My theory/rant on capitalism and associated concepts works

[gamer0004]

Why would globalization be evil? And why should there only be "Hochkultur"? I dislike modern television shows as much as you do, but I simply don't watch it and read books or play games. And I don't think high brow culture is what has been one of the important factors of progression in our culture (at least not the kind of material, income per capita progression since the industrial revolution).

As to why mankind has been able to sustain welfare growth for the first time in history: it's difficult to pinpoint. Historians and, to lesser extent, economists have tried to explain, but explanations are varied. First thing you should realize is the fact that the industrial revolution was, in my opinion, not an independent development. Even before the industrial revolution, income per capita was rising in several west-European countries (notably England and the Dutch Republic). The Dutch republic may have been the first modern economy: there was much specialization (for instance, the Dutch did not raise crops to feed themselves but rather exported certain crops (flax, among others) and imported grains from other countries), there were stock and bond markets, the first multinational enterprise and use of wind power to power machines. GDP per capita was at that point already quite high (historically speaking). To be precise it was more than $2000, adjusted for purchasing power, in 1999 dollars (in 2003 it was about 10 times higher). Throughout history, mankind subsisted on $400 to $600. $400 is the subsistence level, and higher levels were typically the result of a small but rich elite. From about 1400 or 1500 A.D., however, income per capita was rising in Europe (as well as in colonies in North and South America). The industrial revolution was, as such, not the beginning of the sustained increase in welfare. It probably did accelerate growth, but even that is not entirely clear (back then there were no statistical bureaus keeping track of these things).
As to why welfare has been increasing from, say, 1500 A.D. onwards, I would suggest a few reasons:
1. Improvements in transportation
2. Improvements in technology and (later on) science
3. (Relative) Cultural, religious and political freedom

The first reason is important, because it reduces costs, thus increasing the market size and thus the possibility of specialization, and increasing the types of luxury goods available for purchase. Increasing the types of luxury goods is important, for it gave farmers an incentive to work harder to earn money so as to buy these luxury goods. Throughout history, farmers have never really profited from working more than necessary for subsistence, which reduces surplus to feed non-farmers. Developments in other sectors (think clothes, television sets, computers, cars, education &c.) are one of the driving forces of sustained growth.
The second reason is important because it enabled us to reduce labour input in production, which frees hands for other tasks. The result is an increase in GDP per capita, for the former production is equally high, while more people can work on producing something else, so the net benefit it the increase in production in this other sector.
The third reason is very important, because it allows people to gain from profitable investments (in both physical and human capital). It's great to have developed an early steam engine, but if the gains from improved productivity are taken by the government it's not worth investing in either the development or the use of steam power. Culture can be a problem as well, if there is a strong cultural bias against making money or change* the social cost of technological improvements is not worth the benefit.

*Many cultures have these aversions to change and profits. Even today, people talk in disgust about large companies making profits, and people tend to think that things were better in the past. The Church has been against 'usury' (charging interest) for a long time. The idea that the economy is a zero sum game, that is, that the benefit of one person comes at the expense of someone else, is a very strong tendency, but it's - fortunately - not true.

[Mr_Cyberpunk]

I should be clear that I'm not 100% black and white on the subject. You seem to be suggesting that I'm affraid to embrace the borderless change that is Globalization- for that matter seem to think that I beleive only the high brow culture should be the driving force.. This couldn't be further from my thinking on the matter. I'm more in the center. My criticism isn't so much what they're doing, its more HOW they're doing it, Globalization in Theory is a good thing that enables the cultural and economic exchange of ideas and prosperity- its a good thing so long as its not being used as a means of assimilation and economic conquest. If its socialistic then it benefits the entirity of the people, not just a few priviledged people in the west.

Culture can be a problem as well, if there is a strong cultural bias against making money or change* the social cost of technological improvements is not worth the benefit.

But it goes both ways, as I said, it should be more center.. Do it to make enough money, but don't go fucking crazy with it! What I'm complaining about is that they HAVE gone crazy with it and now its "WE HAVE TO KEEP PUMPING IT OUT FASTER AND CHEAPER!". No one wants that.

More variety also helps. For an economy built on the idea that anyone can just create a company and start trading, it sure as hell is hard because there's too much preventing you from doing this, too many monopolies, too many bigger players preventing your success. In my opinion they need to be cut down a bit. Unfortunately the GFC had the opposite effect that it should've had, where by now we have more consolidation as opposed to less, the more consolidation the wrose the monopolies and the fewer choices- it also means bigger risk if that company collapses (because then there's no one that can pickup the demand).

The economy simply isn't balanced, and that's why we're having the problems right now, whereas in the 1980s we had a recession that thinned out most of the companies, if you wanted to trade, you had to REALLY try your best, there weren't as many monopolies which meant a lot of small guys could build up into massive companies, look at Apple, Microsoft, EA, Atari ect.. all perfect examples of this. Nowdays though, those companies are well established and no one can compete against them, repeat the company lifecycle.. instead we're stuck, stagnating.. we can't move forward because these companies won't just go away and let someone else have a turn at being a multi-billion dollar company. Google was the best thing to come out of the previous decade as far as I'm concerned, they really shook things up. It was funny to see Apple and Microsoft squirm because now suddenly they weren't the favourites- now suddenly their consumers had a choice in the matter- which no one had to pay a cent for (other than businesses wanting to trade/advertise).

[VectorM]

I think some people really need to learn the basics:

What is Money (it's hillarious how many people have no clue what money is, yet have a lot to say about it)
http://www.youtube.com/watch?v=EtF_zbI5 ... eqSZMduE9A

Economic basics: Primer
http://www.youtube.com/watch?v=Tp5VyklK ... eqSZMduE9A

Lesson One

http://www.youtube.com/watch?v=Rrxkc8q7 ... XcyDhJRM2D

The Wisdom of crowds
http://www.youtube.com/watch?v=gKd_yG8D ... re=related

Price controls
http://www.youtube.com/watch?v=P0T6ya5q ... re=related

Unemployment

http://www.youtube.com/watch?v=OBm3_1SX ... re=related

[gamer0004]

As for the first video: what an idiot. On the one hand, if you take it very generally, that atheist guy is right: money has value because people perceive it to have value (this is true for anything). Value is not derived from labour (as he claims regarding the production of gold). More specifically (he is more specific in his video), he is right to some extent but also makes some elementary mistakes. One ounce of gold is not worth the same everywhere. In fact, gold has value because people perceive it to have value. If people would decide one day that gold does not have any value you would have the same problem with paper money: it would become worthless. And even with a gold standard, there is never enough gold to pay everyone, so there is still a lot of 'virtual' money in circulation.

The big difference between gold and paper money is that the value of gold is to large extent exogenous: that is, gold can be used for many things, like producing computer hardware or jewellery. However, gold prices rise during an economic crises because people buy it not for consumption or production, but to store value. Part of its value (as represented in its price) is therefore due to it being valuable. Paper money has a very low exogenous value (one could use it to wipe one's ass or make paper planes or whatever, but it's not very useful otherwise) and derives most of its worth from being perceived as valuable. That's because (being fiat money) paper money is basically a standardized IOU: when I get $100 pay, it gives me the claim on goods worth $100, so I can go to a bakery and buy a loaf of bread. The baker accepts the payment because he is legally obliged to do so, but also because it's a beneficial exchange: he has more bread than he needs for himself, and he can use the money he gets to buy other stuff in return. The money has value because people perceive it to have value, and the obligation to accept it means people keep perceiving it as valuable, because it ensures its usefulness and thus its value. Paper money is not actually different from gold or money backed by gold. The production of paper money still requires labour an capital, like gold, and has some exogenous value. The difference is rather in differences within these characteristics. Paper is ill suited as money, because of its low value (which, again depends ultimately on its use), so it would not be any better than simply bartering. (Bartering is in fact what we still do, the process has simply become much simpler because there is now a good universally accepted as valuable, and which is equally valuable to everyone).

EDIT: WTF, this guy is in favour of insider trading? That is pretty fucking retarded. In fact, it's one of the very few things which everybody agrees on is a bad thing: economists, politicians, citizens... That's because there is not a single reason for insider trading.

Long story shirt: read a good textbook if you're interested in economics, don't watch these videos which give a completely wrong impression.

[bobby 55]

As for the first video: what an idiot.

I tend to agree. "To improve the economy government prints more money".....say what?

[VectorM]

The guy himself responded to you, gamer0004:

If people would decide one day that gold does not have any value you would have the same problem with paper money

And if a frog had wings he wouldn't bump his ass a-hoppin'.

The thing is, we have seen this with paper money every single time it's been tried. We haven't seen it with gold ONCE.

The whole "there isn't enough gold" canard just shows how ignorant the person is. The whole POINT of money is that there's not a lot of it!

However, gold prices rise during an economic crises because people buy it not for consumption or production, but to store value.

Yes, gold is EXCELLENT as a store of value--and as I said in the video, that's one reason it works GREAT as money.

Paper money is not actually different from gold or money backed by gold.

What makes this such an incredible fail is that he preceded it with the most important way paper money IS different from commodity money!

The production of paper money still requires labour an capital

Bullshit. It's just someone typing a number in a computer. How much more difficult is it really to type a big number than a small one?

WTF, this guy is in favour of insider trading? That is pretty fucking retarded. In fact, it's one of the very few things which everybody agrees on is a bad thing: economists, politicians, citizens... That's because there is not a single reason for insider trading.

Ignoring all the reasons I DID give for it. And there are PLENTY of economists who say it's a good thing, not the least of which was Milton Friedman.

http://www.bogosity.tv/forum/index.php? ... rdseen#new

You are invited to argue with him directty, if you so wish. (doubt it)

Long story shirt: read a good textbook if you're interested in economics, don't watch these videos which give a completely wrong impression.

Yes, you should definitely read some good textbooks:
http://c457332.r32.cf2.rackcdn.com/pdf/ ... lesson.pdf
http://www.fee.org/library/books/i-pencil-2/

I tend to agree. "To improve the economy government prints more money".....say what?

Um, government does do that all the time, even though it fails hillariously every time.

[Jonas]

I think if you guys can keep this going for another couple of pages, we'll have solved the global financial crisis in a jiffy.

[bobby 55]

I tend to agree. "To improve the economy government prints more money".....say what?

Um, government does do that all the time, even though it fails hillariously every time.

I'm pretty sure The Reserve Bank of Australia doesn't get money printed as an economic fix.

I think if you guys can keep this going for another couple of pages, we'll have solved the global financial crisis in a jiffy.

All the braniacs on the planet are having trouble with that. It's amazing how much easier it is to borrow a trillion dollars than it is to borrow a couple of thousand.

[Jonas]

The Scandinavian countries devalued like crazy after WW2, and that worked like a fucking miracle. That's why the various variations on the krone has been worth about a tenth of the British pound and a 7th of the US dollar ever since. People from abroad tend to joke "lol monopoly money", disregarding the fact that the exchange rates don't matter, as though the British economy is somehow in 50% better shape than the US economy because you get 1.5 dollars on the pound.

Oops that was a digression. My point being: in moderation, devaluation can totally work, even in the long term.

[VectorM]

The Scandinavian countries devalued like crazy after WW2, and that worked like a fucking miracle. That's why the various variations on the krone has been worth about a tenth of the British pound and a 7th of the US dollar ever since. People from abroad tend to joke "lol monopoly money", disregarding the fact that the exchange rates don't matter, as though the British economy is somehow in 50% better shape than the US economy because you get 1.5 dollars on the pound.

Oops that was a digression. My point being: in moderation, devaluation can totally work, even in the long term.

Just because I had diarrhea at the time that I made a ton of cash, doesn't mean that diarrhea "works".

[gamer0004]

Okay, besides the fact that I think it's not that polite to quote my post on another forum, I will take the effort to register. He is simply wrong, especially in his rebuttal.

[Jonas]

Just because I had diarrhea at the time that I made a ton of cash, doesn't mean that diarrhea "works".

Well done, fantastic argumentation. I see now that I was entirely wrong and I cede the debate to you. You have clearly proven your superior intellect with class and style. A toast to VectorM, man of the hour

[gamer0004]

Class and style: true VectorM qualities.

[Mr_Cyberpunk]

My point being: in moderation, devaluation can totally work, even in the long term.

It can work so long as you're not a primary industry based nation, by this I mean, as long as you're dealing in manufacturing and high tech industry then you're fine. But with primary industries you want to dollar to be as high as it can go because it means people are paying more for exported raw materials (which are higher in demand over manufactured- because China does all the manufacturing now).

This is why China is successful, this is also why Australia managed to dodge most of the effects of the GFC, it also helped that Russia and China were looking for alternative investments so they put a lot of their funds into the Australian Dollar because of how well it was trading- plus its high GDP (the result of dealing with China).

The biggest risk we in Australia and for that matter the rest of the world has right now is China trying to buy up all the primary industries, which they are presently doing rather aggressively in Australia. We need to stop this or else we'll be at their mercy because without that primary industry Australia looses its sovereignty. This is why the mining Tycoons in Australia are assholes, because they have so much power, and at the drop of the hat they could do the most unpatriotic thing imaginable and sell our country. I fucking hate them.. Bunch of rich assholes, and no good traitors to this country.

China is set on world domination, dealing too much with them is going to ruin us all if we're not careful. They're buying up economic sovereignty.

[bobby 55]

The biggest risk we in Australia and for that matter the rest of the world has right now is China trying to buy up all the primary industries, which they are presently doing rather aggressively in Australia. We need to stop this or else we'll be at their mercy because without that primary industry Australia looses its sovereignty.

There's one or two others but yeah, mainly China. As someone put it to me, in a few years all the best quality produce will be exported, and we'll have to import inferior quality goods just to feed ourselves. More than what Coles and Woolies are doing now I mean.