How Screwed is the World Economy?

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06 Mar 2009, 11:34 pm

There will always be people who are rich and people who are poor.

Some rich people earn their fortune, others don't.

Some poor people try their best to survive, others live off welfare.

twoshots
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06 Mar 2009, 11:38 pm

And the rest are ground up and served in McDonald's.

What do you think happened to all the homeless in Manhattan? :twisted:

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06 Mar 2009, 11:51 pm

DentArthurDent wrote:

You can laugh your ass off all you like, the truth is we have seen only a fraction of the social devastation that is coming. You think the proletariat are just going to sit by and watch their living conditions disintegrate. In the past the unions and leftist radicals have come to the aid of the ruling class much as the various auto-workers unions around the globe are attempting to do right now. This time around many workers are being openly hostile to the unions

Unions coming to the aid of the ruling class? No, I haven't seen that historically happening. The reason many are hostile to the labour unions is because the unions and their anti-competitive policies are seen as a significant factor in several problems, especially the failure of the US auto industry.

Quote:

No that is why I believe in the Dictatorship of the proletariat, they need good and strong leadership, of course this leadership must be prevented from becoming entrenched.

Sorry, not interested in the job.

Quote:

:lmao: Maybe you need to get you head out of your ass and have a look around.

What you posted after this was irrelevant to your original claim. All you demonstrated was that division of wealth exists, not that there is some sort of active plot on the party of the wealthy to screw over the poor. You only see this because you are holding to a view that looks at all of history as a struggle between antagonistic classes. Of course, such a view is quite plainly wrong, and very few serious academics hold such simplistic ideas.

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DentArthurDent
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07 Mar 2009, 12:05 am

Orwell wrote:

You only see this because you are holding to a view that looks at all of history as a struggle between antagonistic classes. Of course, such a view is quite plainly wrong, and very few serious academics hold such simplistic ideas.

The extraction of surplus value from the working class is a simple concept. This of course has constraints and capital trying to do away with this need and invent a system where growth is supplied by financial markets. As we are all painfully aware you cannot do this, money does not beget money

By its very nature capital must extract as much wealth as it can from the working class, to do this they are necessarily exploited. If they were not exploited there would not be such a polarisation of wealth.

Edit = fixed up the quotes

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Last edited by DentArthurDent on 07 Mar 2009, 4:13 pm, edited 1 time in total.

Orwell
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07 Mar 2009, 12:16 am

DentArthurDent wrote:

The extraction of surplus value from the working class is a simple concept.

It is a simple concept. It is also completely wrong, as the labour theory of value is pretty much a load of crap.

Quote:

This of course has constraints and capital trying to do away with this need and invent a system where growth is supplied by financial markets. As we are all painfully aware you cannot do this, money does not beget money

By its very nature capital must extract as much wealth as it can from the working class, to do this they are necessarily exploited. If they were not exploited there would not be such a polarisation of wealth.

This is not necessarily true, capitalism generally works more towards increasing wealth through greater efficiency (such as technological innovation and the division of labour) and I recall my economics textbook saying something to the effect of "The economy can keep on growing as long as we keep coming up with new ideas." Economics really is not a zero-sum game as the Mercantilists believed it to be, and has not been viewed as such since the 1800s. The goal is not to take wealth from the working class, especially since doing so would fail in developed Western countries (the working class are also consumers) but rather to find better ways to use the resources we have to satisfy more of our wants.

And I don't think anyone has seriously tried to promote the idea of supplying growth through financial markets. You can beat the hell out of as many strawmen as you want, but it won't mean anything.

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DentArthurDent
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07 Mar 2009, 2:52 am

Orwell wrote:

DentArthurDent wrote:

The extraction of surplus value from the working class is a simple concept.

It is a simple concept. It is also completely wrong, as the labour theory of value is pretty much a load of crap.

Oh do please explain

Quote:

Orwell wrote:

This is not necessarily true, capitalism generally works more towards increasing wealth through greater efficiency

Wow we actually agree on something, the disagreement returns when we discuss who gets all this wealth

Orwell wrote:

And I don't think anyone has seriously tried to promote the idea of supplying growth through financial markets. You can beat the hell out of as many strawmen as you want, but it won't mean anything.

Its not a strawman this is what has been going on

to quote Nick Beams
'' ...... In previous periods, debt was incurred by industry in
order to finance its expansion. But with the growing im-
portance of the finance sector, debt has been increasingly
incurred to finance further financial activity.
The buying and selling of securities based on assets be-
came the new road to wealth accumulation. In 1995 the
dollar value of asset-backed securities stood at $108 bil-
lion. By the year 2000, at the height of the share market
bubble, it was $1.07 trillion. It reached $1.1 trillion in 2005
and $1.23 trillion in 2006. In other words, in the space of
a decade, the value of these securities had increased ten-
fold.
In other words, the financialisation of the economy, that
is, the appropriation of surplus value rather than its extrac-
tion in the production process, became the other key factor
in the explosive growth of derivatives.................."

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07 Mar 2009, 7:21 am

IdahoAspie wrote:

I agree with a lot of what you said, especially about not rewarding the idiots that helped put us in this mess.

However, here is the problem. Banks gave loans to people that didn't have the money. So now the banks are broke. With banks being broke, other businesses don't have capital to back the credit. With out the capital business cannot run, so they lay people off. which means demand declines, which means more people get laid off.

There is no solution. the damage was done when banks gave out trillions in bad loans. We have just wait it out until our bad debt is paid off.

Yes, but why not get rip of this banks and let them go bust? The toxic assets would disappear in one go. New banks could be founded with clean balances - here government money would much more effective spend. Make some protection for saver of moderate amounts and owners of moderate houses for their own use.

The main looser in such a policy would be the share holders and the bond holders of those banks. But they enjoyed premiums in their investments in relation to e.g. government bonds. Each profit premium reflects more risk: A trivial knowledge for anyone how invests. So: What's the problem?

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07 Mar 2009, 7:23 am

I'm not the least bit worried!

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07 Mar 2009, 7:33 am

DentArthurDent wrote:

Orwell wrote:

DentArthurDent wrote:

How much work did Edward Land extract from the Proles when he invented the Polaroid Camera. How much work did Dr. Townes and Dr. Gabor extract from the Oppressed Workers of the World when they invented the hologram?

Unless you include mental labor (as opposed to repetitive muscular labor), your notion of the labor origin of value is pure bunk.

ruveyn

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07 Mar 2009, 8:00 am

Orwell wrote:

DentArthurDent wrote:

There are differences of the US and Europe: In western Europe the Unions are part of the ruling class. They have influence in the left wing parties, as well into the conservative spectrum. And they are seen as important factors to keep the social consensus of the society and in the companies.

It is not true that strong unions automatically weaken companies: Within the Scandinavian and German car industry the unions are traditionally very strong. The institutionalised influence of the employees in running companies is seen in Germany as an important factor to avoid frictions: Before the management implements new policies, the management gets a feedback via those channels and must find a suitable compromise for all involved. This reduces the number of strikes drastically.

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07 Mar 2009, 10:03 am

Dussel wrote:

IdahoAspie wrote:

I agree. I think the banks that loaned money to risky clients that were likely to default on their payments in exchange for higher profits, are the ones that should benefit from the gains and loss on the loses, not the taxpayers.

However, you still have a problem with a lack of available capital to loan to businesses because this type of risky lending was so prevalent that it would take out a sizable chunck of the lenders. So much of the US economy is based on credit. Much of that credit is backed by assets owned by banks, which is houses, which all lost there value. When one in ten houses is in default, it lowers the value of the other houses on the block.

You cannot remove the toxic assets because they are houses and they have infected all other houses with a decreased value as well. Like I said though, once all those loans were made to people that could not make their payments, that is when the damage was done. I don't think we can do anything about it now.

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07 Mar 2009, 10:24 am

IdahoAspie wrote:

However, you still have a problem with a lack of available capital to loan to businesses because this type of risky lending was so prevalent that it would take out a sizable chunck of the lenders. So much of the US economy is based on credit. Much of that credit is backed by assets owned by banks, which is houses, which all lost there value. When one in ten houses is in default, it lowers the value of the other houses on the block.

You cannot remove the toxic assets because they are houses and they have infected all other houses with a decreased value as well. Like I said though, once all those loans were made to people that could not make their payments, that is when the damage was done. I don't think we can do anything about it now.

What does a "toxic asset" mean: This an loan which appears in the books as "$1000 Mio." and is worth, by means of realistic repayment or selling the asset (e.g. a real estate) only a small fraction. Those assets are hold by the banks. If the bank would go bust, this assets would be realized on the market and go into the insolvency pot of the bank. How ever will hold this asset on this after this stage will have this asset in his balance just for the real value, so there no longer "toxic", because they will no longer ruin the equity if realistic valued.

The difference will be "paid" via the losses of the bond and share holders of the banks.

---

It is true that the US-economy is much based on credit. I do not think that is healthy at all; it is therefore perhaps a "cold turkey", but it force the US-economy to move back to s more settled basis.

You may look into the very painful process Sweden went through in the 1980s. The main difference to the US is that in Sweden the highly developed system of social security did ease the pain for the ordinary worker. So his pension, his health care, housing and a minimum standard of living was never in danger. In the US such a network does not exist in this extent, therefore drastic cuts like the Swedish government impossed would be much more painful for a majority of US-citizens.

Orwell
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07 Mar 2009, 10:55 am

DentArthurDent wrote:

Orwell wrote:

DentArthurDent wrote:

The extraction of surplus value from the working class is a simple concept.

It is a simple concept. It is also completely wrong, as the labour theory of value is pretty much a load of crap.

Oh do please explain

I already have explained, and so has AG. Marginal utility theory makes much more sense. Read any intro economics textbook if you want to learn more.

Quote:

Orwell wrote:

This is not necessarily true, capitalism generally works more towards increasing wealth through greater efficiency

Wow we actually agree on something, the disagreement returns when we discuss who gets all this wealth

I never discussed distributions of wealth. ANyways, if you look at the numbers you will see that even if most of the wealth produced goes to the upper class (ie those making the innovations to make the growth possible) the lower classes are still better off as consumer goods get cheaper and wages rise. A rising tide lifts all boats.

Quote:

Its not a strawman this is what has been going on

Um... I tell you no one has ever promoted such a way of driving growth, and then you try to refute that by quoting a socialist propagandist? Quote anyone who has advocated for growth through the financial sector. I tell you no one I am aware of has done so, which means you are still fighting a straw man.

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07 Mar 2009, 12:09 pm

We went through a similar cycle with the Savings and Loan crisis a generation ago

http://en.wikipedia.org/wiki/Savings_and_loan_crisis

Since President Bush's father was Vice President and President at that time, you would have thought that President Bush himself would have learned something. But, he didn't larn nuthin'.

So, we'll just have to sit and wait for this cycle to pass.

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07 Mar 2009, 12:13 pm

Orwell wrote:

Stalin was first placed in national leadership because he was Georgian and the Bolsheviks wanted to do away with the old ways of only have Great Russians in positions of authority. The earliest example of affirmative action I'm aware of, and certainly the one with the most disastrous consequences.

In this case they could just struck with Czar. There was hardly a drop of Russian blood in the imperial family: At least since Katherina, Duchess of Schleswig-Holstein-Gottorf, nee Princess of Anhalt-Zerbst-Dornburg, better known as Catherine II the Great of Russia.

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07 Mar 2009, 4:20 pm

ruveyn wrote:

Your argument is stupid and fallacious

The extraction of labour is at the production stage. Of course no one gets exploited when an invention is conceived, unless they are paid a wage to conceive ideas.

Anyone who is paid a wage necessarily must be getting paid less than they are earning for the company, if they are not and there are enough of them in the company the company goes broke. Therefore companies extract surplus wealth from their employees.

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