^^

And should we really all want "less shit" to the detriment of poor, hard-working third world people who get money because we demand more goods? Fair trade or free trade, it's all better than no trade, would you not agree?

Speaking of which this is where I run into problems with the idea of "Fair Trade." Nothing in life is free, including "standards." In a very poor developing country, maybe the government can force labor restrictions down businesses' throats. But it will come at the cost of head count, inevitably. Is it really better to have fewer people making more, and a lot of people making zero and living in absolute desperation?

And for the record, before the inevitable response comes -- yes, hiring very often is a zero-sum game.

7/7/2008 1:49:30 AM

I want someone to come out with Free Trade Certified coffee. I'd drink the shit out of it.

7/7/2008 1:52:51 AM

Quote :

"theDuke866: What's wrong, in and of itself, with wanting more shit?"

Red meets herring. News at 11.

Quote :

"Smoker4: And should we really all want "less shit" to the detriment of poor, hard-working third world people who get money because we demand more goods?"

Oh please. I'm sure that's what drives sales at Wal-Mart; altruism for the Chinese poor manufactured the goods on the shelf. Forget marketing-driven lifestyle obsession.

"Buy shit to support the foreign poor!"

Makes a great tee shirt.

I'm sure the victims of stress-induced heart attacks in America alone could learn a thing or two from decreased demand. Let alone the victims of negligent lending practices or negligent energy policies. The poor in other countries are not our responsibility. We've got a serious problem with the rising poor in our own country.

Living unsustainably beyond our means en masse is a fairly large driver of this problem...

Quote :

"Smoker4: Fair trade or free trade, it's all better than no trade, would you not agree?"

Who's suggesting no trade?

Less shit != No shit.

Sherlock.

Quote :

"Smoker4: Is it really better to have fewer people making more, and a lot of people making zero and living in absolute desperation?"

How does this vision differ from the present paradigm?

One in five Americans own zero percent of American wealth. It takes another one in five to bring that to a whopping one percent. And we're supposedly pretty good at the free market...

[Edited on July 7, 2008 at 2:45 AM. Reason : ...]

7/7/2008 2:43:21 AM

^

OK, nothing in that makes a bit of sense. Sorry, I tried. Maybe the magic is in ... reading the entire post, taking a deep breath, and responding in a single coherent block instead of line-by-line.

I didn't imply anything about people shopping out of altruism. You said that "wanting less shit" is some kind of "solution"; I was stating the blunt fact that more people will starve when our consumer economy shrinks. If that's your idea of a "solution," then by all means, embrace it. I want no part of it.

Obviously "less trade" causes businesses to shrink leaving a gap (a void, a nothingness, if you will) between what was and what is. You're a smart guy, I don't have to explain that to you. That gap, that shrinking of business, is filled with lost jobs. Ever seen a business lay people off? Happens overseas too.

And the 1 in 5 statistic you quoted is beyond silly in the context of global poverty, in which 1.2 billion people (about 3x the whole population of the U.S.) lives on less than a dollar a day. Missing the Big Picture much?

7/7/2008 4:31:53 AM

Quote :

"to the detriment of poor, hard-working third world people "

Your assuming that those third world people knew what poor meant before Free-Trade Farming moved them off their small farms and into Free-Trade sweat shops.

also
Free-trade and its institutions only increase bureacracy and concentrate power. Why cant we let nations be soveriegn and decide their trade for themselves without any interference?

7/7/2008 8:38:51 AM

Quote :

"Free-trade and its institutions only increase bureacracy and concentrate power. Why cant we let nations be soveriegn and decide their trade for themselves without any interference?"

I don't remember invading Mexico or elsewhere and imposing NAFTA or the WTO on them; maybe you have a link to a wiki article?

Quote :

"And should we really all want "less shit" to the detriment of poor, hard-working third world people who get money because we demand more goods?"

Speaking as an economist, if people woke up tomorrow and decided they want less shit then, as a corollary, they have also decided they want to work less. Afterall, we don't work because we feel like it; we work because we want to earn money to buy something. If we decided we don't want to buy something, then earning the money to buy it becomes a waste of time. In response, Americans will work less by retiring earlier, spending more time between jobs, and negotiating contracts with only 30 hours of work a work. Ultimately, while the supply of jobs has fallen because demand for goods has fallen, the demand for jobs will have also fallen by the same amount.

Yes, if this happens suddenly then economic dislocation could be significant, but if the transition to wanting less shit was slow and gradual, then full employment would be maintained throughout the transition.

[Edited on July 7, 2008 at 10:41 AM. Reason : .,.]

7/7/2008 10:40:18 AM

Quote :

"Your assuming that those third world people knew what poor meant before Free-Trade Farming moved them off their small farms and into Free-Trade sweat shops."

Fairly sure this is due to the result of a different phenomenon, i.e., a modern replay of an enclosures movement going on. Which is still bad, but you're placing the blame on the wrong culprit. (Arguably, this enclosures movement has occurred due to a combination of shiftless local governments and pressure by developed-world economic interests. But my point remains the same.)

Quote :

"Free-trade and its institutions only increase bureacracy and concentrate power. Why cant we let nations be soveriegn and decide their trade for themselves without any interference?"

I will concede the point that free trade "institutions" like NAFTA are anything but and in fact are simply new "trade bureaucracies." But, absent that, wouldn't two nations signing an agreement to suspend tariffs upon one another be the definition of free trade + sovereignty that you're talking about?

7/7/2008 12:51:13 PM

Quote :

"Smoker4: I was stating the blunt fact that more people will starve when our consumer economy shrinks."

Unless other consumer economies grow at a pace commensurate with (or to recognize the basic facts, faster than) our economy's hiccups. You're a smart enough guy to understand the difference between the global economy and a vacuum. You've explained it to many people before...

Your equivalence between less trade and no trade was bullshit. Sorry for calling it out, even if I had to quote you to do it. Aggregated bullshit doesn't change consistency.

And I'm not so sure I'm missing the big picture here. If so, you've illustrated it poorly. How does the fact that 1.2 billion live on $1 a day illustrate anything other than the fact that your fearful vision--fewer people making more and a lot of people making zero and living in absolute desperation--is already the status quo?

Perhaps take a deep breath and...try again?

7/7/2008 4:55:38 PM

Here is a better question: How is "buying less shit" a solution to the problems associated with free trade?

You are touching on an entirely different topic, the idea that rampant consumerism has too many negative ramifications. That may be true, but most protectionists have entirely different concerns about free trade; eg falling wages, losing jobs and the exploitation of workers overseas. Does "buying less shit" address any of those concerns? Is it a solution at all, or just some bullshit you threw out there because you don't like the American lifestyle?

7/7/2008 6:11:50 PM

^that's what i was getting at.


also, let's clarify that free trade does not result in a net loss in wages or jobs.

7/7/2008 6:18:37 PM

I'll actually defer to LoneSnark on this. He summed it up pretty well.

Lower the demand and you lower the stakes.

And yes, consumerism is more my issue. Less about free vs. fair trade.

[Edited on July 7, 2008 at 6:33 PM. Reason : ...]

7/7/2008 6:28:50 PM

Fair enough. I do think it's funny that the "economic stimulus" packages are all designed to boost consumer spending, even when reckless spending got us into this mess in the first place. Its like giving a compulsive gambler more money and hoping that he'll use it wisely this time.

7/7/2008 6:37:48 PM

Agreed. I also don't see how encouraging them to spend it--rather than, say, invest--stimulates anything but this quarter's profit margins.

Seems that few people see time as currency.

7/7/2008 6:42:42 PM

Quote :

"I don't remember invading Mexico or elsewhere and imposing NAFTA or the WTO on them"

True, its not forced on anyone, although you have to imagine that countries want to be a part of the trade discussions. Being left out would probably severely reduce their trade options and sources of tax revenue.

Quote :

"Fairly sure this is due to the result of a different phenomenon, i.e., a modern replay of an enclosures movement going on."

Sorry, not exactly sure what you mean by enclosure movement. What i meant about the farmers was that they were probably living a subsistence lifestyle before the Free-trade factory came to town. I know that subsistence farming can be a hard lifestyle but atleast they were their own boss. Now they work 12 hours a day for just enough pay to afford the food and shelter they need. Their quality of life isnt improving with the job change, I would argue it deteriorates. Just because you are making money and someone else isnt doesnt mean you are richer than they are.

Quote :

"two nations signing an agreement to suspend tariffs upon one another be the definition of free trade + sovereignty that you're talking about? "

Yeah its hard to argue against NAFTA. Im pretty sure that was approved by congress. I would still argue its a bad idea from a quality of life point of view and b/c I feel it is slowly leading toward a North American Union type institution, although im sure some of you can drop a bunch of stats on how theres a small increase in jobs, etc.

just to clarify my position some more: Im not against free markets or countries making agreements to suspend tariffs with one another.

I am against UNELECTED officials from government meeting with corporate business leaders behind closed doors to establish trading policy without the approval of congress. I am also against large powerful countries bullying third world countries into bypassing their environmental and labor laws so that said powerful country can continue raping the resources of the third world country. (This is what modern day "Free-Trade" means to me)

7/7/2008 7:00:14 PM

Quote :

"Speaking as an economist"

Are you actually an economist? Who do you work for? What qualifies you to call yourself an economist?

7/7/2008 8:47:13 PM

Quote :

"Sorry, not exactly sure what you mean by enclosure movement. What i meant about the farmers was that they were probably living a subsistence lifestyle before the Free-trade factory came to town. I know that subsistence farming can be a hard lifestyle but atleast they were their own boss. Now they work 12 hours a day for just enough pay to afford the food and shelter they need. Their quality of life isnt improving with the job change, I would argue it deteriorates. Just because you are making money and someone else isnt doesnt mean you are richer than they are."

What I'm referring to was a historical trend in the 16th and 17th centuries in England where farmlands often used in common slowly started growing more fenced off and set to the exclusion of the lower classes. The end result is that the drive toward people working hard jobs in factories in cities was directly the result of a land policy which kicked out poor people in favor of a landed gentry who wielded influence on the government.

It's basically the same phenomena playing itself out again. More influential interests push the government toward re-allocating land - particularly, with who can secure titles to private property - pushing marginal farmers off and into the cities.

Note that I'm not criticizing private property at all here - but the way this was implemented both then and now was done in a pretty slanted fashion. Which is why you're seeing these people in factories.

Free trade agreements were simply the catalyst. But the real driver is policy decisions going on at the local government level.

Quote :

"I am against UNELECTED officials from government meeting with corporate business leaders behind closed doors to establish trading policy without the approval of congress. I am also against large powerful countries bullying third world countries into bypassing their environmental and labor laws so that said powerful country can continue raping the resources of the third world country. (This is what modern day "Free-Trade" means to me)"

Okay, but then your gripe lies with trade organizations (like the WTO) and with the policies of corrupt local governments, rather than free trade itself.

7/7/2008 8:53:50 PM

Gamecat:

Ah, ok, gotcha. So when the biggest consumer economy in the world has sagging demand, the businesses that outsource labor to developing countries to serve that market will continue to spend just as much doing so, presumably ... for the Hell of it.

7/7/2008 9:01:16 PM

I'm an Icahn groupie.

This means I think corporate leadership tries and does squash out the free market often to better suit their own interests.

Free market is great - it works very well. Our system has a large free market component to it. But at the same time, much of it is so fuckered up by this point you can't tell what is and what isn't 'free market'.

7/7/2008 9:05:07 PM

DrSteve

Gotcha on the enclosure movement, I think your probably right that it would probably be happening in these countries with or without free trade agreements, The agreements just served as catalysts as you put it.

So I feel that by supporting "Free-trade" ,which is how the WTO has labeled itself (or atleast the media has labeled it), I am supporting that movement in those countries.

That and I think Being in the WTO is unconstitutional (congress giving up its right w/out an amendment)

and a general suspicion of powerful bureaucracies


I guess, only really the enclosure argument applies to NAFTA, and if you strongly believe in Capitalism I can see how you could argue that its a benefit to all, I just think there has to be a better way.

[Edited on July 7, 2008 at 10:24 PM. Reason : which is why I understand why some people would be against "Free-Trade"]

7/7/2008 10:23:34 PM

Quote :

"But at the same time, much of it is so fuckered up by this point you can't tell what is and what isn't 'free market'."

That is absurd. I know of at least two institutions that would love to give you a list of what isn't 'free market'.

Quote :

"That and I think Being in the WTO is unconstitutional (congress giving up its right w/out an amendment)"

Congress has not given up any rights. A mere 51% majority vote and a signature from whoever is president and the U.S. is no longer a member of the WTO.

Quote :

"I know that subsistence farming can be a hard lifestyle but atleast they were their own boss."

They were their own boss, and some of their children would starve to death every few years. The objection is not that factory life is better than farming life, as you know in may respects it is not. But in one key respect, reliability, a factory job is far better. Even in a severe recession only a small fraction of poor factory workers find it impossible to feed their children. But every weather event tends to land most, if not all, poor farming families into the grips of starvation. So, however hellish life is in the factory, it beats watching the life drain from your family.

But, that said, everything should be taken on a case by case basis. Some countries are actively enslaving their populace and sanctions might be useful (ignoring the fact that sanctions have never worked). But most countries are not, merely victims of widespread corruption, which sanctions would only exacerbate.

Quote :

"Are you actually an economist? Who do you work for? What qualifies you to call yourself an economist?"

I phrased that wrong. I am not an economist by trade, I meant it in an economics sense, similar to when someone else says "Playing devil's advocate."

7/8/2008 1:01:14 AM

^

Well, then I'm confused. I mean, if you're not actually an economist, then you're really just speculating without any evidence, data, etc. to back up your conclusions. Your speculation might be based in what you know about economics, but it's not an "economist's" perspective.

But two can play this game.

For example -- I would counter your argument by saying that, "economically" speaking, it's just not realistic for rational people to arbitrarily "want less." From what I know of economics (all two semesters of it), the whole science is based on the whims of basically rational people.

But what Gamecat is calling for is an irrational motive to drive changes in the market. People, who have the means to afford more comfortable lifestyles (per their own tastes), arbitrarily decide not to use those means.

It's like the so-called Buy Nothing Day. OK, so people don't buy anything today. Then tomorrow there's all kinds of pent-up demand to make up for it.

Also, perhaps the best way to "speak economically" is to consult an actual economist's opinion on personal spending habits. How about Milton Friedman? The Freakonomics blog has this to offer:

Quote :

"When I was a first-year assistant professor at the University of Chicago, my friend and department chair, Jose Scheinkman, relayed the advice Milton Friedman had given him 20 years earlier, “Don’t save too much.” The logic was simple: An academic’s salary rises steadily over time, as do outside opportunities — like writing popular economics books! The right reason to save is so you can even out your consumption. When times are good, you should save, and when times are bad, borrow. Most likely, I would never be as poor again as I was starting out. That meant I should have been borrowing, not saving. I didn’t follow the advice as fully as I should have, partly because my wife insisted we save — she is not quite as good an economist as Milton Friedman."

"Evening out consumption" is the ideal personal spending habit according to Milton. Rather at odds with arbitrarily "wanting less shit," eh?

7/8/2008 1:55:01 AM

Quote :

"Smoker4: Ah, ok, gotcha. So when the biggest consumer economy in the world has sagging demand, the businesses that outsource labor to developing countries to serve that market will continue to spend just as much doing so, presumably ... for the Hell of it."

Or to meet rising demand in other consumer economies.

I mean...are you willfully ignoring the posts you're responding to?

Quote :

"Smoker4: It's like the so-called Buy Nothing Day."

Actually, it's not at all like the Buy Nothing Day. Or the "Don't Buy Gas" days. Or even Google's black screen background on Earth day. It only works as a routine behavior; a habit. Your misrepresentation of my position here is comical, but not grounded at all in reality.

Nobody's asking you to participate. It is still a free market after all.

Quote :

"Smoker4: "Evening out consumption" is the ideal personal spending habit according to Milton. Rather at odds with arbitrarily "wanting less shit," eh?"

At odds with or the result of...?

7/8/2008 2:43:58 AM

^

I'm not willfully ignoring anything, you just have a fanciful idea in your head about an arbitrarily large drop in consumer demand in the U.S. that conveniently has all the good effects and none of the bad. You're just telling fairy tales about the global economy.

So tell me:

* How much less shit should people want to solve the "problems" of free trade, exactly? Can you give me numbers?
* Once people start demanding less, how does that specifically improve the overall problems caused by globalization/free trade/etc?

7/8/2008 3:50:04 AM

No discussion of free trade would be complete without at least a mention of Bastiat.

As far as I'm concerned, he irrefutably skewered protectionism more than 150 years ago with his book Economic Sophisms. It's a wonder we're still having to deal with this nonsense. If Bastiat's work could be popularized, it would go a long way to reducing the influence of the unthinking populism that keeps producing the same tired and demonstrably invalid protectionist filth year after year.

Some highlights.

http://www.econlib.org/library/Bastiat/basSoph.html

Quote :

"Yes, we must admit that our opponents in this argument have a marked advantage over us. They need only a few words to set forth a half-truth; whereas, in order to show that it is a half-truth, we have to resort to long and arid dissertations. This situation is due to the nature of things. Protection concentrates at a single point the good that it does, while the harm that it inflicts is diffused over a wide area. The good is apparent to the outer eye; the harm reveals itself only to the inner eye of the mind. In the case of free trade, it is just the reverse. The same is true of almost all economic questions. You may say, "Here is a machine that has put thirty workmen out on the street." Or, "Here is a spendthrift whose behavior encourages every branch of industry." Or, again, "The conquest of Algiers has doubled the trade of Marseilles." Or, finally, "Government expenditures provide a living for a hundred thousand families." Everyone will understand you, for your propositions are lucid, simple, and self-evident. You may go further, and deduce the following principles from them: Machinery is an evil. Extravagance, conquests, and heavy taxes are all good. And your theory will be all the more widely accepted because you will be able to support it with undeniable facts. But, for our part, we cannot limit ourselves to the consideration of a single cause and its immediate effect. We know that this effect itself becomes in its turn a cause. In order to pass judgment on a measure, we must, then, trace it through the whole chain of its effects to its final result. In other words, we are reduced, quite frankly, to an appeal to reason. "

Quote :

"If man were a solitary animal, if he worked solely for himself, if he consumed directly the fruits of his labor—in short, if he did not engage in exchange—the theory of scarcity could never have been introduced into the world. It would be all too evident, in that case, that abundance would be advantageous for him, whatever its source, whether he owed it to his industriousness, to the ingenious tools and powerful machines that he had invented, to the fertility of the soil, to the liberality of Nature, or even to a mysterious invasion of goods that the tide had carried from abroad and left on the shore. No solitary man would ever conclude that, in order to make sure that his own labor had something to occupy it, he should break the tools that save him labor, neutralize the fertility of the soil, or return to the sea the goods it may have brought him. He would easily understand that labor is not an end in itself, but a means, and that it would be absurd to reject the end for fear of doing injury to the means."

Quote :

"M. Bugeaud, the legislator, has been heard to exclaim: "I understand nothing of the theory of cheapness; I should prefer to see bread more expensive and work more abundant." And, in consequence, the deputy from the Dordogne votes for legislative measures whose effect is to hinder trade, precisely because trade procures for us indirectly what direct production can furnish us only at a higher cost. Now, it is quite evident that the principle of M. Bugeaud, the legislator, is diametrically opposed to that of M. Bugeaud, the farmer. To be consistent, either he would have to vote against every restrictive measure, or he would have to put into practice on his own farm the principle that he proclaims from the rostrum. He would, in the latter case, have to sow his seed in the most barren field, for in that way he would succeed in working a great deal in order to obtain little result. He would have to eschew the use of the plow, since tilling the soil by hand would satisfy his twofold desire for dearer bread and more abundant toil. The avowed object and acknowledged effect of restrictive measures is to increase the amount of labor necessary for a given result. Another of its avowed objects and acknowledged effects is to raise prices, which means nothing more nor less than a scarcity of goods. Thus, carried to its extreme, the policy of restriction is pure Sisyphism, as we have defined it: infinite labor, without any result. "

Well, since I've already made this post too long, I'll stop there. I've posted the link.

7/8/2008 11:41:02 AM

another great piece by Bastiat is "The Petition of the Candle Makers"

if anyone is truly interested in the free trade topic I highly recommend you read this and if it is something up your alley and still at state then take EC 348 with McElroy

http://bastiat.org/en/petition.html

7/8/2008 12:03:16 PM

Opposing free trade is so mind-numbingly stupid. The global economy is here to stay idiots. And it's the only reason you can go to walmart and get socks for 1.57 a pair or a 50" plasma screen television for 1499 (newegg just in case you think I'm making this up).

What people are really opposed to is not having the huge advantages we have had since 1800.

7/8/2008 12:19:41 PM

From The Petition of the Candlemakers...

Quote :

"We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion, particularly because he has for that haughty island a respect that he does not show for us."

HAHAHAHAHAHAH, oh, I died...

7/8/2008 12:41:04 PM

that is what Bastiat does, he takes arguments to the logical extremes just to show the obvious fallacies with them

7/8/2008 12:50:13 PM

Another good one, from Economic Sophisms - Chapter 6. Balance of Trade

Quote :

"Now, after one of my friends, a businessman, had carried out two transactions that had had very different results, I was curious to compare the accounting methods of the bank with those of the customhouse, as interpreted by M. Lestiboudois, with the approval of our six hundred lawmakers. M. T. despatched a ship from Le Havre to the United States, with a cargo of French goods, chiefly those known as specialties of Parisian fashion, totaling 200,000 francs. This was the amount declared at the customhouse. When the cargo arrived at New Orleans, it had to pay a shipping charge of ten per cent and a tariff of thirty per cent, which brought the total to 280,000 francs. It was sold at a profit of twenty per cent, or 40,000 francs, for a total price of 320,000 francs, which the consignee converted into cotton. This cotton had to pay ten per cent more, for transportation, insurance, commissions, etc.; so that, when the new cargo arrived at Le Havre, its cost amounted to 352,000 francs, and that was the figure entered into the accounts of the customhouse. Finally, M. T. again realized, on this return trip, twenty per cent profit, or 70,400 francs; in other words, the cotton sold for 422,400 francs. If M. Lestiboudois requires it, I shall send him some figures taken from the books of M. T. There he will see, in the credit column of the profit-and-loss account—that is to say, as profit—two entries, one for 40,000 francs and the other for 70,400 francs; and M. T. is fully satisfied that in this respect his accounting is not in error. And yet, what do the figures in the account books of the customhouse tell M. Lestiboudois regarding this transaction? They tell him that France has exported 200,000 francs, and that it has imported 352,000 francs; whence the honorable deputy concludes "that it has consumed and dissipated the proceeds of previous savings, that it has impoverished and is on the way to ruining itself, that it has given away 152,000 francs of its capital to foreigners." Some time afterward, M. T. despatched another ship with a similar cargo, worth 200,000 francs, of produces of our domestic industry. But the unfortunate vessel sank while leaving the harbor, and there was nothing else for M. T. to do but to inscribe in his books two brief entries phrased thus: Sundry goods due to X: 200,000 francs for the purchase of various commodities carried by ship N. Profits and losses due to sundry goods: 200,000 francs for ultimate total loss of the cargo. Meanwhile, the customhouse on its part was entering 200,000 francs into its export ledger; and as it will never have anything to enter into the opposite import ledger on this account, it follows that M. Lestiboudois and the Chamber will view this shipwreck as a clear net profit of 200,000 francs for France. There is still a further conclusion to be drawn from all this, namely, that, according to the theory of the balance of trade, France has a quite simple means of doubling her capital at any moment. It suffices merely to pass its products through the customhouse, and then throw them into the sea. In that case the exports will equal the amount of her capital; imports will be nonexistent and even impossible, and we shall gain all that the ocean has swallowed up."

7/8/2008 1:19:16 PM

Quote :

"Smoker4: I'm not willfully ignoring anything, you just have a fanciful idea in your head about an arbitrarily large drop in consumer demand in the U.S. that conveniently has all the good effects and none of the bad."

Name some negatives that involve an honest accounting of the rise of the consumer economy in other, more populated nations...

Quote :

"Smoker4: You're just telling fairy tales about the global economy."

Name one.

Quote :

"Smoker4: How much less shit should people want to solve the "problems" of free trade, exactly?"

Let's get into the black with the consumer savings rate for starters. It's tough to retire on red ink...

Quote :

"Smoker4: Can you give me numbers?"

Sure can't. We can start with the above, though.

I don't claim to be an economist, but I've had to learn quite a bit about the functioning of the economy and investments. (They still require these things of licensed Financial Advisors.) Still, I'd wager that you couldn't assign numbers to any of the nonsense you've put into this thread either. For instance: How many people will starve when our consumer economy shrinks, Smoker4? For how long? At what rate will the Chinese and Indian middle classes need to shrink to accommodate this gloomy vision? Two can play this game, too.

The only numbers you've used in this debate have supported [b]my[/i] position, not yours, about the distribution of poverty and suffering in the current paradigm.

Quote :

"Smoker4: Once people start demanding less, how does that specifically improve the overall problems caused by globalization/free trade/etc?"

1) Earlier retirement,
2) Less time idling on the highway to work,
3) Fewer hours at the office, factory, or production center,
4) Less stress on the body...

As I said, LoneSnark summed it up pretty well. I also said this was more an afront to consumerism than any indictment of free trade. While we're on the subject, though, I'd call the environmental and medical benefits rather tremendous.

7/8/2008 9:17:09 PM

So gas prices going to $4 dollars a gallon, and still rising, because the Chinese and Indians now all want to drive is helping our economy?

7/8/2008 10:11:45 PM

Quote :

"For example -- I would counter your argument by saying that, "economically" speaking, it's just not realistic for rational people to arbitrarily "want less." From what I know of economics (all two semesters of it), the whole science is based on the whims of basically rational people."

Why? Rational people change their mind all the time. And they have changed their mind: as our ability to earn income has improved with time male Americans have chosen to work fewer and fewer hours, while at the same time female Americans have made the choice to start working more and more, sometimes sacrificing the raising children to do so.

Quote :

"But what Gamecat is calling for is an irrational motive to drive changes in the market. People, who have the means to afford more comfortable lifestyles (per their own tastes), arbitrarily decide not to use those means."

Everyone has the ability to afford more comfortable lifestyles than they are currently. I could take a second and third job and easily double my income, but I enjoy sleeping in on weekdays. You are right that Gamecat is in error in his understanding of the savings rate, but he has said repeatedly he is against consumption, not necessarily for saving. But, if Americans are swayed en-mass by Gamecat's arguments, then odds are the savings rate will improve as people adjust their expectations to lower future incomes (because they will be spending less time working) and therefore the young will reduce current borrowing and the old will act to bring debt payments in line with reduced income.

That said, Gamecat is wrong in a few accounts. The activities that Americans tend to spend their free-time engaged in seem to be more stressful on the mind and body than their current professions.

7/8/2008 10:24:25 PM

^

I disagree with your analysis about what would happen if "attitudes changed" vis a vis consumption. People don't work just because they want to buy stuff. Billionaire CEO Steve Jobs doesn't design and market the iPhone because he can't afford a new car! I think you're extrapolating your own choices about work to everyone, without any basis. Work is hard, work is inconvenient; it's also one of the basic ways in which many people find fulfillment.

For the scenario you describe to play out, it requires not only that Americans change their attitudes about consumption but also that they change their attitudes about work. And I fundamentally disagree with you that those attitudes are one and the same. In fact if the basic principle that "people work to buy stuff" is true then our society would virtually cease to function; most of the top level of the private sector is already way beyond that point. Yet they continue to run our businesses day to day. Warren Buffett and Carl Icahn (for example) take huge risks despite being beyond wealthy, and determine the future direction of our economy.

So having established that reduced consumption doesn't logically mean reduced work, the next obvious question is -- what do people do with their money? Stuff it in a mattress?

People can reduce their consumption and pay down debt, sure. Credit card companies won't sit idly by while their margins drop like rocks. They will lure people back in with heavy incentives because, no matter what someone's ideal for consumption is, it's fundamentally stupid to turn down "free" money (i.e. insanely low interest rates that don't even track inflation).

I would argue that the consumer economy of America tacks along as it does not just because of attitudes about savings, but because the system itself draws people in regardless of their original intentions. It's just forgiving to the extent that people have no reason to say 'no' -- I'd think even if attitudes changed, the basic forgiveness of failure (ie Bankruptcy laws) would have to change as well. Which would be disastrous for us given that those same laws also allow for much more entrepreneurship.

[Edited on July 9, 2008 at 1:08 AM. Reason : foo]

7/9/2008 1:07:54 AM

^ Those laws have already changed. Forgiveness of failure has been drastically reduced since 2006 despite the fact that medical bills forced around 50% of all home foreclosures at the time.

Quote :

"Smoker4: Warren Buffett and Carl Icahn (for example) take huge risks despite being beyond wealthy, and determine the future direction of our economy."

Huge risks?

Please articulate what risks they take for the rest of us.

They may sacrifice a little ROI, but that's hardly a "risk" to common understanding. Those men are risking the inherited fortunes of their grandchildren's grandchildren's grandchildren when they take those "huge" risks. Compared to losing your own home or not being able to send your own children to college, I'd say those are risks anyone would love to be able to take.

Even your 1.2 billion poor people.

Some people do work purely for fulfillment. I'm one of them. Clearly, you are as well. But we're a clear and vast minority. (How many Steve Jobs' are there in the world after all? A few hundred?) Ask or look around the office tomorrow and see if you can create a composite of just how many of them there are.

Quote :

"rainman: So gas prices going to $4 dollars a gallon, and still rising, because the Chinese and Indians now all want to drive is helping our economy?"

Ask any of the employees and contractors working with Exxon. Or any of their stockholders.

Absent mining and shipping, they're almost single-handedly propping up our economy!

Quote :

"LoneSnark: You are right that Gamecat is in error in his understanding of the savings rate, but he has said repeatedly he is against consumption, not necessarily for saving."

1) How am I in error?

Are you talking about the "accounting for retirement" tidbit?

2) I am not against consumption. (I enjoy eating food, for example.) I'm against consumerism, which, like Wahabbism, is an extreme form of a far less frightening thing.

3) I am for saving--through less consumption.

Quote :

"LoneSnark: But, if Americans are swayed en-mass by Gamecat's arguments, then odds are the savings rate will improve as people adjust their expectations to lower future incomes (because they will be spending less time working) and therefore the young will reduce current borrowing and the old will act to bring debt payments in line with reduced income."

:sniff: :sniff: If only...

Quote :

"LoneSnark: The activities that Americans tend to spend their free-time engaged in seem to be more stressful on the mind and body than their current professions."

So wait, stress-induced heart attacks (America's #1 Killer) and medical problems arise from...vacations, pool visits, and sleeping in?

Not, for instance, working 60-80 hours a week meeting rigid deadlines enclosed in a 6' x 12' box under fluorescent lighting?

Doesn't wash.

[Edited on July 9, 2008 at 1:21 AM. Reason : ...]

[Edited on July 9, 2008 at 1:22 AM. Reason : if only i could code like those in silicon valley]

[Edited on July 9, 2008 at 1:23 AM. Reason : ...]

7/9/2008 1:13:07 AM

No one I know has ever died from working in a cubicle. It may have shortened their lifespan, but it is too soon to tell. However, several people in my family have been killed by their hobbies. One cousin died of a gunshot wound at a firing range, another cousin died playing football, an uncle crashed his airplane, a second cousin died drag-racing, an aunt died of injuries sustained while horseback riding. Yes, I do have a very big family, but not one has yet to even die on the job, much less of cubicle related stress.

The number 1 cause of death for anyone below the age of 44 is not heart disease, it is accidents. Heart disease kills old people, in order to die of it you need to not kill yourself long enough.

http://www.americanheart.org/downloadable/heart/1173881560405CAUSOFDTH07doc.pdf

[Edited on July 9, 2008 at 8:55 AM. Reason : .,.]

7/9/2008 8:54:23 AM

Does anyone also find it interesting that neither party really opposes free trade?

You'd think that one of the parties would want to get "a majority of americans" vote.

Even if you beleive stopping Free-Trade is a stupid idea, well, thats never really stopped politicians from supporting something if it means they will get a lot of votes.


^Not trying to make light of those deaths, but that is a lot of freak accidents for one Family!

[Edited on July 9, 2008 at 11:30 AM. Reason : dey turk r jobz]

7/9/2008 11:27:43 AM

Wait, which party supports free trade?

Both advocate and uphold various tariffs, restrictions, quotas, embargos, subsidies, regulations and other impediments to trade. I think its fair to say that neither main party opposes trade, but the trade they support is hardly free.

7/9/2008 11:39:23 AM

well by parties I guess I meant Presidential Candidates

McCain has said he is the biggest "Free-Trader" of all time

Obama has said NAFTA and other agreements should be renegotiated (which to me is politician talk for "we arent going to do much about it")

My first reaction is that getting support (and money) from business interests is as important as votes.

7/9/2008 12:00:09 PM

^^^^

What if one of your hobbies is eating red meat?

Quote :

"Those laws have already changed. Forgiveness of failure has been drastically reduced since 2006 despite the fact that medical bills forced around 50% of all home foreclosures at the time."

You can't prove that forgiveness of good faith creditors has been "drastically reduced." We still have one of the most (if not the most) lenient bankruptcy systems in the world. Opposition to the reform was and still is an article of partisan faith.

Quote :

" Please articulate what risks they take for the rest of us."

Articulate what? Do you live on a different planet where risking a few billion or even a measly couple hundred mil isn't a big risk?

Man, life must be good over there.

Besides that, I don't think it's entirely their money on the line. Warren Buffett for example runs Berkshire Hathaway which has his entire life's work tied up in it. He's legally responsible to millions of people; his whole reputation and legacy rides on his investing strategy. Not to mention it's one of the most influential businesses in the world and could easily wreck a lot of well-established companies if it fails badly (see: Bear Stearns for examples of what happens when well-established investment firms fail miserably).

I would also argue that most of the billions of dollars of net worth that these people have is not "real"; as Larry Ellison so nicely explained once that if he tried to sell all his Oracle stock, the over-supply on the market would drive its price down to zero. Mostly their net worth amounts to leverage to do more -- usually with other people's money, and all that entails.

Of course they aren't going to starve if they fail. They'll just wreck their reputations, look like fools in the eyes of millions if not billions of people, possibly be sued to kingdom-come, lose control of their companies and life's work, go to jail in some cases, etc. etc. I know, none of that means anything to you because it doesn't serve to justify universal health care or some other partisan cause-du-jour; but there are more things under the sun.

Quote :

"But we're a clear and vast minority. (How many Steve Jobs' are there in the world after all? A few hundred?) Ask or look around the office tomorrow and see if you can create a composite of just how many of them there are."

What a joke! I was naming Steve Jobs as a visible example because everybody here has heard of him. I know -- using examples to illustrate things isn't allowed on TWW. I think we established that years ago.

Pretty much any corporate executive at the V-level and up, not to mention many successful small businessmen, etc., could retire early without too many problems. I'd also count the 260,000+ millionaires who live in LA county, for starters. Work down the list from there. The number of people is easily in the millions who could get out tomorrow but they continue to take risks and work to grow their wealth.

[Edited on July 9, 2008 at 12:12 PM. Reason : FOO]

7/9/2008 12:12:21 PM

Quote :

"LoneSnark: Yes, I do have a very big family, but not one has yet to even die on the job, much less of cubicle related stress."

What a fortunate(?) anecdote.



Nevertheless, the stress doesn't come from the cubicle itself. It's the pressure each quarter to maximize profit so that Steve Jobs and Paul Allen can fund their next titanic excess...

Quote :

"LoneSnark: The number 1 cause of death for anyone below the age of 44 is not heart disease, it is accidents."

Nice qualified rebuttal to an unqualified statistic.

---

Quote :

"Smoker4: Do you live on a different planet where risking a few billion or even a measly couple hundred mil isn't a big risk?"

Must be the same planet where this fictitious majority of people work for reasons that don't involve (1) rent/mortgage payments, (2) gasoline, and (3) food.

Quote :

"Smoker4: Besides that, I don't think it's entirely their money on the line."

Who pays the taxes on it when it grows?

Who reaps the tax benefits when it shrinks?

Quote :

"Smoker4: (see: Bear Stearns for examples of what happens when well-established investment firms fail miserably)"

The Fed makes an equity investment into a subsidiary of Chase Manhattan Bank who in turn buys up all of Bear's old stinky debts. The sign on the building changes, a few hundred people go home (the greater majority of whom are already wealthy), and next year's Christmas Party may stock a slightly younger wine.

Great example.

Quote :

"Smoker4: I would also argue that most of the billions of dollars of net worth that these people have is not "real"; as Larry Ellison so nicely explained once that if he tried to sell all his Oracle stock, the over-supply on the market would drive its price down to zero."

You may argue that, but you may be quite wrong.

That wealth is as real to his accountants as it is to the IRS, and would be just as real in his bank account after a massive and instantaneous sell-off. The zero dollar stock price would sure suck for any holders of Oracle at the time (poor saps), but given that it's an asset he'd no longer own, I don't see how it'd remain relevant.

"Honey?"

"What?"

"They're talkin' shit about us on the diamond-plated plasma screen television on our yacht."

"[/care]"

Quote :

"Smoker4: They'll just wreck their reputations, look like fools in the eyes of millions if not billions of people, possibly be sued to kingdom-come, lose control of their companies and life's work, go to jail in some cases, etc. etc. I know, none of that means anything to you because it doesn't serve to justify universal health care or some other partisan cause-du-jour; but there are more things under the sun."

My my...look who's getting pissy.

So, really. It would suck horribly to be a multi-billionaire with a bad reputation. I've never understood the Republican's genuine pity for the immense suffering they all must bare.

And since when did universal healthcare enter the discussion?

No, I'd say it doesn't mean anything to me because the point that Larry Ellison remains a real, tangible multi-billionaire--even after cashing out--stands even after so much hand-wringing. His words may look pretty in a magazine, but he does have a job to do as a CEO; first and foremost about Public Relations, not transparent honesty.

Further, who needs universal healthcare, after all, when people are limiting consumption enough to be able to afford medical insurance on their own?

Quote :

"Smoker4: Pretty much any corporate executive at the V-level and up, not to mention many successful small businessmen, etc., could retire early without too many problems."

Divided by the size of the labor force FTW

Quote :

"Smoker4: I'd also count the 260,000+ millionaires who live in LA county, for starters."

Divided by the total population of LA county FTW

Quote :

"Smoker4: The number of people is easily in the millions who could get out tomorrow but they continue to take risks and work to grow their wealth."

To complete the trifecta...

Divided by the total population of Earth FTW

Seems you've gotten lazy with age.

Just because you and I stand closer to the top of the pyramid doesn't discount the fact that a metric fuckton of people below us (1) don't want to be there, (2) lack the skills or opportunity to advance to the point of working for leisure, and (3) work merely to support their overblown sense of entitlement to McMansions, new cars, new clothes, gym memberships, and vacations they cannot afford.

Bottom line is that the larger share of Americans are fundamentally irrational, wreckless consumers.

It's computer science, but basic economics. The "rational behavior assumption" has been thoroughly and cogently discredited. They didn't simply hand out Nobel Memorial Prize to Daniel Kahneman in 2002 for spouting politically-motivated bullshit...

http://nobelprize.org/nobel_prizes/economics/laureates/2002/public.html

Quote :

"Psychology and economics Economic research often assumes that people are motivated primarily by material incentives and make decisions in a rational way. They are assumed to assess the state of the economy and the effects of their behavior by processing available information according to standard statistical principles. This approach has been formulated axiomatically in so-called expected-utility theory, which is the predominant economic theory for decisions under uncertainty. The prevailing view in psychology in general, and cognitive psychology in particular, is to regard a human being as a system that codes and interprets available information in a conscious manner, but where other, less conscious factors also govern decisions in an interactive process. Such elements include perception, mental models for interpreting specific situations, emotions, attitudes and memories of earlier decisions and their consequences. In extensive research on human behavior based on surveys and experiments, Daniel Kahneman and other psychologists have called into question the assumption of economic rationality in some decision situations. Real-world decision-makers frequently appear not to evaluate uncertain events according to the laws of probability; nor do they seem to make decisions according to the theory of expected-utility maximization. In a series of studies, Kahneman – in collaboration with the late Amos Tversky – has shown that people are incapable of fully analyzing complex decision situations when the future consequences are uncertain. Under such circumstances, they rely instead on heuristic shortcuts or rules of thumb. A fundamental bias is nicely illustrated in Kahneman and Tversky’s own experimental data on the way individuals judge random events. Most experimental subjects assign the same probabilities in small and large samples, without taking into account that uncertainty about (the variance of) the mean declines drastically with sample size. People thus seem to adhere to a law of small numbers, without due consideration of the law of large numbers in probability theory. In a well-known experiment, subjects regarded it as equally likely that, on a given day, more than 60 percent of the births would be boys in a small hospital (with few births) as well as in a large hospital (where many children were born). ... [there's more...it's quite interesting actually]"

Consumers typically act upon unreasonable expectations about income and expenses rooted in their ignorance of basic economic facts. Feeling like you're making a rational purchase (by taking out, say, a fat, 3-year ARM with a 2-year balloon) isn't the same thing as making a rational purchase.

[Edited on July 10, 2008 at 3:04 AM. Reason : ...]

7/10/2008 2:50:58 AM

^

I think you make some very good points. But honestly this debate with you is exasperating and I don't really feel like carrying it on here. Call me lazy, but perhaps my time is just worth more. That's not computer science either, but also basic economics.

Having said that, I eagerly await LoneSnark's reply.

7/10/2008 3:31:34 AM

Dammit.

That was fun.

7/10/2008 4:19:35 AM

^

Prob worth continuing over beer next time I'm in town. Cheers!

7/10/2008 4:29:12 AM

It must be done.

7/10/2008 5:11:53 AM

Quote :

"Nice qualified rebuttal to an unqualified statistic."

No, yours was very qualified, you said it was stress induced heart attacks, which is a lie. To assert that heart disease in America is caused by job stress is rediculous: it is primarily killing old people the vast majority of which are retired; what job related stress do they have since they are not working for anyone, much less steve jobs?

Quote :

"Consumers typically act upon unreasonable expectations about income and expenses rooted in their ignorance of basic economic facts. Feeling like you're making a rational purchase (by taking out, say, a fat, 3-year ARM with a 2-year balloon) isn't the same thing as making a rational purchase."

I would argue the other way. In their mind their behavior is rational. Your mistake is assuming that only your outlook on life is the correct one and that everyone must behave as you would have them behave. Such belief has many names, but in the world of economics it has no basis. Perhaps it is merely a case of very high discount rate for the individual (money today is worth infinitely more than money two years from now) or maybe it is hidden preferences: the individual is planning to move in two years anyway and absolutely despises landlords.

Your mistake is that you have forgotten we are talking about human beings. If you want, you can just walk up and ask them why they believe their choiced made sense to them. Perhaps the answer is simply "I didn't want to mess with it anymore so I took whatever was available." This may sound irrational to you, but only because you fail to recognize it as age-old utility maximizing behavior. Even a theoretical maximizer gives up searching for a better deal eventually; so it is perfectly fine for some maximizers to simply give up sooner because they value their time more for doing other activities.

[Edited on July 10, 2008 at 10:37 AM. Reason : .,.]

7/10/2008 10:25:12 AM

Probably off topic, but Josh's statement made me think/

Quote :

"What's wrong, in and of itself, with wanting more shit?"

The quality of"Shit" in general has declined. Not everything, but most. I guess people would rather have more, cheaper, and disposable. As I get older, I find that I wouldn't mind having less sometimes, if it is of the highest quality. I'm not sure where this ties in, but I think it may.

7/10/2008 11:07:16 PM

I'm surprised not to have seen some specifics from Ricardian economic philosophy listed here--I may have missed it, though. Ricardo certainly presented an oft-used argument in support of international trade, which could be used to support an argument for free trade as we know it today.

7/10/2008 11:58:10 PM

i briefly saw something on twitter today about Americans objection to free trade being at an all-time high

[Edited on October 4, 2010 at 9:54 PM. Reason : or something]

10/4/2010 9:54:28 PM

^

Quote :

"the headline tweet should read "Majority of Americans don't know anything about trade or economic theory and are therefore unqualified to answer questions on such topics, and the answers they do give are irrelevant"

10/4/2010 9:58:51 PM

well it's not a big surprise most Americans aren't experts in much other than their primary vocation and what's on tv

but that doesn't stop us from polling them about every other nuanced subject and over-analyzing the results

10/4/2010 10:11:20 PM