[Ultimate Newbie]

Originally Posted by Hebdomad

Without this concentration you encounter social distortions between the rich and poor that the laissez-faire countries now encounter...

Just for argument's sake (and i'm certain to cop alot of flak for this but hey, nothing much else is happening on GD recently), why is this a major problem?

Personally, rather than running around "robin hood" style and taketh away from the rich, fumble it around inefficient governmental departments and crude clumsy mechanisms, and giveth to the poor, a fundamentally bad idea.

Firstly, the situation that i outlined at length above (btw, rofl @ T&F, lovely observation), clearly demonstrates that the really rich people in society own nothing, but control much/everything. They wont get targeted in any robin hood scheme as by the measures employed they arent rich (plus, they're much more globalised and mobile, so pinning them down with taxes is hard because they'll just move to France instead).

Secondly, the result of the above is that you're really targeting the upper side of the middle class who are either financially illiterate, lack the time knowledge skills or inclination in order to protect their family estate like the uber rich, and are typically in a similar bad situation cash flow wise - the difference is that instead of trying to pay off the repayments from a vauxhall 4 cyclinder job, they're paying off a BMW or Merc, instead of paying off a mortgage of $200000, its $1m. So, the value of the "asset"*COUGH* is higher, the corresponding expense is higher. So yes, they earn twice as much, but their expenses month-month are twice as much (or more) as well. In a strict cash flow sense, they're just as rooted as everyone else, even though they might look rich.

Thirdly, the largest proportion of the population will get hit the most because that's just the way the cookie crumbles in today's society. The middle class(es in britain) will cop the majority of the burden only because there are so many of them. So the rate will perhaps be lower, but because they outnumber those above them 20 or 30 times more, they end up paying the majority of the cost of the programme.

Fourthly, as i eluded to above, so much money of the robin hood programme is lost due to less-than-efficient government deparments and agencies, plus self-imposed stupidity. For example, in Australia, there is a "baby bonus" in the order of $6000 per child for every mother who gives birth, irrespective of income. The Opposition (Liberal= UK Conservatives) said that paying the baby bonus to "millionaires" isnt cool, and the egalitarian public agrees. Now, the cost of means testing every family such that those over $100000 do not receive the baby bonus costs more than actually paying the bonus to everyone. If the government wanted to save money, the limit would have to be as low as $50k per household, with an average wage (for a single person) being around $44k, this is clearly silly. Thus, its cheaper (and thus a benfit to all, plus additional babies) to not be egalitarian in this case.

And finally, i'm going to be highly controversial here and say, just giving money to people in the working class(es) isnt really going to help them. Lack of financial skills means that most households will either see it as a one-off and waste it, or even those who are willing to learn and get ahead still might loose it due to the inherrent nature of risk. Either way, its improbable that such measures would result in many people in the working class actually achieving any economic (or social) mobility.

Thus, entirely defeating the point, whilst still making the middle class feel overburdened, the "upper-middle" (such as it is) get behaviour-distorting and net benefits worse, and the actual rich in society dodging it completely.

So, what was the point?

and I find any organisation illegitimate that does not have its primary focus on alleviating the conditions of the poorest in society.

Illegitimate? In what sense? Could you elaborate?
Is there room in economics and society for equity? What about efficiency? Read up on Pareto efficiency and stuff too.

It is the retention of capital, gold included, especially in a depression, that causes huge economic problems. (I'm sure you're aware of this negative equilibrium and how it relates to the banking "confidence trick.")

Ah yes, things like the "paradox of thrift" and "fallacy of composition" errors. So essentially, this is correct. Something resembling good post-neoliberal governance economic policy would resolve such a situation (ie, boost AD keynesian style), but has a political factor because politicians are involved.

It could be said, though, that the capital diverted away will still exist to fight another day. Its the people who dont divert away from falling shares or whatever results in "lost" capital, whilst diverted capital still exists to be readily used when there is a "sale" in the sharemarkets or property markets (eg, a recession or correction).

Yet, in both cases, the economic "fundamentals" did and do not correlate to capital's behaviour, primarily, its exit. Essentially, investors lack of commitment to long term investment (their preference for short term gains, as opposed to the state's preference for long term gains) causes this negative equilibrium, and, ironically, damages an economy's fundamentals.

Whilst that is possible true, the extent of my reading would suggest that the financial collapse in 97 was due to a number of different factors. Sure, the mobility of capital exacerbated the problem firstly by boosting the bubble initially but also hastening the collapse, but you shouldnt be too quick to blame it all on the nasty capitalists. I think you'd find that the IMF's response to the initial problem (which was only a financial jitter) resulted in a financial collapse which then resulted in severe economic disruption and misery (except, mostly, in Malaysia where Dr Mahatier told the IMF to **** off and he was right). Perhaps if you read Joseph Stiglitz's A new paradigm in Financial Economics (iirc), he goes into more detail about the poor neo-liberal policy of the IMF and why they ****ed up the entire region (along with latin america in the late 80's and mexico in the early/mid 90's iirc).

Humanity's predilections are not set in stone. It is our unique capacity of free will that allows us to change. If you argue that the aspects of humanity cannot be changed then I cannot see how this idea leads to anything other than the negation of progress. Our current economic and social relations are not fixed. They are only advertised as so by those who benefit by them.

Take away the luxuries of civil society and you will find that humans quickly resort to primal behaviour. This is for many reasons, but primarily out of self-interest (and described by game theory, first mover advantage and etc). Capitalism doesnt try to change humanity - as its probably futile and perhaps undesireable - but rather re-directs those primal destructive tendencies into positive results that can benefit everyone.

Believe in progress if you so wish. I just think its a waste of time to change something so fundamental whilst you could be working on (other, more pressing) problems.

Because without critique we do not progress.

Progress takes a hell of a lot more than that, too.