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The entire economy is based on the idea of never ending growth, infinite leverage, and assets that always inflate without increasing utility (homes for example)

• coldcode 7y ago
  The problem is the wealth in concentrated in the few, who do not want to give it up, and needed by the many, who do not have (or know) the leverage needed. Of course this has always been the case since cities were first invented. All civilizations come to some kind of end, and new ones arise.
  • weirdstuff 7y ago
    City populations are some of the most unequal in all society. Extremes in close proximity. I've read research on this in the past, although I don't have any links at the moment.
    • WWLink 7y ago
      That can lead to better mobility though, can't it? Instead of living in a town full of poor people who you can't sell anything to. lol.
  • Retric 7y ago
    Total wealth is not important as long as everyone is paying for shared infrastructure based reasonably closely to the value they derive from it. That’s the social contract that’s being broken as for example developers depend on good local schools but they pay nothing for them. Building a new house is inherently different from selling an existing one, but zoning changes are handed out for free.
  • devcpp 7y ago
    This is stupid. You have this marxist idea that conflates wealth and value. In reality, there is no real problem with wealth inequality as long as people don't all work for one person, which never happens because of dynamics of demand and offer for labor. In fact, inequality is responsible for our prosperity, which is much more important than equality unless you have an unhealthy jealousy problem. Gini/Atkinson to HDI correlation is not that great.
    • sfkdjf9j3j 7y ago
      https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."
    • claudiawerner 7y ago
      > This is stupid. You have this marxist idea that conflates wealth and value. I just want to point out that to philosophers and economists interested in Marx, that's not a solid point. Marx rarely uses the term 'wealth' and his definition of 'value' is very specific. Marx's point was that wealth always takes a specific form, there is no 'wealth' in abstract just as there is no 'production' or 'population' or even 'value' in the transhistorical always-the-case sense. >In reality, there is no real problem with wealth inequality as long as people don't all work for one person, which never happens because of dynamics of demand and offer for labor. This seems to be deriving an 'ought' from an 'is'. You may find no problem with wealth inequality, but a wide variety of esteemed economists, sociologists and philosophers do. You need to consider the question of to whom wealth inequality isn't an issue, on the basis of which facts, and which model of wealth and value.
    • sudosysgen 7y ago
      You should read Marx. In general, he explicitly separates accumulated capital (wealth) and value.
  • airstrike 7y ago
    > concentrated in the few, who do not want to give it up This bit is true, but we should remember that no one wants to give up anything, rich or poor. That's human nature.
    • aspenmayer 7y ago
      You don’t speak for me. I would rather pay my taxes than have the money if I know every one else is in the same situation as me in being obligated to pay taxes. That is not the current status quo. Tax shelters and tax minimization strategies generally are tools that are not beneficial to market participants equally. It’s simply not worth the trouble unless you are offsetting a substantial tax liabilities. It’s not always the case that tax liabilities increase as wealth increases. Taxes don’t always go up with your income either. The fact that these variations and exclusions and deductions exist show intent to tax fairly and a desire to not double tax if not a reality. Yet the clear evidence that in real world examples, very high net worth individuals pay less than those in the upper middle class. Taxing proportional ability to pay seems fairer than the current system. That this is not the natural order of the tax system is itself curious. The governments of the world already deficit spend in excess of tax revenues. The tax system isn’t any more about fairness than it is about the money. If the government was able to choose to forgive your tax liability due to an exclusion or deduction, it could choose to do so for the entire tax base. It is not necessary to tax system to exist in its current state. It is the way it is because it benefits those who have money and power for it to be this way. Maybe this is why Fukuyama foresaw the end of history. We just ran out of ideas so this is the closest thing we got to a steady state society.
  • joefourier 7y ago
    If real estate were a depreciating asset rather than an appreciating one, this would not be a problem. Imagine if we had a surplus of housing in major cities (certainly possible with modern technology if you put politics aside) and homes had to compete in the manner of consumer goods such as automobiles.
  • throw_this_one 7y ago
    Yup, precisely this. Obviously this is super hard/impossible to calculate, but everybody should be paying in a certain fraction of what they are getting out of the system. ex. The entrepreneur that gets access to the road system, educated workforce, police/legal system protection... if they didn't have that then they couldn't profit from their widget. So pay something significant back to the system, or you can't participate in the system.
• twic 7y ago
  > The entire economy is based on the idea of never ending growth I hear this a lot. As far as i know it's not actually true. Is there anything specific in orthodox economic theory that requires never-ending growth?
  • fullshark 7y ago
    There are many macroeconomic models with the assumption that populations will keep growing and worker productivity will not shrink. That alone should yield never-ending growth.
  • cagenut 7y ago
    I mean, you clearly know the answer, you just want to label it "unorthodox" and dismiss it.
  • nordsieck 7y ago
    > > The entire economy is based on the idea of never ending growth > I hear this a lot. As far as i know it's not actually true. Is there anything specific in orthodox economic theory that requires never-ending growth? I think a charitable interpretation of this claim is: people's planning (which is usually limited to the short term, when it happens at all) typically assumes the optimistic case. This is certainly true for everyone who lives paycheck to paycheck. It's also true for companies who survive on a revolving line of credit to fund longterm operations.
  • bsanr2 7y ago
    The existence of debt and interest coupled with lack of practical planning for the eventuality of economic decline or stagnation.
  • vsareto 7y ago
    I always hear that there's inflation targets, and deflation and stagflation are both worse than inflation. In this sense, the price of things always goes up, but so should wages. I don't know if economists plan on purchasing power always going up.
    • 7y ago
• drstewart 7y ago
  How does redistributing wealth fix a problem based on never ending growth? I don't see how your two statements follow from one another. In Japan, house prices commonly depreciate. I don't see any evidence their economy is unaffected by that fact.
  • jdc 7y ago
    In Japan, house prices commonly depreciate. Maybe that's why their homelessness per capita is almost 57 times lower than the States'.
    • wutbrodo 7y ago
      Only if you don't understand anything about economics... > Homelessness grew noticeably more widespread in Japanese society since the collapse of the Japanese asset price bubble across the 1990s, and the resulting "Lost Decade" of economic stagnation. This has resulted in higher unemployment, a contributing factor towards potential homelessness.[1] National economies are complicated, and the connection between high (or continually-appreciating) housing prices and homelessness doesn't always run the direction that a naive model assumes it does. [1] https://en.wikipedia.org/wiki/Homelessness_in_Japan https://en.wikipedia.org/wiki/Homelessness_in_Japan
      • renewiltord 7y ago
        Wait, the latest stats read that there are fewer homeless people in Japan than all of San Francisco (and definitely all of LA). That can't be right. It has to be a definition difference or they're doing something remarkably right.
        • jdc 7y ago
          It's because GP cherry-picked a paragraph from the History section of that article and ignored the actual present per-capita homelessness rates.
          • 7y ago
• Ididntdothis 7y ago
  “assets that always inflate without increasing utility (homes for example)” I think that’s the real problem. Work should be rewarded and not just owning things.
  • njharman 7y ago
    Really? Work should be disincentivized. Automation and innovation rewarded. The goal of human existence is not and should not be "gainful employment".
    • Pfhreak 7y ago
      I think the parent is objecting more to the fact that today's economy allows those with wealth to earn income from that wealth. (E.g. they own the property, they can earn income from rent. They own the factory, they can extract excess value from the labor. etc.) Automation vs working is a different axis than rewarding capital vs working. They are both good discussions to have, though.
      • Ididntdothis 7y ago
        Ideally we wouldn’t have to work but we are very far away from that. In the meantime it seems society is getting skewed towards benefiting owners over people who work. The news celebrates rising stock markets and rising housing prices. We celebrate “job creators”. The Fed responds when the stock market goes down but just shrugs when real wages for most people are stagnating or even going down . Investment income is taxed favorably over income from work. Companies claim they are run solely for the owners (shareholders). Why not make workers also stakeholders that need to considered?
  • leetcrew 7y ago
    clearly the rewards from owning things vs actual work is a bit out of whack in our current society. but owning things is itself the reward for surplus work.
    • 7y ago
• katmannthree 7y ago
  I posed that question of the reality of that infinite growth to my econ professor back in the day, and their response was that technological advancements have allowed it in the past and likely will through the future. The plan appears to be to throw money at problems as they come up and coast into the sunset on the current economic system without a serious long-term plan for when things break down. Unfortunately as most people here are probably aware, throwing money at a problem doesn't always result in a viable solution. As more and more of the low hanging fruit of technological advancement gets picked we may be in for some interesting times.
  • meroes 7y ago
    I think technology is only one way of expanding markets indefinitely, albeit one of the most beneficial when it happens. Unfortunately capitalism's need for infinite growth is nigh unstoppable and it always finds a path. If there aren't enough startups, technological advances, or similar we see things like private militaries, Banana Wars, buying elections, private prisons, over leveraging, etc. Capitalism has to have an outlet and we are at its mercy in that sense.
    • sudosysgen 7y ago
      Or, eventually, capitalism has to end.
• leptoniscool 7y ago
  Inventions and new technologies increases wealth, think about the digital revolution in the past few decades. In order to keep growing, society must invest in research and innovation. 'Redistribution' is inherently unfair, and in a global world it will only cause capital flight.
  • Pfhreak 7y ago
    > 'Redistribution' is inherently unfair This is a peculiar, and unsubstantiated assertion. I certainly wouldn't consider this an axiom in any discussion about economic policy. Can you explain a little more? Or are you just saying that you believe that redistribution is unfair?
  • toiletfuneral 7y ago
    You're right. To be fair we need to bring out the guillotines
  • onlyrealcuzzo 7y ago
    Fair is inherently subjective.
    • pvorb 7y ago
      Sure, but you can objectively tell if something is unfair. Defining fairness is more difficult.
      • matz1 7y ago
        How ? The definition of fairness itself subjective.
      • gowld 7y ago
        What's the objective definition of unfair?
        • pvorb 7y ago
          I'm not talking about a definition. Just that, for example, if one child gets born in a rich country to a rich family and one child to a poor family in a third world country, their starting conditions are unfair. This doesn't help much with a definition of unfair, but I think it's still objective.
• onlyrealcuzzo 7y ago
  It keeps going until people are unwilling or unable to put themselves into more debt for the same thing. The government seems dead set on making sure the "unable" part never happens. And people are dead set on always willing. If the government would stop trying to manipulate every market, this maybe wouldn't happen. The Islamic empire was insanely successful for a longer period of time than the US empire has been around, and the Islamic Empire had truly free markets. For anyone interested, Debt: The First 5000 Years is a fascinating examination of this topic.
  • cheez 7y ago
    First time I've seen this discussion of Islamic empire in a favorable light here. What makes you say the Islamic empire had free markets? From the book?
    • onlyrealcuzzo 7y ago
      The book says that the original Islamic Empire was highly favorable of merchants. One of the main ideas (of the Empire, not necessarily the religion) was that gold coinage came from God so that people could easily trade. Instead of everyone acquiring all the skills necessary for sustenance (farming, tool building, carpentry, etc) -- they could become masters of a few skills and trade the fruits of their skills in the open market. The idea was that doing so, humans could advance much faster. This was sort of God's secret sauce. So interfering with the market was like interfering with God. It was a no no. One could argue that they manipulated the market by banning usury (interest bearing loans). However, before the Islamic Empire, interest was usually VERY high -- 60%+ per year was common. Debt was so cost prohibitive that the constant need for debt Jubilees was its own problem. It's unclear how the Islamic Empire financed all these merchants without interest bearing loans. I'd love to learn more about how that worked.
  • ntsplnkv2 7y ago
    If the government doesn't manipulate the market then corporations will swoop in and manipulate it themselves. Which they have. Which is why government stepped in.
• _curious_ 7y ago
  The correction you describe has been perpetually postponed in the form of bailouts - whether that's to wall street or main street. A true reset would be quite painful and catastrophic - but only then can we rebuild a foundation on a different set of values and orientation.
  • airstrike 7y ago
    > but only then can we rebuild a foundation on a different set of values and orientation. [Citation needed]. That's a pipe dream. Human nature remains constant.
    • ModernMech 7y ago
      Aspects of human nature are not evenly distributed throughout the population. For example, psychopaths have a very different value system compared to other people. Societies with psychopaths in charge of things reflect the values of the psychopath (a pathocracy). We can put people in charge who have a more even distribution of human emotions.
• ckdarby 7y ago
  > I don't know how long it will keep going It ends in the next 8-14 years. First time event where retiring class > working class. Population growth assumed to be equal or higher for every subsequent generation back 50 years ago. Wait until those surplus programs stop becoming surplus. If you look now and think inequality is bad now, wait, it gets a lot worst.
  • arbitrary_name 7y ago
    Do you have good demographic data to share? Would love to dive deeper.
    • ckdarby 6y ago
      This book does better justice than I could ever: Sleeping on a Volcano: The Worldwide Demographic Decline and the Economic and Geopolitical Implications
• airstrike 7y ago
  > The entire economy is based on the idea of never ending growth Yes, because total factor productivity[0] always grows. > infinite leverage None of us can raise an infinite bank loan, so this isn't really true. There are many, many, many limits to leverage. > and assets that always inflate without increasing utility (homes for example). Also not true... if the value of living in SF increases, it makes perfect sense that land in SF is also more valuable > It works, until it doesn't. That's not really a falsifiable assertion. > I don't know how long it will keep going, but I do think we need a real correction in order to redistribute some of the wealth. Notwithstanding all the faults in the arguments above, how does distributing wealth arbitrarily at a single point in time ("real correction") solve any of the issues you present? __________ https://en.wikipedia.org/wiki/Total_factor_productivity https://en.wikipedia.org/wiki/Total_factor_productivity
  • ahnick 7y ago
    Why does TFP always grow? Is the fundamental reasoning that new technologies and efficiency improvements in existing technologies will always occur over time and therefore guarantees this growth?
    • nerfhammer 7y ago
      people are smart and slowly inevitably figure out ways to do things more efficiently
      • stouset 7y ago
        And this does not and cannot continue indefinitely.
        • nerfhammer 7y ago
          what do you mean, do you think over time people are going to stop being clever?
          • 7y ago
• megavolcano 7y ago
  > we need a real correction in order to redistribute some of the wealth. There will be no redistribution, that's a fairy tale. There will only be evaporation.
  • dsr_ 7y ago
    Taxes are a redistribution mechanism.
    • megavolcano 7y ago
      And what do you think would happen if we decide to hike taxes on the uber wealthy once this is all over? The same thing they always do - go stash it in some tax haven, never to be seen again. For all intents and purposes, it has evaporated.
• refurb 7y ago
  “Never ending growth” is what drives improvements in the standard of living. And by standard of living I don’t mean a bigger TV or faster computer but better healthcare, improved education, fewer living in poverty and clean energy. Seems like a noble goal, no?
• AnthonyMouse 7y ago
  > The entire economy is based on the idea of never ending growth, infinite leverage, and assets that always inflate without increasing utility (homes for example). It works, until it doesn't. Humans want better lives. More living space, more free time, faster cars, whatever. Humans will not stop wanting this for as long as there are humans. There are two ways to get it. One is creating more stuff. This is growth. The other is taking somebody else's stuff. This is war. Growth is better. But zoning restrictions that inflate housing prices? That's not growth, it constrains growth, which implies...
  • gowld 7y ago
    There's a third way: Living better, not bigger. Engaging in social, intellectual, and aesthetic activities, not ever-increasing consumerism.
    • AnthonyMouse 7y ago
      This is what people say when their basic needs are met and they have enough free time to engage in "social, intellectual, and aesthetic activities." Tell the people who don't that growth isn't necessary and see if they're happy for you to have that but not them.
  • rsync 7y ago
    I hope you will consider - both from a biological perspective and an economic one - that catabolism is also possible. Which is to say, depending on your environment, you can create a "better life" (by your definitions) by catabolizing existing resources. You can't catabolize forever, of course, but it's an immediate and obvious refutation to your claim that "better lives" can only be pursued through growth or war.
    • AnthonyMouse 7y ago
      There isn't a separate thing called catabolism which can increase available value by neither creating nor transferring it. Converting one resource to another at an overall net gain is growth. Converting one resource to another when the original resource was equally or more valuable net doesn't improve lives, it's either completely neutral or net harmful. Note that there are a lot of growth metrics out there that inappropriately fail to account for this, e.g. they measure sale price but not consumer or producer surplus (which are harder to measure because there is no market pricing information available). If someone invents a cheap way to turn farm waste into motor fuel and then suddenly gas is $1/gallon, that's growth -- there is a surplus being created -- even if there is a net reduction in GDP because oil companies are making less money while most of the surplus goes to the consumer. (Though in most cases the reduction in GDP doesn't happen anyway because then consumers have more money in their pockets and spend it on something else.)
• yingw787 7y ago
  It really bothers me to hear this, because the truth is people have unlimited wants, and there will always be rich and poor, whether by context or by deed. Growth is the only way I see where we can hope to lift all boats. An anti-growth mentality kicks the ladder from underneath those who might benefit from increased material wealth. In this context, I'm really proud of my ancestral homeland (mainland China), who in 40 years lifted a billion people from abject poverty through economic growth. Yes, there's significant problems magnified by that, but to paraphrase a popular saying, a full person has a million problems and a starving person has one. Sure, growth with negative externalities have negative side effects and we definitely should talk about that, but that's a separate discussion and focus than "don't grow". I totally agree with your leverage aspect and aligning value to utility, and I think that's a very positive avenue of discussion. Let's talk about that instead.
  • stouset 7y ago
    Exponential growth literally cannot continue indefinitely on a planet with finite land, finite energy reserves, and finite resources. This should be uncontroversial. We can disagree about where, when, and how to stop growth. We cannot disagree that it must stop at some point, and that the tyranny of exponential growth means that you will hit this moment frighteningly fast even when you appeared to have plenty of legroom. With a growth rate of even 1.5%, you can be using less than 10% of the resources available to you, and yet you will hit a hard wall at a minimum within 200 years. And even this is a fantasy, as resources, land, and energy are always utilized in decreasing order of ease of access.
    • yingw787 7y ago
      It is controversial, because the assumption of exponential growth is flawed. For one, your model underfits population growth, it's a logistic curve and not a purely exponential one. Wealthier countries on average produce less children than poorer countries, and assuming no global shakeup occurs, most will end up in the crisis like the one Japan is beginning to see with a lot of older people and not enough younger people to support them. We can talk about what happens after that cliff, but how can you have exponential usage in natural resources when the population _doesn't even exist_? Not to mention human ingenuity when people get desperate. WWI / WWII saw Germany produce coffee from acorns, oil from coal, and Fanta from vegetable scraps, ensuring a rise in industrial production during 1944 under arduous circumstances. We don't operate at 100% efficiency and we can most definitely increase that number by double digit, maybe even triple digit percentages. Take meat, a horrible source of energy inefficiency. Lab grown meats, meat substitutes grown from vertical farms, even eating different kinds of meats (cricket powder protein bars aren't bad and have a more or less 1:1 energy input:output ratio) result in increased efficiency savings. This is a matter of economics. Anti-growth simply isn't feasible from a domestic or foreign policy standpoint. There is no way you will convince any significant politician, and by extension his/her voting bloc, that there must be an end to growth. You can't religion or dictator your way out of this either, since it goes against the very essence of human nature.
• deleted 7y ago
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• twblalock 7y ago
  > I don't know how long it will keep going, but I do think we need a real correction in order to redistribute some of the wealth. How would a correction lead to redistribution? Corrections hurt the poor more than the rich. For the rich, a correction is a great time to invest. For the poor, it is a time of unemployment and despair.