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Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

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Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#71

Post by CryptoPunk »

Meandering wrote: post #36
bigcorp-slave wrote: post #12

Earlier quoted context omitted.

Bob starts with 11 units of utility. Fred starts with 2. It costs 1 unit of utility to exist. Each of Bob and Fred invest their remaining utility in the utility market, which grows at 10% per year regardless of what either of them do. 25 years later, Bob has 109 units of utility, and Fred has roughly 12 units of utility. At the beginning of this thought experiment, Bob had 5.5x the utility units of Fred. At the end,…

This is inline with my reasoning. Certain circles say that the affluent are causation for capital markets operating efficiently. More specifically, that the purchasing power of the affluent are the source or "spring" from which economic activity is generated. It's just not true. Economic activity is generated by the act of expenditure. The act is a threshold behavior relative to the an economic agent's ratio of liqui…

>>Economic activity is generated by the act of expenditure.

The tendency toward expending money for products is not a scarce economic resource. It is always abundant, and leads to almost everything produced being consumed, as it reaches its market clearing price.

What's scarce is capital and production, and only the profit-motivated investment that emerges when people are secure in their right to their private property has been shown to rapidly make it less scarce. Witness China before and after its market reforms.

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#72

Post by WalterBright »

lopmotr wrote: post #65
WalterBright wrote: post #8

Earlier quoted context omitted.

Consider rock musicians. Suppose there were two concerts, one playing a Beatles song with the Beatles performing it (yes I know two of them are gone). Another venue is playing the same songs, just as well, but by a cover band. Which concert is going to make boatloads of money, and which will barely be able to pay the electric bill? Copyright has nothing to do with it.

Without copyright, how would The Beatles ever have become the celebrities in the first place? They'd have been copied the instant they gained a little success and been diluted away. People proposing no copyrights always seem to focus on exploiting existing work, not on how new work will be created. It's expensive to create and promote it so why would anyone invest that money if they can't get it back? Are you countin…

> Without copyright, how would The Beatles ever have become the celebrities in the first place?

They were overnight celebrities. Too fast to ascribe it to copyright. And radio stations played their music for free. A cult-like following immediately grew up around them. That wouldn't happen with a clone. Look at all the fan magazines at the time printing every detail about the Beatles - a clone would be totally ignored. The Beatles' success cannot be placed on the lyrics and arrangement, it's far more than that.

> not on how new work will be created

I work on open source full time. All the collaborators on D also contribute their work to the Boost license.

> Are you counting on passionate independently wealthy hobbyists to create everything copyable for free?

Microsoft (among others) open sourced much of its software. Lots of companies make their software available for free. Open source is highly successful, does not need copyright, and the evidence for it is overwhelming.

> Almost all successful open source software is protected by copyright and license terms that restrict its use.

My work is Boost licensed and copyrighted, simply because public domain is not recognized in many countries. The Boost license is the least restrictive of all the licenses.

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#73

Post by CryptoPunk »

adrianN wrote: post #56
CryptoPunk wrote: post #47

Earlier quoted context omitted.

>>This is a simple thought experiment that I hope illuminates something important: in an economy where there is year over year growth, inequality grows by default as a function of exposure to the market. This is not true. Investment rates of return are much higher when you have smaller amounts of capital to invest, ceteris paribus.

The comment you're replying to is a simplification, but so is yours. Returns on your investments are pretty much zero, if, like a disturbingly large number of people, you don't have any money left at the end of the month to invest and an unexpected expenditure of a few hundred dollars requires you to take on debt.

I did say 'ceteris paribus'.

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#74

Post by forrestthewoods »

WalterBright wrote: post #53
forrestthewoods wrote: post #49

Earlier quoted context omitted.

> Are people really going to stop writing books, composing music, painting pictures, etc, without copyright protection? Not a chance! Yes, authors who make a living selling books would definitely stop writing books if they couldn’t get paid for it. Hobbyist art will never die. But the definition of professional involves being paid. Open source software is not a meaningful comparison to Harry Potter books or Marvel fi…

Why is open source not meaningful? Open source software has proven to be very competitive and often superior to closed source, protected software. People even make money writing open source software.

Not a meaningful comparison.

Open source software has indeed been successful in the presence of closed source software.

However this is not true for films or books. Thus the fact that OSS is successful today is not evidence that books and films will be successful without copyright protection. It’s not evidence they won’t either. Thus it is not a meaningful comparison.

The economics of open source software and fiction books or film are wildly different.

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#75

Post by TeMPOraL »

dcolkitt wrote: post #26
bigcorp-slave wrote: post #12

Earlier quoted context omitted.

Bob starts with 11 units of utility. Fred starts with 2. It costs 1 unit of utility to exist. Each of Bob and Fred invest their remaining utility in the utility market, which grows at 10% per year regardless of what either of them do. 25 years later, Bob has 109 units of utility, and Fred has roughly 12 units of utility. At the beginning of this thought experiment, Bob had 5.5x the utility units of Fred. At the end,…

But finite life expectancies effectively act as a cap on that process. In the very best case, you only have about half a century to compound wealth. Modern America is not very conducive to preserving intergenerational wealth. Of the top ten richest Americans, only one is not a first-generation billionaire. Rockefeller despite amassing an enormous fortune, equivalent to $400 billion today, does not have any heirs in t…

That doesn't seem to matter, though. To extend the parent's example:

Bob and Fred both die at age 43 (18 + 25). During their life, they both married and had children, Barbara and Felicia, respectively. While the US system is not conductive to preserving intergenerational wealth, it's still true that the wealthier can pass on more than the less wealthy.

So at their age of 18, Barbra starts with 20 units of utility, and Fiona with 8. Sure, Bob has passed on much smaller percentage of their wealth than Fred, but his descendant is still better off than Fred's.

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#76

Post by jabl »

WalterBright wrote: post #55
throwaway34241 wrote: post #44

Earlier quoted context omitted.

I’m not sure what you are objecting to. The section you quoted does not use the word unfair, but unequal. The linked article does not seem to be a call for socialism, but rather a series of proposals to increase growth via normal economic measures, like removing regulatory barriers to new housing, or being less hawkish on monetary policy since inflation has been consistently over-estimated. If you are arguing that fa…

> The section you quoted does not use the word unfair, but unequal Calling unequal a problem means it's unfair. > If I inherit (or even buy) a house in Palo Alto and it undergoes millions of dollars of appreciation due to a growing industry nearby that I do not work in, did I create that wealth? Yes. I speak as a person who has repeatedly lost money in real estate. Real estate is hardly a slam-dunk guaranteed money m…

> Yes. I speak as a person who has repeatedly lost money in real estate. Real estate is hardly a slam-dunk guaranteed money making machine, as plenty of people in 2008 will attest to. It's a tough business. Just looking at the winners is called confirmation bias.

That doesn't really prove your point. Just like you may gain wealth in real estate without having to have created it, you can lose wealth without it being your fault in any way.

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#77

Post by djrobstep »

CryptoPunk wrote: post #47
bigcorp-slave wrote: post #12

Earlier quoted context omitted.

Bob starts with 11 units of utility. Fred starts with 2. It costs 1 unit of utility to exist. Each of Bob and Fred invest their remaining utility in the utility market, which grows at 10% per year regardless of what either of them do. 25 years later, Bob has 109 units of utility, and Fred has roughly 12 units of utility. At the beginning of this thought experiment, Bob had 5.5x the utility units of Fred. At the end,…

>>This is a simple thought experiment that I hope illuminates something important: in an economy where there is year over year growth, inequality grows by default as a function of exposure to the market. This is not true. Investment rates of return are much higher when you have smaller amounts of capital to invest, ceteris paribus.

In fact the opposite is true and wealthier households get higher investment returns, even within asset classes: https://www.dropbox.com/s/njzzx31616uek7p/JMP_Xavier.pdf?dl=...

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#78

Post by jabl »

WalterBright wrote: post #4

> At the same time that the major factors expanding the economic pie were losing momentum, other powerful forces emerged that would push toward dividing the pie more unequally The framing of the issue influences what conclusions one draws. Here, the authors think of the economy as a "pie" created by "factors" that gets "divided up". What naturally follows is that if some get a bigger "slice" than others, it is inhere…

Well, ultimately, politics is not about the implementation of optimal economic policy, or fairness, but about power.

While the struggle for power is often framed as a good vs evil struggle, in practice it's more about the elite vs the rest of society. Good vs evil, with few exceptions (say, the Nazi regime, or ISIS), is mostly a discourse perpetrated by the elites to make the peons do their bidding.

That's not to say all the elites do is bad, or that their existence at all is a negative; certainly there are benefits to hierarchy as well. Without that we'd still be hunter-gatherers or subsistence farmers. OTOH when elites get too much power it leads to oligarchism, stasis, and most people living a much lower level of quality of life than what the society could afford. A balance is needed. The historical way of re-balancing is to chop off the heads of the elites and start again.

Back to the market economy, certainly the free market has increased the living standards of Western societies beyond the wildest dreams. But also the market tends to concentrate wealth, and ultimately economical power begets political power. Progressive taxation, inheritance taxes etc. are ways societies can choose to avoid the oligarchy/stasis of too much concentration of power.

So no, Bob creating more wealth than Fred isn't necessarily unfair, but even so, both Bob and Fred would likely benefit from a more egalitarian society (Fred gets a better standard of living, and Bob gets to keep his head).

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#79

Post by lotsofpulp »

ericd wrote: post #38
spaetzleesser wrote: post #21

Earlier quoted context omitted.

I am not sure if the story of "creating" wealth is correct. When I look at people like Bezos or Gates I am not sure they created as much as they were able to gain a larger share of a market. I think without them we would have been fine and other players would have been in the market. So I think to some degree they took wealth from others. I also don't believe that the top 1% (or pick another number) are creating more…

The creation of Google, for example, has added immeasurably to the wealth of the world. Ditto spreadsheets, operating systems. Thanks to Amazon, I waste a tiny fraction of the time my parents historically did shopping, since I don’t have to run to the store basically ever. I’m taking a free university course from one of the top people in the field in between bottle feedings, thanks to YouTube. The economy is not a fi…

> The creation of Google, for example, has added immeasurably to the wealth of the world.

Google and other software advancements have offered amazing utility to everyone, freeing up people to do other tasks by reducing many hours spent on previously tedious tasks.

However, unless there is opportunity for the people who used to perform the obviated tasks to produce something others will value, then all of the wealth that was added will only show up in the profits of Google and other capital owners who benefit from decreased labor costs.

It is possible that previous technological advances obviated people slowly enough that it does not result in their labor’s value being reduced so abruptly. But what happens if it occurs in the course of 5 to 10 years? Certainly, the previously valuable travel agents, secretaries, cashiers, retail employees, etc experience a drop in demand for their labor, so unless they are able to offer the market something else, their value has dropped precipitously.

Re: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy

#80

Post by confidantlake »

CryptoPunk wrote: post #69
bigcorp-slave wrote: post #50

Earlier quoted context omitted.

Can you provide a citation for this? I appreciate that it is a bit unfair to ask for one here, but I fundamentally disagree with your point and would like to learn more about why you believe it to be true. While I concede that at the extreme high end, there are limited ways to invest without distorting the market yourself, it’s just not the case that returns are higher with less money. If anything, returns are lower,…

I don't have a source. I make this claim based on: 1. The observation that very wealthy people like Bill Gates and Elon Musk saw their net worth increase at a far faster pace earlier in their career. 2. Basic complexity theory. Managing less assets is less complex than managing more. 3. The range of investments that can absorb one's entire capital without market distortions grows as one has less capital to invest. Sa…

Most investments are not $50k into an ice cream stand but $50k into the stock market. Also someone with $50 million can still invest into an ice cream stand but someone with $50k cannot be an early investor into a tech company.
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