I guess it could've been phrased better as it costing the government $600 to give the contractor $20 for a hammer. I'm under the impression that there is a cost to running the government, itself, and that it can be terribly inefficient in how much it costs it to spend money to buy things. I don't know how bad it is, and I doubt it really costs $600 for a hammer, but I don't think that all of the "spending" (or costs) of the government contributes to private income.
Well, as NoNukes points out, it has to go somewhere. In the end, people get the money, it doesn't get thrown into some big pit.
If the government was not only wasteful, but also venal and corrupt, and the other $580 in your hypothetical example went on whores, drugs, and gambling, it would still be the case that every dollar would end up in someone's pocket.
So then its not really spending... but if you gotta move $600 around to spend $20, then surely there's some inefficiencies there that could be trimmed down, no?
Now CONCENTRATE...lost as compared with a system that does have profit...see.
You'll have to elaborate - where does that "profit" come from? The only outfit in an economy that can defy the Law of Conservation of Money is the government, because they print it. Profit isn't creative; profit is the deadweight loss between the market-clearing price and the marginal cost of production. Profit is the inefficiency that disappears in a completely competitive market. (Ask a retailer competing with Amazon and Wal-Mart about his profit margins these days.)
System with added value = Proprietary interest system. (Non Govt.) Proprietary interest system - (MINUS) added value = Non Proprietary System (Govt.)
I think part of the problem here is that you're making up your own language for economics, but all you're attempting to do here is conceal the fact that your viewpoint has no actual content. A government system can just as easily add value as a private system, and because it does so generally without profit, it's more efficient.
Profit isn't creative; profit is the deadweight loss between the market-clearing price and the marginal cost of production. Profit is the inefficiency that disappears in a completely competitive market.
Johnny's company is the only company that makes widgets. What market share does he need to gain? If the share holders and executives complain about slow rising Dividends and not receiving a larger bonus than last year it's more likely he will lay off Joe Blow off and make Tom take on the extra work while telling Tom he needs to take a pay cut.
Thats exactly whats happening at my company. The only difference is that the Union is preventing Tom from getting a pay cut, thankfully. The company then hires two temporary (they are all temporary these days...nobody stays around longer than a year) workers at the same wage as Joe was making, then cuts Toms hours. I can honestly say that I am beginning to sympathize with revolutionaries and terrorists. Why the hell should some people be allowed to make excessive money while others are prevented from doing so? And to think the government wants us to spend more to help the economy!
Crashfrog writes:
Profit is the inefficiency that disappears in a completely competitive market. (Ask a retailer competing with Amazon and Wal-Mart about his profit margins these days.)
Seems that my wage is trying to get chopped in order to preserve profit for THEM and deprive ME of it.
Not attempting to be a bother but perhaps you missed it in my larger message in Message 60.
I really want to know your take on this
Would you please explain why every time the top tax rate has been reduced the growth of income of 80% of the population ceases? We see this after Harrding and Into Coolidge and again after Reagan Agitated by Bush.
On a side note, if in america you keep saying 'In god we trust', then god needs to be taxed more than everyone else.
Firstly - I am not American. Secondly - I am about as likely to say In God we trust with any seriousness as I am to say Please set my testicles on fire. Thirdly — Given your stated blind faith in lassiez faire economics the phrase In market forces I trust would seem more appropriate to you.
RobS on China writes:
read post properly...both are now cow-towing to their capitalist opponents by introducing capitalism into their NON Laissez-faire economies...and guess what?, ever since they made this move their economies are beginning to thrive.
China has adopted aspects of a free-market economy whilst retaining stringent state control of banking and other core industries. To cite any success China might have as justification of Lassiez Faire economics is ridiculous. You are conflating arguments for some form of capitalism with arguments for your ideologically driven preferred version of it.
RobS writes:
While I'd have to agree with you that infrastructure does make the process workable it is with the caveat mentioned before and that is that true austrian models have never existed, therefore we've had an opportunity to demonstrate that infrastructure building is not only possible in austrian terms but highly cost effective and innovative.
I find your faith unconvincing. But to recap - You think that unfettered lassiez faire economics is A) Theoretically sound B) Perfectly in tune with human instincts but C) Has never been tried.
Can I ask why you think it is that this obviously superior econmc model has never been implemented?
RobS writes:
If a proprietary interest is involved any hold up, wastage or negligence gets punished immediately.
Having worked reasonably extensively in both the public and private sector I can state with confidence that private firms, even successful ones, are not always more efficient than public bodies.
RobS writes:
Inefficiency is not an indictment that I level lightly, I don't take pleasure in pummelling the government, but as a businessman I can guarantee that the best way to improve anyones' productivity is to make it contingent on proprietary reward (interest). If you offer the right incentives then people will do their very best, otherwise they will always seek the path of least resistance.
RobS writes:
As mentioned before limited Gov has utility as long as it is 'limited' to the bare essentials, including national defence, education, law & order (incl. protection of property) & limited monetary control.
On a point of consistency — If you think that lassiez faire free markets are invariably the best route to efficiency and quality why do you not also apply the same thinking to education, defence et al?
RobS writes:
Capitalism sprung out of feudalism as a reaction to not being allowed the chance to thrive, it is the natural bedmate of the enlightenment values, Thomas Paine was it's best advocate, but sadly his dream has not yet come to fruition.
Enlightenment values are not those of the faith based lassiez faire advocate. Enlightenment values include recognition of the public sphere and it’s role in successful economies and societies. The founders of capitalism were aware of the natural tendencies of unfettered capitalism to result in monopolies and unhealthy concentrations of capital if left unchecked and unregulated. On Thomas Paine (from Wiki):
quote: Paine issued his Rights of Man, Part the Second, Combining Principle and Practice in February 1792. It detailed a representative government with enumerated social programs to remedy the numbing poverty of commoners through progressive tax measures.
Most importantly the enlightenment valued evidence based analysis and conclusions. On what evidence do you base your lassiez faire advocacy?
RobS writes:
Everywhere you find capitalism you find freedom, and to the extent you find capitalism you find the same degree of freedom.
Yet unfettered freemarket capitalism of the lassiez faire kind fails to recognise that one mans freedom is another mans infringement. Or analogously - The freedom of motion of your fist ends before the point of my nose. This sort of balance of rights should be an innate consideration in any socio-economic-moral system. Yet lassiez faire dictates that if the market is such that your wealth and power make the rights of yours fist an overwhelming market consideration then my bloody and flattened nose can simply be disregarded as the necessary result of market forces.
Because first and foremost are people. An economy is all about people; people working together in various ways to satisfy their needs and, if resources permit, their wants.
It is not about the market or GDP or what's written in some textbook. It's about people, just people, and only people.
All the rest are extras and worth nothing if they don't benefit the people.
But I believe the end result would be a population full of lazy layabouts.
I don't see why that would be the case, and even if it were, I don't see why that would be a problem.
First, people don't just laze about in their leisure time; they exercise, play games, go out with friends, and so on. It's not just about more time for sitting on the couch; it's about more time for being a community.
Second, if everyone could produce the requisite number of goods and services by spending five seconds each day pushing a big red button, why should they do any more work than that?
Once everyone's satisfactions are fulfilled, what reason is there to invest more resources into producing more?
Once everyone's satisfactions are fulfilled, what reason is there to invest more resources into producing more?
Because of global competition. Seems these upstarts in other countries want to be able to laze around too...and will do anything to take away my spot. Lest you think I'm whining only about me...please understand that you cant fix an economy without first fixing the people...one at a time. So here I am...52 years old, worked since I was 16...paid lots of taxes...want a decent retirement and a chance to go on vacation once a year...don't ask for much, but seem to be slipping backward lately! Oh, and I have diabetes, so I cost a lot in health care.($600.00 a month estimated)
Phat, I think you have a certain mental blind spot that I notice in a lot of people your age, and that blind spot is that unless it's a manufacturing job, you don't seem to consider it a "real" job. I'm not saying that you look down on those who do other types of work, but you seem to have a notion that those jobs should be temporary stepping stones on the way to 50's-style manufacturing employment.
But the thing is - there's no "global competition" for service jobs, and there's no reason that manufacturing a toaster should be considered more permanent or more stable than "manufacturing" a meal at a restaurant. Bagging groceries and delivering pizzas and teaching Yoga isn't something you can outsource to China, they have to be done here in the US. And as productivity per hour worked increases thanks to technology and network effects (i.e. creating a city like Shenzhen, China) its only reasonable that, as Jon suggests, some people will want to capture those productivity gains in the form of additional leisure hours. Why not? There's more to life than work.
Now, certainly competition from people who don't object to 12-hour shifts 7 days a week is a problem for anybody who wants to convince their employer to let them have a 30-hour workweek. And you're right to point to global competition as the means by which the 30-hour guys are getting their lunch eaten by the 84-hour guys. But that's primarily a difference in prevailing wage rates that will disappear as increasing globalization puts everybody in the same economy. As Chinese workers begin to demand the same quality of life as Americans- and believe me, they are - their prevailing wage rates will be forced to increase, and they'll eventually want to take those wage gains in the form of shorter workdays, too. Unions will help. China's where we were about the time of the Triangle Shirtwaist fire. There's no reason not to think they'll eventually be where we are today.
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