Topic: Solution to poverty - Socialism or Capitalism? - page 38. (Read 30796 times)

It's bad. There has never been an example in history of a culture recovering from the current conditions. We are looking at an extinction event for northern and western europe over the next 50 or so years. As the native population dwindles and immigrants keep coming, there is a real risk that we will be displaced. The states have similar but slightly different problems.

What I meant by not academic is that he's more like politician.  He has some politics he's pushing and he finds data to to support his argument.

In academics you don't do that.  You hypothesize something then you try to find empirical evidence to support your hypothesis.  Then you write a paper that gets peer reviewed.  Your conclusions might be opposite of your hypothesis after to look at the empirical data.  Also you invite critics to falsify your claims

I don't think academics have a more valid opinion.  But they are experts in their field.  Anyways, the attitude is just different because the goals are different.  I'm more interested in learning how things work than pushing some political agenda.

I don't think the Nordic model is perfect but you have to compare the economic stats between tax rates of different countries and try to determine is there is a causal link between tax rates and economics.

http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

I'm not saying every country should just raise the tax rate to solve their economic problems.  What I'm saying is that the national budget comes from taxation and where there is higher taxation there is better social programs, infrastructure, etc.. that create the stability for growth to occur.  The other way without taxation is to receive capital from the outside in terms of investment.  But that could lead to problems like debt.  A common criticism of IMF is that they structure loans to third world countries that can't be paid off so there is some amount of exploitation going on.

I think you are not thinking in terms of economics.  You are using example of one situation

Look at the logic this way and decide if it scales to the entire economy.   If you raise the tax rate SOME people might be de-incentivize to work harder.  But I think it won't de-incentivize all people.  Lets say if I earn $100K/ year I get taxed 35%.  But $100K-$300K I get taxed 40%.  If I'm offered a job of $102K of course I'd only take $100K.  But if  I get a promotion to $120K.  Of course I take the promotion.  Even if I'm only making $7K more and maybe I have to be more responsible & work more hours.  I take it because after that promotion I go higher up the ladder.  People are forward looking.  They don't set a goal and then stop once they hit that goal.

Look at the wiki chart I linked.  You can see that the richest countries in the world have the highest taxes.  What is the correlation and what conclusions can you draw fro this data?  If high taxes create contraction in economies then why are the largest economies have highest taxes and smallest economies have lowest taxes?

If you tax high earners and throw the money in the garbage then its pointless.  But if you use the taxes to reinvest in education, infrastructure, social programs, defense, research etc..  Wouldn't that have a positive net effect over the long term?

Yes, while what You say is a 100% correct, i do not think it is good or bad. It is just a fact :-)
Actually, we should be happy, that there are fewer of us. More resources/space etc per person. The problem as You mentioned is the overblown social welfare system of medicare and retirement checks. People do not know, but retirement pension was started after the II. world war, it is no more than a 60 years of welfare program, centrally planned, which means it was doomed to fail! If someone could save that money for themselves what they now pay for retirement money to the State, they would have a pension, bam! Unless they are stupid, and do not make savings.
But why should the rest of us pay for someone who was not able to take care of himself???

Also, now we have bitcoin, which as a non-inflation currency, you can actually save for the future :-)

Yes, You got really valid points about inequality perceived by economic or moral standpoint. Although, economic view, as i see it, can not deal - or care - about moral point of views, because at that very moment it is not science anymore. I think we agree on this one.

I appreciate that You mentioned the Chinese middle class formation through "cheap labor force exploited by evil western capitalists", because that certainly proves my point that free markets serves more to eliminate poverty than everything else!

About environmental damage: if we would have real unregulated private property use - which means total control of usage AND at the same time total responsibility in the caused harm done by using it -, than using our basic rule of "exclude of force" (filling your city border with toxic waste is actually physically harming You!) the company and it's leaders polluting the environment (external costs) could be put on trial/jail, now that is an incentive to take care about the surroundings is it? :-)

But if anyone needs evidence, just look at the pollution caused by eastern block-soviet industry vs. western private industry. And yes, oil companies that "blow up" nature, and killed our habitat should have been on trial, and the key thrown away. It is a sad thing it did not happened. Because they have friends in the government, so they do not have to pay the price misusing their private property is against the most basic rules of capitalism as i know it.

Regarding Marx, i think he has made a terrible job identifying the real causes of corruption. The problem is arbitrary - and so necessarily - use of force, which can only reside with government, NOT voluntary exchange between employee and employer!
So regarding the problems of society, he was right, regarding the causes, he was terribly wrong. So wrong, that his ideas basically destroyed all the possibilities of the promising 20th century - and to be honest, he WAS AWARE of this! (just read the letters sent to the early dissident to Russian revolutionists about how to implement proletarian dictatorship in Russia!).

Additionally, the entire western world is facing a common problem. The fertility rate is too low. More people are dying than are being born. This means the income from the working age people is shrinking relative to the old non-working people who also happen to be the biggest drain on public medical resources. It's the perfect economic storm, failing demographics for the economic system we use coupled with a breakdown in work discipline and, for europe, massive immigration which makes it even harder to find jobs and puts further strain on the welfare system.

Well Ibian has a point anything taken to excess is a problem
Thinking more along the lines of a poor country than a highly developed country as long as their is an incentive to work that is greater than the incentive not to work.
Denmark and a cradle to grave works but it would make sense if they all work towards that society.

Shut. Up.

On Stefan, he talks numbers. Hard statistics that anyone can look up and verify. "Care for" has nothing to do with it, that's just ignoring reality.

On Scandinavia, and specifically my country, Denmark, you either have no clue what capitalism and socialism mean or are just trolling. The state takes half our income before it even hits our bank accounts. Welfare, enough to live on and even raise a family on, is available to anyone who can't find work. That is not capitalism, that is taking from those who work and giving to those who do not work. Communism. Given that less than half the population work, and that a growing number of those are government employed (read: the working people pay their salery through taxes) there is an ever-growing tax burden and ever-shrinking benefits from those taxes.

The problem with welfare is that it reduces incentive to find a job. Why bother when the state pays for you? And so we have less people working every year and more people taking handouts. That's how social programs reduce economic growth in a nutshell.

You are not looking at inequality from an economics point of view.  You are looking at it from a social or philosophical point of view.  There's always inequality because people have different abilities.  But when I say "inequality in economics" you have to look at the trend of increasing wealth gap.  The reason it is dangerous is because we need middle class people to act as consumers or else economies will contract.  Rich people are few so they can't do all the consumption to support production.  Its just inefficient.

The problem of laissez-faire is that its an incomplete picture and it assumes that people are good or rational.  You have to look at the problem globally alongside scarcity of resource.  Environmental issues.  Issues of technological unemployment.  I'm not against free trade or anything.  But I think there is a concern about the trend of increasing inequality coming out from the academic economics.

Right now the way development moves around globally is that money chases the cheapest labor.  So places like Taiwan & Korea was poor 50 years ago but they had cheap labor so the capital (investments) went there.  Then it was China, India, etc..  Now Vietnam, Bangladesh, etc.  What's left behind in China is now a burgeoning Middle Class and now they can be consumers.  In this way I'm pro Capitalism because the capital allows investment into infrastructure, technology and legal progress that allows these countries to develop.

However I also understand Marx's critique of Capitalism.  About the tendency of capital to consolidate into monopolies, oligarchies

So there's 2 views the short-medium & the long term

With my mind i agree, mostly, but i think some socialist can be reasoned with, after all, many have changed their minds on the way :-)
And it is utmost important for the bitcoin community to understand why socialism can not work, otherwise the whole technology might be "captured" by false ideology.

I do not know who said but: "to socialism to win needs nothing more than freedom believers not to speak up".

Sadly, the "Nordic model" is failing slowly but steadily. So no, progressive tax is essentially killing them (read here: http://www.brusselsjournal.com/node/510 for actual economic facts). I try to explain why. And by the way, i really appreciate Your friendly manner, and i respect Your views, it is rare to have a real and friendly conversation :-)

As You mentioned, those who really rich does not get paid, they have capital gains, not a salary, so income tax does not apply to them. So, in effect progressive tax burdens those, who are among the highest in demand jobs; engineers, doctor, researchers, the most valuable (by this i mean society values them highly!) members of the labor (means salary earners) force.

Here in our country we had this very odd situation, the capital city government wanted to hire sanitation workers to clear the city. They offered a salary higher than than the average of teachers and resident doctors. That resulted many people with PHDs, and even college professors to apply for jobs cleaning the streets! They had 10.000+ applications for 250 street "swiper" jobs in 1 week, it was all over the news, and it was a joke.

Am only telling this, because if you tax those who can contribute more harder, than they will just work less, produce less wealth, since they going to  lose the "2 extra hour per day" anyway to taxes, so why work (=produce more value) more.

And that is the problem of progressive taxes, that is why the Nordic model is failing slowly since the 1970's and as a result, the whole economic "pie" begin to shrink.

I understand. It is a long video, he is not academic (thx god), but 99% of the graph shown were from US government institutes. The whole video is just number crunching basically. Math is just math:)

Btw, why is that most people only listen to academics? That is http://en.wikipedia.org/wiki/Ad_hominem. You do not argue the argument, you argue the person. If i were a peasant boy in the age of Galielo saing You, that the Earth is round, You would have ignored me, but still i was right! :-)

Society decides.  In the Scandinavian countries the people voluntary accept high taxes because they choose that over extreme rich & poor.

You don't take away my salary.  Progressive tax is designed to tax people more at higher income brackets.  You are welcomed to make as much money as you want just the more you make the higher your taxes.  So if I make $250K/ year and you make $50K my effective tax rate is higher

The US has such a system but it's actually easier for rich people to avoid taxes through business ownership & capital gains.  I really don't know much about Sweden's tax system.   Only that income tax is higher than US.  But their corporate tax is lower than US.  Many US companies use foreign tax havens because of this.  I support the lowering of US corporate tax rates so some of that tax money can be repatriated

As a side note, i am just wondering, how can so many people here, in the very heart of capitalism, free trade and laissez-fair itself which is bitcoin - even if driven by good intentions -, still insist on "inequality", government, and social "justice" (who is "the society"? if not even 2 person, like in a marriage can not get on the same ground - as shown in divorce rate -, why they assume 300.000.000 would on anything beyond the "don't shoot me" rule??).

I know why, because many have been thought about that (socially necessary (by Marx..) labor time=value. So their basic assumption is: someone got exploited! Which means the economy is a zero sum game in mathematical terms. (because if the "capitalist" extracts value from the "laborer", the so called surplus, than no value really added.).

In reality, just think about the most basic situation in every day life of exchange. You change your dollars to buy a good/service, because you think that has higher value than that dollar bill in your hands. The seller also thinks, that the dollar bill in your hand has higher value than the good/service hes selling.

But wait. That means, both parties in the exchange increased their sum value!! That is why the exploitation theory does not stands, that is why voluntary trade is the only way to increase wealth in society (yes, it is only perceived, subjective increase, but did you get happier? Yes. Than it is real for You!), and that is why inequality does not really care anyone. If they would, they would invite homeless/poor people for dinner, but strangely, people do not do that in real life - so much for worrying about "inequality".

Uh No.  I don't care for Stefan Molyneux.  He's not an academic.  I don't want to waste my time listening to him.  You should read Thomas Piketty's "Capital, In the 21st Century if you want to see empirical studies.  He will probably win a Nobel in Economics.

Please cite these studies about social programs reducing economic growth.  I'm specifically referring the Scandinavian nordic system.  Scandinavians are not 'socialist'.  They are Capitalist but they have high taxes to fund social programs.  Its not about redistribution its about restraining runaway inequality.  

My family escaped from a Communist country so I can empathize w you.  I'm a supporter of Capitalism but I also support progressive tax rates

I understand your point and the good intentions behind it. Although, there is no such thing as "checking inequality", because, by what standard? Who decides how much is OK, and how is not? Do we vote on your ability to make money through VOLUNTARY trade is too much  - because, do not forget that those historical examples you mentioned were not based on voluntary trade, those were based on feudal reigns, or despots, or other force and privilege based societies -, so now we can stop you to became "too unequal"?

You understand my point i think. I only say, that inequality is not morally bad or good, it just is. The same thing as lions eat gazelle is not bad or good either, it is just as it is. You, or me, or none can make a decision about someone else's life, or they wealth, because on what ground? On the ground of need? So i can morally justified to take away half your salary because i can not get enough staff to satisfy my need?

No bad intentions, just asking :-)

Facts and reason will not convince a committed socialist. Only living through it will convince them that their ideas need to be reconsidered.

You should check this http://www.youtube.com/watch?v=bYkl3XlEneA, the numbers says crystal clear, that all state programs directed to reduce poverty through welfare programs founded on high taxes actually increase poverty, and reduces, even destroys economic growth for all excepts those with "friends of the state", the crony capitalist high class. I thought the history of the USSR is a clear lesson about "reducing inequality through redistribution". Sigh. I am from a post socialist country, i have lived it through.

It doesn't matter at all.  But what matters is that if inequality goes unchecked the system will eat itself since the filthy rich need consumers to make money from.   What you want is a bell curve w/ most people in the middle.  History has shown us that when there is too much inequality bad shit happen.  French Revolution, Russian Revolution, China, Vietnam, Cuba, etc..

If you want to know then survey different economic data empirically and hypothesize a correlation.

Currently, probably the highest standard of living are the Scandinavian countries and Switzerland.  In US, UK, Canada & Australia the time after WW2 from about 1950s to 1980s had the least inequality and highest middle class.

All of these countries are capitalist.  But the reasons for the variability of inequality can be correlated to the tax rate and also the relation of asset price to economic growth.  The relationship as described by Thomas Piketty is (r)return on investment & (g) growth.

When r>g you have investments outperforming growth.

http://radioopensource.org/capital-in-10-graphs/

So the solution to poverty is not an either/or proposition it lies somewhere in between.  Most likely a capitalist system with a high tax rate paying for social programs

No current western country uses a capitalist model. We are all socialist states. Which is just a synonym for communism - Stalin originally called his party the communist party because he didn't think the existing socialist parties went far enough.