6 ms·

Interestingly enough, it appears that the wheels of capitalism (free markets) have run out of the lubrication (purchasing power) that allows them to function.

by FD3SA 14y ago

Interestingly enough, it appears that the wheels of capitalism (free markets) have run out of the lubrication (purchasing power) that allows them to function. Wealth inequality is at record highs [1], and is being further fueled as a result of productivity gains from technology. Thus, corporate profitability is no longer coupled to wage growth, and "trickle-down" economics no longer applies. This is a brave new world indeed, and I'm not sure more startups in the web sector will help. However, applying the lean productivity philosophy of startups to government while simultaneously laying out a new plan for revitalizing the purchasing power of the public, through redistribution mechanisms such as Negative Income Tax or otherwise, may be steps in the right direction. 1. http://news.ycombinator.com/item?id=5345267 http://news.ycombinator.com/item?id=5345267

argumentum 14y ago
Negative income tax is a good idea only if it replaces all the other forms of redistribution. Otherwise you are just adding another middleman bureaucrat who moves wealth around rather than creates it. It's main benefit is that it could cut out a lot of the bloat in government, while keeping a floor for the least fortunate amongst us.
- FD3SA 14y ago
  Agreed. Ideally, government services would be completely self serve (via web apps), and all current government employees would be laid off and put on Negative Income Tax benefits. Law would be non-profit, as would healthcare, and there would be severe limits on legal complexity. In a nutshell, the government must be engineered such that form follows function. Currently, it has become a malignant tumor that grows for the sake of growth itself. Until we agree that government must be leanest of all institutions, we will continue to fall into this ever deepening quagmire of bureaucratic impotency.
- kaonashi 14y ago
  For a sovereign currency issuer, taxation and spending are not operationally connected. Taxation serves to regulate inflation and unemployment. Too much taxation, you get high unemployment and idle output capacity, too little, you get inflation. In a situation with a general lack of aggregate demand and high unemployment, adding a minimum income would work similarly to a tax decrease on the extreme low end of the income scale. I'm not sure what the windging about middleman bureaucrats is about. Look at something like Social Security, it's direct payouts to beneficiaries, so the decision making is left to the beneficiaries as to what to buy. No central planning, just let demand and markets do their work.
  - argumentum 14y ago
    Even without central planning, social security requires administration, auditing etc. The Social Security Administration alone has 57,000 employees.
    - kaonashi 14y ago
      The point was that they're not planning or interfering with production and consumption, merely passing along financing.
      - argumentum 14y ago
        But they exist, and take a salary and benefits, do they not?
        kaonashi 14y ago
        Yes, there is going to be some overhead in administering most anything, I'm not sure I see the point you are trying to make.
        argumentum 14y ago
        That's exactly the point. Since there is always going to be overhead to administer anything, does it not make sense to have less things to be administered?
        kaonashi 14y ago
        If you're making an efficiency argument, then it really depends on the details. You could conceivably have 10 programs that are horribly mismanaged, and 100 that are well-run.
        argumentum 14y ago
        The more programs you have, the more you have to manage the managing of programs, making it less likely that any one program will be well-managed.
NoPiece 14y ago
You could say the wheels of capitalism has run out of lubrication, or you could say that the creeping growth of regulation and governemnt spending has thrown sand into wheels. See this graph of spending as a percent of GDP: http://www.ritholtz.com/blog/wp-content/uploads/2011/07/outlays-GDP.png http://www.ritholtz.com/blog/wp-content/uploads/2011/07/outl... You may want a lot of government spending but you have to acknowledge there is a cost. You may think we need a lot of the regulations, but there are plenty that are a drag on the economy (see patents).
- FD3SA 14y ago
  Agreed, though I don't believe the two are mutually exclusive. In fact, we suffer from both maladies at present. Government can spend, but that spending should be as investment, not overhead. Current government spending is akin to charities which have 90% overhead per dollar donated.
  - NoPiece 14y ago
    I'm not opposed to government spending or large investments in infrastructure, but it should happen when spending is at 15% of GDP, not 25%. The problem today is we are spending so much, and seemingly getting so little for it. The spending now is just political payoff to big corporations, unions, and thousands of various interest groups. Government is getting less and less efficient as it gets bigger and spends more.

by FD3SA 14y ago

argumentum 14y ago

Negative income tax is a good idea only if it replaces all the other forms of redistribution. Otherwise you are just adding another middleman bureaucrat who moves wealth around rather than creates it. It's main benefit is that it could cut out a lot of the bloat in government, while keeping a floor for the least fortunate amongst us.

FD3SA 14y ago
Agreed. Ideally, government services would be completely self serve (via web apps), and all current government employees would be laid off and put on Negative Income Tax benefits. Law would be non-profit, as would healthcare, and there would be severe limits on legal complexity. In a nutshell, the government must be engineered such that form follows function. Currently, it has become a malignant tumor that grows for the sake of growth itself. Until we agree that government must be leanest of all institutions, we will continue to fall into this ever deepening quagmire of bureaucratic impotency.
kaonashi 14y ago
For a sovereign currency issuer, taxation and spending are not operationally connected. Taxation serves to regulate inflation and unemployment. Too much taxation, you get high unemployment and idle output capacity, too little, you get inflation. In a situation with a general lack of aggregate demand and high unemployment, adding a minimum income would work similarly to a tax decrease on the extreme low end of the income scale. I'm not sure what the windging about middleman bureaucrats is about. Look at something like Social Security, it's direct payouts to beneficiaries, so the decision making is left to the beneficiaries as to what to buy. No central planning, just let demand and markets do their work.
- argumentum 14y ago
  Even without central planning, social security requires administration, auditing etc. The Social Security Administration alone has 57,000 employees.
  - kaonashi 14y ago
    The point was that they're not planning or interfering with production and consumption, merely passing along financing.
    - argumentum 14y ago
      But they exist, and take a salary and benefits, do they not?
      - kaonashi 14y ago
        Yes, there is going to be some overhead in administering most anything, I'm not sure I see the point you are trying to make.
        argumentum 14y ago
        That's exactly the point. Since there is always going to be overhead to administer anything, does it not make sense to have less things to be administered?
        kaonashi 14y ago
        If you're making an efficiency argument, then it really depends on the details. You could conceivably have 10 programs that are horribly mismanaged, and 100 that are well-run.
        argumentum 14y ago
        The more programs you have, the more you have to manage the managing of programs, making it less likely that any one program will be well-managed.

NoPiece 14y ago

You could say the wheels of capitalism has run out of lubrication, or you could say that the creeping growth of regulation and governemnt spending has thrown sand into wheels. See this graph of spending as a percent of GDP: http://www.ritholtz.com/blog/wp-content/uploads/2011/07/outlays-GDP.png http://www.ritholtz.com/blog/wp-content/uploads/2011/07/outl... You may want a lot of government spending but you have to acknowledge there is a cost. You may think we need a lot of the regulations, but there are plenty that are a drag on the economy (see patents).

FD3SA 14y ago
Agreed, though I don't believe the two are mutually exclusive. In fact, we suffer from both maladies at present. Government can spend, but that spending should be as investment, not overhead. Current government spending is akin to charities which have 90% overhead per dollar donated.
- NoPiece 14y ago
  I'm not opposed to government spending or large investments in infrastructure, but it should happen when spending is at 15% of GDP, not 25%. The problem today is we are spending so much, and seemingly getting so little for it. The spending now is just political payoff to big corporations, unions, and thousands of various interest groups. Government is getting less and less efficient as it gets bigger and spends more.