"The poor need capitalism"

[financeguy]

THE POOR NEED CAPITALISM
The Left's version of recent economic history boils down to one terrible fact: The distribution of income has gradually become more unequal. Within the United States, that fact is incontrovertible. It is not clear, however, that increased inequality has been bad, says economist Kevin A. Hassett.

Inequality is, after all, the foundation of a capitalist society. When individuals work hard, or innovate, they receive outsized rewards. When others see those rewards, they are motivated to work hard and innovate. As the lottery-ticket market has demonstrated, the bigger the prize, the bigger the motivation, explains Hassett.

A landmark new study by economists Maxim Pinkovskiy and Xavier Sala-i-Martin set out to study changes in the world distribution of income by gathering data from many different countries. As a byproduct of their work, they are able to count the number of individuals who live on $1 per day or less, a key measure of poverty. According to their calculations:

The number of people living in poverty so defined has plummeted, from 967,574,000 in 1970 to 350,436,000 in 2006, a decrease of a whopping 64 percent.
The biggest factor in the reduction was the emergence of middle classes in previously poverty stricken China and India.


Source: Kevin A. Hassett, "The Poor Need Capitalism," National Review, November 23, 2009; based upon: Maxim Pinkovskiy and Xavier Sala-i-Martin, "Parametric Estimations of the World Distribution of Income," National Bureau of Economic Research, Working Paper No. 15433, October 2009

THE POOR NEED CAPITALISM

Parametric Estimations of the World Distribution of Income

 

[BVS]

Inequality is, after all, the foundation of a capitalist society. When individuals work hard, or innovate, they receive outsized rewards.

It sounds good in theory, doesn't it?

 

[Kieran McConville]

but what about Goldman Sachs and their outrageous rewards detached from any sense of perspective or reality?

 

[financeguy]

but what about Goldman Sachs and their outrageous rewards detached from any sense of perspective or reality?

That is an example of oligarchical behaviour which should be combated by strong regulatory action to enforce already existing anti-trust legislation.

Essentially, break 'em up into tiny bits, if one of the bits gets too big, break it up again.

 

[MadelynIris]

I completely agree with this guy -- especially in the information age, as it allows people to be the most innovative, with the least investment in capital.

 

[Vincent Vega]

If you take out China and India, and thereby about half of earth's population, you will see that for most of the world the situation has indeed worsened. The most negative factor for most countries is the false promises of free trade by the IMF and World Bank (and even worse, capital liberation), together with fierce protectionism by the West.

 

[AEON]

If you take out China and India...

and Brazil, Argentina, Eastern Europe...?

 

[melon]

That is an example of oligarchical behaviour which should be combated by strong regulatory action to enforce already existing anti-trust legislation.

Essentially, break 'em up into tiny bits, if one of the bits gets too big, break it up again.

Out of curiosity, what do you think of "ordoliberalism"?

Ordoliberalism - Wikipedia, the free encyclopedia

 

[Vincent Vega]

and Brazil, Argentina, Eastern Europe...?

Guess the implications of the point I was trying to make weren't as apparent, but they lie within the greater complexity of economic development.
Brazil, Argentina and Eastern Europe, however, are great examples of how free trade and capitalism, imposed on countries with underdeveloped economies can do great harm to such countries and how the IMF's policy of credit are destroying rather than building thriving economies.

 

[the iron horse]

I'm thankful that I can still sell my vegetables and honey by a roadside stand without government interference.

I hope we do not loose this freedom.

 

[BVS]

How does that help the poor?

 

[the iron horse]

How does that help the poor?

Who do you think I am, Donald Trump?

I'm selling turnip greens at 90 cents a pound.

 

[BVS]

Who do you think I am, Donald Trump?

I'm selling turnip greens at 90 cents a pound.

You have a farm and internet, not exactly what I consider poor.

 

[INDY500]

That is an example of oligarchical behaviour which should be combated by strong regulatory action to enforce already existing anti-trust legislation.

Essentially, break 'em up into tiny bits, if one of the bits gets too big, break it up again.

Maybe "business ethics" could make a return and applied not only to top end wages but marketing, political lobbying, community interaction et cetera.

 

[A stor]

You have a farm and internet, not exactly what I consider poor.

You don't necessarily need a large "farm" to grow produce. An acre or two of land, may be all that you have to do this.

 

[BVS]

You don't necessarily need a large "farm" to grow produce. An acre or two of land, may be all that you have to do this.

My point is, let's get some global perspective.

 

[AEON]

Out of curiosity, what do you think of "ordoliberalism"?

Ordoliberalism - Wikipedia, the free encyclopedia

I would say that is what we are attempting this in the present era. I would also add that we are failing at it - the waves regulation and de-regulations often benefits a few, well funded companies that in turn can continue to buy the politicians to keep the regulations/de-regulation cycle working to their own benefit.

That being said, I do think the role of the state should be to encourage and protect the free market. Remove the ability of companies to buy politicians through campaign contributions - and we may have a shot at it. As it stands now, they are all on the same team.

 

[Se7en]

My point is, let's get some global perspective.

enlighten us as to your poverty requirements.

 

[A stor]

My point is, let's get some global perspective.

I agree.....though, there is poverty in the first world nations. It is nothing compared to that of underdeveloped countries. None of us here are living on less than one dollar/euro per day.

 

[purpleoscar]

How to Conquer Poverty - John Chamberlain - Mises Institute

Combing through the records of antiquity, Mr. Hazlitt notes what "the New Deal in Old Rome" did to enervate our first great universal empire. Between state supported slavery, high taxes, the multiplying relief of "bread and circuses," and the final imposition of price controls, Roman productive efficiency simply vanished.

Mr. Hazlitt rather doubts that the problem can ever be resolved to everybody's satisfaction. He recognizes that it would be politically impossible to get the state totally out of the welfare business. But he sees some hope in the educative value of events.

The real solution to the problem of poverty does not lie in any government relief system, or in any endeavor to redistribute wealth or income. It lies, says Mr. Hazlitt, in increased production. One increases production by making investments in more efficient tools. The free-swinging enterpriser, using capitalist savings, is the true hero of the war on poverty.

The reality is probably somewhere inbetween.

 

[purpleoscar]

We also need to avoid this:

At least with competing currencies we can avoid what happened to the Roman Empire but with a world currency there is nowhere to run to, except maybe gold, which can still be inflated if gold reserves are released to the market.

 

[INDY500]

How many lap dances at the Tatoonie Cantina will one of those get?

 

[AEON]

How many lap dances at the Tatoonie Cantina will one of those get?

That's no moon...

 

[melon]

I would say that is what we are attempting this in the present era. I would also add that we are failing at it - the waves regulation and de-regulations often benefits a few, well funded companies that in turn can continue to buy the politicians to keep the regulations/de-regulation cycle working to their own benefit.

That being said, I do think the role of the state should be to encourage and protect the free market. Remove the ability of companies to buy politicians through campaign contributions - and we may have a shot at it. As it stands now, they are all on the same team.

Well, when I see very large corporations get even larger, with their merger proposals getting approved with little to no scrutiny, I certainly have my doubts as to whether government at all cares about competition. I'd say that all is not lost in the U.S. on this front. Canada, on the other hand? I really get the sense that, as long as you are a corporate oligarch, you can really do whatever you want, and that preserving competition is not even a consideration.

As for point #2 regarding regulating campaign contributions, I certainly do agree with this point, but the obstacles are fairly insurmountable. Supreme Court precedent has basically put campaign contributions on the same level as "free speech," and any real attempts to reign in campaign contributions generally get thwarted by the court system. I do understand where they are coming from, with access to the political system as a form of expression, but it is hard to see how it benefits society-at-large.

 

[AEON]

Well, when I see very large corporations get even larger, with their merger proposals getting approved with little to no scrutiny, I certainly have my doubts as to whether government at all cares about competition. I'd say that all is not lost in the U.S. on this front. Canada, on the other hand? I really get the sense that, as long as you are a corporate oligarch, you can really do whatever you want, and that preserving competition is not even a consideration.

As for point #2 regarding regulating campaign contributions, I certainly do agree with this point, but the obstacles are fairly insurmountable. Supreme Court precedent has basically put campaign contributions on the same level as "free speech," and any real attempts to reign in campaign contributions generally get thwarted by the court system. I do understand where they are coming from, with access to the political system as a form of expression, but it is hard to see how it benefits society-at-large.

Since we were discussing Plato in the other thread - I thought bring his wisdom here. I have always thought this was a fantastic idea:

Plato held that guardians should own no private property, should live and eat together at government expense, and should earn no salary greater than necessary to supply their most basic needs. Under this regime, no one will have any venal motive for seeking a position of leadership, and those who are chosen to be guardians will govern solely from a concern to seek the welfare of the state in what is best for all of its citizens.

Plato: The Republic 1-4

 

[anitram]

Well, when I see very large corporations get even larger, with their merger proposals getting approved with little to no scrutiny, I certainly have my doubts as to whether government at all cares about competition. I'd say that all is not lost in the U.S. on this front. Canada, on the other hand? I really get the sense that, as long as you are a corporate oligarch, you can really do whatever you want, and that preserving competition is not even a consideration.

Not really; the legislation was amended as of March of this year, and the merger approval process in place now is modelled on the US system (and is very similar, though in some ways actually more efficient).

(Must scurry back to work now, but damn I needed a 5 min break)

 

[purpleoscar]

Since we were discussing Plato in the other thread - I thought bring his wisdom here. I have always thought this was a fantastic idea:
Plato: The Republic 1-4

I don't know if that would really work:

Around 388 a Greek visitor arrived at the court of Dionysius, the philosopher Plato (c.429-347). Plato got involved in trying to educate the son of the tyrant, who would shortly become Dionysius II, in philosophy and responsible statesmanship. Plato returned a couple of times as part of the effort, but it didn't turn out very well. Plato's friend Dion, who launched a coup against the tyrant, was killed and Plato was left with a very bad impression of the whole business -- "But the requests of tyrants are coupled, as we know, with compulsory powers," as Plato says in Epistle VII, written to Dion's friends. This helped confirm Plato in his determination to stay out of Athenian politics.

Democracy is still much better than Plato's republic IMHO.

 

[AEON]

I don't know if that would really work:



Democracy is still much better than Plato's republic IMHO.

I don't think I would want the entire system of Plato's Republic, but I certainly like the idea of the Guardians and their inability to have wealth or property.

 

[purpleoscar]

I don't think I would want the entire system of Plato's Republic, but I certainly like the idea of the Guardians and their inability to have wealth or property.

Oh I know it's a dream I wish came true but their self-interest would have to be labotomized from their brains before they would agree to it. I could see most husbands or wives from politicians trying to find ways to get the taxpayer to fund home renovations like in the U.K. Even getting priests to remain unmarried was to help with commitment to the church and reduce costs on the church and it is still filled with financial corruption and abuse. The best way for the politicians to act in benefit of the people that I know of is to have the voting public be less complacent and actually punish malfeasance and get motivated to push those guys out.

For your idea to work you would have to find a way to get the public to change the constitution in such a way that politicians will vote for that change to be under law that requires them to be paupers. That's a tough one.

 

[AEON]

For your idea to work you would have to find a way to get the public to change the constitution in such a way that politicians will vote for that change to be under law that requires them to be paupers. That's a tough one.

Yes, I certainly doubt it could happen in any time soon. And it could happen with a Republic type education system (where the future Guardians are selected young and trained for the role).

Remember, they wouldn't necessarily become "paupers" - just housed and fed by the government they serve.