is looking at brining the bankers to account. Bring charges and ensure they feel the rigers of the law. They acted in a reckless manner and now the world economies have been brought to their knees. They need to be brought to account.

[quartermaster]

I dont think you understand what you have just asked.

Government is always a big player in an economy. They are generally the largest employer, the richest organisation and the organisation with the largest purchasing power.

Now in relation to a bailout. You need to understand that if the banking sector were to ever collapse it would mean the collapse of a country. Simple as that. Banking is so very important.

So when Governments (and I use plural here because a lot of national governments are "bailing" out the banks) bail out the banks they are bailing out the country.

They have to do it. Now what we should be doing now is looking at brining the bankers to account. Bring charges and ensure they feel the rigers of the law. They acted in a reckless manner and now the world economies have been brought to their knees. They need to be brought to account.

I will respond to your economically-ignorant post in due time.

[redcar]

I will respond to your economically-ignorant post in due time.
Oh I am many things my friend but economically ignornant is not one of them.

[kingpinnn]

I dont think you understand what you have just asked.

Government is always a big player in an economy. They are generally the largest employer, the richest organisation and the organisation with the largest purchasing power.

Now in relation to a bailout. You need to understand that if the banking sector were to ever collapse it would mean the collapse of a country. Simple as that. Banking is so very important.

So when Governments (and I use plural here because a lot of national governments are "bailing" out the banks) bail out the banks they are bailing out the country.

They have to do it. Now what we should be doing now is looking at brining the bankers to account. Bring charges and ensure they feel the rigers of the law. They acted in a reckless manner and now the world economies have been brought to their knees. They need to be brought to account.

Oh I am many things my friend but economically ignornant is not one of them.

your response to my previous post shows that you are very ignorant. i dont like to say that, but just the fact that you said "You need to understand that if the banking sector were to ever collapse it would mean the collapse of a country. Simple as that. Banking is so very important."
banking is important, but it is like any other sector of the economy, and any other business...it will fail, and when it does it will allow smaller businesses to take its place.

[kingpinnn]

here is the essay i wrote..

I don't like communism, or socialism, they don't work...the only way a country can flourish is through pure capitalism. Unfortunately, obama has sought to regulate our economy so heavily it starting to look socialist. if you look at history, the more regulation that has been put on our economy, the slower the growth has become. Look at Europe. They are a semi socialist, and their government programs have slowed their economic growth. The United States was, and still is, dominating the world economy, because it has been the one last hope for capitalism. China has started to embrace capitalism which is why it has been growing at such a rapid rate for the past ten years. if you watch the stock market while obama is giving a speech, the minute he starts talking about regulation, and punishing wall st. and the banks, the stock market drops...i am appalled at how people have are expecting or government to get us out of this mess. it is with perseverance and determination that we will the through this, and with the will of the American people. not some damn government stimulus bill that doesn't work because the central government has no idea what local places need. i have talked with communists and socialists, and they all say the same thing...that capitalism is brutal, and mean to people...and that socialism and communism are helpful to all...my point is that the idea behind communism and socialism is noble, all the people sharing and singing chum bi ya is fine, but the reality is that it doesn't work...it gives money to those that don't work for it, and it provides no incentive for striving to succeed. capitalism is the time tested economic format the has shown that i works. i beg you to read the book "the wealth of nations" it will explain why capitalism works.

About the united state's democratic system...the only thing i don’t like is the Electoral College. People say the if it were popular vote, and then the people would only have to campaign i the biggest states. This would be true if all people in that are voted for him, and that NEVER happens...but it does in the Electoral College. in the electoral college, if a state gets even a slight majority for a campaigner, ALL the electoral votes goes to that person, not half the electoral votes, not three quarters, regardless if the majority was by 1 %, or 20, that is the only issue I have with our republic.

As for our current president, i think he has destroyed our presence as a world super power and has no spine i the face of confrontation. he doesn't eve have the balls to threaten Iran. he is also going to cripple our economy with socialist medicine, bank bailouts, wall st. regulation and much much more. if you want to see the crippling effects of regulation look at the bread basket...due to regulation, prices are higher than they should be, production is less, and foreign competitors are starting to beat us. the health care sector is also another example how regulation increases cost and hinders economic growth. luckily, other countries are more socialist than us, but we are still worse than we should be. Thanks to the FDA, it is so costly to get medicine into the market that producers have to charge massive costs to compensate for the FDA's ridiculous and numerous tests. Despite what the government tells you, it is not the private sector that raises costs, and creates economic problems...it is government...when government get involves with the economy, it screws everything up. look at Fannie may, Freddie mac, acorn, and the FED. despite what obama keeps saying, it wasn't the banks that caused the economic recession, it was all the government programs that got involved with the private sector. the housing programs, including Fannie may, Freddie mac, acorn and the especially devastation sub-prime mortgage industry which was crated and run by the government that caused the housing bubble, which lead to this economic recession.

please message me if you have questions or comments, i love debating, and know my history and my facts, just to warn those that want to start a debate. [please be sure it is a debate,and not an argument]

[redcar]

your response to my previous post shows that you are very ignorant. i dont like to say that, but just the fact that you said "You need to understand that if the banking sector were to ever collapse it would mean the collapse of a country. Simple as that. Banking is so very important."
banking is important, but it is like any other sector of the economy, and any other business...it will fail, and when it does it will allow smaller businesses to take its place.
Ok banking is not like any other sector. It's the engine room for the economy to put it better.

Simply, money doesnt grow on tree's. A business needs credit to survive. Banks give credit. No banks. No credit. No business. No job. Less money in an economy. Collapse of economy.

Banking sector is very important.

[belfordrocks]

It is really a controversial issue, but unless governments stop bailing out companies that are clearly formed on a shoddy business model (eg Skybus) then perhaps we could see some more healthy competition and better businesses.

[kingpinnn]

Ok banking is not like any other sector. It's the engine room for the economy to put it better.

Simply, money doesnt grow on tree's. A business needs credit to survive. Banks give credit. No banks. No credit. No business. No job. Less money in an economy. Collapse of economy.

Banking sector is very important.


even though banks are vital to the economy, when a bank fails it should be allowed to fail and not be propped back up...bailouts also destroy responsibility and accountability. why do you think the banks are wasting so much of the bailout money? instead of allowing the big banks to fail and allow the smaller banks to grow, the government has replaced a sudden depression that would be very very brief, like the 1920s depression (not the great depression) the government has paved the way for a long hard, very hard road to full economic growth. the big drop is coming, it isn't over.

[Whisper]

I will respond to your economically-ignorant post in due time.
I'm sorry I saw this and...ya....
Dude your foot just went so far down your throat i think its literally stickin out ur ass
He's working on his masters
Have you even finished HS yet?

kids today
no respect

[redcar]

even though banks are vital to the economy, when a bank fails it should be allowed to fail and not be propped back up...bailouts also destroy responsibility and accountability. why do you think the banks are wasting so much of the bailout money? instead of allowing the big banks to fail and allow the smaller banks to grow, the government has replaced a sudden depression that would be very very brief, like the 1920s depression (not the great depression) the government has paved the way for a long hard, very hard road to full economic growth. the big drop is coming, it isn't over.
In any other sector I would agree that the if a company gets itself into trouble on its own accord it should suffer the consequences and fail.

Not in the banking sector though. The banking sector has seen a lot of consolidation over the past 20/30 years so you are left with big players and not much room for small banks. If a big bank falls it has an adverse effect on the whole economy. Why though? Banks get deposits from people and they in turn lend this money out. Banks also get money from each other, this is called inter bank lending.

This is where the problem happens. If a bank fails it means there is a problem in the industry. Banks will stop lending to each other, panic reaction. They dont want to risk giving out money to banks if they might not get it back.

Then every Joe Commoner on the street starts to panic. They all go to the bank and want to withdraw all their money. But the bank wont be able to cover all deposits at the same time as they have lent it out to others. They are insolvent and collapse.

Now if the banks stop lending to each other they certainly wont be lending to Joe and Mary down the street who want to open up a new business. Money stops flowing. The economy shrinks.

Banking is really important. They needed to be saved.

kids today
no respect

<3 you!

[kingpinnn]

but the way it was done, it will just prolong the fall of our economy. the other problem is that the banks will sometimes become reliant on the government for money, such as AIG. they are falling slowly and painfully. instead of letting them fail, it is just prolonging the inevitable. the government has gotten way way way to big.

[Maverick]

The governments role should be to promote the integrity of the economy not put massive regulations and restrictions on it. In addition, the government should be fiscally responsible and have low taxes and low spending budgets. Also, the government should promote a stable currency, not inflate and manipulate the money supply.

The people should be able to spend their money how they see fit. The government does not have any money. It can only take money from somewhere else. It can only take money out of the economy because it does not produce anything. Isn't it logical that the people will prosper when they have more of their own money in their pockets?

As for the bailouts they should have never occurred. It is only harmful in the long term to prop up insolvent banks. Would there be pain associated with their failure? Yes of course. But in the long term the financially responsible and strong banks will prevail and benefit the economy as a whole.

And yes the money supply would contract. Although a credit crunch is actually medicine to an economy. When the money supply is shrinking and banks aren't lending, it encourages saving and deflation occurs which makes money more valuable.

All that has happened is a failure of a monetary system. The fiat dollar system has failed. The world reserve currency is on the verge of no longer being trusted. However rather than our politicians and central bankers admit that the system has failed they would rather prop it up for as long as possible. Interest rates are being slashed and money is being printed like crazy. Its not by accident. Its a house of cards and all someone has to do is say Boo at the right time to make it all fall apart.

[quartermaster]

The governments role should be to promote the integrity of the economy not put massive regulations and restrictions on it. In addition, the government should be fiscally responsible and have low taxes and low spending budgets. Also, the government should promote a stable currency, not inflate and manipulate the money supply.

The people should be able to spend their money how they see fit. The government does not have any money. It can only take money from somewhere else. It can only take money out of the economy because it does not produce anything. Isn't it logical that the people will prosper when they have more of their own money in their pockets?

As for the bailouts they should have never occurred. It is only harmful in the long term to prop up insolvent banks. Would there be pain associated with their failure? Yes of course. But in the long term the financially responsible and strong banks will prevail and benefit the economy as a whole.

And yes the money supply would contract. Although a credit crunch is actually medicine to an economy. When the money supply is shrinking and banks aren't lending, it encourages saving and deflation occurs which makes money more valuable.

All that has happened is a failure of a monetary system. The fiat dollar system has failed. The world reserve currency is on the verge of no longer being trusted. However rather than our politicians and central bankers admit that the system has failed they would rather prop it up for as long as possible. Interest rates are being slashed and money is being printed like crazy. Its not by accident. Its a house of cards and all someone has to do is say Boo at the right time to make it all fall apart.

Well dang, you beat me to it; all the bailouts are doing is propping up malinvestment, all the government can ever do is take resources from productive sources or investors (vis-à-vis, citizens) in the market and reallocate it; that reallocation, of course, is the source of the bubble economy and the malinvestment. So, again, when you bailout the banks, you are taking away money that could be used to invest and expand the economy, to prop-up bad investments.

"Saving" the banking sector did nothing to alleviate the problem, all it did was, as you said, prolong it until a later date, as you will need a continuing flow of money to keep the banks solvent and to continue to prop-up the malinvestment. As such, when the stimulus "wears off," we will be looking at another banking catastrophe. Correction will occur, but it is a matter of us allowing it to happen with a large crisis now, or an even more catastrophic crisis down the line, those are our only two options. We have been, for decades, living in the world of illusory wealth through the fractional reserve and the central bank, and now we are seeing what it reaps: short term gain for long term pain.

House of cards...someone has been listening to Peter Schiff :)

[ltimm]

In my opinion, if the government didn't get into the economy, then inflation would take affect. the dollar would become less and less due to the high prices set by companies and the monopolies that would be forming. The Government has already made this illegal to protect the value of the dollar.

[quartermaster]

In my opinion, if the government didn't get into the economy, then inflation would take affect. the dollar would become less and less due to the high prices set by companies and the monopolies that would be forming. The Government has already made this illegal to protect the value of the dollar.

That's not how it works I am afraid, as the price of the dollar is not based on the price of other commodities, set by companies. If there was a gold standard, of course, the dollar would be worth whatever amount of gold it is pegged against, or gold itself would be used as the medium of exchange. The dollar only exists because of either the government, or through banks (bank notes), but they set the price of the dollar (not so-called monopolies); the companies or monopolies, as you call them, would not inflate the dollar, as they would have neither the authority nor the ability to do so, such an idea is simply not how inflation works. Inflation would occur if there was an increase in the money supply, which is what is occurring now with the massive printing by the Federal Reserve.

On the other issue of monopolies forming, that is also incorrect, as monopolies are a rarity, a near impossibility in the free market. The only times in the course of history that we have seen monopolies form is when they are created and supported by the government; monopolies are hard to create because in a free-market, there is always an open competitor to challenge and undercut the monopoly price, thus breaking the monopoly. In the case that a monopoly is created naturally, it would be because the monopoly is providing a good for a price that is acceptable, not oppressive, to the consumer and/or the company has a monopoly on a certain resource (however, such a monopoly is not sustainable, as the market would find a suitable supplement to that said resource).

To summarize, the dollar, or any form of fiat currency can only exist through the government or through banks, where they set the price through credible commitment (it is not set by commodity prices), second, in a gold, silver, or any case of a bimetallic standard, the currency would be worth its intrinsic value, not based off of what a company or bureaucracy says. Moreover, democracies only really occur because they are created and proped-up by the government, they do not really occur in the free-market, thus, the government , in "protecting" against monopolies, was really only countering its own deeds.

[kingpinnn]

The governments role should be to promote the integrity of the economy not put massive regulations and restrictions on it. In addition, the government should be fiscally responsible and have low taxes and low spending budgets. Also, the government should promote a stable currency, not inflate and manipulate the money supply.

The people should be able to spend their money how they see fit. The government does not have any money. It can only take money from somewhere else. It can only take money out of the economy because it does not produce anything. Isn't it logical that the people will prosper when they have more of their own money in their pockets?

As for the bailouts they should have never occurred. It is only harmful in the long term to prop up insolvent banks. Would there be pain associated with their failure? Yes of course. But in the long term the financially responsible and strong banks will prevail and benefit the economy as a whole.

And yes the money supply would contract. Although a credit crunch is actually medicine to an economy. When the money supply is shrinking and banks aren't lending, it encourages saving and deflation occurs which makes money more valuable.

All that has happened is a failure of a monetary system. The fiat dollar system has failed. The world reserve currency is on the verge of no longer being trusted. However rather than our politicians and central bankers admit that the system has failed they would rather prop it up for as long as possible. Interest rates are being slashed and money is being printed like crazy. Its not by accident. Its a house of cards and all someone has to do is say Boo at the right time to make it all fall apart.

you put it very well, except for the saving and devaluation or the currency...it is both good and bad...a more valuable curency usually decreases exports so you must find a good medium which is the only thing the government should do...and with the saving...it could help, but as for the american economy...if everyone all of a sudden started saving all their money, it would devastate business seeing as how 70% of our economy if fueled by internal consumption...it might help in the long term though. other than that, i completely agree with you.

[kingpinnn]

i am so happy a post i started has been doing so well...

[quartermaster]

you put it very well, except for the saving and devaluation or the currency...it is both good and bad...a more valuable curency usually decreases exports so you must find a good medium which is the only thing the government should do...and with the saving...it could help, but as for the american economy...if everyone all of a sudden started saving all their money, it would devastate business seeing as how 70% of our economy if fueled by internal consumption...it might help in the long term though. other than that, i completely agree with you.

Deflation, in the American sense, is a very good thing, but generally speaking, what is most important for a currency is that it is stable, which is what makes a gold or silver standard so desirable. Bank notes issued on a non-fractional reserve system would also work, as inflation and deflation would not be based on a single currency, but many competing currencies, which would prevent against the problems involved with a single monolithic entity (such as a government or central bank) controlling and possibly manipulating the money supply and interest rates as a whole. Such a system would mean that no single entity could create or promote malinvestment on nearly as large of a scale as governments can, and often, do (but, alas, that is Rothbard for you).

Saving is a very important facet of a healthy economy, because the economy revolves around the consumers not the producers. A consumer base that is not in debt and has capital allows for non-artificial, vis-à-vis , real investment. The current system of cheap credit and citizens buying while in debt is unsustainable and above all, an artificial life-style. As such, saving will allow for correction within the economy, as there are many businesses that exist solely off of the artificial "wealth" of the American citizenry. To be sure, avid saving would create problems in many sectors for a season, similar to not bailing out the banks, however, the saved capital and the paying off of debts would allow for a more stable, and above all, non-artificial system of exchange, in the future.

In the end, what we do now as a generation is purely for posterity, as either way, our generation is in a lot of trouble. The best system to ensure prosperity for posterity (it rhymes!), as I am glad you and Maverick see, is to reject the FDR Welfare/Warfare state mentality, the Keynesian system of economics and the entitlement and perpetual-debt legacy left by the Baby boomer generation (as that was all they left us).

[Maverick]

you put it very well, except for the saving and devaluation or the currency...it is both good and bad...a more valuable curency usually decreases exports so you must find a good medium which is the only thing the government should do...and with the saving...it could help, but as for the american economy...if everyone all of a sudden started saving all their money, it would devastate business seeing as how 70% of our economy if fueled by internal consumption...it might help in the long term though. other than that, i completely agree with you.
Part of that correction would be changing that 70 percent. An economy that is 70 percent consumption is not sustainable. America can't just consume for eternity. Also remember while Americans would be saving more, we will be buying less. However the trade off would be exporting more and start alleviating the trade deficit. Americans can't continue spending money they don't have.

[kingpinnn]

that's why i said it was good and bad, it would hurt in the short term but help in the long term.

[quartermaster]

I'm sorry I saw this and...ya....
Dude your foot just went so far down your throat i think its literally stickin out ur ass
He's working on his masters
Have you even finished HS yet?

kids today
no respect

I missed your post, but I must respond, because of your ignorance. First, to imply that working on a masters in economics somehow makes him automatically economically sound or adds any clout to his sufficiency in economics, is a fallacy known as an appeal to authority (your first folly).

Secondly, I have finished high school and I am a Junior, double majoring in Political Science and History at one of the best Universities in the United States, but that is unimportant because it does not add anymore clout to my arguments, but since you are so interested in appeals to authority as some form of legitimacy, there you are.

Lastly, do not refer to me as a kid or imply that I owe any person any more respect than they have proven they deserve. He deserves no more respect for a masters in economics than you deserve for being so thoroughly deficient in argumentation.

[penguin13]

here is the essay i wrote..

I don't like communism, or socialism, they don't work...the only way a country can flourish is through pure capitalism.

Ok, Capitalism would be great if there was no workers!!

The aim of capitalism is to exploit each and every worker in order to increase their profits. Workers are not paid for their labour - Take the example of a carpenter he makes a table and gets 20 dollars for making that table. But that table goes on sale for $25, so the carpenter can not buy his labour back. So he is underpaid.

Take another example of a company named Gama that operated here in my country Ireland. The miminum wage here is €8.65. Gama was tendering for a contract from the government, and it was so desperate to get this contract it paid its workers €2.50 an hour with no overtime while they were working 80 hours a week.

That is capitalism in its workings; We were told that the capitalist market would transform this country. Yet after 15 years of unprecedented growth and wealth, the health service is worse, the education system is in crisis and 50,000 are still waiting for social housing! We were the fastest growing economy in europe - and the young people of today are facing worst living standards than their parents

[kingpinnn]

Ok, Capitalism would be great if there was no workers!!

The aim of capitalism is to exploit each and every worker in order to increase their profits. Workers are not paid for their labour - Take the example of a carpenter he makes a table and gets 20 dollars for making that table. But that table goes on sale for $25, so the carpenter can not buy his labour back. So he is underpaid.

Take another example of a company named Gama that operated here in my country Ireland. The miminum wage here is €8.65. Gama was tendering for a contract from the government, and it was so desperate to get this contract it paid its workers €2.50 an hour with no overtime while they were working 80 hours a week.

That is capitalism in its workings; We were told that the capitalist market would transform this country. Yet after 15 years of unprecedented growth and wealth, the health service is worse, the education system is in crisis and 50,000 are still waiting for social housing! We were the fastest growing economy in europe - and the young people of today are facing worst living standards than their parents

the health system and education, i think in your country, are run by the government...and about the abuse to workers...you honestly thing communism and socialism is better? all examples show they don't work...greece for example is pretty socialist...their workers got paid well, but it lead to huge debt and the when they had to cut worker's wages, and bonuses there were riots in the streets. the US' gov has a huge deficit and debt because the gov. is to big. capitalism isnt perfect, but it is, so far, the best system we have. also, concerning abuse of workers...that i what unions are for. they used to run for helping workers until they got in bed with the gov. just like what has happened here in the US. capitalism is also based on entrepreneurial spirit. people start their own businesses and make them big enough to hire people.


please give me an example of where communism or socialism works better than capitalism.

[quartermaster]

Ok, Capitalism would be great if there was no workers!!

Take another example of a company named Gama that operated here in my country Ireland. The miminum wage here is €8.65. Gama was tendering for a contract from the government, and it was so desperate to get this contract it paid its workers €2.50 an hour with no overtime while they were working 80 hours a week.

That is capitalism in its workings; We were told that the capitalist market would transform this country. Yet after 15 years of unprecedented growth and wealth, the health service is worse, the education system is in crisis and 50,000 are still waiting for social housing! We were the fastest growing economy in europe - and the young people of today are facing worst living standards than their parents

You don't know what Capitalism is, in two of your examples you have pointed to corporatist or government failures, which have NOTHING to do with capitalism. In real terms, what you speak of is closer to what economic Fascism is, NOT, capitalism. Despite that, Ireland saw one of the greatest booms due to more liberal, capitalist reforms and benefited from them for years, but unfortunately, the Irish government expanded its size and began to interfere more within the economy during the "good times," and what Ireland reaped was a collapsed economy. Again, what Ireland has, what Thatcher and Reagan advocated was NOT capitalism, it was corporatism under the pretense of a free-market. Of course you haven't done the research to know the difference between the two, and thus you think, incorrectly, that any system where goods and services are remotely exchanged on a market, is automatically capitalism, what foolishness is that!


The aim of capitalism is to exploit each and every worker in order to increase their profits. Workers are not paid for their labour - Take the example of a carpenter he makes a table and gets 20 dollars for making that table. But that table goes on sale for $25, so the carpenter can not buy his labour back. So he is underpaid.

I love how you paraphrase Marx without actually knowing what you are saying here; you have, in your example, created a paradox. Let us, first, per adventure, eliminate the arbitrary price valuation of the table and assume that the worker's labor is based entirely off of the "value" of the table. Labor is, of course, a subjective value, so how then, if the value of the table is dependent on the value of the labor, do you decide the value of the labor, or the value of the table, for that matter? As Carl Menger says, such reasoning is circular as you are trying to derive the value of a good based on the value of labor and in turn the value of labor based on the value of the good(s) produced; Marx, of course, never resolved this issue, because even without a monetary valuation, there is no way, given your example, to determine the value of labor. In short, Marx's theory of labor value is a paradox, it is circular reasoning as it does not actually resolve how you determine "worth," because worth is inherently subjective.

Menger explores value, stating:

"[v]alue is… nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs... and in consequence carry over to economic goods as the… causes of the satisfaction of our needs." (Principles of Economics)

The value of labor, in essence, is derived from what value is put on it, just like any product. Something is valuable because a person decides to value it, this is true for all associations and all goods. Money and the market simply "pool" the combined value that is put on labor and goods by all people, thus, we have the phrase "market value." The value, is, in a sense, subjective, therefore, a person cannot be technically "underpaid" anything more than market wages, or how much the market puts value on a wage; which is, again, subjective.

In another realm, Böhm-Bawerk states:

The completely just proposition that the worker is to receive the entire value of his product can be reasonably interpreted to mean either that he is to receive the full present value of his product now or that he is to get the entire future value in the future. But…the socialists interpret it to mean that the worker is to receive the entire future value of his product now. (Böhm-Bawerk pp. 263–64)

In essence, even assuming that the worker should be paid for the “full value” of the good(a pretense I just disproved), workers are paid under the sold price because they are paid before the product is released; they are paid for the present value, and not the future value of the product when it is sold. As such, the end price is based off of the accumulated value due to the time difference between when the workers were paid and the product released. In essence, your example fails because of this regard.

Next, I would like to address the fallacy that in the free market people trade goods with "value for value;" this of course, is incorrect. In a market, where value is subjective, a person would have to value another good that they are exchanging their good (or money) for, more than they value their own good. Otherwise, if they had the same value, they would just trade their two goods back to each other and go about their way; that is wrong, if I trade my gold for some of your fish, I value that fish more than my gold, and the inverse is true, for you.

In the very same way, as an employer I value your labor more than the good I am giving away (usually money), and you, as the employee, value the good I will give you more than you are giving away, which is your time and labor. Again, capitalism does not exploit labor, because value is first of all subjective and moreover, work is voluntary. The purpose of capitalism is not to exploit the worker, but of course, when you do not understand the means of production you fail to see why that is.

[finnguy]

I think the economy should be regulated by the gov't not controlled.

[kingpinnn]

I think the economy should be regulated by the gov't not controlled.

there is a very fine line, and the more regulation you have the less business there is, and the harder it is to do things, but if you dont have enough then you have many illegal activities such as in Dubai, they have almost no regulation on their gold market and there is billions of dollars in smufggling going on there

[boy.on.laptop]

here is the essay i wrote..

I don't like communism, or socialism, they don't work...the only way a country can flourish is through pure capitalism. Unfortunately, obama has sought to regulate our economy so heavily it starting to look socialist. if you look at history, the more regulation that has been put on our economy, the slower the growth has become. Look at Europe. They are a semi socialist, and their government programs have slowed their economic growth.

Wow mate, if you are going to make some statements like that you need facts to back them up. First of all what do you describe as flourishing? Personally I think a country is flourshing when there and fewer and fewer people bellow the poverty line and can either afford healthcare, education, housing and food(or it is provided by the government but thats another statement entirely).

Lets get one thing straight Obama is not a socialist its a stretch to even call him a social democrat. His tax proposals are not really any different to what the tax policy of the United States was after George Bush Seniors tax hikes(unless you consider him a socialist).

Europe's semi-socialist policies have slowed economic growth? If you want a great example of how semi-socilaist policies work and their effectiveness in this last global financial crisis you need look no further than Australia which had a massive stimulus policy and remained the only major first world country that was largely unaffected by the GFC.

Also more regulation has slowed economic growth? Three letters my friend: FDR

[quartermaster]

Also more regulation has slowed economic growth? Three letters my friend: FDR

Two words: prolonged depression.

[boy.on.laptop]

Two words: prolonged depression.

This is something economists historians have argued for many years with no real concensus, the economy recovered under FDR either to spite his regulation or because of it, I obviously am more inclinded to lean to the latter especially when compared to other western countries that didn't follow as strict measures lead to a slower recovery.

[quartermaster]

This is something economists historians have argued for many years with no real concensus, the economy recovered under FDR either to spite his regulation or because of it, I obviously am more inclinded to lean to the latter especially when compared to other western countries that didn't follow as strict measures lead to a slower recovery.

The economy did not fully recover until 1946, a year after FDR died and similar to the depression of 1920-21, it followed massive decreases in government spending. There may be no consensus within academia, however, much data points to the fact that FDR not only prolonged the Great Depression with his failed New Deal programs, but in many cases (such as the case in 1937) actually exacerbated the depression. Indeed, as it is commonly said, FDR's policies are what made that depression "Great."

Edit:

Even most Neo-Keynesians agree that FDR's First and Second New Deal programs failed at recovering the economy and it was World War II that ultimately ended the depression (this claim is equally as erroneous in its own right, but a common notion that is not accepted is the pretense that FDR ended the depression through his policies).

[kingpinnn]

Wow mate, if you are going to make some statements like that you need facts to back them up. First of all what do you describe as flourishing? Personally I think a country is flourshing when there and fewer and fewer people bellow the poverty line and can either afford healthcare, education, housing and food(or it is provided by the government but thats another statement entirely).

Lets get one thing straight Obama is not a socialist its a stretch to even call him a social democrat. His tax proposals are not really any different to what the tax policy of the United States was after George Bush Seniors tax hikes(unless you consider him a socialist).

Europe's semi-socialist policies have slowed economic growth? If you want a great example of how semi-socilaist policies work and their effectiveness in this last global financial crisis you need look no further than Australia which had a massive stimulus policy and remained the only major first world country that was largely unaffected by the GFC.

Also more regulation has slowed economic growth? Three letters my friend: FDR

you're right...the fact obama wants to create a consumer protection agency that will have the ability to monitor ALL investments of all people, and their debts such as mortgage, and the fact that obama backs the idea of giving the head of the Treasury Dept. the power to take control of any institution hat he deems "to big to fail", if he decides the industry is, he will then be able to seize it, dismantle it, sell of its assets, and reinstate all its management with people he wants. you're right that is exactly what Bush senior did...he wants to put on a Value Added Tax (VAT tax) which is said to just to be another sales tax, except this tax will be present at every production step...a table for instance: there will be a tax when the timber is sold, when the leg of the table is made, when the store buys the table, but the tax will not show up when the consumer buys it, which is a way to fool the consumer.


Europe's semi-socialist policies have slowed economic growth? If you want a great example of how semi-socialist policies work and their effectiveness in this last global financial crisis you need look no further than Australia which had a massive stimulus policy and remained the only major first world country that was largely unaffected by the GFC.

that is why the United States is still the largest economy in the world, and will continue to be if we don't allow the progressive semi-socialist agenda of the obama administration.

[kingpinnn]

Also more regulation has slowed economic growth? Three letters my friend: FDR

it wasn't FDR that got us out of the depression, it was Hitler...FDR has actually created more problems that anything with all the damn entitlement programs he made, which are bankrupting the government and are in a deficit. you want to see how more regulation and taxes hinder economic growth look at California, and compare that to Texas which is almost the opposite which has one of the fastest growing economy in the US.

[dead]

it wasn't FDR that got us out of the depression, it was Hitler...FDR has actually created more problems that anything with all the damn entitlement programs he made, which are bankrupting the government and are in a deficit. you want to see how more regulation and taxes hinder economic growth look at California, and compare that to Texas which is almost the opposite which has one of the fastest growing economy in the US.

Hitler didn't help us in economic growth, The Allies in WWII did.

[Nickk XD]

OK...the government has a HUGE role in the economy. Without previous regulation of things like the stock market...everyone threw their money away in it and all of a sudden...DOWN IT CAME=great depression.

People used to play nasty tricks and stuff in the stock market, which is no longer permitted by the Government.

Also, the government plays a huge role in stimulating the economy (i.e. Stimulus Plan).

Actually, FDR managed to pull us out of a depression. It wasn't completely him...but to say Hitler helped is absurd. Hitler helped GERMANY'S economy, but damaged ours greatly. World War II had a negative, then a later positive, effect on our economy. FDR's new deal created many jobs and put America back to work. It also created the Social Security program which many Americans use. Yes, it is abused...but what isn't?

This chart below may not mean a lot to you, but look at the economic growth once FDR took office and implemented the New Deal.
http://uncajoe.today.com/files/2009/02/depression-gdp-output-1.gif

Also note that FDR was the ONLY United States President elected to more than two terms. The people of that era must have liked him...

Also note that he was America's ONLY dictator. That sounds like a negative thing...but he was the only U.S. president to use the power of congress to be elected a dictator. That simply meant he could make rapid changes in a time of need, like the depression and world war II. His changes went past congress and were implemented almost immediately.

---

To Quartermaster: all that made the great depression "great" was the fact it was worldwide. The United States actually experienced a much worse depression in 1886...but it was localized. The current time we are in is sometimes referred to as "the great recession" simply because the word depression makes people pessimistic and pessimism can make the economy worse (since people stop spending and start saving). The recession is "great" because it is worldwide.

[kingpinnn]

OK...the government has a HUGE role in the economy. Without previous regulation of things like the stock market...everyone threw their money away in it and all of a sudden...DOWN IT CAME=great depression.

People used to play nasty tricks and stuff in the stock market, which is no longer permitted by the Government.

Also, the government plays a huge role in stimulating the economy (i.e. Stimulus Plan).

Actually, FDR managed to pull us out of a depression. It wasn't completely him...but to say Hitler helped is absurd. Hitler helped GERMANY'S economy, but damaged ours greatly. World War II had a negative, then a later positive, effect on our economy. FDR's new deal created many jobs and put America back to work. It also created the Social Security program which many Americans use. Yes, it is abused...but what isn't?

This chart below may not mean a lot to you, but look at the economic growth once FDR took office and implemented the New Deal.
http://uncajoe.today.com/files/2009/02/depression-gdp-output-1.gif

Also note that FDR was the ONLY United States President elected to more than two terms. The people of that era must have liked him...

Also note that he was America's ONLY dictator. That sounds like a negative thing...but he was the only U.S. president to use the power of congress to be elected a dictator. That simply meant he could make rapid changes in a time of need, like the depression and world war II. His changes went past congress and were implemented almost immediately.

---

To Quartermaster: all that made the great depression "great" was the fact it was worldwide. The United States actually experienced a much worse depression in 1886...but it was localized. The current time we are in is sometimes referred to as "the great recession" simply because the word depression makes people pessimistic and pessimism can make the economy worse (since people stop spending and start saving). The recession is "great" because it is worldwide.


because of WW II US arms production sky rocketed producing jobs...we were selling soooo much stuff to our allies...another thing that lead to that massive growth was the reform FDR did, but it was also because most other countries couldn't compete with the US. we had the resources to have a great economy and our infrastructure was intact after WWII and i was the opposite for most other countries. our only competitor was Russia, but they fell...FDR helped, but Hitler did more...the main thing FDR did was regulate credit, which was needed, but he also created massive entitlements that are now bankrupting the country

[quartermaster]

OK...the government has a HUGE role in the economy. Without previous regulation of things like the stock market...everyone threw their money away in it and all of a sudden...DOWN IT CAME=great depression.


Though a quaint explanation to tell schoolchildren, this does not actually make economic sense; you are substituting economic theory for "animal spirits." What you are failing to ask yourself is why were they throwing their money away? How could such malinvestment happen all at once and on such a massive scale? That is to say: how could there be so many bad investments in a sector that has no actual demand? Have all investors and businessmen, who have made their wealth by being wise and ingenuitive, all of sudden become completely irrational at once? Or, could there have been an entity that drove all of that malinvestment into the system, by creating the allusion of palpable growth and credit?

Despite your “animal sprits” or voodoo superstition in the madness of the human condition, investors do not aggregately “throw” their money away; they take rational actions given the perceived conditions.

The Great Depression occurred because of artificially low interest rates and inflation, causing banks and investors, alike, to over invest (vis-à-vis malinvestment) and invest with funds that did not exist. The Federal Reserve manipulated several sectors of the American economy (soundly in banking) through the expansion of credit, however, there was never any actual aggregate demand, thus, we have a boom, however, it is a boom fueled off of contrived signals of demand in banking, not based off of consumer demand. To be sure, this was partly an issue of fractional-reserve banking, but overwhelmingly, this was an issue of the Federal Reserve sending false signs to the investor and consumer, thus creating a bubble. This bubble of the mid-1920s, of course, “popped,” as it were, in 1929 with the stock market crisis, although, the crash itself was merely a symptom.


People used to play nasty tricks and stuff in the stock market, which is no longer permitted by the Government.

The stock market crash did not cause the depression, it was merely another result of massive government induced malinvestment. The average worker had already begun to feel the effects of a fledgling economy before October 1929.


Also, the government plays a huge role in stimulating the economy (i.e. Stimulus Plan).


The stimulus plan has failed to do anything but prop-up bad investments; the economy, in real terms, cannot be "stimulated." The economy can only be artificially propped up and then, of course, forced to correct when the so-called "stimulus money" has run out. You are simply inducing a short-term boom, for a larger problem further down the line, when the “zombie” companies and malinvestments collapse due to there being no actual demand.


Actually, FDR managed to pull us out of a depression. It wasn't completely him...but to say Hitler helped is absurd. Hitler helped GERMANY'S economy, but damaged ours greatly. World War II had a negative, then a later positive, effect on our economy. FDR's new deal created many jobs and put America back to work. It also created the Social Security program which many Americans use. Yes, it is abused...but what isn't?

This chart below may not mean a lot to you, but look at the economic growth once FDR took office and implemented the New Deal.
http://uncajoe.today.com/files/2009/02/depression-gdp-output-1.gif


You are aware that GDP takes into account government spending, right?

GDP, in scope, really does not actually show “economic growth,” as you call it, as GDP only takes into account dollar output, it does not take into account whether funds were malinvested or whether productive goods were created; that is to say, if such spending went to productive use. For example, our current GDP figures include the thousands of vacant homes built during the housing boom or foreclosed on by banks. GDP does not actually show you that these homes were bad investments and wasted resources, it just shows money was spent! It does not take into account economic growth or relative prosperity and living standards; in the case of the Great Depression, all GDP did was reflect the enormous amount of government spending and pointless projects that wasted resources due to the lack of demand! It does not show actual economic growth or capital gains/ returns.


Also note that FDR was the ONLY United States President elected to more than two terms. The people of that era must have liked him...

Now you are just appealing to the mob; this is meaningless, as we have no "control," as it were, to compare against FDR. If we could compare FDR to another US president during that exact same period, in some alternate universe, then perhaps your statement would make some sense. Even then, your statement is fallacious for what you are trying to portray, as under that same logic, I could justify Hitler because he was widely loved by many Germans well throughout the early Wehrmacht victories of World War II.


Also note that he was America's ONLY dictator. That sounds like a negative thing...but he was the only U.S. president to use the power of congress to be elected a dictator. That simply meant he could make rapid changes in a time of need, like the depression and world war II. His changes went past congress and were implemented almost immediately.

Why is this noteworthy other than further revealing that FDR began a federal growth that has increasingly usurped economic liberties?

I think you are now more concerned with regurgitating what you were taught, as opposed to actually addressing the main points of contention.

---

To Quartermaster: all that made the great depression "great" was the fact it was worldwide. The United States actually experienced a much worse depression in 1886...but it was localized. The current time we are in is sometimes referred to as "the great recession" simply because the word depression makes people pessimistic and pessimism can make the economy worse (since people stop spending and start saving). The recession is "great" because it is worldwide.

Again, you are presenting trivial facts that contribute nothing to this thread; my statement was a play on words, not an actual argument, but I imagine you just wanted to get a word in on my post.

As a former Monetarist-Keynesian, myself, I understand how easy it can be to praise FDR or World War II for ending the Great Depression, however, I have come to understand that increased spending does not “fix” the economy, it just puts a band aid on a severed limb (excuse my prose).

[kingpinnn]

i gotta love ya Quartermaster...you put it much more eloquently than i could have.