8 ms·

Democratic Domestic Product

40 points by pizza 5y ago

ZeroGravitas 5y ago
Interesting stuff. I feel that "economics" as currently practiced has "you're not allowed to take the rich people's money" baked in as a very deep but generally unspoken assumption. Even taking away their outsized ability to claim more money is frowned upon as in this example: we've generated X amount of money so that's good, let's very carefully ignore who actually got that money because that's not important for some odd reason. If someone set you a task with a million unborn babies, and magic money to redistribute, it's fairly obvious what you'd do with it to maximise happiness, utility, and even GDP to the degree it measures something useful. If an algorithm randomly allocated the magic money to some of the hypothetical babies before you got a chance to make the decision, it doesn't change that answer economically, just politically as the hypothetical baby parents might use the money to harm your political career if you make the wrong decision.
- neilwilson 5y ago
  " feel that "economics" as currently practiced has "you're not allowed to take the rich people's money" baked in as a very deep but generally unspoken assumption. " It's more simple than that. The unspoken assumption is: "There's a fixed amount of money". Once you realise there is no more a fixed amount of money as there are a fixed amount of awardable points in basketball, then how many points "the rich" happen to have becomes an irrelevant concern. Then you can get onto the real issue - what are the power dynamics and are real resources being used effectively or hoarded.
  - HPsquared 5y ago
    There is no fixed amount of money or goods, but there is a fixed supply of status (per person, at least) - and status is what really matters to most people.
    - dredmorbius 5y ago
      Cardinality is at least potentially non-rivalrous. Ordinality is inherently zero-sum. That is, any "game" metric in which the quantity aquired by an individual, without concern for what others have is the basis for evaluation, so long as one person has a sufficient quantity, what any other party has doesn't matter. But in a game in which each contestant is ranked against others, then no matter how many participants there are, there is only one first place. And in fact the more participants are, the harsher the competition for that place. Economics claims that competition is based on profit, utility, and wealth, which are cardinalities. Evidence suggests, and Adam Smith notes, that it is instead based on power, an ordinality, and a zero-sum game.
  - bschne 5y ago
    While you could create infinite amounts of money, that's not very meaningful if it serves as an abstract means of exchange for goods which are ultimately somewhat constrained/scarce. Also, I am pretty sure it'd be a challenge to find a single economist who claimed the amount of money was fixed. What they do think (many of them, and probably somewhat reasonably, anyway) is that you can't create infinite amounts of it without things going awry — see above.
    - neilwilson 5y ago
      That's the point though. It doesn't serve as an abstract means of exchange of goods and service. Money is exchanged and retained in its own right. There isn't a one-to-one relationship between money and stuff. It's more of an inductive relationship. Something power engineers understand of course. They have to generate and deal with reactive power every day, and ensure there is sufficient generated so that electrical items can operate at full output. Too many economists believe the apparent power of the economy and the real power of the economy must be the same.
      - dahfizz 5y ago
        The term you're looking for is a store of value. USD absolutely does serve as a medium of exchange (have you ever bought something..?). It also serves as a store of value - Dollars themselves are valuable _because_ they can be used to purchase goods in the future. Economists understand this perfectly well. The relationship between dollars and things depends on how many dollars and how many things are produced. Doubling the money supply while keeping the productive output of an economy the same will only half the value of dollars. You can increase the nominal dollars infinitely, but that doesn't change the productive capabilities of an economy.
        neilwilson 5y ago
        It won't halve the value of the dollars that are stored, because they are not being spent. Only spent dollars cause price changes, and then only if the capacity to expand is exhausted. If I have a billion dollars in a cupboard prices won't change at all. More importantly if I have a billion dollars in a bank account prices won't change at all, because money in a bank account isn't available for anybody else to use. Economists struggle with the difference between a stock and a flow, which is why their accounting is terrible. Particularly their bank accounting.
  - avgcorrection 5y ago
    The power dynamics? Well the rich have more power than the poor. And the rich rely on people being poor enough to have to sell their labor for money in order to continue being rich. So having a lot of money in absolute terms is supported by being rich in relative terms. “Basketball points are an irrelevant concern… now let’s move on to the real topic at hand: what basketball teams are the best?”
  - syki 5y ago
    There is a fixed amount of awardable points in basketball though. The fixed amount is large and is determined by physics. Effectively though one could use as an upper bound 10% more points than the greatest number of points ever scored in a game. With regard to economics how much the rich have in relation to everyone else becomes a concern due to the nature of human psychology and social dynamics with regard to greed, jealousy, sense of fairness, etc. The social dynamics indicate that too much imbalance in wealth leads to societal instability. In the realm of economic theory it might not matter that there is great inequality but in the realm of politics and societal mechanics it is definitely something to pay attention to.
    - actually_a_dog 5y ago
      > The social dynamics indicate that too much imbalance in wealth leads to societal instability. In the realm of economic theory it might not matter that there is great inequality but in the realm of politics and societal mechanics it is definitely something to pay attention to. You seem to have missed that what ties your first and second sentences together is that, above a certain level, wealth, by itself, brings political power. So, effectively, we end up with a system that's closer to $1 = 1 vote rather than 1 human = 1 vote. Understandably, the humans who only get 1 vote, while others get 1 billion votes, tend to get upset about this.
      - syki 5y ago
        I didn’t miss this; I didn’t state the connection with power. The real imbalance of concern is actually not “wealth” or “money” but power. However, money is a useful proxy for power in the U.S. (and most other countries too)
    - dredmorbius 5y ago
      Scoring opportunities may be bounded. Points are not. So long as there's an ability to make an additional score, there is no limit to the capacity to award points. No valid score will lack a point award for lack of points. The same capacity exists in an economy with a fiat currency or infinitely extensible government credit (equivalent statements FWIW). There is no limit on the government being able to award additional monetary units (points). What's upwardly bounded is the ability to produce real wealth in any given period. The analogy breaks down in the sense that points aren't transactable; there is no basketball economy in which teams exchange points for economic goods and services and engage in entrepreneurial activities to develop new point-scoring abilities within a game. And in basketball, if a score is made, the point is awarded automatically, rather than being exchanged in a market. But so far as the concept of points and monetary units not being constrained by any physical quantity, the similarity holds. I agree largely with your second paragraph, and add to that: "Wealth, as Mr Hobbes says, is power." -- Adam Smith, Wealth of Nations
  - hammock 5y ago
    This comment is too funny, because the reality is that there is NO fixed amount of money, in fact the principal way the rich get richer is by printing more money and receiving it via the cantillon effect.
  - nradov 5y ago
    “How can you have money,” demanded Ford, “if none of you actually produces anything? It doesn't grow on trees you know.” “If you would allow me to continue..." Ford nodded dejectedly. “Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich.” -Douglas Adams, The Restaurant at the End of the Universe https://www.goodreads.com/quotes/685739-if-the-management-consultant-said-tersely-we-could-for-a https://www.goodreads.com/quotes/685739-if-the-management-co...
  - VictorPath 5y ago
    > Then you can get onto the real issue - what are the power dynamics and are real resources being used effectively or hoarded. If you get into the real issue of power dynamics, then you realize that resources are not what is important. What is important is the social relationship between two classes - the class of heirs who expropriate surplus labor time from the class of workers who create all wealth. The very deep but unspoken assumption in the hegemony spread by the heirs is this revolves around resources. From the perspective of the worker who may not even contemplate it, is that this revolves around relationships. Even the name of the study shows this. Originally, people studied political economy. As the study itself became political on the side of the current ruling class, the word political was dropped, and the scientific sounding -ics suffix was attached - economics.
    - efitz 5y ago
      The workers do not create wealth (at all). We would not have iPhones if we just had FoxConn workers. We have iPhones because we had capitalists who conceived that we could have such things, gathered people who could invent the things, gave them direction, and then organized the complex factories and supply chains so that workers would have a place to come to do their part. Likewise “heirs” is a misnomer. Most millionaires in the US did not inherit their wealth, they accumulated it. Marxism is religious bunk.
      - lucian1900 5y ago
        Accumulation of significant wealth happens through exploitation of the labour of others: paying them less than the value their labour produces. It's commonly called profit. Marxism happens to be correct as a science, even if its conclusions are against your own class interests. Possibly the most obvious example is the tendency of the rate of profit to fall.
        scatters 5y ago
        And how do you determine the value of someone's labour? Marxism can't answer that, while conventional economics can. > Possibly the most obvious example is the tendency of the rate of profit to fall. So your evidence of the validity of Marxism is... a 50-50 shot? Even in the replication crisis, science at least demands no more than 5% chance for hypotheses to come true by random luck.
  - ZoomerCretin 5y ago
    You're buying into that lie we've been taught about economics: That creating the conditions for massive inequality is okay because everyone will be better off. https://www.epi.org/publication/secular-stagnation/ https://www.epi.org/publication/secular-stagnation/ Inequality stifles GDP growth.
- avgcorrection 5y ago
  > Interesting stuff. I feel that "economics" as currently practiced has "you're not allowed to take the rich people's money" baked in as a very deep but generally unspoken assumption. Like this line from the article: > > One key conflict in economic affairs is that between the individual and the collective Specifically the rich individual versus the collective, since the individual in liberal economics is modeled on propertarian individualism. “The pursuit of property”
- js8 5y ago
  Isn't this unspoken assumption just pareto-efficiency? https://en.wikipedia.org/wiki/Pareto_efficiency https://en.wikipedia.org/wiki/Pareto_efficiency It's not particularly well-hidden..
  - ZeroGravitas 5y ago
    Yes, that's exactly what I'm talking about. Rather than openly say, "this is the best solution possible, as long as we don't take the rich people's money and redistribute it, which would definately be better" they talk about how something is "Pareto efficient or optimal". Imagine you were stuck on a deserted island and one guy had hoarded all the coconuts. If someone started talking about what the Pareto optimal solution is, or how we could theoretically get there by creating a free market for coconuts then it would clearly be a smokescreen for saying "you are all going to starve to death because I have claimed the coconuts and will physically attack you if you try to take them from me"
    - jkhdigital 5y ago
      > as long as we don't take the rich people's money and redistribute it, which would definately be better Would it, though? It’s not like this hasn’t been done repeatedly throughout history. Go read up on the campaign against the Russian kulak class for a particularly bloody example. Mao’s Cultural Revolution was in a similar vein, and that didn’t exactly go swimmingly.
      - danaris 5y ago
        "These specific authoritarian systems that used communist/socialist language as a smokescreen to get the people to go along with them did not create beneficial results" is not the gotcha argument you think it is.
      - ZoomerCretin 5y ago
        I'm sure he was referring to the more moderate policies enacted in social democracies where income above a high threshold is taxed at higher rates to pay for social services. "Take from the rich to give to the poor" rarely means take everything.
- KarlKemp 5y ago
  Today’s economics has very little to do with anti-redistributive policies today. Your point about ideal allocation is among the core tenets of economics as the diminishing marginal value of money. The mechanism of incentive that allowing for unequal wealth creates is, unfortunately, a conflicting idea. These need to be balanced, but I assure you mainstream economic science would place the optimum at broadly European levels rather than what the US reality is.
  - ZeroGravitas 5y ago
    I'm sure they have the tools available, whether they use them is another thing. Is there any country yet that doesn't just use GDP as their main measuring stick? I just skimmed through a proposal from the UK government about their plans to complement GDP with a suite of measure which take into account climate change and other trendy stuff but still manage to avoid any discussion about how raising incomes for the poor by X is better than raising incomes for the rich by X is something that should be a popular policy goal in a democratic country. Topically, the poorest quintile were the hardest hit financially from covid, but that won't show up in the stats that everyone uses to measure their performance, and any action that actually attempted to fix the real problem would look bad in the current stats. I have a feeling that if GDP really badly reflected the interests of the rich and powerful instead, we'd not have put up with it for so long.
    - actually_a_dog 5y ago
      > Is there any country yet that doesn't just use GDP as their main measuring stick? Bhutan uses "Gross National Happiness" as their metric. If you ask me, they've got the right idea. I don't give a damn about numbers at the bottom of some calculation. I care whether peoples' lives have gotten better. See https://sustainabledevelopment.un.org/index.php?page=view&type=99&nr=266&menu=1449 https://sustainabledevelopment.un.org/index.php?page=view&ty...
- commandlinefan 5y ago
  > you're not allowed to take the rich people's money Actually you're not allowed to take anybody's money, and that's not economics, that's law as practiced since the dawn of civilization.
  - ZeroGravitas 5y ago
    This is factually not true. Slavery, for example, has been legal in various forms. You may quibble that we're not taking their money, just chaining them up and lashing them with whips to force them to earn money that we keep without them ever seeing it, and occasionally selling their children to other slavers for more money, but I feel even expressing that quibble is an important indicator. Somehow "you can't take peoples money" got enshrined in law more concretely than "you can't own slaves/serfs/peasants". It's almost like it was the people with money, and not the slaves/peasants/serfs that were writing the laws.
- ZoomerCretin 5y ago
  >I feel that "economics" as currently practiced has "you're not allowed to take the rich people's money" baked in as a very deep but generally unspoken assumption. It very much is. David Card, who won the Nobel Prize in Economics this year for his work in the 90s that showed modest increases in the minimum wage do not cause layoffs, talked about this attitude in the field. https://www.minneapolisfed.org/article/2006/interview-with-david-card https://www.minneapolisfed.org/article/2006/interview-with-d... "I've subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole." This "cause of economics" is making rich people richer at the expense of everyone else.
throw8932894 5y ago
I do not understand why persons worth is measured in personal income, without including expenses, child support, taxes and negative externalises such as damaged health. Company can include all sort of expenses and pay zero taxes, lowly employee can not even put gas into expenses. It leads to absurd situations, where person has actual negative income (has to borrow money to get by), but on paper is "very rich". But millionaire with couple of properties can claim hardship and ask for social welfare.
- brightball 5y ago
  I’ve never understood why the cost of health insurance isn’t fully deductible.
  - onlyrealcuzzo 5y ago
    For the same reason food isn't?
  - bojangleslover 5y ago
    Make an LLC
  - dahfizz 5y ago
    Because the government wants your money.
  - leetcrew 5y ago
    because you're not a business. businesses have different rules because a) they are not people (unless we're talking campaign finances), and b) all the money that flows into a business eventually flows out to people in a way that is eventually taxable. a health insurance deduction would likely be regressive anyway. the primary beneficiaries would be the same (upper) middle class people that max out their 401k every year. imo we should get rid of pretty much every deduction (except maybe for dependants) and slightly raise all the brackets.
- nradov 5y ago
  A person's worth is not measured in personal income. Where did you get that idea? A person's net worth is simply defined as assets minus liabilities. Income isn't part of the equation, but having a higher income can sometimes allow you to increase your assets over time. What sort of social welfare are you referring to? Most welfare programs have cut offs based on income and assets.
huitzitziltzin 5y ago
Economist here. To defend conventional GDP calculations for a moment, it’s worth keeping in mind that when GDP measures were first invented the data necessary to compute something like what is proposed in the article wasn’t even a pipe dream. (The original ideas predate the 20th century.) The data simply did not exist and was not even foreseen in anyone’s wildest imagination. Even computing conventional GDP measures 75 years ago took a lot of work, a lot of it on paper. (In fact one of the earlier innovators in GDP calculations warned about treating it as a welfare measure way back in the 1930’s! The critique here is not new.) You can sell a measure with a lot of individual heterogeneity like the one proposed in this note to economists. (You don’t need to dress it up in superfluous mathematical machinery like a geometric Brownian motion either.) But this is stuff that has become possible only recently thanks to advances in data availability and computing power. It’s also worth noting that the data itself is only available to a tiny fraction of researchers. If you are the IRS and have a good picture of everyone’s income at a very precise level, you can compute this measure. (It is not easy once you get into the details!) If you are the Bureau of Economic Analysis, which computes GDP, you probably need permission from Congress to access that data for that purpose.
- pizza 5y ago
  But the underlying idea is that now that we can calculate the average individual growth rate, we actually should use that to ask questions about how the wealth of individuals grows, rather than using growth rates that correspond to concatenation of different times of different peoples lives together as if they’re swappable
skybrian 5y ago
If you think of GDP as a matter of activity, then it makes sense that there is more work to be done when rebuilding after a hurricane (for example). It also makes sense that conflicts increase activity. There are good and bad reasons to be more active.

40 points by pizza 5y ago

Interesting stuff. I feel that "economics" as currently practiced has "you're not allowed to take the rich people's money" baked in as a very deep but generally unspoken assumption. Even taking away their outsized ability to claim more money is frowned upon as in this example: we've generated X amount of money so that's good, let's very carefully ignore who actually got that money because that's not important for some odd reason. If someone set you a task with a million unborn babies, and magic money to redistribute, it's fairly obvious what you'd do with it to maximise happiness, utility, and even GDP to the degree it measures something useful. If an algorithm randomly allocated the magic money to some of the hypothetical babies before you got a chance to make the decision, it doesn't change that answer economically, just politically as the hypothetical baby parents might use the money to harm your political career if you make the wrong decision.

neilwilson 5y ago
" feel that "economics" as currently practiced has "you're not allowed to take the rich people's money" baked in as a very deep but generally unspoken assumption. " It's more simple than that. The unspoken assumption is: "There's a fixed amount of money". Once you realise there is no more a fixed amount of money as there are a fixed amount of awardable points in basketball, then how many points "the rich" happen to have becomes an irrelevant concern. Then you can get onto the real issue - what are the power dynamics and are real resources being used effectively or hoarded.
- HPsquared 5y ago
  There is no fixed amount of money or goods, but there is a fixed supply of status (per person, at least) - and status is what really matters to most people.
  - dredmorbius 5y ago
    Cardinality is at least potentially non-rivalrous. Ordinality is inherently zero-sum. That is, any "game" metric in which the quantity aquired by an individual, without concern for what others have is the basis for evaluation, so long as one person has a sufficient quantity, what any other party has doesn't matter. But in a game in which each contestant is ranked against others, then no matter how many participants there are, there is only one first place. And in fact the more participants are, the harsher the competition for that place. Economics claims that competition is based on profit, utility, and wealth, which are cardinalities. Evidence suggests, and Adam Smith notes, that it is instead based on power, an ordinality, and a zero-sum game.
- bschne 5y ago
  While you could create infinite amounts of money, that's not very meaningful if it serves as an abstract means of exchange for goods which are ultimately somewhat constrained/scarce. Also, I am pretty sure it'd be a challenge to find a single economist who claimed the amount of money was fixed. What they do think (many of them, and probably somewhat reasonably, anyway) is that you can't create infinite amounts of it without things going awry — see above.
  - neilwilson 5y ago
    That's the point though. It doesn't serve as an abstract means of exchange of goods and service. Money is exchanged and retained in its own right. There isn't a one-to-one relationship between money and stuff. It's more of an inductive relationship. Something power engineers understand of course. They have to generate and deal with reactive power every day, and ensure there is sufficient generated so that electrical items can operate at full output. Too many economists believe the apparent power of the economy and the real power of the economy must be the same.
    - dahfizz 5y ago
      The term you're looking for is a store of value. USD absolutely does serve as a medium of exchange (have you ever bought something..?). It also serves as a store of value - Dollars themselves are valuable _because_ they can be used to purchase goods in the future. Economists understand this perfectly well. The relationship between dollars and things depends on how many dollars and how many things are produced. Doubling the money supply while keeping the productive output of an economy the same will only half the value of dollars. You can increase the nominal dollars infinitely, but that doesn't change the productive capabilities of an economy.
      - neilwilson 5y ago
        It won't halve the value of the dollars that are stored, because they are not being spent. Only spent dollars cause price changes, and then only if the capacity to expand is exhausted. If I have a billion dollars in a cupboard prices won't change at all. More importantly if I have a billion dollars in a bank account prices won't change at all, because money in a bank account isn't available for anybody else to use. Economists struggle with the difference between a stock and a flow, which is why their accounting is terrible. Particularly their bank accounting.
- avgcorrection 5y ago
  The power dynamics? Well the rich have more power than the poor. And the rich rely on people being poor enough to have to sell their labor for money in order to continue being rich. So having a lot of money in absolute terms is supported by being rich in relative terms. “Basketball points are an irrelevant concern… now let’s move on to the real topic at hand: what basketball teams are the best?”
- syki 5y ago
  There is a fixed amount of awardable points in basketball though. The fixed amount is large and is determined by physics. Effectively though one could use as an upper bound 10% more points than the greatest number of points ever scored in a game. With regard to economics how much the rich have in relation to everyone else becomes a concern due to the nature of human psychology and social dynamics with regard to greed, jealousy, sense of fairness, etc. The social dynamics indicate that too much imbalance in wealth leads to societal instability. In the realm of economic theory it might not matter that there is great inequality but in the realm of politics and societal mechanics it is definitely something to pay attention to.
  - actually_a_dog 5y ago
    > The social dynamics indicate that too much imbalance in wealth leads to societal instability. In the realm of economic theory it might not matter that there is great inequality but in the realm of politics and societal mechanics it is definitely something to pay attention to. You seem to have missed that what ties your first and second sentences together is that, above a certain level, wealth, by itself, brings political power. So, effectively, we end up with a system that's closer to $1 = 1 vote rather than 1 human = 1 vote. Understandably, the humans who only get 1 vote, while others get 1 billion votes, tend to get upset about this.
    - syki 5y ago
      I didn’t miss this; I didn’t state the connection with power. The real imbalance of concern is actually not “wealth” or “money” but power. However, money is a useful proxy for power in the U.S. (and most other countries too)
  - dredmorbius 5y ago
    Scoring opportunities may be bounded. Points are not. So long as there's an ability to make an additional score, there is no limit to the capacity to award points. No valid score will lack a point award for lack of points. The same capacity exists in an economy with a fiat currency or infinitely extensible government credit (equivalent statements FWIW). There is no limit on the government being able to award additional monetary units (points). What's upwardly bounded is the ability to produce real wealth in any given period. The analogy breaks down in the sense that points aren't transactable; there is no basketball economy in which teams exchange points for economic goods and services and engage in entrepreneurial activities to develop new point-scoring abilities within a game. And in basketball, if a score is made, the point is awarded automatically, rather than being exchanged in a market. But so far as the concept of points and monetary units not being constrained by any physical quantity, the similarity holds. I agree largely with your second paragraph, and add to that: "Wealth, as Mr Hobbes says, is power." -- Adam Smith, Wealth of Nations
- hammock 5y ago
  This comment is too funny, because the reality is that there is NO fixed amount of money, in fact the principal way the rich get richer is by printing more money and receiving it via the cantillon effect.
- nradov 5y ago
  “How can you have money,” demanded Ford, “if none of you actually produces anything? It doesn't grow on trees you know.” “If you would allow me to continue..." Ford nodded dejectedly. “Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich.” -Douglas Adams, The Restaurant at the End of the Universe https://www.goodreads.com/quotes/685739-if-the-management-consultant-said-tersely-we-could-for-a https://www.goodreads.com/quotes/685739-if-the-management-co...
- VictorPath 5y ago
  > Then you can get onto the real issue - what are the power dynamics and are real resources being used effectively or hoarded. If you get into the real issue of power dynamics, then you realize that resources are not what is important. What is important is the social relationship between two classes - the class of heirs who expropriate surplus labor time from the class of workers who create all wealth. The very deep but unspoken assumption in the hegemony spread by the heirs is this revolves around resources. From the perspective of the worker who may not even contemplate it, is that this revolves around relationships. Even the name of the study shows this. Originally, people studied political economy. As the study itself became political on the side of the current ruling class, the word political was dropped, and the scientific sounding -ics suffix was attached - economics.
  - efitz 5y ago
    The workers do not create wealth (at all). We would not have iPhones if we just had FoxConn workers. We have iPhones because we had capitalists who conceived that we could have such things, gathered people who could invent the things, gave them direction, and then organized the complex factories and supply chains so that workers would have a place to come to do their part. Likewise “heirs” is a misnomer. Most millionaires in the US did not inherit their wealth, they accumulated it. Marxism is religious bunk.
    - lucian1900 5y ago
      Accumulation of significant wealth happens through exploitation of the labour of others: paying them less than the value their labour produces. It's commonly called profit. Marxism happens to be correct as a science, even if its conclusions are against your own class interests. Possibly the most obvious example is the tendency of the rate of profit to fall.
      - scatters 5y ago
        And how do you determine the value of someone's labour? Marxism can't answer that, while conventional economics can. > Possibly the most obvious example is the tendency of the rate of profit to fall. So your evidence of the validity of Marxism is... a 50-50 shot? Even in the replication crisis, science at least demands no more than 5% chance for hypotheses to come true by random luck.
- ZoomerCretin 5y ago
  You're buying into that lie we've been taught about economics: That creating the conditions for massive inequality is okay because everyone will be better off. https://www.epi.org/publication/secular-stagnation/ https://www.epi.org/publication/secular-stagnation/ Inequality stifles GDP growth.
avgcorrection 5y ago
> Interesting stuff. I feel that "economics" as currently practiced has "you're not allowed to take the rich people's money" baked in as a very deep but generally unspoken assumption. Like this line from the article: > > One key conflict in economic affairs is that between the individual and the collective Specifically the rich individual versus the collective, since the individual in liberal economics is modeled on propertarian individualism. “The pursuit of property”
js8 5y ago
Isn't this unspoken assumption just pareto-efficiency? https://en.wikipedia.org/wiki/Pareto_efficiency https://en.wikipedia.org/wiki/Pareto_efficiency It's not particularly well-hidden..
- ZeroGravitas 5y ago
  Yes, that's exactly what I'm talking about. Rather than openly say, "this is the best solution possible, as long as we don't take the rich people's money and redistribute it, which would definately be better" they talk about how something is "Pareto efficient or optimal". Imagine you were stuck on a deserted island and one guy had hoarded all the coconuts. If someone started talking about what the Pareto optimal solution is, or how we could theoretically get there by creating a free market for coconuts then it would clearly be a smokescreen for saying "you are all going to starve to death because I have claimed the coconuts and will physically attack you if you try to take them from me"
  - jkhdigital 5y ago
    > as long as we don't take the rich people's money and redistribute it, which would definately be better Would it, though? It’s not like this hasn’t been done repeatedly throughout history. Go read up on the campaign against the Russian kulak class for a particularly bloody example. Mao’s Cultural Revolution was in a similar vein, and that didn’t exactly go swimmingly.
    - danaris 5y ago
      "These specific authoritarian systems that used communist/socialist language as a smokescreen to get the people to go along with them did not create beneficial results" is not the gotcha argument you think it is.
    - ZoomerCretin 5y ago
      I'm sure he was referring to the more moderate policies enacted in social democracies where income above a high threshold is taxed at higher rates to pay for social services. "Take from the rich to give to the poor" rarely means take everything.
KarlKemp 5y ago
Today’s economics has very little to do with anti-redistributive policies today. Your point about ideal allocation is among the core tenets of economics as the diminishing marginal value of money. The mechanism of incentive that allowing for unequal wealth creates is, unfortunately, a conflicting idea. These need to be balanced, but I assure you mainstream economic science would place the optimum at broadly European levels rather than what the US reality is.
- ZeroGravitas 5y ago
  I'm sure they have the tools available, whether they use them is another thing. Is there any country yet that doesn't just use GDP as their main measuring stick? I just skimmed through a proposal from the UK government about their plans to complement GDP with a suite of measure which take into account climate change and other trendy stuff but still manage to avoid any discussion about how raising incomes for the poor by X is better than raising incomes for the rich by X is something that should be a popular policy goal in a democratic country. Topically, the poorest quintile were the hardest hit financially from covid, but that won't show up in the stats that everyone uses to measure their performance, and any action that actually attempted to fix the real problem would look bad in the current stats. I have a feeling that if GDP really badly reflected the interests of the rich and powerful instead, we'd not have put up with it for so long.
  - actually_a_dog 5y ago
    > Is there any country yet that doesn't just use GDP as their main measuring stick? Bhutan uses "Gross National Happiness" as their metric. If you ask me, they've got the right idea. I don't give a damn about numbers at the bottom of some calculation. I care whether peoples' lives have gotten better. See https://sustainabledevelopment.un.org/index.php?page=view&type=99&nr=266&menu=1449 https://sustainabledevelopment.un.org/index.php?page=view&ty...
commandlinefan 5y ago
> you're not allowed to take the rich people's money Actually you're not allowed to take anybody's money, and that's not economics, that's law as practiced since the dawn of civilization.
- ZeroGravitas 5y ago
  This is factually not true. Slavery, for example, has been legal in various forms. You may quibble that we're not taking their money, just chaining them up and lashing them with whips to force them to earn money that we keep without them ever seeing it, and occasionally selling their children to other slavers for more money, but I feel even expressing that quibble is an important indicator. Somehow "you can't take peoples money" got enshrined in law more concretely than "you can't own slaves/serfs/peasants". It's almost like it was the people with money, and not the slaves/peasants/serfs that were writing the laws.
ZoomerCretin 5y ago
>I feel that "economics" as currently practiced has "you're not allowed to take the rich people's money" baked in as a very deep but generally unspoken assumption. It very much is. David Card, who won the Nobel Prize in Economics this year for his work in the 90s that showed modest increases in the minimum wage do not cause layoffs, talked about this attitude in the field. https://www.minneapolisfed.org/article/2006/interview-with-david-card https://www.minneapolisfed.org/article/2006/interview-with-d... "I've subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole." This "cause of economics" is making rich people richer at the expense of everyone else.

throw8932894 5y ago

I do not understand why persons worth is measured in personal income, without including expenses, child support, taxes and negative externalises such as damaged health. Company can include all sort of expenses and pay zero taxes, lowly employee can not even put gas into expenses. It leads to absurd situations, where person has actual negative income (has to borrow money to get by), but on paper is "very rich". But millionaire with couple of properties can claim hardship and ask for social welfare.

brightball 5y ago
I’ve never understood why the cost of health insurance isn’t fully deductible.
- onlyrealcuzzo 5y ago
  For the same reason food isn't?
- bojangleslover 5y ago
  Make an LLC
- dahfizz 5y ago
  Because the government wants your money.
- leetcrew 5y ago
  because you're not a business. businesses have different rules because a) they are not people (unless we're talking campaign finances), and b) all the money that flows into a business eventually flows out to people in a way that is eventually taxable. a health insurance deduction would likely be regressive anyway. the primary beneficiaries would be the same (upper) middle class people that max out their 401k every year. imo we should get rid of pretty much every deduction (except maybe for dependants) and slightly raise all the brackets.
nradov 5y ago
A person's worth is not measured in personal income. Where did you get that idea? A person's net worth is simply defined as assets minus liabilities. Income isn't part of the equation, but having a higher income can sometimes allow you to increase your assets over time. What sort of social welfare are you referring to? Most welfare programs have cut offs based on income and assets.

huitzitziltzin 5y ago

Economist here. To defend conventional GDP calculations for a moment, it’s worth keeping in mind that when GDP measures were first invented the data necessary to compute something like what is proposed in the article wasn’t even a pipe dream. (The original ideas predate the 20th century.) The data simply did not exist and was not even foreseen in anyone’s wildest imagination. Even computing conventional GDP measures 75 years ago took a lot of work, a lot of it on paper. (In fact one of the earlier innovators in GDP calculations warned about treating it as a welfare measure way back in the 1930’s! The critique here is not new.) You can sell a measure with a lot of individual heterogeneity like the one proposed in this note to economists. (You don’t need to dress it up in superfluous mathematical machinery like a geometric Brownian motion either.) But this is stuff that has become possible only recently thanks to advances in data availability and computing power. It’s also worth noting that the data itself is only available to a tiny fraction of researchers. If you are the IRS and have a good picture of everyone’s income at a very precise level, you can compute this measure. (It is not easy once you get into the details!) If you are the Bureau of Economic Analysis, which computes GDP, you probably need permission from Congress to access that data for that purpose.

pizza 5y ago
But the underlying idea is that now that we can calculate the average individual growth rate, we actually should use that to ask questions about how the wealth of individuals grows, rather than using growth rates that correspond to concatenation of different times of different peoples lives together as if they’re swappable

skybrian 5y ago

If you think of GDP as a matter of activity, then it makes sense that there is more work to be done when rebuilding after a hurricane (for example). It also makes sense that conflicts increase activity. There are good and bad reasons to be more active.