Posted on 02/21/2016 1:33:12 AM PST by M. Dodge Thomas
Economics makes one assumption that is flat-out wrong, that people are rational in the economic sense. They aren’t, and have never been rational in their purchasing patterns.
The only thing a person absolutely needs to have:
Shelter, food, clothing. Nothing else.
The “toys” that people buy, are not needed, they are simply wanted. Why does anyone need a car with a 300HP engine and a top speed of 140+ mph? There is no where in this country that a person could drive that fast. It is wasteful and ignorant to purchase such a vehicle, but people buy what they WANT, not what they NEED. IMO.
It seems to me that when we are talking about the capture of politics by “Washington Establishment”, we are largely talking about it’s capture of the discussion of what adds “value” to the ecconomy.
For example, that the banking system as it currently exists is so important to the economy that it must be bailed out at taxpayer expense, but the same taxpayers are not allowed to ask exactly what sorts of actual economic “value” are being protected.
“Economics makes one assumption that is flat-out wrong, that people are rational in the economic sense.”
That’s certainly one problem, but as pointed out in the article, part of the deeper problem is defining what is “rational” from the standpoint of measuring economic success.
For example, the bankers who continued to receive fat compensaon packages during the bailout had a economic perspective from which both the compensation and the bailouts were “obviously” rational in terms of economic efficiency.
And as a result, you can read pieces on editorial page of the Wall Street Journal which *still* do get why so many conservative voters are furious over the bailouts.
In context of economics, when it’s said that people are rational, it means that they act in rational ways (i.e. use available knowledge to coordinate, plan, etc.) towards desired ends.
An end itself may seem rationally desirable to that individual, but not necessarily to another. Given that every individual is subject to differing sets of values & preferences, and so forth.
All the issues raised in this article were resolved by classical market liberals a century ago and back. This is little more than a rhetorical quest for answers in search of a problem.
over 100 years ago we used to have a depression and boom cycle every 10-5 years, and the smart people learned how to ride those cycles, the progressive era sought to control the natural cycle with dangerous results one of them being the great depression.
We are so disconnected from the real economy, one day we will be forced to commune with it once more and it won’t be pretty.
“We are so disconnected from the real economy, one day we will be forced to commune with it once more and it won’t be pretty.”
Agree; won’t be pretty at all. There’s a little something percolating below the radar is what’s referred to as negative interest rates. The Fed and the big banks are considering this. The Fed wants to do this so to force spending over saving as it’s pretty much exhausted all its other tools. What this means is savers will be charged a fee (penalized) for bank savings. Thereby, causing savers to spend. So, you are thinking ok, I’ll just pull my savings out and keep it in cash in a safe at home. Well, the Fed is ahead of you and has anticipated your move. To make hoarding cash difficult or cumbersome the Fed is considering discontinuing the $50 and $100 bills. Their objective is to force Americans over to a cashless economy so your every purchase can be tracked.
>>> Despite the setback of the Great Recession, the U.S. economy more than doubled in size during the last three decades while middle-class incomes and buying power have stagnated.... <<<
Is that what common folks call inflation? When everything costs more but income hasn’t grown in proportion...
Seriously. $4.00 for a gallon of milk?
“Is that what common folks call inflation? When everything costs more but income hasn’t grown in proportion...”
Sounds like it to me! The sales tax on a restaurant meal in South Carolina is now greater than the entire cost of the meal PLUS TAX was fifty years ago. I’m about fourteen weeks away from 72 and during my lifetime we have gone from a postwar time when working people scraped by on the barest necessities to the late sixties when young men finished high school, went to work and became married family men and homeowners by their early twenties to the current situation in which people finish high school with a fourth grade education, finish college with a sixth grade education, take a part time job that a tenth grade dropout would have scorned fifty years ago and move back in with their parents.
BS. The political system is well-lubricated and running along just fine under the single-party crony-capitalist model that has taken over the 6 Million dead-soul megalopolis called Washington DC which lives in a close symbiotic relationship with that even bigger parasite, New York city.
It hums along just fine doing the bidding of those who control it. This isn't an argument about an economy at all. It is only an argument about which pigs get all four trotters in the trough.
What everyone needs to wake up to is that while this system always existed, it became hog fat through the actions of GWB who abandoned economic caution and told them all they could loot the public temples so long as he could go to war in Iraq. DHS is just the tip of the iceberg. All those godawful high-rises in the Virginia quadrant of 495 are a monument to the Bush Cheney neocon doctrine that has destroyed this country.
>>> Sounds like it to me! The sales tax on a restaurant meal in South Carolina is now greater than the entire cost of the meal PLUS TAX was fifty years ago. <<<
Yeah. I remember getting a gallon of gas, a pack of Luckies and change back on a dollar.
The problem as I see it is that somehow taxes ‘add value’ to a product and that value is then taxed again and again. The difference between us and the Euro folks is that they’re more honest about their excessive taxation.
No different that the senior branch of the Bush family, the House of Saud.
This new perspective also makes obvious why both the laissez-faire policies of the far right
Now we can wonder about referenced target referred to as "the far right," but as DC and NY operate today, as a result of GWB's deal with the devil to invade Iraq, we don't have anything resembling "lassez-faire" policies. We have the heaviest hand of government picking the losers who are going to get all of our money.
Sure Obama has made it far worse, but he didn't invent the whole thing. He just took advantage of it.
There is another big difference. I am not a socialist, but in classic european socialism, as opposed to it Islamic pandering stepchild, folks actually got something for their money - I don't argue that they got their money's worth or that it was efficient, merely that the objectives were sort of achieved. School and university educations are paid for, pensions are provided, and "council flats," while having their issues are not Pruitt Igoe.
There is something particularly nasty and depressing about the American version of crony capitalism in socialist clothing.
>>> There is something particularly nasty and depressing about the American version of crony capitalism in socialist clothing. <<<
Agreed. The whole subsidy/money laundering industry for which drug dealers are prosecuted and government agencies are praised: Solyndra, ethanol fuel, federal college loans, etc.
...We are so disconnected from the real economy...
The article seemed to me little more than a mindless leftwing rant. Examples:
For everyone but the top 1 percent of earners, the American economy is broken.
Straight from the bowels of OccupyWallStreet --the evil haves are exploiting the nobel masses.
the U.S. economy more than doubled in size during the last three decades while middle-class incomes and buying power have stagnated.
Not quite. Overall GDP did double, but if anyone here cares the actual numbers show median household incomes (per Census Br.) since 1986 have not been stagnant, but rather soared for two decades and then proceeded to lose almost half the gains the minute Obama came to Washington and the Dems took over gov't spending. Speaking of which, during this time real income for the federal government doubled just like the economy but average real personal percapita incomes (per BEA) came up 60%.
...great wealth is created on Wall Street with products like credit-default swaps that destroyed the wealth of ordinary Americans" and yet we count this activity as growth?
Ah yes, if logic fails then go for foggy big words. Once again, if anyone cares this is what a credit-default-swap is:
cred-it de-fault swap
noun Finance
Insurance does not destroy wealth, it minimizes loss of wealth, but that's not the issue. What's going on now is that a decade of socialism has failed America, and now the left rewrites economic history to explain it. In the early 70's after the failure of the War on Poverty the call was that "we need a quality of life, not a standard of living". In the '90's as Cuba collapsed the U.N. changed their econ development methodology to show what they called "well-being". Their new index 'proved' Cubans were better off than Americans.
Our economic policy discussions are nearly always focused on making us wealthier and on generating the economic growth to accomplish that. Great debates rage about whether to raise or lower interest rates, or increase or decrease regulation, and our political system has been paralyzed by a bitter ideological struggle over the budget. But there is too little debate about what it is all for. Hardly anyone ever asks: What kind of growth do we want? What does wealth mean? And what will it do for our lives?IOW, they're not talking about economics, they're talking about their next book, 'The Agenda-Driven Life'. Gubmint policies to limit economic activity, and tax codes purportedly intended to extract more money (on spec) from allegedly wealthier members of the society will always, always, always result in fewer jobs, longer queues for public assistance, and greater numbers (always carefully restricted in size) of people among whom politicians have fostered feelings of dependence, hopelessness, and misdirected rage.
It’s simple. Put the taxpayers on the hook for the money let into the system for quantitative easing, and the cronies get the pie. The penny stinkers get crumbs if they are lucky.
Yeah, but it only costs half that for a gallon of gas...No one griped about milk when gas prices were high, and hamburger is through the roof.
Don't have to worry about the golden calf being worshiped. They fattened it up and butchered it and it's in the meat case.
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