What Is Wrong with "Trickle Down Economics"?

[datagal]

Asteroid mining in significant quantities means tech that can drive large masses toward Earth. Their KE makes these masses the non-radioactive equivalent of nuclear weapons. Frankly, any ideology that advocates private ownership of weapons of mass destruction is not just crank economics. It's merely barbarism with scifi PR.

Though asteroids are not weapons, the ability to steer them could be used for harmful effect, but I don't see that technology as controllable, governments will just have to learn how to steer them back if they are on dangerous paths.

Having done myself the favor of skipping over the larger part of the thread, I will note that the original question is simply answered. All versions of what opponents dub "trickle down" economics demand policies based on the assumption that wealthy people are not investing their capital because some government policy is lowering their rate of profit. It's true that if there's a lower rate of profit there's less investment but the issue is whether the assumption government policy of any sort has direct effects on the profit rate. Or, for that matter, immediate indirect effects on the profit rate.

The overwhelming majority of orthodox economists do not have an agreed upon theory about the origin and rate of profit. Partly this is because all the favored theories, especially including all the theories promoted by the trickle down theorists, are easily refuted by economic history. Academic economics is not quite as ridiculous as astrology or theology, but it is highly ideologized, balkanized into isolated fields to limit the relevance of what it does finally succeed in discovering and completely unable to excise even the nuttiest crank theories. Austrian economics and neomonetarism are particularly good examples. You can rest assured however that no academic economist is using Marxian economics.

One thing academic economics lacks is objectivity, economics is highly related to politics, and one encounters facts that contradicts their favorite political theory, that evidence is ignored. I've seen liberals argue their case for Keynesian economics, they can't seem to see that its not working, they keep on making excuses for it not working, and when someone tries to implement it and it doesn't work, they always say he did not try it quite right, some little technicality such as the way he twiddled his little pinkey caused the whole thing to come crashing down, it wasn't the fault of Keynes now was it, who's theory always worked in theory and on the black board when the professor demonstrated it, but never in practice, gee I wonder why? Would War II was a special case, this was a matter of national survival, and that motivation caused governments to work more efficiently than they normally do and there is no way to achieve that efficiency in government work short of total war. We can't start World War III to get us out of this recession.

I'm going to ask you this one more time. Are you an Economist?

And what make Friedman economics any better than Keyesian economics?

 

[gturner]

Academic economists at least try to develop economic theories that are objective and account for the behavior of humans, governments, and firms. But it's not easy, because economics is not just a matter of supply and demand, nor resources and technology, but a great deal of human psychology and the politics of the moment. Good luck ever developing a fully objective theory that serves as an adequate predictive model.

Besides that, what is the least bit objective about your goldbugging? You have absolutely nothing concrete to base that on.

Well, gold bugging is at least a very historically established and governments used to be slavishly devoted to the logic of it, so it's not surprising that it still attracts followers.

There is a certain logic to it. In Europe, what would a peasant have trusted, princes who print paper promise which few people would accept in trade, or real gold that wouldn't be questioned by any jeweler or shopkeeper in the world?

Gold built that level of unquestioned trust because over thousands of years it was one of the few metals whose utility and desirability never failed. Silver corrodes and tarnishes, while gold is always bright. It can be melted and remelted without the loss of a single gram. Precious stones go in and out of fashion (Are rubies in this year, or is it emeralds? What color goes with this dress?), as do their gold settings, but the gold itself can always be reworked into the latest fashion. And the desire for jewelry is universal and dependable, so nobody has ever been stuck with gold they can't unload. Thousands of years of accumulated observations and experience taught people that gold was the safest, surest form of portable wealth that survives fires, disasters, and the collapse of empires.

The trouble with it as currency is that the supply doesn't expand and contract with economic output. In a zero-sum world of nearly constant population and fixed economic output (most of human history) it would make the perfect currency basis. Then the industrial revolution happened and we outstripped the ability of a perpetually medieval money supply to cope with all our trade and commerce.

The desire to return to the security of gold pops up whenever central banks are screwing around with monetary values, which creates uncertainty and doubt and the gnawing realization that the wealth we've spent our lives building all hinges on opinion. That can be a frightening thought when first thunk.

 

[Romulus Prime]

What's wrong with 'trickle down economics'?

In a word: GREED.

Which is certainly not beholden only to that type of economy or the environment it creates.

 

[ryan123450]

Just the first page of this thread made me realize that I will never figure out the answer to the economy. I can see the wisdom in both parties economic viewpoint. I'll continue to vote based on moral issues and the need to prevent an entire economic collapse based on our insane debt problem.

 

[gturner]

I don't vote on values, I vote for the candidate who is least likely to be an NID or Goa'uld plant lying about the existence of the Stargate program. On that score the answer is clear.
　
Obama keeps sending out Susan Rice to claim that the Libyan attack was a "spontaneous"protest, despite having days of advance notice from the Libyan government about an Al Qaeda attack set for 9/11, and now intelligence agents are saying there wasn't even any protest going on when the attack occurred. That's more patently absurd than claiming that the loss an an entire aircraft carrier battle group, and the loss of the world-wide electricity and communications grid, was the result of a "freak meteor shower." No, it had nothing to do with Anubis attacking our base in Antarctica. Nothing at all.
　
This latest round of "spontaneous uprisings" from the Arab Street comes after we sold out our allies in Egypt to the Muslim Brotherhood and radical Islam, a move inexplicably stupid unless there happened to be some new archeological finds we weren't being given access to, say finds involving advanced alien technologies in sealed canopic jars. Even Hillary couldn't figure out our Egyptian policy, at least until Bill gave her a little side briefing. And the Arab Spring started in Tunisia, very near Carthage, a bump on a map that mysteriously almost wiped out the Roman Empire using elephants in Italy. Where they alpine mountain elephants or something? Did they swim to Italy? How dumb to these stories have to get before the public will wake up?
　
And all that came after we spent hundreds of billions on a Wall Street bailout, tens of billion of which went to parties unknown to this day, citing confidentiality and the fear of damaging the reputations of foreign banks and lending institutions. Anyone who believes that has to be a total idiot. Obviously massive amounts of government funds were diverted to some sort of crash emergency program, probably one dealing with alien activities.
　
Then Obama pushes through a massive stimulus bill for "infrastructure investment" Where's the investment? They allocated the money, but nobody seems to have been spending it on this planet, at least not on any projects visible above ground. Are people dumb enough to believe that hundreds of billions of dollars in government construction money is just sitting around in state bank accounts, waiting for the day that someone says the shovels are ready? Another patent lie from this administration. They're building something, somewhere, and they're not telling us what it is.
　
We have millions of people just disappearing from the workforce. Do you really think that millions of Americans would just give up working, for no real reason at all? Not likely. Then there are all the millions of unemployed people, millions, who nobody can seem to see anywhere. All told about 25 million people have just, I don't know, "quit and disappeared." Any rational person would realize that they're probably off-planet working with all those hundreds of billions of dollars of "idle" construction money. And then the government conveniently keeps extending their unemployment insurance, stretching it out to two years, as if they can't quite get most of those off-world workers back through the gate, so they have to invent a reason why they're not starting to show up for job interviews on this planet.

Are these millions of Americans enslaved by the Goa'uld or allied with the free Jaffa, or perhaps working with the Tok'ra or Asgard? Again, the most transparent administration in history pretends nothing is going on, like they did when buildings would just disappear, or people would see alien insects walking around. They lie, and the mainstream media won't even report the stories because they're either in the tank with the NID or controlled by Goa'uld symbiotes
　
And what about the energy scandals like Solyndra, run by administration buddies, whose business plan seemed to consist of making solar cells that cost more than anybody else's, with the taxpayer footing the bill? Has anyone seen their solar panels installed anywhere? Of course not, because they were so expensive due to all the radiation hardening a solar cell needs to power massive stealth space platforms in close orbits around blue giant stars. Again, nobody in the administration was fired, or even admonished, which would be the expectation if it was just a mind numbingly stupid business loan, which it obviously wasn't.
　
The Chinese, meanwhile, keep subsidizing trillions of dollars in US deficit spending, as if a billion peasants couldn't think of anything better to do with their money, like buying some freakin' food. Either the Chinese are happy to trade precious commodities for worthless paper, or we're providing them with something valuable under the table, like secret Asgard technology.
　
And we have the whole Fast & Furious Scandal, in which high administration officials risked 30 years in jail and billion dollar fines to provide guns to drug cartels. Again, not a single person has even been dragged into court over what amounts to an act of war on a sovereign nation. The only explanation a rational mind could reach is that the drug cartel is a drug cartel, and tritonin is a drug - that fuels the Jaffa rebellion. But all the American public hears are lies and more lies, shockingly absurd ones, and yet most people believe them.
　
Do we want four more years of absurd and shockingly juvenile lies from "the most transparent administration in history?" Wouldn't it be nice to actually know that our President was born on Earth, much less on US soil? Wouldn't it be nice to know what planet the 25 million suddenly-not-working Americans are working at? Wouldn't it be nice to know that the collapsing US foreign policy is actually a brilliant scheme to secure alien technologies and support allied planets? Wouldn't it be nice to know that our collapsing economy and missing family savings are actually appearing on the other side of a wormhole halfway across the galaxy, and not just spiraling down the toilet?
　
We can learn these things, and more, if we'll vote for someone who doesn't constantly lie to the American people, blaming everything on George Bush, meteor showers, freak chemical spills, solar flares, bad market decisions, and mysterious and obscure Youtube videos.
​

 

[stj]

Oh, but government ownership of WMD is just peachy.

A single human administration will not need WMDs, so, no, it's not "peachy."

So how is a company going to profit from being able to smack a small asteroid into the Earth someplace (we can barely control a satellite well enough to miss continents) years after they decide to hit something, and what exactly is the business model?

Privately steered asteroids would be the only Earth crossers up there that aren't at risk of smacking into us.

The business model is that the closer the resources are to Earth, the more profit. The rest is you explaining very vividly how money-grubbing scumbags will screw up.

Of course they're not, because that would be retarded, like having JPL use Earth-centered Aristotlean epicycles to calculate asteroid trajectories.

The joke's on you because you could use epicycles to calculate asteroid trajectories. It would needlessly complicate the math. But the math would still work out. It is quite insulting to the memories of men like Eudoxus and Claudius Ptolemy to compare their work, very successful in making predictions, to the crank ramblings of conservatives.

... And the desire for jewelry is universal and dependable, so nobody has ever been stuck with gold they can't unload. Thousands of years of accumulated observations and experience taught people that gold was the safest, surest form of portable wealth that survives fires, disasters, and the collapse of empires.

The real question, is have they been stuck with gold they couldn't get rid of without a loss? The answer is yes. Also, there has been many a time when non-portable property like land gave greater returns than portable property.

The desire to return to the security of gold pops up whenever central banks are screwing around with monetary values, which creates uncertainty and doubt and the gnawing realization that the wealth we've spent our lives building all hinges on opinion. That can be a frightening thought when first thunk.

The supposedly special value of gold depends upon "opinion"
such as the supposedly universal opinion that the brightness of gold never goes out of fashion (unlike that of jewels,) or that gold jewelry is always desirable. In fact, the real source of wealth is a diversified economy with developed resources, access to foreign trade, a strong infrastructure, an educated workforce and a healthy equality in income and property, in short the division of labor in a just and equitable society. The general opinion of the members of such a society that cooperative production and life will continue is vital to its smooth functioning.

Those who want to liquidate everything and chase after hard cash always damage this opinion and decrease the wealth of society as a whole. Layoffs, bankruptcies, wage cuts, cutbacks in everything that doesn't personally profit the powerful, all these things sow panic and dismay and worsen every problem the proponents claim to oppose. They are of course pursuing their dreams of personal advantage from the wreck of society. Sometimes their castles in the air are founded upon clouds of obfuscation about the value of gold. But whatever the crank economic ideology, the point for them is always that society exists only for the benefit of a few. Economics is not about the satisfaction of wants but the preservation of wealth.

 

[gturner]

So how is a company going to profit from being able to smack a small asteroid into the Earth someplace (we can barely control a satellite well enough to miss continents) years after they decide to hit something, and what exactly is the business model?

Privately steered asteroids would be the only Earth crossers up there that aren't at risk of smacking into us.

The business model is that the closer the resources are to Earth, the more profit. The rest is you explaining very vividly how money-grubbing scumbags will screw up.

Which means that the first asteroids to be controlled will be drawn from the set of the closest Earth crossers. From a financial and engineering perspective, the idea is to move them to a more accessible location from their present trajectory with the least expenditure of fuel. That means putting them in a very high orbit, probably out past lunar orbit, or possibly into the L4 or L5 Lagrange points. It's not economical or efficient to drop them in closer because the delta-V requirements go up dramatically for the breaking maneuvers, and most of the asteroid is going to be either slag or nickel-iron, which is about a thousand times more valueable in near space, where metals have a launch cost of $2,000 to $10,000 a pound, than on Earth where they'd sell for $2 a pound. The only thing we'd want to bring down are small amounts of gold, platinum, and rare earths, along with some samples and unusual isotopes.

If they're moving asteroids into those high orbits, they wouldn't bother launching the vastly larger amounts of fuel and reaction mass it would take to move them into a low orbit.

The joke's on you because you could use epicycles to calculate asteroid trajectories. It would needlessly complicate the math. But the math would still work out. It is quite insulting to the memories of men like Eudoxus and Claudius Ptolemy to compare their work, very successful in making predictions, to the crank ramblings of conservatives.

Um, they were wrong. Horribly, horribly wrong. Only a complete and utter idiot would even attempt to generate epicycles for a four-body problem (Sun, Earth, Moon, asteroid), especially one with a varying thrust component, because each solution would have to be thrown away the moment anything changed, anything at all.

... And the desire for jewelry is universal and dependable, so nobody has ever been stuck with gold they can't unload. Thousands of years of accumulated observations and experience taught people that gold was the safest, surest form of portable wealth that survives fires, disasters, and the collapse of empires.

The real question, is have they been stuck with gold they couldn't get rid of without a loss? The answer is yes. Also, there has been many a time when non-portable property like land gave greater returns than portable property.

The question isn't whether they might take a small loss, people do that all the time, because the values of everything fluctuates, and people's opinions about those values fluctuates, as well. The question is whether the market answer will be "Galactic Credits are no good here."

Those who want to liquidate everything and chase after hard cash always damage this opinion and decrease the wealth of society as a whole. Layoffs, bankruptcies, wage cuts, cutbacks in everything that doesn't personally profit the powerful, all these things sow panic and dismay and worsen every problem the proponents claim to oppose. They are of course pursuing their dreams of personal advantage from the wreck of society. Sometimes their castles in the air are founded upon clouds of obfuscation about the value of gold. But whatever the crank economic ideology, the point for them is always that society exists only for the benefit of a few. Economics is not about the satisfaction of wants but the preservation of wealth.

Um, you realize that when you turn assets into cash, the assets aren't literally "liquidated", don't you? Only the ownership of a piece of personal property, real estate, or capital changes, not its actual existence (except in odd cases).

 

[stj]

The last I looked, calculating orbital paths in a four-body problem required continued approximations, in which each interim solution is "thrown away" until desired accuracy is achieved. You don't really have a point.

But I did, which is not that Ptolemy et al. were right. They weren't. The point is that they at least offered theories that fit the data. Conservative economic theorists refuse to even attempt that much! They will blindly repeat so-called theories, such as the notion that national debt will cause hyperinflation, despite the known examples contradicting it, in the face of better explanations (hyperinflation is almost always the result of defeat in war, undermining the currency by discrediting the government backing it.) Or insisting that "people" have found over thousands of years that gold will always function as these idolators insist. This, in spite of wellknown facts about feudal manoral economies in Europe! A suit of heavy armor and a strong horse would have been worth much gold, perhaps the gold accumulated by the sale of many material goods when there was a functional society.

Um, you realize that when you turn assets into cash, the assets aren't literally "liquidated", don't you?

Much more clearly than you do, obviously. Since the assets in a functioning economy are still present, the question has always been how everything needed for social life is still there, but the system isn't working. If "opinion" were all it was about, the psychotic insistence that gold really is the fundamental form of wealth, true and eternal, is possibly the prime deranged opinion causing crises. I suppose you are promoting damage to the economy in hopes of personally profiting at the expense of the rest of humanity. If you wanted to do good, you would vigorously remind people that the wealth of nations is not money, but economic production. But that suspect ideology comes from that johnny-come-lately Adam Smith, so I suspose you will reject it.

Another note on "opinion," which is clearly smoke implying some idiotic tripe about consumer sovereignty. In a highly industrialized economy, many or most goods are purchased by firms as part of the production process. The notion that a collective entity like a firm even has an "opinion" needs a great deal of clarification.

Most "opinion" is derived from vague impressions of an ephemeral now, and changes in opinion general follow from changes in the environment. Turning it around backwards is childish.

 

[Robert Maxwell]

If you wanted to do good, you would vigorously remind people that the wealth of nations is not money, but economic production.

As much as you and I disagree in other areas, I am fully agreed with you on this point. I believe I stated upthread that the ultimate value of money comes from labor. It doesn't come from being stored in any tangible asset, but our potential to be productive. Any asset which cannot scale with our productivity is ultimately worthless as a genuine store of value. That puts gold (and any other material resource, really) right out the window.

 

[Tora Ziyal]

Then Obama pushes through a massive stimulus bill for "infrastructure investment" Where's the investment? They allocated the money, but nobody seems to have been spending it on this planet, at least not on any projects visible above ground. Are people dumb enough to believe that hundreds of billions of dollars in government construction money is just sitting around in state bank accounts, waiting for the day that someone says the shovels are ready? Another patent lie from this administration. They're building something, somewhere, and they're not telling us what it is.

Interesting article in the NYT about how much the American Recovery and Reinvestment Act has actually accomplished, and how little most people are aware of that. I know I've seen signs on contraction and road projects stating that they were funded by the ARRA.

 

[gturner]

The last I looked, calculating orbital paths in a four-body problem required continued approximations, in which each interim solution is "thrown away" until desired accuracy is achieved. You don't really have a point.

But I did, which is not that Ptolemy et al. were right. They weren't. The point is that they at least offered theories that fit the data.

You're so far out in the weeds that you don't realize you're standing in the middle of Kansas.

Epicycles have no predictive value because they don't model the physics of gravitational attraction. Not even a little bit. They're an attempt to reproduce the visual appearance of retrograde motion by adding small circles riding bigger circles. With an infinite number of nested circles you could probaby recreate any arbitrary curve, a bit like assembling any waveform sample from a vast number of sine waves, but the mechanism doesn't have an predictive value about how the waveform changes, or what caused it in the first place.

When we're running an orbital program, we're calculating the forces between all the masses, and from their initial positions and trajectories we're integrating with a small step size (often using a Runge-Kutta method) to solve for the resulting paths through the gravitational fields. That's how we can get satellites to within meters of their planned destinations in interplanetary missions. Epicycles can't do this, because there's no method to link an epicycle to the changing forces, nor any connection between forces, masses, or accelerations. They're just arbitrary geometric curve tracers.

If I've got an asteroid moving in a four-body problem and increase it's velocity by 4 meters per second, how do you calculate the required change in the epicycles? There are thousands of them, so which should change, and by how much? There's no answer to that problem. All you could do is use the conventional methods of orbital dynamics to find an extremely close approximation for the new path, then search an almost infinite epicycle-space to find one that seemed to match. But that solution would be useless when there's another change, because epicycles aren't hooked to any physics.

Conservative economic theorists refuse to even attempt that much! They will blindly repeat so-called theories, such as the notion that national debt will cause hyperinflation, despite the known examples contradicting it, in the face of better explanations (hyperinflation is almost always the result of defeat in war, undermining the currency by discrediting the government backing it.)

Gee, wouldn't that be a case of people losing trust in their currency because nobody will accept it at the old valuations? That's not just the result of war, it can also be the result of schemes to devalue the currency, such as Germany used after WW-I so their war reparations wouldn't actually be worth much. It almost worked as they intended.

Or insisting that "people" have found over thousands of years that gold will always function as these idolators insist. This, in spite of wellknown facts about feudal manoral economies in Europe! A suit of heavy armor and a strong horse would have been worth much gold, perhaps the gold accumulated by the sale of many material goods when there was a functional society.

I can't even make sense of that. Knight on a horse...

The reason medieval economies often didn't work is that most people were locked out of the real economy, forbidden by their station from real property ownership by rulers who wouldn't recognize those rights. So a peasant could have personal possessions but he often couldn't own land or run a legal business without some noble granting him permission, and that permission was expensive and rare. It was like communism, but with a bit more versatility for the peasants who could at least occassionally break into the ownership class. The problem was the view that the land and overthing on it was owned collectively, through the sovereign, who was the embodiment of the state. Even for the nobility, ownership was tentatitve and conditional upon continued loyalty to the sovereign, who had the power to shuffle the noble's ownership around like playing musical chairs. It's just like having the Central Committee putting you in charge of a factory or a city. It's all tentative so you don't dare piss them off.

Um, you realize that when you turn assets into cash, the assets aren't literally "liquidated", don't you?

Much more clearly than you do, obviously. Since the assets in a functioning economy are still present, the question has always been how everything needed for social life is still there, but the system isn't working. If "opinion" were all it was about, the psychotic insistence that gold really is the fundamental form of wealth, true and eternal, is possibly the prime deranged opinion causing crises. I suppose you are promoting damage to the economy in hopes of personally profiting at the expense of the rest of humanity. If you wanted to do good, you would vigorously remind people that the wealth of nations is not money, but economic production. But that suspect ideology comes from that johnny-come-lately Adam Smith, so I suspose you will reject it.

And how do we measure the wealth? With money, using market pricing for the assets, where the market price is set by buyers and sellers. The reason we do so is because all other valueations are fairy tales. The King (and the communist party) always tells the peasants that they are rich and thriving, even as they stand knee-deep in mud. The person who finds an antique in the attic always thinks it's worth a million bucks. All estimates of values are just dreams, until two people come together and make a trade in which those dreams become a transaction that causes a change in ownership. But that trade, in itself, was just an incident, possibly the action of a pair of idiots, so we estimate the value of something based on our belief in the likelihood of finding a buyer or seller in a certain price range. The reason we use "money" to measure these values is that it's an extremely useful abstraction, letting us think of a number instead of a complicated set of features and traits that each object possesses. We do this not just in out thinking, but in the physical world, by simplifying what would otherwise be an extremely long and complicated chain of bartering.

For example, you have a 1968 Barracuda and would prefer to have a 1937 Ford. To arrange an acceptable barter, you might have to spend five or ten years carefully building a chain of a hundred owners and cars who are willing to swap A for B, B for C, and C for D, going through millions of people to find owners who want to trade, and make a particular trade for a car whose owner also wants to trade. We simplify this by letting cars be traded for money, and then to simplify it even further, car dealers arise who are always willing to trade, and trade just about anything. As a result, when you want a different car, you don't have to go knocking door to door asking people if they want to swap with you.

In the communist system everybody has antique cars for an entirely different reason.

Another note on "opinion," which is clearly smoke implying some idiotic tripe about consumer sovereignty. In a highly industrialized economy, many or most goods are purchased by firms as part of the production process. The notion that a collective entity like a firm even has an "opinion" needs a great deal of clarification.

Most "opinion" is derived from vague impressions of an ephemeral now, and changes in opinion general follow from changes in the environment. Turning it around backwards is childish.

We don't turn it around backwards. Changing the environment of "opinion", and thus the value of particular objects, is an entire industry. Perhaps you noticed the little breaks in Star Trek episodes where they talk about refreshing beverages, used car lots, and feminine hygiene products. Under communism, those are work songs about the glory of laboring for the state because nobody has anything to sell, and nobody would want to buy the collectively built crap anyway.

 

[gturner]

Then Obama pushes through a massive stimulus bill for "infrastructure investment" Where's the investment? They allocated the money, but nobody seems to have been spending it on this planet, at least not on any projects visible above ground. Are people dumb enough to believe that hundreds of billions of dollars in government construction money is just sitting around in state bank accounts, waiting for the day that someone says the shovels are ready? Another patent lie from this administration. They're building something, somewhere, and they're not telling us what it is.

Interesting article in the NYT about how much the American Recovery and Reinvestment Act has actually accomplished, and how little most people are aware of that. I know I've seen signs on contraction and road projects stating that they were funded by the ARRA.

Those stories are planeted by the Air Force. It's a cover story, like that whole Wormhole Extreme! show that got cancelled after one episode.

For example, it says:

But the stimulus did far more than stimulate: it protected the most vulnerable from the recession’s heavy winds. Of the act’s $840 billion final cost, $1.5 billion went to rent subsidies and emergency housing that kept 1.2 million people under roofs. (That’s why the recession didn’t produce rampant homelessness.) It increased spending on food stamps, unemployment benefits and Medicaid, keeping at least seven million Americans from falling below the poverty line.

So $1.5 billion out of $840 billion (0.17%) went to actually easing the housing crisis. Then it says food stamps and unemployment benefits kept people from falling below the poverty line, when those benefits aren't used to calculate poverty. If we did then we wouldn't have poverty, because we could just give the bottom 10% (now 17%) welfare checks and declare them "not poor". Taxes aren't calculated in either, because then politicians would be accused of literally taxing people into poverty. A writer for the New York Times would know this, but an alien probably would not. That kind of tells you who might be writing it.

How many New Yorkers know that the stimulus is helping to pay for the Second Avenue subway, or the project to link the Long Island Rail Road to Grand Central?

Gee, million of dollars have been visibly spent, out of $840 billion! What do you bet the Alpha Site has some really cool new buildings and probably an Asgard shield over it?

Almost every American worker received a tax cut from the act, but only about 10 percent of them noticed it in their paychecks.

Only the Air Force would write crap like that.

"We gave you money, but you just didn't happen to notice! We swear we did. Hey, look at this red blinky thing."

If it wasn't a bald faced lie to cover up a top secret government program on alien worlds, why would anyone in the government be tracking how many people believed the lie?

Wake up! Kelno Reem! Cree! Or whatever the heck they say.

 

[Mars]

Asteroid mining in significant quantities means tech that can drive large masses toward Earth. Their KE makes these masses the non-radioactive equivalent of nuclear weapons. Frankly, any ideology that advocates private ownership of weapons of mass destruction is not just crank economics. It's merely barbarism with scifi PR.

Though asteroids are not weapons, the ability to steer them could be used for harmful effect, but I don't see that technology as controllable, governments will just have to learn how to steer them back if they are on dangerous paths.

Having done myself the favor of skipping over the larger part of the thread, I will note that the original question is simply answered. All versions of what opponents dub "trickle down" economics demand policies based on the assumption that wealthy people are not investing their capital because some government policy is lowering their rate of profit. It's true that if there's a lower rate of profit there's less investment but the issue is whether the assumption government policy of any sort has direct effects on the profit rate. Or, for that matter, immediate indirect effects on the profit rate.

The overwhelming majority of orthodox economists do not have an agreed upon theory about the origin and rate of profit. Partly this is because all the favored theories, especially including all the theories promoted by the trickle down theorists, are easily refuted by economic history. Academic economics is not quite as ridiculous as astrology or theology, but it is highly ideologized, balkanized into isolated fields to limit the relevance of what it does finally succeed in discovering and completely unable to excise even the nuttiest crank theories. Austrian economics and neomonetarism are particularly good examples. You can rest assured however that no academic economist is using Marxian economics.

One thing academic economics lacks is objectivity, economics is highly related to politics, and one encounters facts that contradicts their favorite political theory, that evidence is ignored. I've seen liberals argue their case for Keynesian economics, they can't seem to see that its not working, they keep on making excuses for it not working, and when someone tries to implement it and it doesn't work, they always say he did not try it quite right, some little technicality such as the way he twiddled his little pinkey caused the whole thing to come crashing down, it wasn't the fault of Keynes now was it, who's theory always worked in theory and on the black board when the professor demonstrated it, but never in practice, gee I wonder why? Would War II was a special case, this was a matter of national survival, and that motivation caused governments to work more efficiently than they normally do and there is no way to achieve that efficiency in government work short of total war. We can't start World War III to get us out of this recession.

I'm going to ask you this one more time. Are you an Economist?

And what make Friedman economics any better than Keyesian economics?

Yes, I have a BA degree in Economics from Pace University, so technically, I am an Economist. And I know that Milton Friedman's economics works and Keynes does not because history has proven Friedman's theories and not Keynes, it hasn't worked in the 1930s, the 1970s or today, printing money, taxing and spending more does not stimulate the economy, all your doing is taking money out of one pocket and putting it in another. The government performs no magic on money taxed that makes it more stimulative than if the original owners of that money kept it and spent it on their own wants, desires, needs and investments.

 

[Mars]

Academic economists at least try to develop economic theories that are objective and account for the behavior of humans, governments, and firms. But it's not easy, because economics is not just a matter of supply and demand, nor resources and technology, but a great deal of human psychology and the politics of the moment. Good luck ever developing a fully objective theory that serves as an adequate predictive model.

Besides that, what is the least bit objective about your goldbugging? You have absolutely nothing concrete to base that on.

Well, gold bugging is at least a very historically established and governments used to be slavishly devoted to the logic of it, so it's not surprising that it still attracts followers.

There is a certain logic to it. In Europe, what would a peasant have trusted, princes who print paper promise which few people would accept in trade, or real gold that wouldn't be questioned by any jeweler or shopkeeper in the world?

Gold built that level of unquestioned trust because over thousands of years it was one of the few metals whose utility and desirability never failed. Silver corrodes and tarnishes, while gold is always bright. It can be melted and remelted without the loss of a single gram. Precious stones go in and out of fashion (Are rubies in this year, or is it emeralds? What color goes with this dress?), as do their gold settings, but the gold itself can always be reworked into the latest fashion. And the desire for jewelry is universal and dependable, so nobody has ever been stuck with gold they can't unload. Thousands of years of accumulated observations and experience taught people that gold was the safest, surest form of portable wealth that survives fires, disasters, and the collapse of empires.

The trouble with it as currency is that the supply doesn't expand and contract with economic output. In a zero-sum world of nearly constant population and fixed economic output (most of human history) it would make the perfect currency basis. Then the industrial revolution happened and we outstripped the ability of a perpetually medieval money supply to cope with all our trade and commerce.

The desire to return to the security of gold pops up whenever central banks are screwing around with monetary values, which creates uncertainty and doubt and the gnawing realization that the wealth we've spent our lives building all hinges on opinion. That can be a frightening thought when first thunk.

Well who's done a better job, Gold or the Federal Reserve? The problem is, human beings in control of our money supply can't resist the urge to print more money from time to time, I don't like the way prices have risen in the last four years, so I am losing my confidence in human managed money supply, does that surprise you? The supply of gold can be expanded, as there is plenty of gold in the Earth that has not yet been mined, by expending extra resources, one can expand the gold supply - problem is paper currency is too cheap to make, one can expand the money supply indefinitely, expanding the gold supply is harder than adding extra zeros to banknotes.

 

[gturner]

If you wanted to do good, you would vigorously remind people that the wealth of nations is not money, but economic production.

As much as you and I disagree in other areas, I am fully agreed with you on this point. I believe I stated upthread that the ultimate value of money comes from labor. It doesn't come from being stored in any tangible asset, but our potential to be productive. Any asset which cannot scale with our productivity is ultimately worthless as a genuine store of value. That puts gold (and any other material resource, really) right out the window.

You're overthinking it. Your labor is just a thing, just like a car, because we abstract it with our big brains. It's a complicated thing, like a car, with it's own set of complicated rules and preferences, but you easily price it.

So all ask you a few questions, like you were having a yard sale and I'm standing in your yard.

How much would you take for your laptop?
How much for the old analog TV?
How much for your house and all the furniture?
How much for the kittens, or are you giving them away to good homes?
How much for your Babe Ruth rookie card?
How much would you want to mow my yard over there?
How much to rework my web page? Hourly or for the whole job?
How much would you want to run my project development team on a new iPhone ap?
How much would you want to watch my dog for the next two hours?

Since you not only know that these questions have answers, but can throw out a ballpark figure and then get right down to negotiations like a master poker player, the answer to the question of value is far simpler, yet far more complicated, than the labor theory can possibly explain.

Your brain can assign values to things as easily as it can assign names to them. As soon as gold looks like a stupid way to price things, your brain can come up with something you will accept, and do it in about 10 seconds, weighing not only what you think, but what you think your neighbors think, or what people on eBay think. Implementing Paypal took a lot of coding, but conceiving it didn't take any time at all.

The reason people have so much trouble understanding the nature of value, money, and markets is that it's virtually instinctive, like language or social groups. If you have an adult get down on all fours and ask them which limb they need to move next to crawl, they can't tell you, because we don't crawl using conscious commands to our arms an legs, we just do it. Adam Smith wrote down observations about how people crawled, and offered a few theories on how it seems to work. Marx didn't even bother to watch, he just dreamed up an elaborate theory about why crawling couldn't work (too many limbs not working together - so we should hop or bounce) and claimed that locomation was a vast conspiracy to monopolize the food bowl.

Lots of Nobel Prizes in economics have gone to people who make the simplest observation, like the theory that two companies, one of which is heavily leveraged and one of which is not, actually have equal value since the person buying stocks doesn't care and would pay the same for each, because the expected return on investment is the same. That actually won a Nobel.

Breakthroughs come when you manage to crawl inside your own head and understand why you answered my yard questions the way you did, like it was second nature, which it is.

 

[horatio83]

Yes, I have a BA degree in Economics from Pace University, so technically, I am an Economist. And I know that Milton Friedman's economics works and Keynes does not because history has proven Friedman's theories and not Keynes, it hasn't worked in the 1930s, the 1970s or today, printing money, taxing and spending more does not stimulate the economy, all your doing is taking money out of one pocket and putting it in another. The government performs no magic on money taxed that makes it more stimulative than if the original owners of that money kept it and spent it on their own wants, desires, needs and investments.

You are not even technically an economist. If you actually were you wouldn't repeat the Treasury view nonsense or even believe that money is neutral.
Always puzzles me why Austrian back-to-gold voodoo economists falsely use the name of Friedman, a guy who viewed the shrinking of the monetary base as the single reason for the Great Recession, to rant against central banking. It is a simply misrepresentation of his views and an indication of how serious Austrian economics should be taken.

About deficit (so much about taking money out of the pocket of somebody) spending, it is simply the best tool to fight against a recession in a liquidity trap, i.e. when interest rates are close to zero, when reducing interests rates to increase liquidity and credits becomes impossible.
The other tool, quantity instead of price policy, i.e. the central bank buys crappy assets, shifts debt from private to public players and can unfreeze credit markets (deficit spending also implies such a shift). So monetary policy isn't totally impotent when we are in a liquidity trap yet as we have witnessed even massive quantitative easing didn't do the trick so fiscal policy is necessary to undo the partial impotence of monetary policy.


This isn't rocket science, it is Econ 101 and although Koo wrote his stuff about balance-sheet recessions fairly recently Fischer's debt-deflation article from the 30s already contained all the basic ideas.
We have known how we could have gotten out of the "Little Depression", worldwide coordinated (in small European countries a lot of demand goes into imports, we have a positive externality and thus a coordination problem) deficit spending, yet we chose to repeat the mistakes from the thirties (in my country Brüning's austerity lead to unemployment which lead to Hitler) and keep millions of people unnecessarily in unemployment. It is hard to imagine a more wicked crime in the economic realm.

 

[gturner]

Well who's done a better job, Gold or the Federal Reserve? The problem is, human beings in control of our money supply can't resist the urge to print more money from time to time, I don't like the way prices have risen in the last four years, so I am losing my confidence in human managed money supply, does that surprise you? The supply of gold can be expanded, as there is plenty of gold in the Earth that has not yet been mined, by expending extra resources, one can expand the gold supply - problem is paper currency is too cheap to make, one can expand the money supply indefinitely, expanding the gold supply is harder than adding extra zeros to banknotes.

Well, that doesn't indicate that gold is good basis, since its supply can't be controlled, it just indicates that the people in charge of the money supply aren't even getting a monkey score.

I think one problem we've picked up is that the consumer price index depends on a selective basket of goods.

As I understand it (and you can probably give the details on this), until a decade or so ago weren't including the gains new technologies offered the consumer and we weren't considering that people's home prices were going up (making home owners more wealthy, which meant they could buy more stuff, as if prices had dropped). That overstated inflation and resulted in a vast transfer of wealth from young people to old people, and vastly increased the amount the government paid out in social transfer payments that were tied to the CPI.

So we corrected the measure to include consumer electronics and home prices. As a result, when home prices plummeted during the housing collapse, it dropped the CPI because homes are part of the basket of goods. Electronics are always getting cheaper (for the same item). If you look at the old basket of good (food, energy, etc) the inflation rate should've been about 8% in the years since the housing crash, but the official rate was only running about 3% (Houses are cheaper! The consumer wins!)

Houses are problematic because few people buy them at any given time, but scads of people own them, and not only own them, but use them as capital. The price of a loaf of bread is what you pay week to week, but the price of a house also affects your net worth. When home prices dropped, the CPI method says a person can buy a lot more stuff. In reality, home owners are worth a lot less now, so they can buy a lot less stuff, as if the price of everything else had skyrocketed.

Given this screw up, using the official inflation rate as a target for adjusting the money supply is going to cause lots of problems. When a calculation is backwards, you don't even get a monkey score.

 

[horatio83]

The back-to-gold Austrians cannot even get empirics right. Inflation has not been exceptionally high during the last four years which is hardly a surprise, a housing bubble burst, house prices fell.
By the way, there is nothing inherently stable about gold. Its price is subject to market forces like that of any other product so a gold-based currency would be prone to far more price level volatility than one in which the monetary base is controlled by the central bank.

 

[Davros]

Yes, I have a BA degree in Economics from Pace University, so technically, I am an Economist. And I know that Milton Friedman's economics works and Keynes does not because history has proven Friedman's theories and not Keynes, it hasn't worked in the 1930s, the 1970s or today, printing money, taxing and spending more does not stimulate the economy, all your doing is taking money out of one pocket and putting it in another. The government performs no magic on money taxed that makes it more stimulative than if the original owners of that money kept it and spent it on their own wants, desires, needs and investments.

History shows the exact opposite of what you have stated here.

 

[Robert Maxwell]

And I know that Milton Friedman's economics works and Keynes does not because history has proven Friedman's theories and not Keynes, it hasn't worked in the 1930s, the 1970s or today, printing money, taxing and spending more does not stimulate the economy, all your doing is taking money out of one pocket and putting it in another. The government performs no magic on money taxed that makes it more stimulative than if the original owners of that money kept it and spent it on their own wants, desires, needs and investments.

At best, you could say neither Keynes nor Friedman had it exactly right. To claim one was right and the other was wrong is simply an ideological statement and indicates nothing of value.

Keynes was right that government spending can stimulate the economy. History has borne this out. Friedman was right that you need to worry about inflation and prices. History shows that, too. There is no simplistic economic theory that will lead you anywhere but to false conclusions and dangerous policy ideas.