Re: Economic and politics (Was: Comparing Lisp conditions to Java Exceptions)

On Fri, 06 May 2005 23:35:56 -0700, Don Geddis wrote:

> You're confusing the price of a manufactured product (which we were
> talking about), with the hourly wage given to a laborer (which is another
> interesting issue where your theory breaks).

No I'm not. I'm simply recognising that the only way to add value to
something is with labour and consequently the value of any good or service
is equivalent to the amount of labour put into it.


> In your previous message you wrote (at least twice!):
>>>> (+ production-costs
>>>> (* price-of-labour average-hours-of-labour-in-production))
>
> This is the price of a manufactured item, in your world.
>
> We all assumed that "price-of-labour" was a constant for your society. You
> want it to vary? By industry? By individual?

Price-of-labour is the value of one hour of an average worker's labour and
is a constant. Since most people would be concerned about individual
productive efforts not being rewarded appropriately, yes I see no reason
for actual individual wages not to differ to reflect the level of labour
value added to society by individuals differing productivity. No, I don't
think it needs to change according to industry.

If my job is to produce 500 units in 5 hours and I pull it off in 3 then I
see no reason for my actual wage to be (* price-of-labour 5/3). Likewise
if I take 7 hours then it could be (* price-of-labour 5/7). Or if I only
produce 300 of the 500 units in my 5 hours then my wage could be (*
price-of-labour 300/500). (In this example the 500 units in 5 hours is
equivalent to 100 units as the number of units an average worker can
produce in 1 hour, as determined by statistical analysis of that form of
production)


> (By the way: another huge problem with your formula is that you have no
> way to account for development costs. Say it takes Intel $1B to design
> and manufacturer a new CPU. They'll sell one of them for $500. But it
> only costs $100 to make, given marginal production costs and labor hours.
> What is the right price, in your economy, for the new CPU? $101? But
> then how do they ever make the $1B back? Do you see that surely you need
> to spread the upfront cost a little bit to each individual. But the
> problem is, that to do that calculation, you need to know how many you're
> going to sell over the life of the product. And nobody can predict that
> with reliability. It's a business problem with risk and unknowns. So how
> does your exciting new economy solve this problem?)

Investments such as R&D need popular support before they're taken on. Such
an investment would need to be proposed with projected budgets etc by an
interested group of individuals who see the need, just as a group of
individuals seeking a grant might do now. Then everyone who would have
a hand in paying for it has the option to vote for or against this
investment according to how needed they consider it to be. Should an
investment get the go ahead, R&D labour and production materials
are paid according to the requirements of the investment just as any other
production is. The source of this labour would come from banks similar to
what we have now but would differ in that they would not participate in
any form of interest.


> But you admit that a manufactured item should cost less if it takes less
> hours to make? Even if the difference is that a skilled master can make
> it faster than a new trainee?

Not quite. I said that an item should be valued according to average hours
it takes to produce the item multiplied by the cost of labour per hour and
added to any other costs gone into making the item. Who actually makes
the item doesn't affect the cost. If skilled masters produce quicker then
it's they who are rewarded for their effort, not the consumer.


>> There's two popular solutions that I know of (though there's probably
>> others I don't know of). First is to allow price fluctuations according
>> to demand and supply while costs of labour in those sectors stay close
>> to average.
>
> But wait: allowing prices to vary according to supply and demand is
> EXACTLY WHAT FREE MARKETS ARE! That's the clever trick that free markets
> use, that presumably you hate. Didn't you, just above, give me the
> required price of a manufactured item? You're completely inconsistent
> here. Either the price of the thing is determined by your formula (in
> which case you have shortage problems), or else the price is determined by
> supply and demand (in which case you have a free market). You can't do
> both. You're trying to cheat.

I sketched over details so I can see how it looks like I'm being
inconsistent, but there's several alternatives to the system I propose,
and in my view I see them all capable of coexisting and cooperating with
eachother. Essentially, the market I mentioned is the "Black Market"
mentioned by you and other people. Only it's not something illegal so
"Black Market" is a useless term. Such a marke t would be people who
aren't really interested in the particular layout I have in mind and would
rather continue to use a market. And as I've said, there's no reason to
stop them so long as they don't participate in capitalist methods of
extortion like interest or rent.

In the version of the system I've mostly talked about it's the second
solution I mention below that would be used most.


>> The idea is that without huge gaps between rich and poor, demand is less
>> likely to be fickle as it is when a few people are excessively rich and,
>> say, order more iPods than they use.
>
> No, you understand almost nothing about supply and demand and real
> economics.
>
> Demand for an item has very little to do with the number of labor hours
> that went into its creation. It has a lot to do with how useful the item
> is to the purchaser, which is an orthogonal concept.

I never suggested anything about demand having anything to do with labour
hours put into production. What I said was markets that don't have huge
gaps between rich or poor (attainable, according to its advocates, by
simply abolishing interest and rent while leaving the market to work
everything else out) are less likely to result in excessively rich people
who go about denying poor people of access to scarce resources by
out-purchasing them. In other respects, the scarcity principle in this
particular alternative (not the one I have been mostly advocating,
but not one I oppose) would be solved in the same way any other market
solves it - by prices.


>> The other is a scarcity index. Each production site simply maintains an
>> index of their supply relative to demand. When a consumer notices one of
>> it's suppliers scarcity index drop indicating less supply (eg unexpected
>> drop in natural resources) or increased demand, it simply takes that
>> into account in its orders. It can check with the supplier to get an
>> idea of whether the change is likely to be temporary or long term and
>> determine if it can get by on reserved stock or it needs to investigate
>> the feasibility of alternative supplies.
>
> The problem you're not fixing, is the one when a supplier simply chooses
> not to make any more items. People want a lot more, but nobody has an
> incentive to make one.

How's that worse than an item getting taken off the market in the current
system for the same reasons? It's not a problem unique to any system; it
doesn't matter what system you use, if people aren't producing an item
then nobody's going to be able to consume it.

Or if what you mean is not that nobody is making any of the items, but
that less people are making the items then the solution to that's no
different to the ones I've already described. It basically would require
rationing. The market's no different, by raising prices to lower demand
it's just rationing in a manner that favours people who are wealthy enough
to afford the new prices. Personally, I consider such discrimination
against the underprivileged to be one of the bad qualities of a market.


> Take services. How, in your economy, do you decide how much to charge for
> an hour of a doctor's time, vs. an hour of burger flipper's time?
>
> If you're going to try to account for the cost of the doctor getting the
> M.D. training, you'll soon be back stuck in the Intel CPU problem with
> dealing with upfront costs. You obviously have no solution.

Why do you assume I have no solution before I've even offered one?
Obviously you're more interested in rhetoric than actually judging the
worth of my system.

It is as you say like the Intel CPU problem; it's a problem of
investment. And it's solved the same way. The society may choose to
sponsor peoples' education in the same way other forms of investment are
considered. So someone wishing to be a MD simply needs to request entry
into education as a MD and fulfill whatever prerequisites are required for
that entry.

I don't think an average MD should earn any different rate than an
average burger flipper. In my society investment costs of education are
absorbed by the system so it's not like a qualified MD has any claim
that they should be repayed for their investment in education. In the end,
an MD is still putting hours of labour in like a burger flipper is. They
should be rewarded according to their productivity in their task, not
according to their societal rank.

I think one of the beauties of this is that it gets rid of a lot of crap
MDs. Crap MDs are almost always MDs who are soley in it for the money.
The best MDs are almost always the ones who are MDs primarily because they
find it personally fulfilling. Not only does the financial incentive to
become a MD result in crap MDs, but it also means people who would
otherwise make excellent MDs are denied the opportunity because the money
chasers lower supply of MD education opportunities. The same goes for any
profession.


>> That happens even now. So how is that problem currently solved?
>> Purchasing power forms a sort of rationing - that needn't change though
>> with the abolishing of non-labour forms of income and fairly standard
>> wages no longer would there be the problem of ridiculously rich people
>> hoarding all they can get.
>
> You're imagining a problem that doesn't really exist. Capitalist
> economies may have short-term shortages, but they don't have long term
> systemic shortages that never disappear, the way Russia _always_ had lines
> for toilet paper, groceries, gas, etc.
>
> But communist countries, and your society, will _consistently_
> misproduce the "wrong" amount of items (vs. supply & demand pricing),
> and that imbalance will never go away (because you won't let prices vary
> in order to attract additional producers).

Russia had lines of toilet paper, groceries etc because people were
rewarded according to rank rather than productivity so there was less
incentive for individual productivity. Also, supply was decided centrally
by a government. Of course that's going to result in misallocation of
resources. It's the producers themselves who need to figure out how to
meet demand, not some egotistic government.

By the way, argument by analogy only works when the subject and object of
the analogy are sufficiently similar to draw convincing parallels. You're
wasting your time trying to pretend that my system will be anything like
Russia.


>> Also producers simply impose rationing by saying things like "X items
>> per person" or "first come first serve". Nothing much need change there
>> either.
>
> In real societies, the solution winds up being things like black markets,
> and under-the-table "illegal" payments, and political power favors, etc.
> Basically, corruption. People trying to secretly get around the rules you
> are trying to enforce.

In my system, there's no "enforcing" of rules. Black markets would just be
ordinary markets of people attempting their own version of my system.
There'd be no political powers to get favours from. Under the table
illegal payments is an interesting one I hadn't thought of and I'd myself
be interested to see how the people of my society figure a solution.

But look, you mentioned 3 problems in capitalism resulting from scarcity,
yet my system only potentially suffers from 1 of them. Who's got the
bigger problem with scarcity?


>> I'd argue such decisions would be better left as a collective decision
>> by the people affected.
>
> What if people don't agree? What if you can't come to a consensus?

Consensus probably wouldn't be the best tool for something as
controversial and necessary a decision as rationing. I'd say simple
democracy would work better for something like this. It'd only be needed
in the very worst case scenarios anyway, and it's pretty clear by
looking at scarcity now that problems of scarcity need not get so bad as
to need that kind of systematic rationing very often.


> 1000 people want toilet paper. The guy who makes it only wants to make
> 500 rolls (at the "agreed on" price). Nobody else wants to start making
> it (for that price). Yet there's an continual imbalance.

What you're arguing only makes sense in a restricted market where
someone's fixed prices too low. But I'm not talking about a market
remember? If a guy's hired to make toilet paper at a 1000+ roll quota as
determined by average toilet paper productivity, he's not going to get
paid his full "agreed on price". And what exactly is this about the price
being "agreed on"? Labour price is simply a static value given to average
productivity in my system. It doesn't even matter what that value is since
it's the same for everyone and is the only value which affects prices.
There's nothing to agree on.

Lastly, I've already explained how scarcity is solved in my system. Why do
you think your example is any different to any other kind of scarcity? If
there's a scarcity of toilet papers, consumers need to adjust their
consumption habits or find an alternative from say the facial tissue
industry. Since the problem is that only one guy wants to make toilet
paper, then perhaps investment into researching how to increase toilet
paper production through machinery needs to be discussed or researching
how to decrease the unpleasantness of the task of creating toilet paper so
more people are willing to do the job.


>> I don't see where the "problem" is with having a black market but feel
>> free to fill me in if I've missed it.
>
> You're trying to fix prices, different than what they would be if the guy
> who made it and the guy who wants it were to negotiate their own contract.
> Since you want them to do something different than they want to do, you
> need a state to enforce the rules you want in your economy. They are not
> natural rules.

There's no need for a state to enforce the rules. All it needs is a bunch
of people willing to work together to make it happen. In my system if
other people want their market economy then they can have it so long as
they're not exploiting labour through interest or rent or participating in
other forms of coercion.

There's nothing unnatural about a bunch of people getting together and
agreeing to cooperate in a certain way.


>> It seems to me if demand becomes such a problem that people are reduced
>> to having to spend much more than cost price for an item they
>> desperately need then so be it. As determined by my above suggestions
>> black markets need be no more (and more likely less) ubiquitous than
>> they are now in helping fix problems of scarcity.
>
> Black markets don't fix scarcity problems in capitalist societies. Prices
> rise so that demand drops to the level of what can be supplied in the
> short term. That's how capitalist allocation comes back into balance.

Oh? So why are there black markets in capitalist societies if not to
fulfill demand by supplying goods and services that would otherwise be
scarce?


>> You also forgot to mention problems of unemployment, labour
>> exploitation, and irrational inequalities of wealth and power to name a
>> few.
>
> It's a matter of great debate whether those are even problems to be fixed.
>
> It's far from obvious that anything needs to be changed on those topics.

I'm tempted to see how on earth you could possibly debate that they aren't
problems. But if you're that blind to your own system's problems that's
obviously going to be too long, tiring and fruitless a tangent.


> You don't understand how US elections actually work. Plenty of rich
> people have tried, and failed, to "buy" their way into office.
>
> Yes, wealth in a campaign and getting elected are correlated. But your
> assumption about cause and effect actually appears to be backwards.
> People who look at it now believe that it is wealth which flows to
> electable people, not the other way around. (For example, take a look at
> the recent book "Freakonomics".)

It doesn't matter how they get wealthy, what matters is that it's only
wealthy people and people sponsored by wealthy people who rule the US and
most countries who ruled by representatives. And that *is* how US
elections work. So what if many people who attempt to buy their way into
office don't make it? What matters is that all the ones who get into
office are the few remaining people who attempted to buy their way into
office.


>> In general, a small group of people selected at random from the total
>> population will have approximately the same proportion of alternate
>> convictions as the total population as simple statistics dictates. So if
>> a government were randomly selected there wouldn't be much difference in
>> how much tyranny they get up to except that given the population of the
>> ruling class is drastically reduced they're in a much better position to
>> bargain with eachother and cooperate for their own gain at the expense
>> of the population. So a small group of people with control over the
>> decisions affecting everyone has on average the same amount of tyrrany
>> as letting everyone have a say in their decisions in addition to the
>> increased probability of corruption and vested interests inherent in a
>> small group of rulers. So in the average case, small groups of people in
>> power is always inferior to full democracy.
>
> You're getting confused about a representative democracy vs. a "full"
> democracy. That isn't the issue. "Tyranny of the majority" isn't a
> concern that a small group will somehow take power and screw the average
> guy.

Who said that's what tyranny of the majority was? That wasn't my point. My
point was a simple statistical proof that minority rule leads to tyranny
more often worse than majority rule. As such full democracy is superior in
preventing tyranny than any form of rule by minority and "Tyranny of the
majority" is the least evil.


> The concern is that: any group which manages to get 51% support, if the
> government is really unrestricted to majority vote, will likely start
> voting horrors onto the losing 49% of the citizens. Without minority
> rights built into the constitution, the losers wind up being absolute
> losers. Taxed, prevented from participating, executed, etc. And every
> vote comes up 51% to 49%, and the minority loses every time.

What, you think it's EASIER to convince 51% of the total population to do
something evil than it is to convince a small group of people much smaller
than 51% of the total population?

.

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