Dynamism and Its Discontents

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Dennis Sanders

Dennis Sanders is the Associate Pastor at First Christian Church (Disciples of Christ) in Minneapolis, MN.  You can follow Dennis through his blogs, The Clockwork Pastor and Big Tent Revue and on Twitter.  Feel free to contact him at dennis.sanders(at)gmail(dot)com.

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157 Responses

  1. The free market works great for some purposes. When the discussion is about optimizing the production and pricing of widgets, no other system comes close to doing as well. The free market works less great for other purposes. There is not and never will be a brisk competition among companies to pipe water into my house, or sewage away from it. Pretending that the free market is the answer here, so the government has no interest in the matter, leads to crappy (literally) service and exorbitant prices.

    The observation that the free market is not ideal for all purposes is so obvious as to be banal, but say it out loud and there will be someone–typically someone eager to tell you how rational he is–who will conclude that you are a bomb-throwing Marxist. My eyes glaze over at that point.

    Oh, and that snort of derision you heard was me, when I got to the part of conservatives and personal responsibility.Report

    • Avatar Swami in reply to Richard Hershberger says:

      Yeah, I would say that free markets are one leg of a three legged stool. The other two are representative government and science. Three sets of institutions which support and reinforce each other. Libertarians think we can get there with just two legs, as do Marxists. They just disagree on which two legs. The number of long term thriving states based on either ideology is zero.

      The modern miracle of escalating living standards (which started around 1776) has always required all three and every successful nation has its personalized mixture.Report

      • Avatar Rufus F. in reply to Swami says:

        I think your main point is valid here, but having spent much of the 90s arguing with radical Marxists- back when they were still a thing- I’m not sure which two legs they would believe in. I assume you’re saying they don’t believe in free markets, but they also believed that the state would wither away once society was able to govern itself. Of course, when you pointed out that the state definitely did NOT wither away in Communist countries, they said that was because we didn’t have “true communism” yet. Just give it a few more centuries and a few million more dead, give or take!Report

  2. Avatar Oscar Gordon says:

    Just a quick thought:

    Part of the issue is our regulatory environment is, in so many ways, too focused on trying to catch ‘evildoers’ and punish them, rather than simply assigning responsibility and enforcing rehabilitation and restitution.Report

  3. Avatar Jaybird says:

    The free market is a wonderful servant but a horrible master.

    That said, if I worshipped acceleration, the market is what seems most likely to bring it.Report

    • Avatar JoeSal in reply to Jaybird says:

      There are indications that if you stop building the socialism, you stop building the mass graves. Just sayin’.Report

      • Avatar LeeEsq in reply to JoeSal says:

        (Sarcasm on) Yes, all forms of government intervention in the economy will lead to billions of deaths and no business person or corporation ever used deadly force to deal with striking workers or did anything immoral like the Belgian Congo. Business people have a perfectly ethical track record. (Sarcasm off)Report

        • Avatar JoeSal in reply to LeeEsq says:

          I assume ‘business people and corporations’ have their own forms of socialism, not beyond creating mass graves. Stupidity, doesn’t care about its host.Report

          • Avatar dragonfrog in reply to JoeSal says:

            No, sending Pinkertons to murder striking workers and their spouses and children at Ludlow was not socialism. It was its opposite.

            You can’t just define socialism as “things that are bad” and then when discussing someone doing something bad, point to that definition as evidence that that bad thing must somehow have been socialism. That’s not how it works.Report

            • Avatar Jaybird in reply to dragonfrog says:

              That wasn’t real capitalism.Report

            • Avatar JoeSal in reply to dragonfrog says:

              Well obviously the Pinkertons held a control position in the means of production.

              We could say they didn’t, but it would look a lot like semantics.

              (What did Stillwater used to say about ‘impunity’?)Report

              • Avatar dragonfrog in reply to JoeSal says:

                Yesss, they did exercise a control position in the means of production. That was like 95% of their business – controlling the means of production on behalf of capitalists and staving off any attempt by workers to move the balance of control even a little bit away from capitalists and toward workers.

                Are you saying that this anti-socialist work made them… socialists? Or am I drastically misunderstanding you?Report

              • Avatar JoeSal in reply to dragonfrog says:

                I’m not sure how we don’t end up talking past each other here.Report

              • Avatar JoeSal in reply to dragonfrog says:

                Where do you see the difference:

                US government+Corporation thingy+Pinkertons=
                Control of the means of production+control of workers

                Soviet government+Firms=
                Control of the means of production+control of workersReport

              • Avatar pillsy in reply to JoeSal says:

                This is exactly the argument that Leftists use to argue that the USSR was Capitalist, Actually.Report

              • Avatar JoeSal in reply to pillsy says:

                I could see that, and probably agree with it for a definition of ‘state capitalism’.

                I think there is a easy indicator to tell which flavor it is.

                Set up a owner operator who is making a lot of money. If the state, or state approved enforcement shows up, you have the state variety. If a corporate enforcer shows up, you have the corporate flavor.

                That’s kind of where I’m at with it.Report

              • Avatar Swami in reply to JoeSal says:

                So a “corporate enforcer” is like the mob? I certainly agree that historically guilds and such acted as enforcers to prevent competition. They usually had implicit support by the government though, assuming there was one, right?Report

              • Avatar dragonfrog in reply to Swami says:

                They were a sort of branch of government in themselves, weren’t they, kind of like a professional college? In that they had official jurisdiction over who was allowed to practice a particular trade in a particular region.Report

              • Avatar Swami in reply to dragonfrog says:

                Yeah, they controlled membership, prices, quality and production methods. Markets were not close to free until the merchant and craft guilds were undermined.

                Interestingly, I think an argument can be made that it was mercantilism which undermined the guilds. The emerging larger national markets undermined the strangling effects of local guilds, and the kings had no reason to support them since they undermined their competitive mindset against other states.Report

              • Avatar JoeSal in reply to Swami says:

                We would have to parse what implicit support looks like, but I mostly agree.Report

              • Avatar dragonfrog in reply to JoeSal says:

                Where do I see the difference? Well, in the economic system, for one thing – socialism vs. capitalism being a question of economic arrangements, while totalitarianism vs. individual freedom is a different issue.

                People tend to want a sort of middle-of-the-road economic system – a reasonable social safety net, public funding of a variety of things like education, healthcare, water treatment, public transit, etc. “Economic centrism”, you might call it. If you’re a Soviet aparatchik, you might call it “capitalist extremism”. If you’re a Republican-loving Fox News talking head ignoramus, you might call it “socialist extremism”.

                The further you want to drag a country’s economic system out of this economic centrism, the more you need to suppress individual freedom – to vote you out of office, to write critical news stories, to go on strike, etc. You need totalitarianism.

                Needing totalitarianism to accomplish socialist extremism does not mean that anything that requires totalitarianism to accomplish must be socialist extremism.

                Now, if I’m understanding the gist of your comments here, you’re working with a personal (and highly idiosyncratic) definition of “socialism” that’s something like “any economic system that requires totalitarianism to accomplish”, so:
                1) every time you see an instance of totalitarianism, you conclude there must be socialism, and
                2) every time you hear people discuss socialism using a more conventional definition (e.g. being anywhere on the more collectivist third or so of the economic spectrum, or if you’re watching Fox News, anywhere on the more collectivist nine tenths of the economic spectrum), you conclude there must be totalitarianism, if not now then within a few years.

                And that, I suspect, is how we keep talking past one another.Report

              • Avatar JoeSal in reply to dragonfrog says:

                There is a lot in that comment.

                I think it is an error to say that people want a ‘middle of the road’ economic system. They want to pick and choose.

                I use a power politics compass to parse collectivism/socialism and individualism on the left-right spectrum. authoritarianism-antiauthoritarianism on the Y axis.

                https://steemitimages.com/DQmZiP5778EnDBgZGn2hgYvhWskYHVQBKwTGzdvTESGP4Zb/COMPASS.JPG

                The lower right hand corner allows the most authority in a owner operator framework. Allowing the worker the most return on a means of production and the least amount of rule-by-force from a collective.(and the most individual freedom)

                Calling it highly idiosyncratic may be fair, I’m not sure.Report

            • Avatar Saul Degraw in reply to dragonfrog says:

              It is when you are bad-faith debator!!Report

            • Avatar Dark Matter in reply to dragonfrog says:

              That was in 1914, more than a century ago. If we confine history to the last 50 or so years, management hasn’t engaged in violence (although unions can’t make that claim).

              I would say preventing management from abusing the workforce has worked well. I’m less convinced about this ever increasing regulatory state nor the ever increasing entitlements.Report

              • Avatar pillsy in reply to Dark Matter says:

                Management hasn’t engaged in violence in the United States! That certainly isn’t universal to every place management exists.Report

              • Avatar Chip Daniels in reply to pillsy says:

                Is it true that management engages in violence?

                “Well first of all I’d like to apologize for the behaviour of certain of my colleagues you may have seen earlier, but they are from broken homes, circus families and so on and they are in no way representative of the new modern improved management.
                They are a small vociferous minority; and may I take this opportunity of emphasizing that there is no violence in management.

                Absolutely none, and when I say none, I mean there is a certain amount, more than we are prepared to admit, but all new ratings are warned that if they wake up in the morning and find any toothmarks at all anywhere on their bodies, they’re to tell me immediately so that I can immediately take every measure to hush the whole thing up.

                And, finally, necrophilia is right out.”Report

              • Avatar Dark Matter in reply to pillsy says:

                If we’re going to pull the rest of the world into this then the big picture story is China+India backing away from socialism and using capitalism to pull a Billion or more people out of poverty.Report

              • Avatar pillsy in reply to Dark Matter says:

                Yeah and if my argument were, “Capitalism is bad,” I’d agree that would be a big problem for my argument, which is more that there’s nothing about capitalism that’s incompatible with authoritarianism, atrocities, and mass violence.

                Lifting people out of poverty is good. But it’s not like the current, capitalist PRC isn’t putting Uighurs in concentration camps.Report

              • Avatar InMD in reply to pillsy says:

                This is the kind of thing I was trying to get at above. Market capitalism isn’t good or bad but rather it reflects the character of the entities that administer it. Places like China have pretty thoroughly disproved the idea that capitalism necessarily goes hand in hand with civil liberties and a liberal form of government.Report

              • Avatar Chip Daniels in reply to InMD says:

                That’s kind of what I was getting at in my earlier comment.

                In response to some conservatives claims that the gulag was the natural and inevitable result of socialism, I’ve seen leftists claim that slavery was the natural and inevitable result of capitalism.

                I don’t see anything “natural and inevitable” about any outcome of any political or economic system.Report

              • Avatar Dark Matter in reply to Chip Daniels says:

                I don’t see anything “natural and inevitable” about any outcome of any political or economic system.

                History is not destiny, but it’s also a bad artist and likes to copy it’s older work.

                And slavery predates Capitalism by many thousands of years. Slavery might even predate us as a species.Report

              • Avatar Dark Matter in reply to pillsy says:

                there’s nothing about capitalism that’s incompatible with authoritarianism, atrocities, and mass violence.
                …it’s not like the current, capitalist PRC isn’t putting Uighurs in concentration camps.

                Those are communist re-education camps. They have the forced study of communist propaganda for hours per day, the forced praise of the Communist Party of China, and so forth. Ideally people walk out the door transformed into Communists.

                They’re a holdover of the old system, run by holdovers (i.e. Communists) of the old system.

                Having said that, I’m sure you can find other examples. What we did to the indians comes to mind.Report

              • Avatar greginak in reply to Dark Matter says:

                Yeah China isn’t exactly capitalist and certainly is still authoritarian. The Gov is still firmly in charge and directing a heck of a lot of economy.Report

              • Avatar Oscar Gordon in reply to greginak says:

                At Davos, China defended it’s forced technology transfers as, “well, you have to expect some IP theft in Global markets”.Report

              • Avatar pillsy in reply to Oscar Gordon says:

                IP, and the fact that “IP theft” is a thing, is one of the top 5 reasons I don’t really believe in “pure capitalism” or a “pure free market”.

                Not so much in the sense that “pure free markets” are bad, as that they don’t really exist, since so much of how markets work is based on more-or-less discretionary decisions about how property should work made by the state to serve specific policy ends.Report

              • Avatar Oscar Gordon in reply to pillsy says:

                It really should be ‘freer’ or ‘free-ish’ markets.Report

              • Avatar James K in reply to Oscar Gordon says:

                I prefer free-er markets as a term, though I’d rather discuss specific policy changes.Report

              • Avatar dragonfrog in reply to Dark Matter says:

                I would say preventing management from abusing the workforce has worked well.

                Yeah, I’m a fan of socialism too.Report

      • Avatar Jaybird in reply to JoeSal says:

        That wasn’t real socialism.Report

        • Avatar JoeSal in reply to Jaybird says:

          “That wasn’t real socialism.”

          Hold really still…..we’re going to try it again.Report

          • Avatar George Turner in reply to JoeSal says:

            Well, according to AOC we only have 12 years left before the world ends, so why not give socialism one last, pointless try? Let’s go out like Venezuelans!

            Besides, I always wanted to eat zoo animals. Do zebras have bands of white meat and dark meat? Do Korean dog stew recipes work for lions and tigers? When people grill a giraffe, do they throw the neck out like they would for a chicken? Let’s find out.Report

    • Avatar pillsy in reply to Jaybird says:

      We’ll make a squishy left-liberal out of you yet.Report

      • Avatar Jaybird in reply to pillsy says:

        I was born squishy.

        The problem is my proclivity to technocracy and seeing these problems as engineering ones.

        And when people get up and start shouting about how this isn’t an engineering problem but a moral one and people need to agree with them or demonstrate how they don’t really care about the problem, I’m reminded more of Elmer Gantry than Moses.Report

        • Avatar pillsy in reply to Jaybird says:

          And when people get up and start shouting about how this isn’t an engineering problem but a moral one and people need to agree with them or demonstrate how they don’t really care about the problem, I’m reminded more of Elmer Gantry than Moses.

          Everybody is trying to shake the feeling that they’re talking to Elmer Gantry. Demonstrating that you aren’t Elmer Gantry, and correctly assessing when the person you’re talking to isn’t Elmer Gantry either, is itself an engineering problem.

          It’s an engineering problem that I suck at addressing, of course.Report

        • Avatar Mike Schilling in reply to Jaybird says:

          You know how when you hear about something for the first time in a long time, you’ll hear about it again the same day?

          In those lists of Jazz Age best-sellers Richard linked to, among the few bookswe still read today are the Sinclair Lewis ones: Main Street, Babbitt, Arrowsmith, Elmer Gantry and Dodsworth. (This Side of Paradise didn’t show up, though I’ve seen it described many times as a best-seller.)Report

  4. Avatar LeeEsq says:

    The free market as an ideology suffers a flaw similar to the different forms of Marxism or anarchism as an ideology. The greatest advocates of the pure free market, Marxism, anarchism, etc. are academic theoreticians and not actual practitioners. Most business people go into business because they want to make money. If a real true free market is going to interfere with that then they are going to abandon it in order to make money. The people who are advocating for the free market as an ideology tend to have the virtue of getting a salary outside the business world. This allows them to remain pure.Report

    • Avatar pillsy in reply to LeeEsq says:

      There are plenty of people in the business world who advocate for a “pure” free market…?

      I think they’re generally pretty much wrong about everything, but they definitely exist.Report

      • Do they really? That is to say, do they advocate it even when its implementation would harm their businesses? Do they continue to, even if there is a real danger of the implementation actually happening? Or are they free market dilettantes, talking up the idea at the country club?Report

        • Avatar Oscar Gordon in reply to Richard Hershberger says:

          Most of them won’t practice what they preach.Report

        • Avatar pillsy in reply to Richard Hershberger says:

          I think most of them have typically distorted views of what will and won’t harm their business or interests, and how much of their current success (or failure) is attributable to the freedom (or lack thereof) of the market.

          IOW, most of them are full of shit, but not really any more than the rest of us.Report

          • Avatar Dave in reply to pillsy says:

            You know this how?

            I’m getting very entertained by some of the comments all over this post.Report

            • Avatar pillsy in reply to Dave says:

              Conversations with the ones I’ve met, stuff I’ve read by what people in those areas have written, and general beliefs about the way people tend to fool themselves.Report

              • Avatar Dave in reply to pillsy says:

                Interesting…

                I work in investment management dealing with a non-traded REIT. I also have to know healthcare inside and out. That puts me into several highly regulated markets.

                Most of the time I’m right about what’s good or not good, and when I’m wrong, I don’t find myself too far off-base.

                My world is interesting because in healthcare, what’s bad for consumers is actually good for me in my business.
                I know that one of the worst things that happened with the ACA is that it gave tremendous amounts of power to health insurers. I think that kind of sort of completely sucks for people at the mercy of their health insurers, but as a landlord, that may not be a bad thing. Insurer power means that in order for health providers to gain negotiating leverage, which means consolidation. If I have tenants that are consolidating into larger entities (i.e. local hospitals being bought out by larger health systems), I have a stronger roster of tenants. Assuming that we list our company at some point, that’s a good story for Wall Street.

                That’s one example.

                If I explain whether or not I think something is bad, I’ll at least be able to support the argument. I think M4A would be a complete shit show if we assume that provider reimbursements were coming strictly from Medicare at current reimbursement rates. I see practices with 60% plus private pay insurance so hitting that by 30-40% would crush margins. For health systems that raise debt in the tax exempt markets, they’re exposed to credit risk because of potential downgrades.

                I don’t think I’ve ever sat down and thought about whether or not my success is attributable to free markets. I’ve worked in regulated industries my entire career and I’m just used to dealing with those marketplaces as they are and thriving within them.

                The market is nothing more than a playing field as far as I’m concerned. How well I do is governed by my ability to navigate it while keeping in mind the multitude of regulatory issues. I can’t think about it more than that.Report

        • Avatar Dave in reply to Richard Hershberger says:

          “Do they really? That is to say, do they advocate it even when its implementation would harm their businesses?”

          Good question. Maybe we need to find someone in business that understands many of these things to address them.

          I can’t think of anyone that fits that mold right now so one of you come up with a name.Report

      • Avatar LeeEsq in reply to pillsy says:

        Most of the really sincere beliefs in the free market that I’ve come across are academics that have no real business experience.Report

        • Avatar pillsy in reply to LeeEsq says:

          I’m not sure that’s actually more sincere, certainly not by the bar that @richard-hershberger has set. Academics are generally pretty well-insulated from the vicissitudes of the market.Report

        • Avatar Dave in reply to LeeEsq says:

          “Most of the really sincere beliefs in the free market that I’ve come across are academics that have no real business experience.”

          I can’t say that the socialists I’ve had the pleasure of reading on their views of capital are academics (I hope to hell not), but I know for a fact that they have no real business experience either.

          Being a real world capitalist has its advantages…like insulating myself from ideological discussions on markets because I deal with them in the real world every day all day.Report

    • Avatar Swami in reply to LeeEsq says:

      This is an example of the basic prisoners dilemma. It is “best” to cheat or privilege oneself if one can get away with it. Hence we get crony capitalism, guilds, unions, rent seeking, minimum wages, maximum prices, entrance barriers and so on. However, once everyone does it we destroy the system and its fruits.

      Mancur Olson addressed this issue and how to combat it at length in his Logic of Collective Action and in The Rise and Decline Of Nations.Report

  5. Avatar Chip Daniels says:

    I’ve come to the idea that these terms we use like “free market” “socialism” and “globalism” aren’t useful or even accurate.

    They are singular nouns, the assumption being that they have singular meanings, so we talk about them in binary ways. One can be for or against free markets, or globalism does this or that, and socialism leads to such.

    The use of the singular noun assumes it is an isolated variable, and outcomes can be traced to it.

    This leads to drawing correlations that don’t really exist.

    Should we conclude that free markets lifted China out of poverty, or was it a combination of authoritarianism, corruption, and a favorable set of trade treaties?

    And then we reach absurd conclusions. The variable called “free market” somehow produces wealth in China and poverty in the United States.

    So in this essay, and to address the discontent with our current state, maybe the best question is, are there other forms of trade treaties, different methods of delivering consumer goods, healthcare and allocating resources, that would produce a more optimum result?Report

    • Avatar LeeEsq in reply to Chip Daniels says:

      We also tend to treat things like the free market, government, etc. as abstract concepts with minds and wills of their own rather than collections of humans with different motivations working with and against each other.Report

    • Avatar James K in reply to Chip Daniels says:

      I have a post idea floating around in my head on this exact subject. It occurred to me when I was talking to a friend of mine about economics and we quickly realised that we had radically different definitions of both socialism and neoliberal. In fact our definitions of neoliberal were almost diametrically opposed.

      It’s simply not possible to have productive discussions using terms so poorly specified.Report

    • Avatar Dark Matter in reply to Chip Daniels says:

      They are singular nouns, the assumption being that they have singular meanings, so we talk about them in binary ways. One can be for or against free markets, or globalism does this or that, and socialism leads to such.

      Strongly agreed with this. There’s no singular definition of many of these terms, so we end up with American socialists arguing that they’re Sweden style (high levels of economic freedom, high taxes, high social nets) when their published goals look more like private-ownership-of-capital-needs-to-go. https://www.dsausa.org/about-us/what-is-democratic-socialism/

      Should we conclude that free markets lifted China out of poverty, or was it a combination of authoritarianism, corruption, and a favorable set of trade treaties?

      Given how long and hard China tried authoritarianism without the markets, and how much improvement they had the more free they made their markets, and the level to which all of this matches well established bedrock economic theories, the way to bet is free markets lifted China out of poverty. More freeing of internal markets than external free trade imho.

      …are there other forms of trade treaties, different methods of delivering consumer goods, healthcare and allocating resources, that would produce a more optimum result?

      It depends on what “optimum result” means. Healthcare probably needs serious reform, I’d argue a lot more market and less gov, it’s popular to argue the opposite. For a more extreme example, if the existence of Bill Gates, Steve Jobs, etc are so distabling to the political environment (inequality is bad!) that it threatens the existence of the country, then we should pass laws to prevent their existence and simply live with less growth and success.

      However many of the problems we’re trying to solve don’t exist or are simply irrelevant to the issues being raised. Trump’s attempt to improve crime/economic-issues by preventing immigration is a stand out example.Report

  6. Avatar Doctor Jay says:

    I’ve been wondering if it wouldn’t be good to figure out how to grant people relocation money when they’ve been laid off or had their plant close, or their employer go out of business.

    Sometimes, I think they do need to move somewhere else, why not figure out how to help them do that? And while we’re at it, I’d like to figure out how to get the capitalists involved – private equity or whatever – on the hook for some of that money. You know, take responsibility for your actions and all that.

    I don’t have any super-solid ideas on that, but a 70% marginal rate after the first million of income in a year seems like it might help.

    Or we could go more focused – if you start a plant or expand, you pay a bit into a fund that covers the potential closing of that plant. It probably wouldn’t have to be much.Report

    • Avatar Oscar Gordon in reply to Doctor Jay says:

      Any business over 25 employees should have a severance fund. Something they have to keep funded to a certain level, but can’t touch except on the last day of operation, when it gets distributed to everyone who got laid off (except the executives). I would let them enjoy any interest earned from the fund.Report

      • Avatar Doctor Jay in reply to Oscar Gordon says:

        The only think about this plan that I don’t like is that the fund is in the custody of the business. Which means there are shenanigans that can be pulled with it. It needs to be somehow untouchable by bankruptcy, for instance. How many pension funds have we seen cracked by private equity maneuvering?Report

        • Avatar Swami in reply to Doctor Jay says:

          And also kept out of the prying hands of politicians. They would spend it and replace it with trillions in IOUs faster than I can spell “social security.”Report

          • Avatar Doctor Jay in reply to Swami says:

            You know, whether the Social Security Trust Fund and how it works was shenanigans or just good financial practice depends, in the end, on whether those IOUs are paid, right?

            I guess there are some people who think of loans as evil/sinful. I am not among them. I suppose you might be, though. Is that the case?

            I mean, if the IOUs in the SSTF are paid up, and people get their benefits, then all is well, right?

            And if not, well, then I think the politician that did that would find that he or she had finally managed to unite the country – in hatred of themselves.Report

            • Avatar Swami in reply to Doctor Jay says:

              Yes, that is exactly the risk. The risk is that it is not repaid.

              But no, IF it is not paid, it the politicians will have long since retired, the money long since spent, and the only way of coming up with the money is to suspend other benefits or tax the next generation. This is pretty much the situation for retirement benefits in Illinois.Report

            • Avatar j r in reply to Doctor Jay says:

              You know, whether the Social Security Trust Fund and how it works was shenanigans or just good financial practice depends, in the end, on whether those IOUs are paid, right?

              That’s not quite right. The NPV of future SSDI payments is wholly determined by the sum of the payments the present and future congress decides to pay out. The trust fund doesn’t mater one bit. It’s there for show. Congress can make a future promise to pay the SSA, but it can’t actually compel future congresses. Unless they’ve invented a time machine or something.Report

              • Avatar Doctor Jay in reply to j r says:

                All money is in some sense fiction. So it’s not like you’re wrong about calling the Trust Fund a fiction. But some fictions get shared, and become a way of living.

                Here’s the thing. The “full faith and credit of the United States of America” means something. It means something pretty important.

                The United States has never defaulted on any obligation, in nearly 250 years. It is the most reliable debtor known to humankind. Nothing is guaranteed, of course.

                So, the bonds in the trust fund are obligations, backed by the full faith and credit of the United States of America. A refusal to pay them in full would be a default.

                I’m pretty sure that voting to send the country into default on loans that are owed to its own citizens is something no politician wants to do.Report

              • Avatar Dark Matter in reply to Doctor Jay says:

                The United States has never defaulted on any obligation, in nearly 250 years.

                https://www.theglobalist.com/a-brief-history-of-u-s-defaults/

                However SS would be easier than most, all of the problem points are political, not legal. The Supremes have already ruled Congress could eliminate everything without any legal issues.

                Or if it’s unrealistic to expect Congress to man up, since these bonds are one hand owing the other, there are ways to fudge that. Merge SS with general obligations. Roll/transform all of SS and all of its “assets” into something else.Report

              • Avatar Brandon Berg in reply to Doctor Jay says:

                Congress doesn’t have to refuse to pay back the bonds in the Social Security Trust Fund (sic). All it has to do is cut Social Security benefits (or restrain their growth) to the point where they can be covered by incoming Social Security taxes. If Social Security has no shortfall, it never tries to cash the bonds.

                Anyway, the key thing to understand is that the bonds do absolutely nothing to reduce the burden on taxpayers from paying out scheduled benefits. Likewise, the exhaustion of the so-called trust fund will be a non-event. I suppose it’s possible that it could affect the political optics in a way that affects policy outcomes, but it doesn’t matter at all financially or economically.Report

        • Avatar Oscar Gordon in reply to Doctor Jay says:

          Honestly, pensions should have been untouchable by bankruptcy as well. But yeah, protecting it from shenanigans is key, and not easy (maybe Dave would have an idea, but that kind of financial maneuvering is beyond my ken). Maybe it could be something like a 401K. You start working for a company and they give you control of an account with the funds in it. If you quit or are let go prior to the start of the shuttering, you sign the account back over to the company. If you are let go as a result of the shuttering, the funds are released to you.Report

          • Avatar Doctor Jay in reply to Oscar Gordon says:

            Well, nothing is certain except death (and taxes). I begin to wonder if we don’t need to just change how we are doing things every 40 years or so, because the grifters and con-artists have figured out how to game the system really well by then, so we have to throw it out and get a new one.

            Maybe we can’t do better than that, maybe we can. Maybe it’s kind of a spiral, where we come back to the same place periodically, but with improvements.Report

        • Avatar Dave in reply to Doctor Jay says:

          I don’t know. You tell me.Report

    • Avatar Swami in reply to Doctor Jay says:

      I would suggest a few other things.

      First, we need to fix the problem with housing costs in growth markets. The places with jobs have artificial barriers on home construction which are driving new job entrants away. Who can afford to move to the coasts when unemployed?

      Second, we need to grasp the ramifications of safety nets to foster negative unintended consequences. Once you get much needed aid, it effectively ties you to the community. This isn’t always bad of course, but it leads to festering dead communities (and to festering inner city communities of fatherless families — two pathologies with a similar cause).

      I think the idea of a tiny fund for business to slowly build up insurance for closure is worth considering, especially if it is aimed at helping pay for relocation of the affected jobless.Report

      • Avatar Doctor Jay in reply to Swami says:

        “Fix housing costs in high-growth markets”

        That’s a really tall order, and nobody knows how to do it. It’s not that I don’t want to. You say that nobody wants to move somewhere while their unemployed, but that’s the point of my proposal – to make certain things possible that before seemed impossible.

        Yeah, it seems unlikely that people would move to the Bay Area, my home. But there’s lot of other places in the country with jobs and housing that is less expensive.Report

    • Avatar j r in reply to Doctor Jay says:

      It would certainly be a good idea to think about how to help people to be more mobile, but I’m not clear that handing them money is going to do that. From what I understand the main implements to more mobility are lack of social connections and poor incentives. People are often reluctant to leave an area where all their friends and family are. Social capital is important and can’t easily be given to someone by way of a transfer. And if you’re a new college grad, it makes a lot of sense to move to the coasts or to the nearest big city for a job making $50k and career trajectory that has you into six figures within a decade. But if you’re a service sector worker, the calculation isn’t so clear. There are certainly more and higher paying jobs in cities, but the cost of living can erode all of that extra income very quickly.

      There are a lot of local governments in the rust belt and the south that are figuring out ways to make their towns and cities more economically viable. Pittsburgh and North Carolina’s Research Triangle stand out as successful examples. My bet is that these local efforts will be way more important in deciding the future of American workers than what happens to the highest marginal tax rate or whether there is a wealth tax.Report

      • Avatar pillsy in reply to j r says:

        It may do that. It may not. I think this is the dual to what I was discussing with @jaybird the other day about housing. Giving people money is a decent way of giving them an additional tool of solving the problem they actually have, not the problem we think they have.

        But one of the (very well-founded) reasons people are reluctant to move is that it cuts them off from economic support, which is closely connected to social and familial support networks. Reducing that kind of risk would tend to improve mobility.

        The best way to give people more money is a different question, of course. But I’m generally of the opinion that however we do it, it shouldn’t be predicated on them doing the “right” thing with it.Report

        • Avatar j r in reply to pillsy says:

          I’m a huge fan of giving people money. Let’s start by expanding the EITC into a true negative income tax and let’s get a real health care public option (either through subsidized payments or public providers) so people aren’t tied to their jobs for health care. I support those things.

          Give people more money and they may use it to fund a move or they may stay put and use it to subsidize their consumption. Im fine either way. But it doesn’t really get at the most important barriers to mobility.Report

  7. Avatar Swami says:

    Can we start with some basic facts?

    First, global incomes and living standards are higher now than ever before and rising faster than any other generation ever.

    Second, US living standards as measured by AIC (Average Individual Consumption) are the highest in the world and are higher than at any point in any country ever. However, growth rates per capita are slightly slower than prior eras, though still surprisingly fast for the lead economy of over a century and a half (see Caldwell’s Law).

    Third, free enterprise depends upon creative destruction as old jobs, industries and products are replaced with better consumer solutions produced more efficiently by new industries in new locales. This has always been the case since the advent of the realization of modern economics (Smith 1776] and the adoption of freer markets (remember the Luddites?)

    Fourth, the US and all major developed economies have extensive, non-market based safety nets for those harmed by creative destruction. This includes welfare, free or subsidized medical care, negative taxes, housing and food allowances, and unemployment insurance. The current benefit package in the US is commensurate with its wealth and with any other western nation. Higher than most, as absolute standards of living of the lowest decile are competitive with any nation on earth, and higher than at any other time ever.

    Fifth, the world went through a particularly large and severe recession about a decade ago, which temporarily set us back. Even though living standards are now higher than ever before, this did cause larger shocks which are still affecting people. Creative destruction and a severe recession are tough in one decade.

    As far as analysis, I would suggest that the worst possible thing we could do is get in the way of creative destruction which is the true dynamism of the economy. Doing so, will just shift global leadership to whichever places can hold the line and maintain the dynamism. We do need to continue to offer safety nets, but I would suggest the safety nets are not just a solution, but are actually perversely part of the problem. They allow those who lose jobs or are stuck in declining industries or locales to subsist and thus avoiding making the moves necessary for adapting to the conditions. The people become dependent and bitter, and local economies fester longer than they could or should.

    Thus, I would recommend reinforcing the dynamism of markets while improving how we structure safety nets so they do not encourage longer-term disfunctional behavior traps. I could add something on rent seeking and the problems fostered by local governments on housing costs (interfering with easy relocation to jobs) So yeah, the government has a role, and has had a role for about a century now. It doesn’t need to do more as much as it needs to do what it does much better and smarter.

    The hardest type of problem to fix is the type created by good intentions gone awry. We may be better off than ever before, but we could be much better still.Report

    • Avatar Jaybird in reply to Swami says:

      The more growth we have, the more inequality we have.

      If you see the basic problems as having a definite floor of poverty and the goal is to get as far away from the floor as possible, then there is one set of solutions. (See, for example, Heritage’s annual list of stuff that families have. 99% have a refrigerator, 73% have a game console, etc.)

      If you see the basic problems as positional goods, the increase of inequality is the true root of the problem and it’s better for inequality to be reduced by cutting down the tall poppies and change nothing else than to do nothing at all.Report

      • Avatar JoeSal in reply to Jaybird says:

        If ‘tall poppies’ are created through chance processes occurring in social constructs, do you ever see a world without tall poppies? (Given that we live in a world of near infinite social constructs)

        Maybe we could talk of minimizing chance processes that occur in social constructs?Report

      • Avatar Swami in reply to Jaybird says:

        I am not sure I am following you. I know you well enough that you are not advocating (to quote Rush):

        “For they passed a noble law,
        And the trees are all kept equal
        By hatchet, axe, and saw.”

        I am always on alert when I see the word “Inequality”. It is a term which is too easily manipulated for rhetorical purposes. It can mean equal rules, equal outcomes (regardless of contribution) or outcomes proportionate to contribution. The troubles are that at least two of these three can conflict, and often do.

        Even worse, some people (not you!) try to smuggle in a concept of fairness with inequality. This makes sense when we talk about impartial rules, or when the rules set up for either equal outcomes regardless of contribution or for outcomes proportionate to outcome. But the switcheroo is where we establish a system based on fairness proportionate to contribution (market outcomes) and then criticize it based on equality of outcome.

        But back to your comment, I agree that growth leads to both a higher floor (the poor are better off than at any time ever and probably better off than the median of a few generations ago), and to more inequality of outcome. Inequality of outcome is necessary and good in a market system. It is the driver of the entire process.

        Equality proportionate to contribution however IS important in a market, as is equality of rules.

        Safety nets (market and non market) should be aimed not at equality of outcome, but at supplying a necessary floor in a dynamic world. Insurance not coddling.Report

        • Avatar greginak in reply to Swami says:

          I don’t see where growth has to equal greater inequality. That doesn’t really make sense. It depends on what the growth is and various things like tax rates. Growth can just as easily raise all boats and lessen inequality.

          Inequality is a mushy term but most of the bit terms people use are. For all the talk of equality of outcome i don’t actually see where anybody is actually pushing that. Nor is anybody actually trying to remove all inequality. Sure lessen the amount of inequality for a variety of reason some i agree with and some i don’t.Report

          • Avatar Jaybird in reply to greginak says:

            I don’t see where growth has to equal greater inequality.

            Let’s say that someone who makes $40,000 a year gets a 10% raise.
            Let’s say that his boss, who makes $400,000 a year, gets a 10% raise.

            The poor common worker only got $4,000.
            The parasitical boss got a raise equal to the salary of the common man! That’s enough to hire another worker entirely!

            10% growth across the board == inequality being increased. That’s how it can happen.Report

          • Avatar Swami in reply to greginak says:

            Because the minimum you can make in a market is zero. The maximum continues to grow. Thus in a village of twenty people in 1400 AD, the richest person made the equivalent of four thousand a year (five times higher than the median of two dollars a day) and the poorest made zero.

            Today, you can still make zero by not working. But the wealthiest can make ten billion dollars a year (while adding value to billions of people in mutually beneficial interactions), or thousands of times more than the median.

            Wealth and the Inequality of income are positively correlated. I remember reading someone who suggested a better Gini would be based on the log of income.

            I pretty much agree that most serious people don’t REALLY honestly want or argue for complete equality of outcome. What they do though is use weasily language (or thinking) to argue that markets are failing based on inequality of outcome, even though nobody who understands markets or wealth would argue that they should (or realistically could) result in equality of outcome. As above they imply unfairness whether it exists or not by tossing out a poorly defined standard which is guaranteed to “prove” their case, at least rhetorically.

            As JB mentions, the floor of human outcomes continues to rise, dramatically so compared to prior generations. Market inequality of outcomes and overall prosperity continue to rise as does median income. We then use some of that larger pie to fund the floor for the poor (most of whom are poor temporarily as a part of their life stage).

            Also note that most of the rhetoric on inequality specifically excludes some or all of the transfers which have been implemented to address poverty. It is suspect when those arguing for safety nets exclude the contributions of the existing safety nets as they assault the supposed fairness of the system.Report

        • Avatar Jaybird in reply to Swami says:

          Watch this video.

          https://www.youtube.com/watch?v=meiU6TxysCg

          I am not smuggling in this concept of “fairness”.

          It’s in the monkey parts of us. It’s already there. Pretending it’s not is why Capitalism has the sociopaths at the top of the corporations that defect against society. It’s why Socialism has the sociopaths at the top of the People’s Party defect against society.Report

          • Avatar Swami in reply to Jaybird says:

            I thought I stated you specifically were NOT trying to smuggle in fairness.

            I am familiar with the studies and have long believed De Waal’s “Chimpanzee Politics s/be required reading for executives,*but you lost me on your final point. Why is pretending inequality is not synonymous with fairness leading to sociopaths? I am not disagreeing, but just not following the chain of the argument.

            And just to clarify, if the system is one in which rewards are commensurate with contribution or action (as with the monkeys), then incommensurate (unequal) rewards are by definition unfair. In a market it would be unfair to give one worker a sales commission of a grape while another worker gets a commission of a cucumber for the same sale.

            However, it would also be unfair to promise commissions commensurate with sales, and then violate the terms by giving the same final commission to people with different sales results. The deal was that extra sales would be rewarded proportionately and failure to follow through is effectively to cheat the performer.

            * The book is certainly not a “how to” manual!Report

            • Avatar Jaybird in reply to Swami says:

              The fairness was there before I got here.

              It will be there after long after your grandchildren’s grandchildren die of old age.

              I smuggled in nothing.Report

              • Avatar JoeSal in reply to Jaybird says:

                Just a side note. We are using defect against society, the example given has two monkeys put in cages by society and used as a social engineering experiment.

                General Thade may have a point.Report

              • Avatar Swami in reply to Jaybird says:

                Made me think of creating a new occupational code.

                Professional Fairness Smuggler.

                That would look cool on a business card!Report

              • Avatar Jaybird in reply to Swami says:

                Well, maybe if we switch from “is” to “ought”, we’ll be able to agree on more stuff.

                The world ought be different, don’t you agree?Report

              • Avatar Swami in reply to Jaybird says:

                What exactly are we even disagreeing on in your opinion?

                I guess the world could be better, so it ought to be different. But I am also sure it could be a heck of a lot worse, so we need to be careful. The argument is in the details.

                But rather than get into THAT can of worms, I think we should start by clarifying what you and I in disagreeing on? I really would like to know.Report

              • Avatar Jaybird in reply to Swami says:

                I think we’re disagreeing about what is going to happen.

                Because I look at the monkey throwing that cucumber and I extrapolate out from that and make reasonable guesses about what is going to happen.

                And, for some reason, I find myself in a conversation about what people ought to be like whenever I start talking about noticing that sort of thing.

                Like, what the heck? Who’s talking about *OUGHT*?Report

              • Avatar Swami in reply to Jaybird says:

                OK. Thanks.

                My knowledge on fairness leads me to the belief that we have several competing and sometimes conflicting versions of fairness. The monkeys reveal some of these. These include:

                1) Fairness of all playing by the same rules (rule egalitarianism)
                2) Fairness of outcomes proportionate to contribution (getting one grape per pull of the lever, thus getting more grapes for more pulls and no grapes for no pulls.
                3). Fairness of outcomes regardless of contribution. Including equal numbers of grapes for all monkeys pulling levers, regardless of their number of pulls.

                Each definition (there are a few additional ones as well, but these are the biggies) has an appropriate time and place. Each has pros and cons, positive and negative side effects. And they can, in some (not all) cases conflict and interfere with each other. For example, #2 can lead to out of control feedback effects and destitution for monkeys who re temporarily unable to pull the lever or are busy doing something else of value. #3 encourages free riding, laziness, and discourages effort, initiative and so forth.

                Families tend to use a version of #3, markets a version of both #1 and #2, and mixed societies a mixed version of all three.

                What OUGHT we to do? We ought to pursue a balance of fairness which uses all three. Of course every modern society I am familiar with does use all three, so the devil is probably in the details. As a meta answer, I strongly recommend societies continue to experiment with various combinations of all three. This will allow us to slowly tease out better institutions, and for people to freely choose which institutions seem to work best for them.

                I also recommend that we OUGHT to expand the conversation from a childish discussion of income inequality (#3 type) to a broader conversation on overall fairness and consequential outcomes.

                What do you think we OUGHT to do?Report

              • Avatar Jaybird in reply to Swami says:

                I think some variant of “Federalism For Real This Time” might push back the coming Civil War a few decades.

                But since we’re not going to do that, I’d suggest getting a freedom bucket or two the next time you’re at Big R. Pick up a gallon of water next time you’re at Safeway. Keep it next to the Freedom bucket under the stairs.Report

        • Avatar InMD in reply to Swami says:

          This seems like obfuscation. The problem with inequality isn’t (necessarily) economic, it’s political. You mentioned above that you think the worst possible thing is to get in the way of creative destruction. Inequality does just that when a sufficiently critical mass of people decide that they’re getting screwed and/or percieve their situations as unfairly precarious compared to that of others. If left unaddressed long enough it will manifest in the political process and no white paper explaining why they’re wrong is going to stop that. The approach you’re advocating for is designed to result in exactly the outcome you don’t want.Report

          • Avatar pillsy in reply to InMD says:

            There’s also the thing where an incumbent interest gets sufficiently wealthy that it can, one way or another, sway the economy to erect barriers to entry for its competitors, or get continued bailouts because the costs of failure would be too painful one way or another.Report

            • Avatar InMD in reply to pillsy says:

              Agreed. Some amount of inequality is IMO inevitable but it needs to be tended to and managed or else it becomes a threat to liberal democracy and the enlightenment ideas and institutions that go along with it.

              We aren’t built to be cogs in some economic engine.Report

              • Avatar Swami in reply to InMD says:

                Perhaps we could implement a trillion dollars per year in redistribution and implement one of the most progressive income taxes in the world, including negative income taxes for the lowest quintile?

                How does that sound? Just spit balling here.Report

              • Avatar InMD in reply to Swami says:

                We spend money but the safety net has gaping holes. The difference between navigating a medical problem and bankruptcy for huge numbers of people is dictated by the vagaries of local job markets. Our public programs are full of weird incentives and incoherent gaps in coverage based on age and income. Benefits are distributed with all sorts of moralistic strings attached that make them less effective. Favored groups get subsidized by the tax code while others get dicked. As for that trillion bucks our government spent just as much annihilating another country and continues to spend hundreds of billions destroying shit and killing people on the other side of the planet for no discernible taxpayer benefit while our infrastructure here crumbles. The people running things would literally rather blow it up over there than build it here.

                Even with all that, from a certain but very narrow perspective you’re right. In many, many respects now is a better time to be alive than ever before. But what you fail to appreciate is just how tenuous that is. Nowhere is it written in stone that progress will continue unabated. What we’ve achieved in the West is based in large part on shared prosperity, with an emphasis on shared. When some people can buy the civil institutions on which liberalism is founded and others can’t they rot. There’s nothing at all radical about realizing that phenomenon needs to be checked if we want to preserve all the good things in our society. Which is why it sounds so absurd to see someone say things like workers just need to get better at pulling up their roots and moving across the country where the jobs are. Won’t see mom and dad for Christmas again this year but I guess it’s worth it if it keeps shareholder returns at record highs! Creative destruction and all that!Report

              • Avatar Swami in reply to InMD says:

                You mentioned inequality needs to be mitigated to reduce negative side effects, I answered that this does occur in the US, and probably as well here, all considered as anywhere on earth. After all the US retains not just top tier living standards for all income levels and higher median living standards than anywhere else but also a freakishly large share of economic vitalism, scientific dynamism and entrepreneurial innovation. The entire world is free riding off the dynamism of the US and a couple of other places.

                I am sure everyone would agree our safety nets could be better, more efficient and more perfect, though we may disagree on details. I have no idea what your point is by switching to waste of government military intervention. Off topic.

                I certainly agree that creative destruction and tenuous living standards are a real threat. But as you allude, it was worse in every prior generation here and everywhere else. Perfect yet? Not even close. Better now than any time ever and a LOT better than the historic norm? Heck yeah.

                It is not absurd to suggest that mobility is a part of a nation’s responsiveness to dynamism. Yes there are costs and benefits to reallocation short and long term and as someone who has moved dozens of times I am well aware of both sides. However, my point is that there is a perverse side effect in some safety nets which is contributing to reduced migration and perverse longer term social pathologies.Report

            • Avatar j r in reply to pillsy says:

              IMO, perhaps the most important incumbent interest is upper-middle class tax payers, who erect all sorts of zoning barriers to keep people out of the neighborhoods and school districts.

              If you can explain to me how changing the top marginal tax rate or instituting a wealth tax changes that without hurting the poor even more, I’ll support it.Report

              • Avatar pillsy in reply to j r says:

                A lot depends on what you do with the generated revenue.

                I mostly favor giving it directly to the poor and lower middle class. This seems unlikely to hurt them more, and provides more routes towards class mobility and, for that matter, geographic mobility. It’s more about routing around NIMBYism than eliminating it directly.

                There’s also a lot of tax advantages that UMC people get which don’t help, one way or the other, which both increase political power and their view of their property as a (lucrative) investment. Overall the recent tax bill was pretty godawful, but the part where it changed that was good. (Even if I grumble about it because I’m an UMC homeowner in a state with really high taxes.)Report

              • Avatar j r in reply to pillsy says:

                We already know what happens to general revenue. Most of it goes automatically to fund our legacy entitlement programs and to service the debt. The discretionary portion goes to funding the operations of the federal government and what’s left gets divided up among congress to benefit their home districts in proportion to their seniority and power in the caucus.

                There is no mechanism by which cranking up the top marginal tax rates or instituting a wealth tax changes what happens on the expenditure side. Anyone claiming otherwise is engaging in a form of magical thinking or just completely misunderstands the US budgeting process.Report

              • Avatar pillsy in reply to j r says:

                You’re both right and wrong.

                It’s true that there isn’t a direct connection because (among other things) we run a large deficit.

                But politically, and also at least somewhat in terms of the economy in a lot of circumstances, it matters quite a bit whether a program is “paid for” by new revenue (or cuts elsewhere), or whether it’s going to be funded by new borrowing.Report

              • Avatar j r in reply to pillsy says:

                Where am I wrong? Tax more and maybe you get more revenue (if the new tax doesn’t distort behavior in a way that limits new revenue collection). We know what happens to revenue.

                Any big new entitlement gets passed with a plan to fund it. That’s how the ACA got passed.

                There is no existing mechanism by which an increase in general revenue equals funding for all the cool new stuff that I want. That new money goes into the pot for congress to divy up just like the old money.

                You could pass a special tax with the proceeds earmarked for a specific purpose. But as with SSDI payouts, there’s really no way to tie the hands of future congresses. They’ll end up spending the money how they want to spend it.Report

              • Avatar pillsy in reply to j r says:

                Any big new entitlement gets passed with a plan to fund it. That’s how the ACA got passed.

                Yes, and that’s where the increase in marginal rates and/or wealth taxes matter.

                Sure, future Congresses aren’t bound by the commitments or earmarks, but the issue is the political obstacles to getting the program passed and implemented in the first place. In principle future Congresses will run deficits and surplusses when it’s appropriate; in practice they’ll run deficits and surplusses when it’s inappropriate. Either way, though, the program will be in place.Report

              • Avatar j r in reply to pillsy says:

                We weren’t taking about a new program. We were talking about raising the marginal tax rate and instituting a wealth tax.

                My claim was that raising taxes won’t automatically get us better spending. Better spending gets us better spending. If you don’t disagree with that, then we are in agreement.Report

          • Avatar LeeEsq in reply to InMD says:

            I think there is a both good inequality and bad inequality. The good inequality is when you have just enough socio-economic differences to encourage people to work hard and take risks to enjoy more wealth than the less initiative seeking people. Bad inequality is when you have an upper class that takes a lot of resources without giving and causes the entire political system to bend towards its will. Its when you have the disadvantaged suffering both material deprivation and petty and grand injustices. The problem with good inequality is that it quickly can become bad inequality if not checked.Report

            • Avatar Swami in reply to LeeEsq says:

              I would frame the issue differently, Lee.

              I would frame it that the rules of the system need to encourage positive sum, beneficial or mutually beneficial interactions and to discourage negative dum and zero sum interactions. People should be rewarded to create value for themselves and others. As such, as long as a billionaire creates wealth by also creating utility for others they should be rewarded to do so. We would be better off with a LOT more billionaires and even trillionaires, as long as they got theirs by creating better cheaper products and consumer solutions.

              I certainly agree we need to prevent anyone, rich or poor from using their resources or will to pervert the political system. My take on the issue is that as much harm is caused by collectives (unions, government service workers, producer associations and such) as by the rich. Indeed more. The balance is that everybody needs to have a voice in the system, but the voices and influence need to be fair.

              Just to clarify on your final point. The poor suffer less now than at any time in this nations history by pretty much every measure. In other words, the system is getting better over time not just for the rich, but for the median and especially the poor. Every study I have ever seen shows the poor gain more over time (in subsequent decade) than any other quintile, and that the wealthy gain the least. IOW, not only are even our poorest doing better than ever but they have the most to gain from the way the system works.Report

              • Avatar Dave in reply to Swami says:

                Part of this is pure concern trolling and the parts of which are not concern trolling represent compelling evidence of why people with this mindset are absolutely useless when it comes to getting into the weeds and dealing with real world problems.

                Come out of the clouds, roll up your sleeves and try doing more than just cheerleading for your position and you’ll find yourself having to think harder than you are right now.Report

          • Avatar Swami in reply to InMD says:

            The bottom quintile in the US, when tracked over the course of the next decade, improve in income substantially more than the middle and upper quintiles. Easy to link to these studies.

            In addition, the poor in the US are as well off as anyone anywhere even while three are poor, and they are better on average than the poor were a generation ago This is all easily supported.

            So we are to believe that the statistical group which is better off than ever before and empirically most likely to improve the most over the next ten years is going to politically destroy the golden goose?

            I guess it is possible, but if it is so it will be because people have spread lies that they are doing worse and that the system is privileged against them. In other words, the problem is the media and politicians making up BS about immiseration and hopelessness, not with markets.

            People are being spun.Report

            • Avatar Jaybird in reply to Swami says:

              Read 1 Kings 3: 16-28 again.

              The second mother is a very, very interesting character. Top ten for the Bible.

              I think that there are a lot of those mothers out there.Report

              • Avatar Jaybird in reply to Jaybird says:

                Laurence Tribe just had a tweet. (I’m not going to link to it.)

                In the tweet he quote tweeted a news article talking about Elizabeth Warren’s proposed Wealth Tax. A tax on wealth above $50 million (and another tax on wealth above $1 billion). He pointed out that he was one of Warren’s advisors that argued that, yes, this tax would pass Constitutional muster.

                That’s not the interesting part. The interesting part is that in reading the responses to his tweet, there was a tweet waaaaaay down in the replies from a person (not a bluecheck or anything, just an average person with somewhere around 100 followers) who said, and I’m paraphrasing, “Good. I’m tired of working so hard.” (Don’t look for the tweet. I’m not bringing it up so that people can look for it themselves and respond to it. She didn’t ask for that sort of thing.)

                My “engineering” response to her tweet is something to the effect of “how in the ever-living hell will taking 2% of money away from 50 millionaires make you work one minute less?”

                But then I think of the monkey.

                Yes. Take away all that wealth. Take half. Take 75%. Nobody needs that much. I’m tired of working so hard.

                Lotta bad mothers out there.Report

            • Avatar InMD in reply to Swami says:

              This misses the point entirely. There’s more to life than consumer products. Small groups of people being able to exploit wealth to realize benefits others can’t puts stress on social cohesion and by virtue of that on our political system. Too much and you end up with a battle between oligarchic capture against populist backlash. All the nice things like civil liberties and civil society quickly die in an environment like that and no amount of running water and full grocery stores and electronic toys will fix that. All you have to do to see that is read about what’s going on in the world.Report

              • Avatar Swami in reply to InMD says:

                Who said there is nothing to life but consumer products? Can you please argue with what I said rather than a cheap bumper sticker version of what you wish I would have said?

                There is always a risk that anyone in society will use their power, whether it is in the form of wealth, political power, oratory excellence, or sheer numbers to undermine the system. There is very little indication that inequality of income makes up a disproportionate share of that harmful influence, though I certainly agree it is something we should be on the guard against.

                The solution of course isn’t to limit the extent of income a person can make in a positive sum, mutually beneficial interaction, it is to limit how they can use that wealth to make undue influence on politics. (Another topic). To the extent a billionaire can add a billion dollars in value to both themselves and others, it would be absurd to stop that person from making the next billion because we fear they may use for unfair political influence.Report

              • Avatar j r in reply to InMD says:

                I’m not sure how accurate this is. I ask this all the time, but when was the golden age of social cohesion in the United States? And the US is way less oligarchic than it’s been at any point in its history. It just doesn’t feel that way. Getting to the root of why would be a good first step in figuring this out.Report

              • Avatar Dark Matter in reply to j r says:

                And the US is way less oligarchic than it’s been at any point in its history. It just doesn’t feel that way.

                Seems like a good time to blame the media. The overarching story is shockingly good, but shockingly good doesn’t attract eyeballs.

                So they focus on the bad, and that constant droning narrative sinks in.

                We’re at close to full employment, but NPR is talking about the devastation of GM closing plants. Violent crime is going down, the news focuses on school shootings. Every family type is making more money, so average them together so we can talk about income growth stagnation. We cure a disease, focus on that cure not being available to everyone everywhere instantly. A half dozen guys each, separately build a hundred billion dollar companies, focus on the inequality created by Billionaires. Walmart lowers prices which puts more in the pockets of everyone who buys their stuff, focus on the high priced inefficient mom+pop store which they put out of business.Report

              • Avatar Swami in reply to Dark Matter says:

                Fantastic comment, DM.

                It is hard to discuss anything anymore because 9 out of 10 people believe what the media, or their personal media feeder is repeating ad nauseum.

                A lot of people have agendas, and one way to bring others to ones agenda is by feeding a stream of biased yet true anecdotes. If something improves, it doesn’t matter to the propagandist, as they just feed a steady diet of anecdotes out of a country of 350 million people which support your case. Now people are sure poverty is rising, racism is rampant, black boys aren’t safe from cops, illegals are raping our daughters, and sharks are eating everyone else left over.

                That is what makes discussions so tiresome on this and other sites. One could spend all of ones time just correcting for politically biased beliefs that are permeating everywhere.Report

      • Avatar Chip Daniels in reply to Jaybird says:

        What is hilarious about the Heritage list of household items, is that the house itself is not on the list.

        “Dad owned his own home by age 30.
        I am 40 and renting, but hey, I’ve got a sweet Xbox!”Report

        • Avatar Jaybird in reply to Chip Daniels says:

          (I’m pretty sure that the bank owns my house and will for the next 20 years.)

          The hilarious thing about the Heritage List is that they start from poverty and climb up and see the important measurement as a list of things that were luxuries in the living memory of the generation that preceded us that we now see as trivial things that are offensive to mention because everybody has them.

          The hilarious thing is that they don’t see it as centering on intra-group position.Report

        • Avatar Swami in reply to Chip Daniels says:

          Home ownership rates, despite affordability issues on the coasts, have not changed appreciably over the past 50 years.

          You continue to throw out this one stat or component as if it reflects living standards. It doesn’t. To see overall living standards I strongly suggest using the AIC.Report

          • Avatar Jaybird in reply to Swami says:

            “My dad bought his house in Flint, Michigan in 1960 and had it paid off by 1988! I moved to Brooklyn in 1999 and I had to rent and I’m *STILL* renting!”

            “Would you be willing to move back to Flint and buy a house for a mortgage payment smaller than what you’re paying in rent now?”

            “That shithole? Hell no.”Report

          • Avatar Chip Daniels in reply to Swami says:

            We just had a multi-day discussion about this on the other thread.

            TL/dr: Young people are not buying houses at the same rates and ages as their parents. The median Millennial earns about half of what she would to purchase even a starter home in most metros.

            And why would you think the AIC represents anything? “Average” only tells us about the group as a whole.
            Like how Jeff Bezos walks into a bar and the average patron is suddenly a billionaire.Report

            • Avatar Swami in reply to Chip Daniels says:

              The AIC takes out distortions of per capita GDP. It is thus better, not necessarily perfect.

              If we want to get more exact we can look at average income per decile. The US is a leader for every decile except the bottom, and quite competitive with anyone on even the poorest decile. And this dismisses the fact that most people change decile over time, thus the better measure would be average or median lifetime earnings. The US is at or near the top no matter how you cut it, and an order of magnitude higher than the LT historic trend. And that is after the influx of thirty million immigrants who “walked into the bar” improving themselves dramatically while artificially pulling down the statistical average.

              This meme going around that people in the US are immiserated is a complete and total fabrication. No society is perfect, but conditions for most are better now than any other time or place.Report

              • Avatar NoPublic in reply to Swami says:

                *Most* is doing a lot of work in that statement.
                It’s irrelevant to *most* wage slaves that they’re statistically better off if they can’t achieve as outputs what their parents did with equivalent inputs to the system.Report

              • Avatar Swami in reply to NoPublic says:

                As a person whose family is partially descended from real slaves, I take serious offense at your privileged dismissal of voluntary enterprise as some kind of slavery. I find it offensive and would ask you to avoid this type of insensitive framing.

                If you want to know the difference between people being owned by other fellow humans, whipped, chained, executed and raped and someone who agrees to enter into a voluntary, mutually beneficial economic interaction among competing alternatives, then I can clarify it for you.

                As for the word most, it is defined as a majority, and in the case the majority of people continue to do better than their parents after inflation, especially when correcting for smaller households, lower rates of marriage, and thirty million people who immigrated in to the country at sizable gains (but lowering the average while doing so).

                Let me be real clear. Voluntary mutually beneficial interactions are not slavery and it is offensive for you to imply they are. Average, median, and minimum tier incomes are all up and at the highest level in the history of the country, and this undercounts the movement of people over time from lower tiers to higher. If you need me to walk you through the statistics in more detail I can.

                Are things perfect? Nope. Are they better than prior eras? Yeah, in most ways, though not in all and certainly not for everyone. But they are only perfect for everyone in every way in utopia, and utopia is for idealistic fools and is the enemy in every way of real life alternatives.Report

              • Avatar Chip Daniels in reply to Swami says:

                The AIC only measures that we are spending, and has no way of revealing if that spending is actually purchasing anything of value.

                $1,000 spent on housing is treated the same whether it is for an apartment rental or home purchase.

                What you are trying to do here is construct a hypotheses (that we are growing wealthier) and support it with abstract factoids.

                The hypotheses doesn’t explain all the empirical data we are seeing.
                In addition to the declining rate of homeownership of younger people;

                Americans are taking less time off for vacation; Why is that?
                College graduates are entering the workforce carrying a much heavier load of debt than their parents;
                Real wages after inflation have stagnated for decades;
                Defined benefit pension plans have been replaced with 401Ks or nothing at all.

                And mostly, what explains the seething rage we are witnessing across the working class? If Americans are truly living at the peak of historical wealth, how could Trump have been elected promising to blow it all up?

                These facts aren’t explained by the premise you put forward.Report

              • Avatar JoeSal in reply to Chip Daniels says:

                He did mention rent seeking, though failed to point to the US government as the biggest seeker.

                Even with all the abilities of a innovative economy, constantly doubling the M2 money supply without tangible capital formation will eventually lead to the grave yard of nations. The purchasing power of the dollar will continue to approach zero.

                Maybe next time there will be a separation between economy and state.Report

              • Avatar Swami in reply to Chip Daniels says:

                AIC is adjusted for purchasing parity on a national basis. That means that in the US, with widely differing costs of living, it probably understates the American advantage. I have no idea if people spend their money wisely but I know of no argument that they are spending it less wisely here than elsewhere or now than previously. My guess is you are grasping at straws here rather than revise your position when it is clear it is empirically wrong. The AIC data drives a stake through your framework.

                On home ownership, I am not aware that it is intrinsically better for someone to own than rent. You just seem to assume this odd idea. There are pros and cons to both approaches. But if there was a reason everyone s/be an owner, ownership rates are flat over the last 40 years. It seems to go up and down over time as conditions change. What is improving are the amenities, size, quality A/C and so forth of those residences whether owned or rented. Americans have unusually large homes compared to other developed nations,, and trying to use residence status as a sign of immiseration is absurd. The US has freakishly large and nice homes compared to those in Europe.

                Vacation rates, hours worked per worker, leisure time, time spent on chores, and years in retirement are all improved significantly over the longer haul. Every long term trend shows vast and almost steady improvement. Maybe there was a bit of a blip after the recession, but that is what recessions always do.

                Real wages after taxes including benefits corrected for inflation (PCE) have increased by 40 to 60 percent over the past 40 years. Quit making up stuff convenient to your argument. Links available if you really want to continue to push this silliness.

                I am not aware of any intrinsic benefit of one type of pension over the other. Again, pros and cons. I am also unaware of any LT trend toward reduced median retirement planning, please link me to any long term trend showing we are less prepared today than in prior generations, otherwise I will assume you just made this up as well.

                College costs are up. I can give you advice on how to fix this, but can we just agree that the numbers were already corrected in the purchasing power AIC numbers and the PCE adjusted wages? You do know what corrected for inflation means right?

                Your argument on Trump is one I see repeatedly thrown out by circular thinkers. They can’t imagine any reason why he would be elected other than economic malaise, so they use his election as an argument proving malaise. There are a lot of reasons people vote for despicable human beings, and I am sure the hang over from the recession and the lasting effects of creative destruction (which is real and is painful) are probably one reason. But there are lots of others, including as a reaction to people peddling economic BS 24/7.

                Your counter factual list of facts is repeated constantly and eventually people start to believe it. Have you ever considered that one reason for people electing this disgusting human being is because you have made them give up hope with all your “sky is falling” dystopian lies?Report

    • Avatar JoeSal in reply to Swami says:

      Good stuff, you are seeing a lot more parameters than you used too.Report

  8. Avatar Saul Degraw says:

    I largely agree with Lee and Richard. The free market is wonderful for many things but not for all things. The free market is necessary for things that make life more pleasant and comfortable and I suspect that it also provides the necessary wealth base for a welfare state.

    That being said there are discontents, the problem is that discontents have radically different solutions for what is necessary beyond the free market. I’m not a very spiritual person so I’m disclined to be agreeable to religious/spiritual solutions to the problems and alienations of the free market. I’m not also very communal.Report

  9. Avatar Dave says:

    “For Toys R’ Us, it was the actions of private equity firms that led to bankruptcy and leaving many employees with no severance. The market might be working in a sense that people have jobs and unemployment is low, but if you look closer, things aren’t working well.”

    Private equity firms killed Toys R Us the way that labor unions killed Hostess.

    Both firms died because their business models were fundamentally flawed and they couldn’t grow top-line revenues. Private equity or labor negotiations had nothing to do with that.

    It takes a certain kind of creativity to assume that Toys would have thrived or not been targeted for a LBO post 2008 assuming that it wasn’t taken private in 2008.Report

    • Avatar Pinky in reply to Dave says:

      I always found Toys R’ Us to be far more objectionable than any venture capitalist. The company was built on merchandising expensive, unnecessary items targeted at the most impressionable consumers. If I were a parent, I wouldn’t have let my child within 100 yards of the place. Investment bankers might help fund a cure for something.Report

    • Avatar Doctor Jay in reply to Dave says:

      I had the experience of being an employee of a company that went Chapter 7. Full bankruptcy. We were treated well. We knew what might be coming, and we made a decision to stick it out. Management did as much for us as it could, given the circumstances.

      It’s not just that a company died. You might be right about the fate of Toys R Us. You might not, who can say? It’s a counterfactual. But the way these things happen matters profoundly. I remember talking to my boss, the VP of Engineering at this ill-fated company about this. We were both happy to give the company and it’s other employees and customers a death with dignity. My boss said it reminded him of the stint he spent doing hospice care.

      Yeah, the company might have died anyway, but it might well have kept its pension fund intact, and given its last employees retention bonuses as it sought Chapter 11 relief, for instance. (Severance is impossible in a bankruptcy case – creditors get priority over “extra” payments).

      You’re right. Sometimes companies need to die. But how it happens matters a lot.Report

      • Avatar Dave in reply to Doctor Jay says:

        Doctor Jay,

        My father-in-law was a lifelong employee at the GM plant in Moraine Valley, OH when they closed it. He not only was out of a job but his pension benefits also got cut. It was a terrible thing to have happened. That was the farthest thing from a death with dignity, but he’s doing okay all things considered.

        Toys was basically DOA in 2008-2009. PE was looking for the quick turnaround followed by a public markets exit but it wasn’t going to happen if not because of the recession then it was the competitive landscape that followed.

        Unfortunately, I’m in the investment management business and have spent most of my career in real estate and finance so “death with dignity” is something that has never existed in my world nor will it. Of course I feel bad for people on the receiving end of it but I have a much more cynical view of the world.

        I have no objections at all about retention bonuses and treating employees well, but I also know how lenders and other creditors are.

        As for my counterfactual, I work in investment management and while it’s in the real estate business, it’s healthcare real estate so I have to know the business models inside and out, forwards and backwards. In a world where growing revenues and operating income is mission critical to the thriving and survival of health care providers, the last thing I’d go near is a provider with negative revenues or earnings. It smells of credit risk and an inability to adapt to a changing environment.

        No way in hell I’d want to add that kind of credit risk into our portfolio. My capital isn’t compensated for taking on that kind of risk, not unlike other institutional forms of capital being unable to take on enterprise risk of a distressed entity.

        If Toys still existed today, I don’t think it would have been as a publicly-traded company. Maybe it’s taken private by PE or maybe it’s acquired. Retail isn’t what it used to be.Report

  10. Avatar Rufus F. says:

    “The free market is a good thing. But it isn’t the only thing.”

    This has got to be the best two sentence summary of Polanyi ever.Report

  11. Avatar James K says:

    It is very important that businesses that can no longer sustain enough profit to justify their capital use be shut down, so their capital can be put to new uses. One of the problems government has is that it’s terrible at cutting its losses, but markets will cut your losses for you at a certain point. Private equity firms are the vultures of misallocated capital – eating the dead as part of the cycle of life.

    But none of this changes the harm caused to those who lose their jobs as a result. I think there are several things we should be thinking about here:
    1) More support for those who lose jobs, be that higher priority in the creditor hierarchy in bankruptcy, or assistance to help people relocate to more economically-vibrant areas.
    2) Less reliance on employers providing security-dependent services. Having employers run savings funds or act as health insurance brokers is a bad idea and those things should be handled by people themselves and/or the state, not by employers.
    3) We need to understand why so much of the Rust Belt is in the state it’s in. Sure, the car manufacturing business shrank (in jobs at least), but that alone doesn’t explain it. A lot of rural towns are going to die because they rely on resource extraction (which requires fewer workers every year), and there’s no other economic function for a small rural town. But that’s not a problem cities should have – the loss of an industry creates opportunities for new industries to start up. The Rust Belt seems to be all decay with no renewal. I don’t know why this is, but someone should be trying to figure it out.Report

    • Avatar Jaybird in reply to James K says:

      Journalism is currently going through a minor correction with a whole bunch of journalists being laid off over the past week (and some more next week too). Buzzfeed, Huffpost, and Gannett all announcing huge layoffs.

      Business is changing.

      I’m wondering if its accelerating, though. How long were the rust belt jobs around before they evaporated?Report

    • Avatar JoeSal in reply to James K says:

      I know you know this, but I don’t understand why it is something that isn’t addressed.
      If a small town is purchasing products from outside, that require X amount of money, then you need to be externally selling X amount of local developed products. When minimum wage is enforced on a area, it destroys a fraction of the capacity to locally produce X competitively with the outside source that doesn’t have the minimum wage. The disparity is increased with each additional social program/regulation that has to be funded that will continue to be added to the ‘price’.

      This of course should be no surprise in that a government has affected ‘price’. The time scales for the disparity to drain the wealth out of a region can be slow and take decades.

      The outcomes of affecting price are not new and have been well understood for decades.

      I don’t see how there is any big mystery here.

      (I am saying this with full awareness of competitive advantages that can exist in different locations, just that most locations should have at least something that fills a niche, so most locals will have a advantage that is non-zero.)Report

    • Avatar Dark Matter in reply to James K says:

      Less reliance on employers providing security-dependent services.

      YES!!! That.

      …the car manufacturing business shrank (in jobs at least)…

      A lot less than is normally thought. The car manufacturing business shrank IN THE RUST BELT, but that’s the big three losing market share and was mostly in the context of foreign manufacturers setting up shop in the anti-union South.

      …the loss of an industry creates opportunities for new industries to start up.

      It depends. One industry drops the ball and leaves/shrinks/whatever. That frees up resources… but it can also creates the political challenge that infrastructure needs to shrink. The resources freed up might not be all that useful, Amazon doesn’t need coal miners, the tax rate to support the infrastructure may be disincentively high.

      We also have racism and the political challenge of dealing with it in the last few decades. White flight was a big part of Detroit falling apart, and that was an issue even past racism and money. I.e. change that into “middle class flight” and it’s still a serious problem. The engineer who works for company X is also the 5th grade basketball coach and so on. You lose a lot of activities which enrich the community when you lose the middle class.

      And all of these things can build on each other.Report

  12. I should point out the link to the Vance article actually goes to the French article. Here’s the correct link, I think: https://www.nationalreview.com/2019/01/tucker-carlson-health-of-nations-markets/

    Also, thanks for providing yet another fact that demonstrates Vance is a thoughtful person and not the caricature some people make of him.Report

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