Re: Economic and politics

Robert Marlow <bobstopper@xxxxxxxxxxx> wrote on Sun, 08 May 2005:
> I'm simply recognising that the only way to add value to something is with
> labour

That's not true. A whole package of things is required to add value to
something, and labor is generally (but not necessarily always) part of that
package. But that's a different statement.

In any case, it doesn't matter whether we agree on this point, because your
conclusion doesn't follow.

> and consequently the value of any good or service is equivalent to the
> amount of labour put into it.

No, that is not a consequent. Even if your antecedent were true.

I know you _wish_ it was true, and you're trying to design an economy/society
that forces it to be true, but it isn't logically true. In capitalist
economies, for example the value of a good or service is determined by those
who use/purchase it, and has very little to do with the amount of human labor
involved in its manufacturing.

And utility will continue to be determined that way, even if you fix prices
using your formula (which is based on labor hours). That may fix prices, but
it won't change true utility/value, which is always in the eye of the beholder
and generally somewhat different for each individual.

>> 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. [...] No, I don't
> think it needs to change according to industry.

OK, now your new economy is going to have huge labor shortages. Since you're
planning on paying everybody the same hourly wage, regardless of the work,
then everyone will flock to the easy/fun jobs, and nobody will be willing to
do the difficult/demanding/unpleasant work in society. Or work that requires
significant (or unpleasant) training. After all, there is nothing to be
gained personally!

So you'll have tons of lifeguards on the beachs, but no garbage men, and
nobody to clean and repair the sewers, and no electricians, and no doctors.

While your society will suffer mightily, no individual will make a different
choice, because wages of the much worse job are fixed by you to be the same
as the much more pleasant jobs.

How do you propose to solve this new problem, that there are no employees
available for hire (at the fixed wages) for all the bad jobs?

> 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

Where does the money come from to put into such R&D budgets? What is the
source of the money?

> just as a group of individuals seeking a grant might do now.

The interesting R&D that I was talking about, in our current society, is
funded by investors who are looking for a return on their investment, in order
to balance the significant risk that the effort might fail.

You have outlawed interest/rents in your society. Why would anyone donate
money to such an R&D effort?

> 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.

Where do the banks get the money, in your society?

In our current society, they only have money available because they promise
interest to the people/organizations that have the money to begin with.

You don't allow interest. Why would your banks have any money available to
lend out? And, in fact, why would they bother to be banks in the first place,
since even if they had money you aren't allowing them to earn a profit with
it? It would seem that banks couldn't exist, since they can't borrow money
from anyone, and they can earn a living with it even if they had it.

You seem to have a big missing whole in your theory, which is how to account
for doing R&D.

> 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

OK, although this seems _very_ different from what you proposed in your
earlier messages. Now it looks like you're happy to let prices float to
the supply/demand intersection point. You're right that this will solve the
problem of shortages.

But you misled us by writing that formula so many times, claiming to set the
cost of an item for sale. In fact, you don't care about that price after all.

It now seems that your big concern is merely fixing labor wages (and outlawing
ownership/interest/rents). That's got different problems (which I outlined
above). The reason you got the responses you did in the past (from myself as
well as others) is because you were far from clear in what you cared about.

So: you don't care about fixing market prices, and you're happy to have
free market prices. OK, fine.

> What I said was markets that don't have huge gaps between rich or poor are
> less likely to result in excessively rich people who go about denying poor
> people of access to scarce resources by out-purchasing them.

You're trying to solve a problem that doesn't exist. Very few items
are scarce resources just because rich people outbuy poor people.
Bill Gates and/or Larry Ellison could presumably purchase all the hamburgers
that McDonald's makes in a year, but somehow I'm still able to go to my
local franchise and pick one up for a dollar.

The gap between the rich and the poor has very little to do with what the
poor are able to purchase. If there were fewer rich people, the poor would
not suddenly have the ability to buy more stuff.

>> 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.

This discussion was all when you misled us by your talk of fixing prices.
That's what leads to the scarcity. You now seem to have changed your mind,
and no longer care about fixing prices.

With floating prices, such scarcity disappears because the price rises,
and suddenly the supplier is much more interested in making more items.

> 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.

You've completely missed the other part of the effect: yes, raising prices
lowers demand. BUT IT ALSO RAISES SUPPLY! You actually get more items made,
when the price for the item goes higher. _That's_ the beauty of free markets.

Also, you remain confused that only wealthy people purchase more expensive
items. As the price goes up, the people who wind up buying it are generally
those for whom the item has more value. (You're confused about this, because
you've convinced yourself in error that the value of an item must be related
to it manufacture, in particular the labor hours that went in to it. In
reality, the value of an item is about the utility that the purchaser gains
when acquiring it.)

Yes, rich people can afford more things, and are willing to pay more for
less value. But a poor person, who receives more value than most from a
given item, is willing to pay a higher price, even if he has less assets than
the rich person.

You need to understand that individuals can have very, very different utilities
for the exact same item.

>> 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?
>>
> I don't think an average MD should earn any different rate than an
> average burger flipper.

You aren't allowing wages to vary because of the quality/fun of the job, or
because of the training required, etc. Given your new approach, the problem
is simply that no individuals (aside from a few crazy folks) are going to
choose to begin medical training. There's no personal (economic) benefit to
it.

> 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.

You've neglected the opportunity cost of their years of training. They could
have been earning a salary during that time. And having a lot more fun,
being a lifeguard on the beach and drinking tequilas. But instead, they spent
4-10 years studying difficult books and working on-call overnight. Not fun.

> 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.

That's a fine theory.

Now, how does your society deal with the fact that you have the same number
of sick/trauma patients as any other society, but you've trained no doctors
to treat them?

How do you get enough doctors to meet the demand? Everybody wants to use a
doctor, but nobody wants to be one.

> Crap MDs are almost always MDs who are soley in it for the money.

A claim you make with zero evidence. You're almost certainly wrong.
I know this wish supports your theory, but you should stick to factoids
that you can verify.

> 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.

Those analogies came because you confused everyone by initially claiming you
were going to fix the price of items in every market (using your labor-hour-
manufacturing formula). In your latest post, you seem no longer to claim
this. So sure, the communist analogies no longer hold. But you were the
one who misled us originally.

> What you're arguing only makes sense in a restricted market where someone's
> fixed prices too low. 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.

Then every once in awhile you write something like this, which sure SOUNDS
like you want to set the price of items (to the formula which uses the
number of labor hours). But then elsewhere you say you're willing to let
prices vary by supply and demand.

I'm really not sure what you want. Are prices fixed by your formula, or do
they vary? If fixed, you have scarcity problems. If they vary, then I don't
understand why you ever wrote down that formula. Is it just supposed to be
your theory of what the "value" of an item is, but it doesn't affect anything
in the economy because prices don't need to be set at that value? Why did
you tell us of your magic formula?

> If there's a scarcity of toilet papers, consumers need to adjust their
> consumption habits or find an alternative
> 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.

Or, as happens in capitalist economies, raise the wage of a toilet-paper-maker,
and suddenly you'll find a lot more people interested in being one.

But you are definitely fixing wages in your economy (and in fact, fixing them
all to be identical), so you don't have this option.

> 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

Ah, so maybe every item has two markets: the fixed-price market, and the
floating-price free market.

You'll quickly find that there are zero items available in every fixed-price
market, and _all_ of your societies commerce will take place in the
floating-price free market.

> so long as they're not exploiting labour through interest or rent or
> participating in other forms of coercion.

Interesting the way you use words like coercion. If one person happens to
own some assets (like money), and a second person has a possible business
opportunity, then if interest were allowed they could make an exchange,
and the new business would be launched, and society would now have an exciting
new item, and the original asset owner would eventually be paid back, with
interest. Everybody in the story is happy.

But you prohibit this exchange. So you must use governmental force (outlawing
interest, imprisoning people who violate your laws) to prevent the contract
in the previous paragraph. And, as a result, the guy with the money chooses
not to lend it to the guy with the opportunity. And thus, in your society,
no new business gets started.

I don't see how this makes anything better, but presumably you like it for
some reason.

I do find it odd, though, that you call first scenario, where everybody is
happy, "coercion".

>> 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?

There aren't many black markets at all in capitalist societies. There are
some when the item itself is prohibited for moral reasons (drugs,
prostitution). People are willing to pay for them anyway, so that makes
a black market. Secondly, you sometimes get secondary markets to avoid
taxes, such as with immigrant farm labor, or perhaps nanny child care.

But for ordinary items, with low taxes? No black markets, and also no
scarcity. Bananas, razor blades, PCs, toilet paper. Capitalist economies
have neither black markets nor (long-term) shortages of these things.

>>> 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 misunderstand. I'm not blind. I'm fully aware of what the facts are.
The disagreement is whether the facts are a problem for society, and whether
society would be improved by forcibly altering the facts.

1. A low level of unemployment provide grease for the economy, offering a
pool of available labor to exploit the next opportunity. Zero unemployment
is not a goal.

2. Labor "exploitation" is a phrase that sounds bad, but doesn't actually
refer to anything objective. Describe a specific situation, and we can
discuss whether the situation is unfair in some way.

3. "Inequalities of wealth (and power)" surely exist. But "irrational"
isn't a phrase that means anything in connection with them. Ignoring the
meaningless word you threw in there to make it sound bad, yes the inequalities
exist. Why are they bad?

For a positive view, consider: not all humans are identical. Some have more
potential than others. Some are more productive than others. Wealth is a
prize, that "fools" people into working harder than they otherwise would,
which benefits society. (Society gains much more value than the wealth that
the individual accumulates.) Thus: inequality of wealth outcomes is a sign
that you're getting the most from your most productive citizens. A good thing.

> 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.

I'm saying that they in fact didn't buy their way into office. Instead, they
got into office because they offered what the general population wanted.
Then, because they were electable to the ordinary public, as a _consequence_,
money and wealth flowed to them.

Being rich isn't what made them electable. They were electable because
ordinary people liked them. Being electable is what made them rich.

> 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.

We're talking cross purposes here. I don't even deny that rule by a small
group is probably worse in some ways than rule by the full public. That
isn't the concern.

The concern is whether a 51% "majority vote" should allow any outcome, and
provide absolute power to the winning side. The contrasting side suggests
a concept of "rights", which the group is not permitted to violate, EVEN IF
they get a 51% majority.

For example, the US congress can't decide to throw you in jail, even if
they get 51% of the representatives to want to do so and vote to do so.
That isn't one of their allowed powers.

"Tyranny of the majority" means that even if 51% of the people want to do
something, that doesn't necessarily mean that a good society will let it be
done. (You're throwing in a different, unrelated, concern, which is
representative vs. "full" democracy. I've made no comment on that topic.)

If you look at the US, the more and more important things require much
greater support (leading to some of your "consensus" ideas!) than a simple
majority. Some things require a 2/3 "supermajority". Some things require
both the President and Congress. Some things require a majority or 2/3 of
the states, in addition to a vote in the Congress.

"Majority rules" is only good for minor topics that don't matter much to
society.

> 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?

You've misunderstood my concern. It's far too easy to convince 51% of any
group, whether large or small, to do evil things. You need a stronger
political mechanism to prevent many evils than that.

-- Don
_______________________________________________________________________________
Don Geddis http://don.geddis.org/ don@xxxxxxxxxx
Mistakes: It could be that the purpose of your life is only to serve as a
warning to others. -- Despair.com
.

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