5 ms·

Let It Die: Rushkoff on the economy

43 points by dangoldin 18y ago

Rod 18y ago
I get the impression that Rushkoff does not know much about Economics, nor Finance. I do agree that Wall Street was making way too much money and that this new gilded age had to end sooner or later. However, I do NOT agree that the collapse of the financial services industry would benefit the United States. The truth is that the U.S. needs the financial services industry to serve as the economy's lubricant. Ultimately, an efficient marketplace benefits us all.
- kiba 18y ago
  You can't have profit without loss. It is the twin engine of capitalism that make the economy run. When these companies failed, their asset get liquatated. Those assets that got liquatated will hopefully end up in companies that were sound, financially and bottom line wise. That is the purpose of the bust, to clean out unprofitable activity and correct the misallocation of resource. If you subscribe to the Austrian business cycle theory, than you also realize that these booms and bust are not natural, and are largely due to the nature of the federal reserve. For example, if you lower the interest, you're signalling lot of resources are availiable because of the high saving rate. But since the feds control the banking system, the interest its mandate are unnatural and not based on real market condition. This cause a chain reaction in the market(as people are tricked that there are more resources availiable) in which a number of factors lined up perfectly to cause a spectuative boom and than a market correction, thus creating a large cluster of entrepeneural errors. That is not to say that there won't be a boom and bust. It will probably happen in a true free market as entrepeneurs are fooled, but it will happen less. Entrepneurs will make mistakes, but not in such large clusters to cause such a crazy business cycle, which by the way the federal reserves was supposed to protect us against. For some reason, the federal reserves fails to prevent business cycles from happening.
  - kiba 18y ago
    Ok, people have voted down my comment. Can people point out why they disagree with my assesement?
jwilliams 18y ago
Do people really buy the "it's because bankers are evil" line? (I'm oversimplifying I know). If you'd been a highly conservative/prudent investment manager a couple of years ago - well - you probably wouldn't have had many customers. People were happy to throw money at people that promised these huge returns. That's how they got to the position they were in. Not to say there isn't something to answer for - some things went very wrong, and some people crossed the line in a very significant way - but if you don't look at the root causes, you're not really addressing the problem. I've worked in financial services for a decade. There are a lot of dubious people in the industry, and a lot that are purely driven from self-interest (this was colloquially thought to be good as their self-interest usually meant bigger returns). ... But, I've also met people that are in finance because they love it. These people are really an inspiration. They really want to build genuine wealth - to enable people to do great things. It turned me onto the power of the market and economics. All you need is the right intent, and it's up to everyone to drive that.
- menloparkbum 18y ago
  Do people really buy the "it's because bankers are evil" line? Yes, I think that's actually a common sentiment.
  - Rod 18y ago
    It's funny that just 2 or 3 years ago, bankers were rock stars. I lost the count of how many friends and acquaintances left Science & Engineering to try a career as investment bankers... and failed miserably. Bankers deserve neither admiration (their job is not particularly noble), nor everyone's hatred (the economic crisis is not entirely their fault).
    - jwilliams 18y ago
      True - But the same happened in the dotcom boom. There were some pretty terrible coders around. A lot of bad entrepreneurs lost people a lot of money on some bad ideas. I'd disagree that being a banker can't be noble... but you'd really need to meet/know a counterexample to argue that point to it's end conclusion - and that's not necessarily a simple thing to do at this point in history.
russell 18y ago
Where are you guys getting these idiots. Yesterday it was comparing the US today with the Weimar Republic. Today it's some idiot who says it was better 500 years ago than today because they had local currencies based on grain. What utter bullshit. The great cathedrals were built as tourist attractions. The great cathedrals were built 800-900 years ago in a competition to glorify God. There weren't any tourist then. Tourism is a pretty recent invention. All our woes are a legacy of the British East India Corporation. The guy doesn't even understand what a limited liabiity corporation is. Apologies for the impolite put down, but apply some critical thinking before you submit this stuff.
- dangoldin 18y ago
  Oh I don't agree with the article at all. I personally don't think the author understands the way economies work but still thought it was an entertaining read that can hopefully get some debate going.
  - davidw 18y ago
    So ... submit it to reddit, or somewhere else appropriate for these kinds of discussions?
    - run4yourlives 18y ago
      Agreed - this is blatantly off topic.
    - dangoldin 18y ago
      I prefer the discussions here. The same topics will have different discussions depending on where they are introduced. Submitting to reddit won't give you the same result.
      - davidw 18y ago
        Once upon a time, submitting it to reddit would have produced a fine discussion. The problem, however, is that this sort of article is what attracts people who only want to discuss this sort of article, rather than, say, Hacker News. That's what happened to reddit. Since it's a lot easier to dig up articles on batty economics (or even good economics, for that matter), those topics can very easily crowd out the 'on topic' stuff.
darkhorse 18y ago
i think this fellow is right on the money. our economy borrows against future real growth to finance itself, and that will never work in the long term - that real growth is physically constrained, but the debt is not. just look at our national debt - our economy will never grow fast enough in real wealth terms to be able to pay back the debt that is accumulating much faster. debt is just a number on paper, without bound. growth has to contend with the real world.
- jwilliams 18y ago
  So - What's the alternative to debt to fund growth? Or are you saying we should contract?
  - jibiki 18y ago
    The author's suggestion seems to be that local governments should pay people directly for creating resources (like his example of receipts for grain.) I'm a little skeptical about how well that model works in the real world. It's worth noting the parallels though, between the weird socialism he seems to be proposing and our current system. In our system, the fed creates money and lends it to the banks, at interest, so that they can lend that money to productive people. In his world, local governments would just give money directly to productive people. Frankly, I think that's bound to be less inefficient, even though it's more direct.
    - jwilliams 18y ago
      Exactly - it's all debt of some form - To be honest, I didn't really get a clear picture of his scheme from the article. It seems like he's advocating a highly decentralised form of debt? So maybe this is great from a community perspective - but it kind of sucks for something bigger... Like a Google or a Stem Cell breakthough.
    - kiba 18y ago
      I thought he was advocating free market money where good money earned their way on the marketplace.
triplefox 18y ago
While I'd like to believe the article, it doesn't entirely jibe with my B.A. degree's understanding of good economic policy, of which the fundamental tenet is to ensure a marketplace that is both fair and stable. Eliminating corporations would destabilize many sectors of the economy(particularly infrastructure-oriented ones), and it wouldn't make those sectors more fair than before. The point made for human health in the Middle Ages can be interpreted as a factor of the lower number of people around at that time. The difference is that we now support a large population via improved disease treatment and engineered methods of increasing calorie count. We probably still don't get the same kind of nutrition per person as the people in the Middle Ages. Alternative currencies are worth considering(for example, the scrip used in Germany and Austria historically.) in isolation as a means of balancing local economies with national ones.
- kingkongrevenge 18y ago
  > ensure a marketplace that is ... stable. Punctuated equilibrium is a feature of markets. Creative destruction and all that. Stability is bad. You want upheaval and reformation. Unfortunately, things are playing out exactly as Schumpeter warned: the wealthy players are using political power to achieve "stability" and keep themselves dominant.
- cturner 18y ago
  Eliminating corporations would destabilize many sectors of the economy(particularly infrastructure- oriented ones), and it wouldn't make those sectors more fair than before. Instability needn't be a bad thing. Newspapers are destabilised by the internet. This doesn't indicate that the internet is a bad thing. I knew a guy who ripped the guts out of a regional beef market cartel with a simple program on an Apple II. There was lots of instability there and it was definitely a good thing. It's interesting that you identify stability and low risk as being a strength of corporations - the only strong argument I've ever heard in favour of the idea of creating a structure with an individual's rights but without its responsibilities is that the limited liability of a corporation gives people the opportunity to take risks they otherwise wouldn't, and that the net effect on the system is positive. I'm dubious about this too. We probably still don't get the same kind of nutrition per person as the people in the Middle Ages. The improvement to quality of life, health, friends, freedom, and opportunity for self-actualisation in general is profound. We support a large population and anyone in regular employment has an opportunity to access education, food and resources that are so luxurious to people of the middle ages that many would be incomprehensible to the people of that setting.
tjic 18y ago
> In a perfect world, the stock market would decline another 70 or 80 percent "The economy" is a measure of the value being created and enjoyed. Anyone who says that they want "the economy" to decline 80% is saying that they want EVERYONE'S standards of living to decline 80%. You, your brother's, your retired parents - they should lose 80% of their housing, 80% of their nights out, 80% of the books they'd like to buy, 80% of the movies they'd like to watch, 80% of the vacations they hope to go on. Except for the dead bodies piled on the sidewalks, he's basically hoping for a genocide. "I feel alienated and I feel like a failure and I hate everyone and therefore I want it all to burn" is a fine sentiment for a high school heavy metal band or an idiot 14 year old goth, but it's an absolutely shameful thing for an adult to say.
- kiba 18y ago
  When a stock market declines, it just mean that the investors think the companies are doing unprofitable activities and that they need to change their activities to more profitable one. Hopefully they will switch to production of goods that people actually want and the stock market will rise up again.
- mechanical_fish 18y ago
  Without getting into the rest of Rushkoff's argument, he said the stock market, not the economy. Though the media tend to confuse these things, they are not the same. At all. The S&P 500 is down nearly 50% since last year. Obviously, this has not produced a 50% drop in the standard of living. Here's a calculation of the historical total-market P/E ratio from 1871 to 2003: http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B23663E61%2DC865%2D46F2%2DB83E%2D4EEC2DDEC0C0%7D&dist=morenews&param=archive&siteid=mktw&garden=&minisite= http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B236... The historical average is 11 to 14, depending on how it is calculated. The same source reports that the S&P 500 P/E ratio on February 12 was 29.1: http://www.marketwatch.com/news/story/how-current-pe-ratios-stand/story.aspx?guid=%7B13BD1A19-0A04-4FEE-97A6-0A1C410D6881%7D http://www.marketwatch.com/news/story/how-current-pe-ratios-... That implies that, in mid-February, the market needed to drop another 52% to 62% to get back to the average P/E ratio of the market over the last century. Obviously, an average P/E of 11 implies that the market has historically spent quite a bit of time at an even lower P/E. Obviously, this is a facile analysis. The Marketwatch guy himself hedges it quite a bit (e.g. he points out that during a big recession P/E can surge temporarily due to the relative timing of economic events). But it does go to show that, when Rushkoff suggests that the market might drop another 70% or 80%, he's not talking about something unprecedented -- he's merely talking about a market-average P/E of 6. Nor is he suggesting a drop of 80% in a real economic measure, like employment, or GDP.
kamidev 18y ago
Well... I have no idea what Rushkoff really knows about economy. But I see nothing wrong with the kind of questions he asks: is the current crisis just another unavoidable cycle? Should we just hope for the economy to "get back to normal or seriously think about something better? Who benefits if most of us think there is no alterative? Perhaps this really is the best of all possible worlds. Perhaps we already know everything we need to know about economy and politics. But personally, I don't think so. And I enjoy when hackers speculate about these things.
jwhitlark 18y ago
Rushkoff seems to subscribe to the daddy model of wealth. http://www.paulgraham.com/gap.html http://www.paulgraham.com/gap.html http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html Seriously, there is an optimum level of debt for countries as well as people, and it's NOT zero.
- kiba 18y ago
  I thought the opposite. He didn't subscribe to the daddy model of wealth but rather he understood that what those bankers are doing are not creating real wealth.
- stavrianos 18y ago
  I may well not be getting something here. It seems to me that money, at the core, isn't a true representation of wealth. Obviously economics is not zero-sum in terms of wealth, but isn't it supposed to be zero-sum in terms of money? Certainly businesses aren't expected to manufacture the cash to represent the wealth they create. At the same time, I understand that banks much prefer that a loan be repaid in money, rather than raw wealth. When you fail to repay a loan and they repossess your house, that's sort of like payment in terms of raw wealth, I guess... Obviously I've got something wrong, because if the total money supply is constant but the total wealth is increasing, then money should become MORE valuable over time, not less. So, either the actual supply of money is increasing faster than the actual amount of wealth (for whatever reason) or else money doesn't actually represent wealth like it's supposed to. And if wealth and money aren't properly correlated, the daddy model of money may be very appropriate even if the daddy model of wealth is obviously wrong.
CWuestefeld 18y ago
Rushkoff's conclusions don't follow from his argument (such as it is, setting aside such silliness as middle-ages tourism). He seems to be arguing against mercantilism and fiat money. Luckily, we've progressed past mercantilism in many ways, and fiat money could be easily replaced without destroying the economy. His conclusions about the banking system seems a hopeless confusion between central banking and a market for capital. He indicts the former, yet wants to tear down the latter. While he seems to be aiming at corporatism (or corporate fascism), he only takes an unsupported swipe at corporations in general, placing all blame on their shoulders without acknowledging any blame that might fall on the government and democracy. Saying "For one business to pay back what it owes, another must go bankrupt", he reveals a childish idea that all business must be zero-sum, so that there must always be a winner and a loser. But it can plainly be seen, when two parties freely enter into a transaction, that both feel that they are coming out ahead. He seems never to have considered that business can actually create wealth. And apparently dismisses the idea that new markets are being created at a furious pace, ignoring the giant strides in communications, healthcare, computing, transportation, etc, that have been made in the last half a century.
- jibiki 18y ago
  > Saying "For one business to pay back what it owes, another must go bankrupt", he reveals a childish idea that all business must be zero-sum, so that there must always be a winner and a loser. I think he's making a comment about the fact that fiat money bears interest. So if there's $1000 of fiat money in the system, then there's a total of (say) $1200 owed to the central bank. So we have 2 corporations, each of which has borrowed $500 from the central bank, and owes $600 to it. If the bank were unwilling to increase the money supply through further loans, then one of those corporations would necessarily default (assuming that they have to pay it back in the currency they borrowed.) But fiat money doesn't really work this way, so it's a very moot point.
chasingsparks 18y ago
This feels a bit too much like the Zed Shaw "Two Flaws of Libertarianism" submission.

43 points by dangoldin 18y ago

Rod 18y ago

I get the impression that Rushkoff does not know much about Economics, nor Finance. I do agree that Wall Street was making way too much money and that this new gilded age had to end sooner or later. However, I do NOT agree that the collapse of the financial services industry would benefit the United States. The truth is that the U.S. needs the financial services industry to serve as the economy's lubricant. Ultimately, an efficient marketplace benefits us all.

kiba 18y ago
You can't have profit without loss. It is the twin engine of capitalism that make the economy run. When these companies failed, their asset get liquatated. Those assets that got liquatated will hopefully end up in companies that were sound, financially and bottom line wise. That is the purpose of the bust, to clean out unprofitable activity and correct the misallocation of resource. If you subscribe to the Austrian business cycle theory, than you also realize that these booms and bust are not natural, and are largely due to the nature of the federal reserve. For example, if you lower the interest, you're signalling lot of resources are availiable because of the high saving rate. But since the feds control the banking system, the interest its mandate are unnatural and not based on real market condition. This cause a chain reaction in the market(as people are tricked that there are more resources availiable) in which a number of factors lined up perfectly to cause a spectuative boom and than a market correction, thus creating a large cluster of entrepeneural errors. That is not to say that there won't be a boom and bust. It will probably happen in a true free market as entrepeneurs are fooled, but it will happen less. Entrepneurs will make mistakes, but not in such large clusters to cause such a crazy business cycle, which by the way the federal reserves was supposed to protect us against. For some reason, the federal reserves fails to prevent business cycles from happening.
- kiba 18y ago
  Ok, people have voted down my comment. Can people point out why they disagree with my assesement?

jwilliams 18y ago

Do people really buy the "it's because bankers are evil" line? (I'm oversimplifying I know). If you'd been a highly conservative/prudent investment manager a couple of years ago - well - you probably wouldn't have had many customers. People were happy to throw money at people that promised these huge returns. That's how they got to the position they were in. Not to say there isn't something to answer for - some things went very wrong, and some people crossed the line in a very significant way - but if you don't look at the root causes, you're not really addressing the problem. I've worked in financial services for a decade. There are a lot of dubious people in the industry, and a lot that are purely driven from self-interest (this was colloquially thought to be good as their self-interest usually meant bigger returns). ... But, I've also met people that are in finance because they love it. These people are really an inspiration. They really want to build genuine wealth - to enable people to do great things. It turned me onto the power of the market and economics. All you need is the right intent, and it's up to everyone to drive that.

menloparkbum 18y ago
Do people really buy the "it's because bankers are evil" line? Yes, I think that's actually a common sentiment.
- Rod 18y ago
  It's funny that just 2 or 3 years ago, bankers were rock stars. I lost the count of how many friends and acquaintances left Science & Engineering to try a career as investment bankers... and failed miserably. Bankers deserve neither admiration (their job is not particularly noble), nor everyone's hatred (the economic crisis is not entirely their fault).
  - jwilliams 18y ago
    True - But the same happened in the dotcom boom. There were some pretty terrible coders around. A lot of bad entrepreneurs lost people a lot of money on some bad ideas. I'd disagree that being a banker can't be noble... but you'd really need to meet/know a counterexample to argue that point to it's end conclusion - and that's not necessarily a simple thing to do at this point in history.

russell 18y ago

Where are you guys getting these idiots. Yesterday it was comparing the US today with the Weimar Republic. Today it's some idiot who says it was better 500 years ago than today because they had local currencies based on grain. What utter bullshit. The great cathedrals were built as tourist attractions. The great cathedrals were built 800-900 years ago in a competition to glorify God. There weren't any tourist then. Tourism is a pretty recent invention. All our woes are a legacy of the British East India Corporation. The guy doesn't even understand what a limited liabiity corporation is. Apologies for the impolite put down, but apply some critical thinking before you submit this stuff.

dangoldin 18y ago
Oh I don't agree with the article at all. I personally don't think the author understands the way economies work but still thought it was an entertaining read that can hopefully get some debate going.
- davidw 18y ago
  So ... submit it to reddit, or somewhere else appropriate for these kinds of discussions?
  - run4yourlives 18y ago
    Agreed - this is blatantly off topic.
  - dangoldin 18y ago
    I prefer the discussions here. The same topics will have different discussions depending on where they are introduced. Submitting to reddit won't give you the same result.
    - davidw 18y ago
      Once upon a time, submitting it to reddit would have produced a fine discussion. The problem, however, is that this sort of article is what attracts people who only want to discuss this sort of article, rather than, say, Hacker News. That's what happened to reddit. Since it's a lot easier to dig up articles on batty economics (or even good economics, for that matter), those topics can very easily crowd out the 'on topic' stuff.

darkhorse 18y ago

i think this fellow is right on the money. our economy borrows against future real growth to finance itself, and that will never work in the long term - that real growth is physically constrained, but the debt is not. just look at our national debt - our economy will never grow fast enough in real wealth terms to be able to pay back the debt that is accumulating much faster. debt is just a number on paper, without bound. growth has to contend with the real world.

jwilliams 18y ago
So - What's the alternative to debt to fund growth? Or are you saying we should contract?
- jibiki 18y ago
  The author's suggestion seems to be that local governments should pay people directly for creating resources (like his example of receipts for grain.) I'm a little skeptical about how well that model works in the real world. It's worth noting the parallels though, between the weird socialism he seems to be proposing and our current system. In our system, the fed creates money and lends it to the banks, at interest, so that they can lend that money to productive people. In his world, local governments would just give money directly to productive people. Frankly, I think that's bound to be less inefficient, even though it's more direct.
  - jwilliams 18y ago
    Exactly - it's all debt of some form - To be honest, I didn't really get a clear picture of his scheme from the article. It seems like he's advocating a highly decentralised form of debt? So maybe this is great from a community perspective - but it kind of sucks for something bigger... Like a Google or a Stem Cell breakthough.
  - kiba 18y ago
    I thought he was advocating free market money where good money earned their way on the marketplace.

triplefox 18y ago

While I'd like to believe the article, it doesn't entirely jibe with my B.A. degree's understanding of good economic policy, of which the fundamental tenet is to ensure a marketplace that is both fair and stable. Eliminating corporations would destabilize many sectors of the economy(particularly infrastructure-oriented ones), and it wouldn't make those sectors more fair than before. The point made for human health in the Middle Ages can be interpreted as a factor of the lower number of people around at that time. The difference is that we now support a large population via improved disease treatment and engineered methods of increasing calorie count. We probably still don't get the same kind of nutrition per person as the people in the Middle Ages. Alternative currencies are worth considering(for example, the scrip used in Germany and Austria historically.) in isolation as a means of balancing local economies with national ones.

kingkongrevenge 18y ago
> ensure a marketplace that is ... stable. Punctuated equilibrium is a feature of markets. Creative destruction and all that. Stability is bad. You want upheaval and reformation. Unfortunately, things are playing out exactly as Schumpeter warned: the wealthy players are using political power to achieve "stability" and keep themselves dominant.
cturner 18y ago
Eliminating corporations would destabilize many sectors of the economy(particularly infrastructure- oriented ones), and it wouldn't make those sectors more fair than before. Instability needn't be a bad thing. Newspapers are destabilised by the internet. This doesn't indicate that the internet is a bad thing. I knew a guy who ripped the guts out of a regional beef market cartel with a simple program on an Apple II. There was lots of instability there and it was definitely a good thing. It's interesting that you identify stability and low risk as being a strength of corporations - the only strong argument I've ever heard in favour of the idea of creating a structure with an individual's rights but without its responsibilities is that the limited liability of a corporation gives people the opportunity to take risks they otherwise wouldn't, and that the net effect on the system is positive. I'm dubious about this too. We probably still don't get the same kind of nutrition per person as the people in the Middle Ages. The improvement to quality of life, health, friends, freedom, and opportunity for self-actualisation in general is profound. We support a large population and anyone in regular employment has an opportunity to access education, food and resources that are so luxurious to people of the middle ages that many would be incomprehensible to the people of that setting.

tjic 18y ago

> In a perfect world, the stock market would decline another 70 or 80 percent "The economy" is a measure of the value being created and enjoyed. Anyone who says that they want "the economy" to decline 80% is saying that they want EVERYONE'S standards of living to decline 80%. You, your brother's, your retired parents - they should lose 80% of their housing, 80% of their nights out, 80% of the books they'd like to buy, 80% of the movies they'd like to watch, 80% of the vacations they hope to go on. Except for the dead bodies piled on the sidewalks, he's basically hoping for a genocide. "I feel alienated and I feel like a failure and I hate everyone and therefore I want it all to burn" is a fine sentiment for a high school heavy metal band or an idiot 14 year old goth, but it's an absolutely shameful thing for an adult to say.

kiba 18y ago
When a stock market declines, it just mean that the investors think the companies are doing unprofitable activities and that they need to change their activities to more profitable one. Hopefully they will switch to production of goods that people actually want and the stock market will rise up again.
mechanical_fish 18y ago
Without getting into the rest of Rushkoff's argument, he said the stock market, not the economy. Though the media tend to confuse these things, they are not the same. At all. The S&P 500 is down nearly 50% since last year. Obviously, this has not produced a 50% drop in the standard of living. Here's a calculation of the historical total-market P/E ratio from 1871 to 2003: http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B23663E61%2DC865%2D46F2%2DB83E%2D4EEC2DDEC0C0%7D&dist=morenews&param=archive&siteid=mktw&garden=&minisite= http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B236... The historical average is 11 to 14, depending on how it is calculated. The same source reports that the S&P 500 P/E ratio on February 12 was 29.1: http://www.marketwatch.com/news/story/how-current-pe-ratios-stand/story.aspx?guid=%7B13BD1A19-0A04-4FEE-97A6-0A1C410D6881%7D http://www.marketwatch.com/news/story/how-current-pe-ratios-... That implies that, in mid-February, the market needed to drop another 52% to 62% to get back to the average P/E ratio of the market over the last century. Obviously, an average P/E of 11 implies that the market has historically spent quite a bit of time at an even lower P/E. Obviously, this is a facile analysis. The Marketwatch guy himself hedges it quite a bit (e.g. he points out that during a big recession P/E can surge temporarily due to the relative timing of economic events). But it does go to show that, when Rushkoff suggests that the market might drop another 70% or 80%, he's not talking about something unprecedented -- he's merely talking about a market-average P/E of 6. Nor is he suggesting a drop of 80% in a real economic measure, like employment, or GDP.

kamidev 18y ago

Well... I have no idea what Rushkoff really knows about economy. But I see nothing wrong with the kind of questions he asks: is the current crisis just another unavoidable cycle? Should we just hope for the economy to "get back to normal or seriously think about something better? Who benefits if most of us think there is no alterative? Perhaps this really is the best of all possible worlds. Perhaps we already know everything we need to know about economy and politics. But personally, I don't think so. And I enjoy when hackers speculate about these things.

jwhitlark 18y ago

Rushkoff seems to subscribe to the daddy model of wealth. http://www.paulgraham.com/gap.html http://www.paulgraham.com/gap.html http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html Seriously, there is an optimum level of debt for countries as well as people, and it's NOT zero.

kiba 18y ago
I thought the opposite. He didn't subscribe to the daddy model of wealth but rather he understood that what those bankers are doing are not creating real wealth.
stavrianos 18y ago
I may well not be getting something here. It seems to me that money, at the core, isn't a true representation of wealth. Obviously economics is not zero-sum in terms of wealth, but isn't it supposed to be zero-sum in terms of money? Certainly businesses aren't expected to manufacture the cash to represent the wealth they create. At the same time, I understand that banks much prefer that a loan be repaid in money, rather than raw wealth. When you fail to repay a loan and they repossess your house, that's sort of like payment in terms of raw wealth, I guess... Obviously I've got something wrong, because if the total money supply is constant but the total wealth is increasing, then money should become MORE valuable over time, not less. So, either the actual supply of money is increasing faster than the actual amount of wealth (for whatever reason) or else money doesn't actually represent wealth like it's supposed to. And if wealth and money aren't properly correlated, the daddy model of money may be very appropriate even if the daddy model of wealth is obviously wrong.

CWuestefeld 18y ago

Rushkoff's conclusions don't follow from his argument (such as it is, setting aside such silliness as middle-ages tourism). He seems to be arguing against mercantilism and fiat money. Luckily, we've progressed past mercantilism in many ways, and fiat money could be easily replaced without destroying the economy. His conclusions about the banking system seems a hopeless confusion between central banking and a market for capital. He indicts the former, yet wants to tear down the latter. While he seems to be aiming at corporatism (or corporate fascism), he only takes an unsupported swipe at corporations in general, placing all blame on their shoulders without acknowledging any blame that might fall on the government and democracy. Saying "For one business to pay back what it owes, another must go bankrupt", he reveals a childish idea that all business must be zero-sum, so that there must always be a winner and a loser. But it can plainly be seen, when two parties freely enter into a transaction, that both feel that they are coming out ahead. He seems never to have considered that business can actually create wealth. And apparently dismisses the idea that new markets are being created at a furious pace, ignoring the giant strides in communications, healthcare, computing, transportation, etc, that have been made in the last half a century.

jibiki 18y ago
> Saying "For one business to pay back what it owes, another must go bankrupt", he reveals a childish idea that all business must be zero-sum, so that there must always be a winner and a loser. I think he's making a comment about the fact that fiat money bears interest. So if there's $1000 of fiat money in the system, then there's a total of (say) $1200 owed to the central bank. So we have 2 corporations, each of which has borrowed $500 from the central bank, and owes $600 to it. If the bank were unwilling to increase the money supply through further loans, then one of those corporations would necessarily default (assuming that they have to pay it back in the currency they borrowed.) But fiat money doesn't really work this way, so it's a very moot point.

chasingsparks 18y ago

This feels a bit too much like the Zed Shaw "Two Flaws of Libertarianism" submission.