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TED and inequality: The real story

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Re: TED and inequality: The real story

#151

Post by WalterBright »

utunga wrote: post #147
WalterBright wrote: post #135

Earlier quoted context omitted.

His talk makes the mistake that spending money is what drives the economy. This is a fundamental error. What drives the economy is people creating value. When people have created value, they can exchange that value for things they want from other people who have created value. Simply handing people money to spend is not stimulative because it does not create value. Put another way, taking money from A and giving it t…

I don't think its fair to describe that as a fundamental error. Rather, your explanation while OK as far as it goes is overly simplistic. Yes, its the real value not the currency that we are after, but you also have to take into account secondary effects like 'aggregate demand'. Perhaps that's an ideological bent of yours or perhaps just omission? Either way, the process of creating 'real value' on both sides cannot…

Money in bank accounts is not idle. It is loaned out - and nobody is going to borrow unless they have plans to spend it.

(As eloquently put by Jimmy Stewart in "It's a Wonderful Life".)

Re: TED and inequality: The real story

#152

Post by WalterBright »

Androsynth wrote: post #137
WalterBright wrote: post #135

Earlier quoted context omitted.

His talk makes the mistake that spending money is what drives the economy. This is a fundamental error. What drives the economy is people creating value. When people have created value, they can exchange that value for things they want from other people who have created value. Simply handing people money to spend is not stimulative because it does not create value. Put another way, taking money from A and giving it t…

Thats a good point. Wouldn't the logical conclusion to that point be that it is a mistake to think that a businesses purpose is to create jobs (as opposed to value)?

Of course. Hiring people is only done in the service of creating value.

Re: TED and inequality: The real story

#153

Post by kevinskii »

ealloc wrote: post #150
WalterBright wrote: post #135

Earlier quoted context omitted.

His talk makes the mistake that spending money is what drives the economy. This is a fundamental error. What drives the economy is people creating value. When people have created value, they can exchange that value for things they want from other people who have created value. Simply handing people money to spend is not stimulative because it does not create value. Put another way, taking money from A and giving it t…

> Simply handing people money to spend is not stimulative because it does not create value. Put another way, taking money from A and giving it to B so B can buy things from A does not (and cannot) make A wealthier. Sure they can, according to some models. Here's the argument: Say A and B produce goods for each other, and so A might buy something from B for $5, and B might come back and buy something from A with the s…

Nevermind its simplicity, that model is just not an accurate representation of why economic transactions take place. I will only pay you $5 if I value the goods I'm getting in return more than my money, and likewise you will only accept it if you value the money more than the goods. The "babysitting co-op" scenario would only happen if everyone involved ultimately values everything equally, which of course they don't.

Re: TED and inequality: The real story

#154

Post by kevinskii »

roguecoder wrote: post #130
Gormo wrote: post #92

Earlier quoted context omitted.

I don't see how the necessity of demand is the 'elephant in the room' - it seems pretty obvious that you need both supply and demand in order for ongoing commerce to take place. Yes, there has to be a customer; but identifying that customer, discovering his desires, and satisfying them in a way that creates net value for all parties is the role of the entrepreneur. Doing that successfully is not a trivial task, and e…

You are missing the piece that all conservative economists miss: access to the medium of exchange. It doesn't matter how well you identify the customer, satisfy their desires and add net value for all parties involved: if that customer doesn't have a job that gives them cash to buy your product the economy grinds to a halt. It can be summed up by the famous if possibly apocryphal line by Ford: "I pay my employees eno…

You are missing the piece that most amateur liberal economists miss: money is only a valid medium of exchange as long as it represents real value. When you forcibly redistribute too much of it, you aren't helping people buy things and "stimulate the economy" except maybe over the very short term. You're just destroying that value that it would otherwise represent.

Re: TED and inequality: The real story

#155

Post by aptwebapps »

ealloc wrote: post #150
WalterBright wrote: post #135

Earlier quoted context omitted.

His talk makes the mistake that spending money is what drives the economy. This is a fundamental error. What drives the economy is people creating value. When people have created value, they can exchange that value for things they want from other people who have created value. Simply handing people money to spend is not stimulative because it does not create value. Put another way, taking money from A and giving it t…

> Simply handing people money to spend is not stimulative because it does not create value. Put another way, taking money from A and giving it to B so B can buy things from A does not (and cannot) make A wealthier. Sure they can, according to some models. Here's the argument: Say A and B produce goods for each other, and so A might buy something from B for $5, and B might come back and buy something from A with the s…

I believe the Babysitting Co-op scenario is a little different. The solution there was not to redistribute the scrip but to print more.

Re: TED and inequality: The real story

#156

Post by Karunamon »

roguecoder wrote: post #20
nkurz wrote: post #2

The response is eloquent, but I think it sidesteps the point that concerns me and many others. Yes, for the reasons stated, this talk is not the right one to be highlighted on Ted.com. It's not censorship, it's a valid editorial decision. But I think the real point is this quote from the NJ article: "But even if the talk was rated a home run, we couldn't release it, because it would be unquestionably regarded as out…

Yeah, their response said exactly what I assumed had happened happened. They, like everyone else building a brand, are trying to erase the truly antagonistic dynamics of modern culture and worship some mythical conflict-free land of bipartisanship and kittens, where smart people never disagree they just have different evidence. That myth is what TED is selling. Not truth, not even a better world, just a world where w…

where smart people never disagree they just have different evidence

Welcome to the world of science.

Re: TED and inequality: The real story

#157

Post by bahgoo »

thaumaturgy wrote: post #75

I watched the video after reading TED's response, and I'm skeptical of some of their claims, but I can also see why they didn't initially choose to publish it on their site. The video is at http://www.youtube.com/watch?v=bBx2Y5HhplI Since it's short, I'll go over it point-by-point. 1. "It is astounding how significantly one idea can shape a society and its policies. Consider this one: if taxes on the rich go up, job…

Thanks for providing the transcript. I listened to this and the guy is not a good presenter. Both the content and the delivery need serious work. What's worse is you can tell he has rehearsed this thing ad nauseum. And it's still really stiff and awkward.

Now, in some way he, being as lame as he is in this presentation, has proven his own argument.

A lot of wisdom is imparted on the wealthy to be leaders of the economy. But not everyone who is wealthy is actually very wise. They have succeeded in making money. But that in itself does not elevate them to God status. Don't believe me? Let us look at Exhibit A:

Rich guy from Seattle who has "started _dozens_ of companies."

Roll presentation.

And what's with use of the term "capitalist"? Are there lots of socialists in America now? Are American workers not capitalists?

Re: TED and inequality: The real story

#158

Post by bhb916 »

nl wrote: post #132
Gormo wrote: post #115

Earlier quoted context omitted.

'Increasing demand' is itself a supplier-directed activity; it's one of the primary functions of marketing. It seems baffling to consider this from a political/macroeconomic perspective; how would you increase demand but through marketing activity, without your methods becoming coercive or oppressive? > If the necessity of demand isn't the elephant in the room, then why isn't there broad political support for higher…

'Increasing demand' is itself a supplier-directed activity; it's one of the primary functions of marketing. It seems baffling to consider this from a political/macroeconomic perspective; how would you increase demand but through marketing activity, without your methods becoming coercive or oppressive? Wow, seriously? As an extreme example, and something no one is proposing: give all unemployed people a $1 million cas…

I believe you're misrepresenting the Australian situation. While it is true they experienced less of a slowdown that other nations, it's not entirely clear that the stimulus had anything to do with it. A few points:

(1) The data (when compared to the recession forecast) doesn't support the idea that household spending is what boosted the economy. Instead, business investment and exports appeared to prop up the Australian economy.

(2) The Rudd government didn't try anything (broad stimulus, cash payments, home rebates, auto stimulus) that wasn't tried in the United States. If you believe these things succeeded in AUS, you'd have to have a convincing argument as to why they didn't in the US.

Obviously this is a tough nut to crack and there are really too many sourced to cite. Here is an article that talks a little bit about the data:

http://www.theaustralian.com.au/business/opinion/how-mining-...

Re: TED and inequality: The real story

#159

Post by josh33 »

WalterBright wrote: post #135
thaumaturgy wrote: post #75

I watched the video after reading TED's response, and I'm skeptical of some of their claims, but I can also see why they didn't initially choose to publish it on their site. The video is at http://www.youtube.com/watch?v=bBx2Y5HhplI Since it's short, I'll go over it point-by-point. 1. "It is astounding how significantly one idea can shape a society and its policies. Consider this one: if taxes on the rich go up, job…

His talk makes the mistake that spending money is what drives the economy. This is a fundamental error. What drives the economy is people creating value. When people have created value, they can exchange that value for things they want from other people who have created value. Simply handing people money to spend is not stimulative because it does not create value. Put another way, taking money from A and giving it t…

I cannot up vote this enough. Value creation is key. One new theory I've been exploring lately is that, while people can value good and bad things (moral and immoral, sustaining and destructive, etc), the creator of value has a responsibility not only to give people what they want, but actually what they deserve. The distinction this makes can be explained with an example:

John makes software for law firms. His software has lots of bugs. John justifies this because he can make more money by adding features and isn't at risk of losing his cash flow because there are no competitors in his space. IMHO, John has an obligation to write better software simply because his constituents deserve it. I also think it could be warranted that he charge even more for it at this point. While I'm not sure bug-free software is a universal good, there are definitely products that ought to be better or not exist (pornography and cigarettes come to mind). The government should not have to regulate these.

Re: TED and inequality: The real story

#160

Post by brc »

WalterBright wrote: post #135
thaumaturgy wrote: post #75

I watched the video after reading TED's response, and I'm skeptical of some of their claims, but I can also see why they didn't initially choose to publish it on their site. The video is at http://www.youtube.com/watch?v=bBx2Y5HhplI Since it's short, I'll go over it point-by-point. 1. "It is astounding how significantly one idea can shape a society and its policies. Consider this one: if taxes on the rich go up, job…

His talk makes the mistake that spending money is what drives the economy. This is a fundamental error. What drives the economy is people creating value. When people have created value, they can exchange that value for things they want from other people who have created value. Simply handing people money to spend is not stimulative because it does not create value. Put another way, taking money from A and giving it t…

Says Law says it all. No consumption without production first.
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