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You're right about debt, but it's orthogonal to the essay. Re. real wages: "The result is a steady rise in the productivity of labor, which continually increa

You're right about debt, but it's orthogonal to the essay. Re. real wages: "The result is a steady rise in the productivity of labor, which continually increases the supply of goods produced relative to the number of workers producing them. The effect of this is a steady fall in prices relative to wages, a fall which occurs even in the midst of an increasing quantity of money and volume of spending great enough to raise prices; in this case, the rise in money wage rates outstrips the rise in prices, with the result that prices still fall relative to wages. In other words, the effect is a continuing rise in real wages and the average standard of living." I encourage you to read the whole thing, and consider that paragraph in particular when evaluating wages vs. cost of goods, especially goods that one could simply not obtain in the past.

api 12y ago
> The result is a steady rise in the productivity of labor, which continually increases the supply of goods produced relative to the number of workers producing them. The effect of this is a steady fall in prices relative to wages Huh? Where is this fall in prices? Okay... I see it. It's in gadgets and manufactured goods. These are all things people get paid wages to produce. Meanwhile food, fuel, real estate, health care, and college tuition are exploding. You know... the things people need. If you were going to extract rents, that's where you'd go... the things people need... the things with inelastic demand. Pay people less. Extract more rent. But Pravda says crop yields are increasing, so I guess I'm crazy. -- Edit: here's my reply as HN won't let me post it: I was once a Randian myself. I feel like I know what I'm going to read. I began to question the faith when we allowed the top tier of society to become astronomically wealthy and the promised age of wise captains of industry and private sector innovation didn't materialize. Instead we got the economic la-la-land we have now where rent and property values are mysteriously holding at unaffordable levels as wages are falling and everyone is in debt. Granted, we have a few lights in the wilderness. Elon Musk is probably the closest thing to a Rand hero I can think of... but wait... none of his enterprises would exist without government assistance. SpaceX is being built in close cooperation with NASA and with NASA and DoD funding. Tesla would have gone under were it not for a very risky DoE loan. He's an exception that proves the rule, I'm afraid. He also does not espouse Randian ideology. Honestly most of the greatest captains of industry and genius investors I know of do not espouse Randian ideology. I have my own peculiar views on the subject: I think capitalism and socialism fail for the same reason. I call it the "big dumb money problem." It occurs when the concentration of capital exceeds the intelligence of its owner/administrator(s). It's pretty easy to see how this happens in pure socialist systems. The initial round of investments made by a socialist bureaucracy are often pretty good: roads, schools, hospitals, universities, power plants, etc. But then the problems start. Those were all the easy, obvious investments. As they pay off, the wealth they create coupled with the increasing difficulty of the next steps forward creates a resource allocation problem that rapidly outpaces the collective IQ of the bureaucracy administrating everything. It makes a series of increasingly bad investments. Eventually the whole system collapses in a blow-off of cynicism, ending with something akin to the Russian or Chinese mafia states. (I have a brother in law in China. It is most definitely a mafia state.) Capitalism in its pure sense follows the same course when too much wealth accumulates at the top. Individual capitalists rapidly find themselves in possession of pools of money too large for them to possibly invest productively. They solve this by delegating the problem to a financial industry not terribly unlike the Soviet bureaucracies of socialist states. This industry proceeds to make a series of bad investments (since it cannot possibly comprehend the problem domains it's investing in) and quickly becomes gun-shy, instead retreating from innovative investments and into the realm of rent extraction. Rent extraction works too well, causing yet more and more capital to be concentrated into fewer and thus by definition dumber (relative to the problem) hands. In the end it blows off a bit differently... instead of a post-socialist mafia state you get a post-capitalist feudal state a bit like the universe of The Hunger Games. Everyone has to go into massive debt and pay rent forever, and class mobility and monetary velocity collapses. Innovation stagnates. The optimum is probably a hybrid, a system that permits private accumulation of capital up to the limits of the cognitive horizon of those who hold it and redistributes the rest to achieve maximum monetary velocity. The ideal -- probably not achievable since P!=NP -- would be something in which each individual always held an amount of money equal to their knowledge re: how to properly spend or invest that money. Since again P != NP and the answers are probably not computable, we will never have the optimum. Barring theoretical breakthroughs that redefine the problem, we will have to settle for bad as opposed to more bad. So I think a system with mild progressive taxation spent in ways that improve the lot of the majority is probably best.
- duncan_bayne 12y ago
  No, you're not crazy, you just haven't read the essay that is the subject of this thread ;)

api 12y ago

> The result is a steady rise in the productivity of labor, which continually increases the supply of goods produced relative to the number of workers producing them. The effect of this is a steady fall in prices relative to wages Huh? Where is this fall in prices? Okay... I see it. It's in gadgets and manufactured goods. These are all things people get paid wages to produce. Meanwhile food, fuel, real estate, health care, and college tuition are exploding. You know... the things people need. If you were going to extract rents, that's where you'd go... the things people need... the things with inelastic demand. Pay people less. Extract more rent. But Pravda says crop yields are increasing, so I guess I'm crazy. -- Edit: here's my reply as HN won't let me post it: I was once a Randian myself. I feel like I know what I'm going to read. I began to question the faith when we allowed the top tier of society to become astronomically wealthy and the promised age of wise captains of industry and private sector innovation didn't materialize. Instead we got the economic la-la-land we have now where rent and property values are mysteriously holding at unaffordable levels as wages are falling and everyone is in debt. Granted, we have a few lights in the wilderness. Elon Musk is probably the closest thing to a Rand hero I can think of... but wait... none of his enterprises would exist without government assistance. SpaceX is being built in close cooperation with NASA and with NASA and DoD funding. Tesla would have gone under were it not for a very risky DoE loan. He's an exception that proves the rule, I'm afraid. He also does not espouse Randian ideology. Honestly most of the greatest captains of industry and genius investors I know of do not espouse Randian ideology. I have my own peculiar views on the subject: I think capitalism and socialism fail for the same reason. I call it the "big dumb money problem." It occurs when the concentration of capital exceeds the intelligence of its owner/administrator(s). It's pretty easy to see how this happens in pure socialist systems. The initial round of investments made by a socialist bureaucracy are often pretty good: roads, schools, hospitals, universities, power plants, etc. But then the problems start. Those were all the easy, obvious investments. As they pay off, the wealth they create coupled with the increasing difficulty of the next steps forward creates a resource allocation problem that rapidly outpaces the collective IQ of the bureaucracy administrating everything. It makes a series of increasingly bad investments. Eventually the whole system collapses in a blow-off of cynicism, ending with something akin to the Russian or Chinese mafia states. (I have a brother in law in China. It is most definitely a mafia state.) Capitalism in its pure sense follows the same course when too much wealth accumulates at the top. Individual capitalists rapidly find themselves in possession of pools of money too large for them to possibly invest productively. They solve this by delegating the problem to a financial industry not terribly unlike the Soviet bureaucracies of socialist states. This industry proceeds to make a series of bad investments (since it cannot possibly comprehend the problem domains it's investing in) and quickly becomes gun-shy, instead retreating from innovative investments and into the realm of rent extraction. Rent extraction works too well, causing yet more and more capital to be concentrated into fewer and thus by definition dumber (relative to the problem) hands. In the end it blows off a bit differently... instead of a post-socialist mafia state you get a post-capitalist feudal state a bit like the universe of The Hunger Games. Everyone has to go into massive debt and pay rent forever, and class mobility and monetary velocity collapses. Innovation stagnates. The optimum is probably a hybrid, a system that permits private accumulation of capital up to the limits of the cognitive horizon of those who hold it and redistributes the rest to achieve maximum monetary velocity. The ideal -- probably not achievable since P!=NP -- would be something in which each individual always held an amount of money equal to their knowledge re: how to properly spend or invest that money. Since again P != NP and the answers are probably not computable, we will never have the optimum. Barring theoretical breakthroughs that redefine the problem, we will have to settle for bad as opposed to more bad. So I think a system with mild progressive taxation spent in ways that improve the lot of the majority is probably best.

duncan_bayne 12y ago
No, you're not crazy, you just haven't read the essay that is the subject of this thread ;)