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The Crisis of the Middle Class and American Power

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Re: The Crisis of the Middle Class and American Power

#71

Post by bhntr3 »

acabal wrote: post #58
rdtsc wrote: post #52

> The expectation of rising real incomes was built into the American culture Ah that's the classic propaganda line: "I am not poor, I am just pre-wealthy." ...So I sure don't want to vote for anything that would jeopardize my wealthy position when I get there. The key in all of this is ability to manipulate the people into believing and voting in a particular way. US has no shortage of zombies who don't think on thei…

I've said for a long time the basic problem in the States isn't capitalism vs. socialism or rich vs. poor, but rather educated vs. uneducated. I think I'm not being out of line to claim that on the average an American's high-school-level education is pretty poor. People who are victims of poor education don't know history (which is rich in examples of past policy), can't think critically or reason about potential out…

> I think I'm not being out of line to claim that on the average an American's high-school-level education is pretty poor.

The thing is that it's not really that true. Here's a typical article on Huffington Post bemoaning the American education system: http://www.huffingtonpost.com/2012/07/23/us-students-still-l...

But if you read it carefully, the truth is that we're not getting worse. We're just not getting better as fast as others. We used to be the best. Now we're in the middle. We're not worse than we were 60 years ago. We're better. Other countries have just gotten better much faster. Which is a trend that applies to a lot in America these days.

Education IS improving. So, I think anything that tries to relate an absolute decline to "the failure of our schools" is wrong. Maybe that's not your point though.

The thing is that what you describe at the beginning of your post is actually typically human. Experiments have shown we all have cognitive biases that make us bad at "being skeptical" and "reasoning about potential outcomes" or using past examples to predict future events (even when we're well educated.) Humans are just not good at doing that stuff. We can overcome our biases but that's not really taught in school. You can read about a lot of it at http://lesswrong.com/

So I don't think it's that helpful to bundle up people who struggle with cognitive biases as "Those kinds of people" There's a chance that "our kind of people", aka people who read hacker news, are much better at being rational but it's probably because we've taught ourselves to think like computers! Because that's a big part of what being a hacker is.

Re: The Crisis of the Middle Class and American Power

#72

Post by yk »

anigbrowl wrote: post #36
CleanedStar wrote: post #3

When Karl Marx wrote Capital in 1867, he said capitalism would never be able to get rid of credit bubbles, financial crises, high unemployment etc. He said that over time the problems would get worse and worse with greater and greater financial crises. Here we are about a century and a half later and you just have to look at the housing bubble, the bank crisis, TARP and the government bailout, unemployment in the US…

Basically workers create $240 of wealth every eight hour work day, but are only paid $200 a day. But workers don't create that much wealth in a day by themselves; they need plant and material to create the product or service that is sold. The buildings they work in, the machinery that they use, the raw material they consume, are equally important inputs to production and it is these which are supplied by the capitali…

So the buildings get paid? Marx did work under the assumption of the "Labor theory of value" [1], which states that only labor adds value to raw products, and that only humans are paid. So the price of a consumer product may be broken down into labor costs, raw material, R&D, long term investments etc. But each of the non labor points can be broken up further and in the end you end with only labor.

19th century economists did then follow this thought to construct the market backwards, that is some were trying to model markets based not on utility of a product and demand, but purely on labor costs.

[1]https://en.wikipedia.org/wiki/Labor_theory_of_value

Re: The Crisis of the Middle Class and American Power

#73

Post by Morcane »

martinced wrote: post #26
CleanedStar wrote: post #3

When Karl Marx wrote Capital in 1867, he said capitalism would never be able to get rid of credit bubbles, financial crises, high unemployment etc. He said that over time the problems would get worse and worse with greater and greater financial crises. Here we are about a century and a half later and you just have to look at the housing bubble, the bank crisis, TARP and the government bailout, unemployment in the US…

Because socialism or communism works so much better right? People are especially envious of the great freedom people in North Korea are enjoying? Same as Cuba? Venezuela? Argentina? (wanna change your currency to another one in Argentina to hedge yourself against a very strong inflation? you can't, because the socialist state won't let you do that) What's next after Karl Marx? That the homophobic racist murderer that…

Who cares about freedom when you don't have anything to eat, and hear your children cry because of hunger?

It's day-to-day life for millions of people on this planet.

First-world talk.

Re: The Crisis of the Middle Class and American Power

#74

Post by jeffdavis »

acabal wrote: post #58
rdtsc wrote: post #52

> The expectation of rising real incomes was built into the American culture Ah that's the classic propaganda line: "I am not poor, I am just pre-wealthy." ...So I sure don't want to vote for anything that would jeopardize my wealthy position when I get there. The key in all of this is ability to manipulate the people into believing and voting in a particular way. US has no shortage of zombies who don't think on thei…

I've said for a long time the basic problem in the States isn't capitalism vs. socialism or rich vs. poor, but rather educated vs. uneducated. I think I'm not being out of line to claim that on the average an American's high-school-level education is pretty poor. People who are victims of poor education don't know history (which is rich in examples of past policy), can't think critically or reason about potential out…

"Those kinds of people will never be able to vote in their best interests"

What happened to voting in the interests of the entire population?

Re: The Crisis of the Middle Class and American Power

#75

Post by acabal »

bhntr3 wrote: post #71
acabal wrote: post #58

Earlier quoted context omitted.

I've said for a long time the basic problem in the States isn't capitalism vs. socialism or rich vs. poor, but rather educated vs. uneducated. I think I'm not being out of line to claim that on the average an American's high-school-level education is pretty poor. People who are victims of poor education don't know history (which is rich in examples of past policy), can't think critically or reason about potential out…

> I think I'm not being out of line to claim that on the average an American's high-school-level education is pretty poor. The thing is that it's not really that true. Here's a typical article on Huffington Post bemoaning the American education system: http://www.huffingtonpost.com/2012/07/23/us-students-still-l... But if you read it carefully, the truth is that we're not getting worse. We're just not getting better…

I'm not saying education is better or worse than in the past, just that (in general) it's not up to the task of producing an electorate capable of voting rationally. After all, it's often people of retirement age you see holding those anti-Obamacare signs. Their basic education did happen 60-odd years ago and it clearly failed them.

Re: The Crisis of the Middle Class and American Power

#76

Post by anigbrowl »

maratd wrote: post #68
rdtsc wrote: post #52

> The expectation of rising real incomes was built into the American culture Ah that's the classic propaganda line: "I am not poor, I am just pre-wealthy." ...So I sure don't want to vote for anything that would jeopardize my wealthy position when I get there. The key in all of this is ability to manipulate the people into believing and voting in a particular way. US has no shortage of zombies who don't think on thei…

> US has no shortage of zombies who don't think on their won. A human being is at the most juvenile when he encounters a view contrary to his own and ascribes it to stupidity. If only everyone was as enlightened, as educated, as brilliant as he ... then everyone would understand. No. Grow up. I will never be wealthy and I will still continue to vote for a fair tax system. A flat tax system. Because everyone should pa…

rdtsc's not talking about you personally, but about the median voter. Many political arguments are founded in ignorance (in contradiction of available data or in defiance of logic), and observing this fact is not equivalent to a judgment of people who happen to hold the same opinions.

Having said that... Because everyone should pay the same, regardless of status or income. [...] Because everyone should pay for what they use, no more and no less.

These are perfectly valid opinions to hold, but to express them as if they were facts is to assume the correctness of your premises. I can see why you hold those positions, but I can also think of compelling arguments for the opposite positions.

Re: The Crisis of the Middle Class and American Power

#77

Post by ucee054 »

maratd wrote: post #68
rdtsc wrote: post #52

> The expectation of rising real incomes was built into the American culture Ah that's the classic propaganda line: "I am not poor, I am just pre-wealthy." ...So I sure don't want to vote for anything that would jeopardize my wealthy position when I get there. The key in all of this is ability to manipulate the people into believing and voting in a particular way. US has no shortage of zombies who don't think on thei…

> US has no shortage of zombies who don't think on their won. A human being is at the most juvenile when he encounters a view contrary to his own and ascribes it to stupidity. If only everyone was as enlightened, as educated, as brilliant as he ... then everyone would understand. No. Grow up. I will never be wealthy and I will still continue to vote for a fair tax system. A flat tax system. Because everyone should pa…

Because your views are stupid. Easy example: a homeless tramp dying of ebola.

(You can substitute a bunch of other diseases naturally occuring in the USA if you like)

You'd normally want to pack that guy into a medical isolation unit pronto. You probably won't save him but at least you'll stop other people from catching it from him.

But no! maratd vetoes this because it's not fair. The hobo should pay for his isolation unit and until he can, he should be kicked out into the streets to act as a plague vector.

Rinse and repeat for all the other issues you haven't thought about properly.

Re: The Crisis of the Middle Class and American Power

#78

Post by AnthonyMouse »

mchannon wrote: post #46

I'm confused about the perceived dichotomy of taxation and private investment. If the government threatens to take their cash, wealthy individuals and entities will find ways to use that cash to further their wealth instead of giving it to the government. So if the government's taxes are too high, the wealthy won't have the money to invest, but if the taxes are too low, the wealthy have a no-risk, stable return on th…

The idea has possible merit, but I want to complain about how you're getting to it. For one thing, the implication that inflation is politically easy is probably not true. There is a large contingent of the right (e.g. the Ron Paul crowd) who are always running around talking about auditing the Fed and how fiat money is ruining everything, etc. More strategically, the people who have the greatest incentive to fight inflation are money lenders who own outstanding fixed rate debt, i.e. banks, and as we've learned recently the banks are not exactly without political influence. Though granted increasing the rate of inflation probably is politically easier than raising taxes.

The second thing I want to question is this:

>So if the government's taxes are too high, the wealthy won't have the money to invest, but if the taxes are too low, the wealthy have a no-risk, stable return on their cash- sitting on it.

How does sitting on cash generate any return at all? You have to invest it in something to cause the value to increase, unless the value of money itself is actually increasing (i.e. a period of deflation), which is almost invariably its own brand of near-immediate catastrophic meltdown.

But you're on the right track, because the problem at present is that they invest their money in safe investments, like treasury bonds, as opposed to higher risk private investments.

The relationship between the investor purchase of government debt and economic growth is very squishy: It's effectively investing in the government. Higher demand for government debt reduces the interest rate the government pays. The money not paid in additional interest by government is then put back into the hands of Congress which it can use to either reduce taxes or fund additional programs at the same level of outstanding debt principal. If the government uses the money wisely then it helps the economy; if they use it inefficiently (or just less efficiently than private enterprise would have) then it hurts.

Naturally this leads to all of the arguments about who should get tax cuts and whether government spending, or what kind of government spending, is better for the economy than putting the money in the hands of private enterprise.

But the other compounding factor is that the normal way we know of to cause inflation is for the Fed to print money and buy government securities with it. This will certainly drive private investors away from government securities, because you simultaneously have the Fed bidding down nominal the interest rate and the inflation reducing the real returns at a given nominal rate, but that doesn't mean you don't you still have the same amount (or more) of capital being "invested" in the government (i.e. the real interest government pays on capital goes down not up), it's just that the Fed is doing the investing with newly created money instead of private enterprise doing it.

Furthermore, if you drive the private investors away from government securities, the question becomes what they invest in instead. This is the flip side of the "who should get tax cuts and what should taxes buy" question: If investors tend to take their money and invest in R&D then we're in business. If they tend to do commodity speculating with it then we're in trouble.

It pretty much seems to come down to this: We need to find a way to get investors to invest in things that help the economy. "Quantitative easing" may cause them to do that either if the default private alternative to government securities is economically beneficial, or if we can arrange for it to be using e.g. tax incentives or government subsidies.

Re: The Crisis of the Middle Class and American Power

#79

Post by philwelch »

anigbrowl wrote: post #36
CleanedStar wrote: post #3

When Karl Marx wrote Capital in 1867, he said capitalism would never be able to get rid of credit bubbles, financial crises, high unemployment etc. He said that over time the problems would get worse and worse with greater and greater financial crises. Here we are about a century and a half later and you just have to look at the housing bubble, the bank crisis, TARP and the government bailout, unemployment in the US…

Basically workers create $240 of wealth every eight hour work day, but are only paid $200 a day. But workers don't create that much wealth in a day by themselves; they need plant and material to create the product or service that is sold. The buildings they work in, the machinery that they use, the raw material they consume, are equally important inputs to production and it is these which are supplied by the capitali…

Plus, an individual worker might create $240 of wealth for the customer, or he might create $160, or he might create -$160. The big driver of the gap between value created and wage paid is the level of risk assumed. You cannot capture all the value you create in the economy without also capturing all the risk. People who try to do this are called "entrepreneurs" and they often end up insolvent.

Re: The Crisis of the Middle Class and American Power

#80

Post by mcantelon »

pinaceae wrote: post #67

Related to this, Showtime is currently airing a rather brilliant set of documentaries narrated by Oliver Stone called the 'Untold History of the United States'. It basically puts this article into broader context, from the entry to WW2 onward. Would be interesting to know how much different the reception of those documentaries is for a US-educated citizen. They definitely fit to the overall history being taught over…

I'm currently watching that series... interesting stuff. Another must, for any who haven't seen it, is the British documentary series "Century of the Self", about American conditioning specifically.
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