Poverty is not what you think it is

[JimG]

The value of wealth is its scarcity. If everyone is wealthy, no one is wealthy since the price of goods will inflate to that new, higher equilibrium.

Just as an aside, this seems to be what is happening with health care costs when third parties such as Medicare, Medicaid, and insurance, are paying the cost rather than the consumer. When someone else is paying, prices go up.

 

[Vonsalza]

Just as an aside, this seems to be what is happening with health care costs when third parties such as Medicare, Medicaid, and insurance, are paying the cost rather than the consumer. When someone else is paying, prices go up.

I think you’re spot on.

But the water gets pretty muddy when even the cash prices of care are higher than most people can readily afford. I doubt nuclear medicine (how cancer is often treated) will ever be very cheap.

The solutions to this involve getting folks to divert savings toward future healthcare at a sufficiently aggressive rate where they have $200K-$300K saved up by the time they’re of prime cancer/heart disease age (which I find non-realistic).
-or-
Pool funds together from everyone from every age-group and divert those funds to those in present need. The regular contribution amount would be determined by actuaries and statisticians. This is the insurance model.

To quote my urologist, “Every man on the planet will eventually develop prostate cancer. The men that never do were just killed by something else before it could happen”.

 

[DarkLight]

I think you’re spot on.

But the water gets pretty muddy when even the cash prices of care are higher than most people can readily afford. I doubt nuclear medicine (how cancer is often treated) will ever be very cheap.

The solutions to this involve getting folks to divert savings toward future healthcare at a sufficiently aggressive rate where they have $200K-$300K saved up by the time they’re of prime cancer/heart disease age (which I find non-realistic).
-or-
Pool funds together from everyone from every age-group and divert those funds to those in present need. The regular contribution amount would be determined by actuaries and statisticians. This is the insurance model.

To quote my urologist, “Every man on the planet will eventually develop prostate cancer. The men that never do were just killed by something else before it could happen”.

The other problem with the first one is that obviously it doesn’t do much to help people like me. Saving up is nice, but I’ve already dealt with thousands of dollars of medical costs at various times, and I’m only 29. It just wouldn’t have been reasonable for me to have that much money saved up by the time I needed it most.

 

[Rau]

…In capitalism, anyone can, and many do, escape poverty. The American standard of living, even today under the growing mountain of government power, is the greatest in the world because of capitalism and limited government

The actual distribution of that wealth (or standard of living) in the US should be considered. The average is not all that informative.

 

[JonNC]

=Vonsalza;14866359]More money indeed.

My sympathies to the multitudes that held the old GM stock (or any other failed stock) and those that counted on their 401(k)s to be there for them in 2009. Hopefully you didn’t cash-out too much in a low market out of necessity for survival and kept a sufficient investment to meaningfully capitalize on the slow recovery.

I would feel badly for them, too. I don’t have much, and I’m close to retirement age, so I keep a close eye on things. Very conservative. But it is mine.

Social security is a lower risk “investment” than any given stock (as the volatility beta for the government is less than one).

Very low risk because it is a very low return. It should be low risk.

SS default would require the default of the federal government. Fiscally conservative doomsayers have been prophesying this default since the 70s and 80s…

The federal liability for unfunded responsibilities is well over $100 trillion. I don’t think it doomsaying to be voice concerns about how the federal government is doing things a private entity would be prosecuted for.

Trust me, if a real, full federal default happens, your retirement will be the least of your concerns.

Absolutely.

You could strike out “Government control” from the statement and replace it with literally anything and it would still be equally true.

No. It wouldn’t, because only government can exercise authoritarian controls over individuals. Government, particularly the central government, is vastly more dangerous to individual liberty than, say, a corporation.

Social mobility is a reality. But for every person that becomes wealthier, someone has to become poorer - as an economic fact. Otherwise inflation renders the wealth as moot.

It isn’t a fact. If zero sum economics were true, we’d still be living in a depression.

The value of wealth is its scarcity. If everyone is wealthy, no one is wealthy since the price of goods will inflate to that new, higher equilibrium.

And if everyone is poor, its socialism, since socialism always produces more scarcity than is necessary.

The American standard of living, factually, is not the highest in the world. We’re currently 20th.

Interesting. Perhaps if we weren’t having to defend most of those countries, ours would be higher. Maybe if our corporate tax rates were competitive with the rest of the world, our standard of living would be higher.
OTOH, I don’t see one there remotely interesting to live in, when compared to here.

 

[DarkLight]

The worry I have is that our standard of living is often funded by highly exploitative trade practices. We wouldn’t be able to have our standard of living in the U.S. without trade practices focused on keeping the standard of living down in other parts of the world in order to produce cheap goods for our consumption.

 

[JonNC]

The actual distribution of that wealth (or standard of living) in the US should be considered. The average is not all that informative.

Neither is distribution of wealth. Distribution of wealth is by and large related to the productivity of the job. The greater the productivity, the greater the compensation. It is also often related to scarcity of those trained and able to do the job.

Be even at that, even our poor are far better off than those living in most of the rest of the world.

forbes.com/sites/timworstall/2013/06/01/astonishing-numbers-americas-poor-still-live-better-than-most-of-the-rest-of-humanity/#368ee0af54ef

 

[JonNC]

=DarkLight;14866022]On the other hand, in unrestricted capitalism, you end up with a lot of jobs that almost might as well be slavery.

Can you give me an example of unrestricted capitalism?

The worker is technically free, but he’s expected to work the entire day to meet his basic needs. He doesn’t have the free resources to develop a better skill, and refusing to work will harm him faster than it will harm the business owner, unless there’s some sort of labor organization.

Every worker is free, technically and otherwise, if he has the opportunity to enter into a contractual relationship with an employer who needs his/her services. In the United States, for example, K-12 public education does not directly cost the family, giving every citizen the opportunity to get a job. Some schools are better than others, to be sure, be the bottom floor is there.

Capitalism also tends towards its own destruction without sufficient regulation. People that gain a lot of power and wealth through capitalism tend to use that to keep themselves on top. See things like, for example, the problems with the company town. Workers would end up in a town where they had to purchase housing and goods from the company, at prices the company set.

And socialism is destruction from the start. But again, name me an unrestricted capitalist state.

I think you’ll find American capitalism has done less to wipe these issues out and more to export them.

Sorry, not buying it. A great example of how America exported economic opportunity is the Marshall plan. Europe was in ruins. Germany and Japan destroyed, and they are economic giants. We’ve sent economic helped to many other countries who continue to languish in poverty, oftentimes self imposed by corrupt government and socialist policies.

 

[Vonsalza]

And socialism is destruction from the start. But again, name me an unrestricted capitalist state.

Somalia.

 

[JonNC]

Somalia.

Violence and political unrest have prevented Somalia from developing a coherent and coordinated domestic marketplace. The central government controls only part of the country, and formal economic activity is largely relegated to urban areas like Mogadishu. The lack of accurate economic statistics precludes ranking Somalia in this edition of the Index.

Lack of central authority makes the rule of law inconsistent and fragmented, with different militias, authorities, and tribes applying varying legal frameworks. Traditional customs like Sharia law have become more entrenched. The level of corruption remains high, and the lack of transparency and formal bookkeeping means that government revenues are easily embezzled.

heritage.org/index/country/somalia

Thanks for the chuckle.

 

[Rau]

Neither is distribution of wealth. Distribution of wealth is by and large related to the productivity of the job. The greater the productivity, the greater the compensation. It is also often related to scarcity of those trained and able to do the job.

Distribution of the wealth plainly is more informative than a single average. The US has a highly skewed distribution massively favoring the elite (ruling, if you prefer) class, leading to a relatively large “working poor”.

You omitted to mention that in practice there is a great power imbalance between the one offering a wage and the one needing it. They are generally not equals bartering milk for bread - which is what typically ensures fair outcomes.

It is rare to relate productivity to, say, bank CEO salaries.

 

[JonNC]

Distribution of the wealth plainly is more informative than a single average. The US has a highly skewed distribution massively favoring the elite (ruling, if you prefer) class, leading to a relatively large “working poor”.

You omitted to mention that in practice there is a great power imbalance between the one offering a wage and the one needing it. They are generally not equals bartering milk for bread - which is what typically ensures fair outcomes.

It is rare to relate productivity to, say, bank CEO salaries.

Actually it is directly related. The bank’s profits drop, the CEO may be unemployed. A small bank’s CEO is paid less than a large bank’s.

The great thing about America is the mobility from class to class. And the more competition there is for a skill, the better the bargaining power of the potential employee. Labor unions also can play a role in "leveling the field ".

Glance at the article again, and you’ll find that the large spread of levels of wealth in the US is true, but that our poor are better off than almost all others. The key, however, is not to recut the pie, but to make sure that conditions are right for the American people to make the pie larger

 

[DarkLight]

Every worker is free, technically and otherwise, if he has the opportunity to enter into a contractual relationship with an employer who needs his/her services. In the United States, for example, K-12 public education does not directly cost the family, giving every citizen the opportunity to get a job. Some schools are better than others, to be sure, be the bottom floor is there.

Remember that things like “minimum wage” and “free public education” are the product of government interference - as are things like safety regulations or child labor laws. Take a good look at early 19th century capitalism. Also take a good look at the supply chains of our clothing, or our electronics.

The trouble you had there was that, while the worker was technically free to enter into a contractual relationship, the only relationship offered to him was one where only his bare minimum needs were met (if that) unless he had a skill. And he was expected to work long enough hours for low enough wages that developing a skill was out of the question.

The lesson with many countries as well is that, if corporations gain too much power, it’s easy enough for them to hire “security” that can enable them to do what they will. There are enough armed men who are also for sale.

 

[JonNC]

Remember that things like “minimum wage” and “free public education” are the product of government interference - as are things like safety regulations or child labor laws. Take a good look at early 19th century capitalism. Also take a good look at the supply chains of our clothing, or our electronics.

The trouble you had there was that, while the worker was technically free to enter into a contractual relationship, the only relationship offered to him was one where only his bare minimum needs were met (if that) unless he had a skill. And he was expected to work long enough hours for low enough wages that developing a skill was out of the question.

The lesson with many countries as well is that, if corporations gain too much power, it’s easy enough for them to hire “security” that can enable them to do what they will. There are enough armed men who are also for sale.

RE public education, not st the state and local level. There is a significant difference between the enumerated powers granted under constitution and powers not granted, reserved to the states and people.

One can even argue for a minimum wage at the state level, but more often than not, a minimum wage is a ceiling as much as it is a floor. And for the young and inexperienced, the higher the minimum wage acts like a door, often locked.

There are roles, however, for government, one being anti-trust. Preventing corporate monopolies keeps competition, which improves quality and modifies prices. The same principle needs to be applied to government power, as well.

 

[Rau]

Actually it is directly related. The bank’s profits drop, the CEO may be unemployed. A small bank’s CEO is paid less than a large bank’s.

The great thing about America is the mobility from class to class. And the more competition there is for a skill, the better the bargaining power of the potential employee. Labor unions also can play a role in "leveling the field ".

Glance at the article again, and you’ll find that the large spread of levels of wealth in the US is true, but that our poor are better off than almost all others. The key, however, is not to recut the pie, but to make sure that conditions are right for the American people to make the pie larger

Of course there are elements of truth in all of this. The mistake is to believe that a capitalistic system left to operate as unfettered as possible produces results we should all be happy with. And that is why there is such acceptance of social elements, such as progressive taxation and social security. Generally, these are seen as practical means to improve the society, though some see them as something quite different.

 

[Rau]

…There are roles, however, for government, one being anti-trust. Preventing corporate monopolies keeps competition, which improves quality and modifies prices.

It’s interesting to contemplate why governments are so spectacularly poor at preventing monopolistic behaviours and other malfeasance by corporations.

 

[JonNC]

Of course there are elements of truth in all of this. The mistake is to believe that a capitalistic system left to operate as unfettered as possible produces results we should all be happy with. And that is why there is such acceptance of social elements, such as progressive taxation and social security. Generally, these are seen as practical means to improve the society, though some see them as something quite different.

And yet efforts such as the Great Society have done significantly more damage over the long term than good.
google.com/amp/amp.nationalreview.com/article/392842/legacy-liberalism-thomas-sowell

 

[JonNC]

It’s interesting to contemplate why governments are so spectacularly poor at preventing monopolistic behaviours and other malfeasance by corporations.

Not many monopolies here, except for the progressive call for a government monopoly on healthcare

 

[Rau]

Not many monopolies here, except for the progressive call for a government monopoly on healthcare

Now THAT is worth a good chuckle.

 

[JonNC]

Now THAT is worth a good chuckle.

Not if one is one the receiving end. I suspect Charlie Gard’s parents didn’t chuckle.