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Capitalism Has Gone Off the Rails

spiegel.de

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Re: Capitalism Has Gone Off the Rails

#71

Post by PhasmaFelis »

yummyfajitas wrote: post #50
psychometry wrote: post #33

Earlier quoted context omitted.

A third of the population in the richest nation on earth lives in poverty. According to you, that's not a problem because even poorer people in Bangladesh are slightly less poor than they would be if American companies had never employed them. What kind of callous person could look around at all the suffering and think this system's working great? Or do you not look around at all, holed up in a tacky mansion of your…

95% of the biggest nation in the world (or maybe second biggest, no one really knows the exact pop of India and China) lives in far deeper poverty than poor americans. Many of them experience actual suffering - not enough food, no flush toilet, no power. What, precisely, do you believe poor Americans are suffering from? The only concrete answer I usually hear is envy (I.e. "oh noes the inequality"). http://economix.b…

> What, precisely, do you believe poor Americans are suffering from?

Well, just for starters, they're suffering from entirely treatable diseases and injuries because they don't have health insurance, or don't have non-shitty health insurance. Quite a few of of them are suffering from childhood malnutrition, leading to lifelong cognitive and developmental defects. On the lowest rung, they are suffering from homelessness and all the deprivation and desperation that comes with it.

You're trying to tell us that someone to trying to raise kids in a rotting, roach-infested apartment in a drug-haunted slum, with no chance at a decent education and no real hope of advancement, is really perfectly all right because at least they're not actually living in a Delhi sewer. Or are you not even aware that this happens in America? You sound like the closest you've ever come to actually knowing a poor person is tossing a quarter to a homeless man in the subway.

Re: Capitalism Has Gone Off the Rails

#72

Post by ivanca »

AnthonyMouse wrote: post #43
RangerScience wrote: post #25

Earlier quoted context omitted.

We do have a model that has successfully demonstrating certain principles which may be capable of addressing this problem: Burning Man. Bear with me for a second. I'd say (and then pointing out my lack of formal or amateurish study of economics) that the issue you're pointing at is that capitalism doesn't function well in a post-scarcity environment, which we're entering. This is because our means of determining valu…

> the issue you're pointing at is that capitalism doesn't function well in a post-scarcity environment, which we're entering. A literally post-scarcity environment is not a problem because it makes the price of everything zero. Food is free, shelter is free, medical care is free, you don't need a job. Do whatever you want all day, it's not a problem. The problem is that what we're entering is not a post-scarcity envi…

Then the solution is pretty simple, doesn't it? make it illegal to foreclosure a house for more than 6 months, an "use it or lose it" policy.

Re: Capitalism Has Gone Off the Rails

#73

Post by [deleted] »

mattmcknight wrote: post #27
Animats wrote: post #17

This is an important article, but I doubt there will be a useful discussion of it here. The developed world has incredible productive capacity. With 1% of the workforce in agriculture and 8% in manufacturing, the US produces as much stuff as China. There are no significant shortages of any manufactured good anywhere in the developed world. Quality is pretty good across the board, too. This is unique in history. That'…

This is not an important article, it is a rant against people with "tacky mansions", a turn of phrase that is more indicative of the author's point of view than the other conventional points about not understanding creative destruction. I think it is this overly nationalist view of economics that needs to die, not "capitalism". There is not less productive work to go around, it's just not being done in the US. We are…

[deleted]

Re: Capitalism Has Gone Off the Rails

#74

Post by nostrademons »

adsenseclient wrote: post #64
scottlocklin wrote: post #62

Earlier quoted context omitted.

You evidently didn't read my comment. None of the companies I listed above are publicly traded: they are all family owned, and the families which own them have almost unfathomable power. Of course, many of the families which sold shares in their businesses also have considerable power. I originally learned about these people by studying the grain and commodity markets.

I am curious to know the proportion of GDP generated by publically vs privately owned companies in the US and how it has changed in the last 150 years

It's possible to estimate this using public, easily Googlable data:

http://www.google.com/publicdata/explore?ds=a7jenngfc4um7_

Total U.S. GDP is about $15T. Of that, $8T is compensation of employees, so roughly half accrues to wage-earners (this ranges from the janitor to the CEO, but is probably exhibits a bit less inequality than returns to capital. $5.6T is gross operating surplus: this is profit that accrues to incorporated businesses. GDP is defined as wages + profits + gross mixed income (effectively profits accruing to unincorporated businesses; things like sole proprietors and landlords) + taxes - subsidies. Subsidies is negligible (about $60B) and taxes are about $1T, so that leaves about $500B as GMI (this seems pretty low to me, but I guess most business owners choose to incorporate these days).

Now the question is how much of the $5.6T in profits accrues to publicly traded vs. privately traded companies. This isn't broken out by the government stats, but you can estimate it from financial data. The total market cap of the S&P 500 is about $18.5T:

http://en.wikipedia.org/wiki/S%26P_500

The P/E of the S&P 500 is about 18.68:

http://online.wsj.com/mdc/public/page/2_3021-peyield.html

Market cap divided by P/E gives earnings, by definition, so the total profit accrued by publicly-traded companies is roughly $1T. Similar math done on the Wilshire 5000 index gave the same result. So as a very rough ballpark estimate, the total value-add by privately-traded companies is roughly 5x that of publicly-traded companies.

It would likely be hard to find similar figures for 150 years ago, both because you can't just Google up 150-year-old data, and because 150 years ago the NYSE operated out of coffeehouses and the ticker symbol hadn't yet been invented.

Re: Capitalism Has Gone Off the Rails

#75

Post by zanny »

yummyfajitas wrote: post #50
psychometry wrote: post #33

Earlier quoted context omitted.

A third of the population in the richest nation on earth lives in poverty. According to you, that's not a problem because even poorer people in Bangladesh are slightly less poor than they would be if American companies had never employed them. What kind of callous person could look around at all the suffering and think this system's working great? Or do you not look around at all, holed up in a tacky mansion of your…

95% of the biggest nation in the world (or maybe second biggest, no one really knows the exact pop of India and China) lives in far deeper poverty than poor americans. Many of them experience actual suffering - not enough food, no flush toilet, no power. What, precisely, do you believe poor Americans are suffering from? The only concrete answer I usually hear is envy (I.e. "oh noes the inequality"). http://economix.b…

There is tremendous long run psychological and physical harm associated with living paycheck to paycheck in perpetual debt having to eat subpar foodstuffs because fruits and vegetables cost way more than dollar menu cheeseburgers per calorie. And if you don't have a working kitchen you can't cook farmers market produce.

And that is at best. A lot of us are unemployed, and families are collapsing in on themselves as you have fewer and fewer breadwinners.

Re: Capitalism Has Gone Off the Rails

#76

Post by zanny »

radmuzom wrote: post #51
ef4 wrote: post #34

Earlier quoted context omitted.

> Why is this not happening any more? It is happening. The average manufacturing wage in China is up 700% in fourteen years. It isn't happening in the US and Europe, but that's because the average worker here still makes absurdly more money than the average worker in the developing world. The gap is closing quickly. As it does, we'll be able to see more evenly spread growth again. But purely from a humanitarian stand…

Ok. But thinking aloud here, when and how does exchange rate come into play? The only reason I have been lifted out of poverty living in India is because of "Western" consumers - I do work for which my employer gets paid in dollars, and they give me a fraction which is enough for me to lead an upper middle class lifestyle in India. No Indian company will pay, or has the ability to pay, as much money as I am getting n…

The hope is that the temporary wealth transfer until you reach equilibrium can fuel your own countries growth to the point where it can self perpetuate the cycle with its own infrastructure.

IE, you built factories and call centers and all manner of things to service western tastes, and even when the western money dries up by then you should have enough in your own little money cycle plus the infrastructure to produce enough to compete globally to maintain equilibrium.

It is an efficiency game. You start out with a farmer who has no tools, but because they live in an impoverished nation he sells his crops for next to nothing and that next to nothing money is considered a lot where he comes from. That money gets him funds to buy tractors and plows and other productivity boosters or maybe self driving combines to just outright replace some of his labor.

Now while a lot of that might come from the same western market, he will still spend some of it locally, and macroeconomically that effect will spread wealth in the local area assuming locals can buy something from each other. As long as the equation has money flowing out of another country into yours you are boosting your economy through your citizens productivity.

By the time the equation equalizes, the farmer should have all the modern tools of the farming trade such that there is price equalization between himself and all other farmers - their countries economic deficit gave him an opportunity to invest in his farming, yielding a more efficient farm that can produce significantly more food and by the time it is done sell it at western market value because their economy has equalized with the first world.

Of course, the farmer could also blow all his temporary profits on drugs and women, and end up screwed when he cannot produce enough crop to sustain himself as the cost of living rises with a modernizing economy.

Re: Capitalism Has Gone Off the Rails

#77

Post by zanny »

Animats wrote: post #17

This is an important article, but I doubt there will be a useful discussion of it here. The developed world has incredible productive capacity. With 1% of the workforce in agriculture and 8% in manufacturing, the US produces as much stuff as China. There are no significant shortages of any manufactured good anywhere in the developed world. Quality is pretty good across the board, too. This is unique in history. That'…

> We have no successful model for dealing with this.

Canada seems to have had pretty good success with that basic income town. And no major western democracy has really attempted it yet.

I like it because it lets you have a completely deregulated economy, because both employer and employee would be participating in voluntary negotiation without a huge bias towards the employer - when one side is starving and need shelter and the other just wants a third yacht, the incentives are skewed. If both of them want money for luxuries and not necessities (worker wants a TV, boss wants a movie theater wing on his mansion) you don't need as stringent workers protection regulations and you don't need a minimum wage, because all employment is voluntary and a worker could just walk without fear of homelessness if a boss cannot offer him enough to keep him working.

It also means people can pursue what they think is valuable, rather than what the market can show is valuable, which like you say it is becoming worse and worse at over time. It means every artist could draw all day, any recluse could stay in their bedroom trolling reddit all day, and everyone who wanted to help starving children in Africa could help starving children in Africa whenever they wanted.

Re: Capitalism Has Gone Off the Rails

#78

Post by antimagic »

ende wrote: post #40
stormbrew wrote: post #15

Earlier quoted context omitted.

I think it's really important to make it clear that they (well, specifically bailouts really) are also not ideas of the opposing bogeymen, though. No one who even thinks of considering themselves socialist or, say, anarchist would ever say "Yeah, let's give a bunch more money to rich people!" The tendency for power to accumulate into the hands of a few, who then manipulate the economy to their own ends, is a problem…

Nor has any political force yet emerged built on that premise of social power structures. Perhaps classial liberalism, georgism, distributism, and good old fashioned anarchy. Every existing political force along the spectrum simply tries to subvert the pyramid to its own purpose.

Interestingly enough, the US Constitution's much-abused 2nd amendment was targetted at precisely this problem - the founders were at least aware of the problem.

It's still too early to know if this is a sufficient safeguard. But things must be getting close - those Occupy Wall Street protests only needed to have a few hotter heads leading things, and we may have seen impromptu armies numbering in the thousands taking over corporate America. I don't know how the government would react to such an uprising.

Re: Capitalism Has Gone Off the Rails

#79

Post by mqsiuser »

jvm wrote: post #21

There's a lot of conflation in this article between distribution and economic growth, which I think arises from the Spiegel's European perspective. Going back to the start of the DAX tracking (mid-2011), we see okay performance in German DAX index, stagnation for the French CAC and British FTSE, and strong performance in the US S&P 500 and Japanese Nikkei. [1] Eurozone unemployment has soared into double digits of la…

A German here, I probably read Spiegel for >10 years (from ~2000 to beginning of 2014):

They are kind of "left" which reflects in their articles "raises a second narrative about inequality". They'd support basic income any time.

The Spiegel has turned into yellow press lately, I am surprised to see a (english) article on HN.

Thank you HN for unveiling that there are some spots in Europe that are doing fine and that there are structural problems (I can see them, the borders are open and ppl come to Germany from other European countries).

Re: Capitalism Has Gone Off the Rails

#80

Post by tormeh »

jvm wrote: post #21

There's a lot of conflation in this article between distribution and economic growth, which I think arises from the Spiegel's European perspective. Going back to the start of the DAX tracking (mid-2011), we see okay performance in German DAX index, stagnation for the French CAC and British FTSE, and strong performance in the US S&P 500 and Japanese Nikkei. [1] Eurozone unemployment has soared into double digits of la…

Japan has stagnated because its working age population is in decline. Apart from the demographics, Japan's doing great.
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