Walk the talk

One person asked me, upon reading my anti-capitalism pro-free market essay series, for ideas on how individuals might help contribute in daily life.

Walking the walk on two of the big points is easy: shop at independant stores instead of chains, don't buy IPOs, and if you create something (art, music, software, inventions), make it creative commons / open source / patent it but then licence it for free.

As to walking the walk on real estate: I don't really think it's applicable. There is some political momentum behind changing the corporate system after Citizen's United, and there is piracy/file sharing undermining copyright, but there is exactly zero movement behind one person one parcel.
Thats not even a phrase that exists. I just made it up, just now, as I was typing!
But there really is no inbetween. Nothing any one person does (short of the solution proposed in Manna) is going to have more than zero effect on the rest of the world.
The closest I imagine one could possibly come would be buying rental properties, and renting them at below market rent, even at cost (though with hidden irregular costs, like vacancies and major maintenance, factored in). One could opt out, but that would do as little to change the system or benefit anyone as opting out of voting does (i.e. exactly none, and possibly counter-productive, since then you are diluting your own potential influence)

For one person one parcel, I think the best anyone could do right now, even a billionaire, would be to publicize and promote the idea, because the first step would be getting the idea into the minds of millions of people. Its not quite communism, not quite libertarianism, not quite anarchy, not quite free market. As far as I know, its something no one has ever thought of before.

There is one other thing - probably the single biggest change to our system, (short of one person one parcel) would be for working hours to be adjusted downward to match increases in efficiency.
That is something we could easily do, if we were so inclined, just like we reduced working hours from 60-80 per week at the turn of the last century down to 40-50 hours today, as the industrial revolution vastly increased output per worker.

Today, computers and the internet and robots, plus outsourcing and corporate consolidation, not to mention quickly advancing 3D printing, has increased productivity far more than steam power and assembly lines ever did, yet we have never adjusted the 40 hour work week to match.  Our insanely massive income inequality, inflation adjusted income stagnation, and steadily high unemployment are all direct results of that.
I have started a petition to that end: http://petitions.moveon.org/sign/a-35-hour-work-week-will
Of course, given the actual increase in output per worker since the 1940s when the 40 hour week was officially established, we should be at 4 hour work weeks by now,

 but 35 seems a bit more politically realistic as a starting point.

Unfortunately, I'm just a manual laborer with some ideas and a free blog account, not an activist or promoter, but if you happen to have a network of people who'd support the idea, by all means help me get some signatures
http://petitions.moveon.org/sign/a-35-hour-work-week-will

Free Market VS Capitalism: So How Do We Fix It?

[Part 10 of 10, Free Market VS Capitalism essay series.  Part 1 here]

At its root, the solution is a change in mindset.

The whole point of having an economy is to support and improve the lives of the citizens, the people, who make up society.  The economy isn't a goal in itself.  Benefiting "the economy" has no value if it doesn't benefit actual people.  There is no principal involved - any principle which does not actually make life better for real life people is necessarily an invalid principle.

There is a widespread misunderstanding of the Amish approach to technology.  The Amish are not luddites.  They simply question the value of each and every use of technology on an individual case by case.  So while they may not find that the use of tractors in general improves life for their society, if a particular farmer is disabled, he might be granted an exception.
If the entire point of the economy is to benefit society as a whole, it makes sense to question whether or not that end goal is being accomplished.  As the graphs in part 3 show, it is not.  Maximizing growth had value when the nation was young and growing, but today we are grown, and conditions have changed.

Our current system gives the biggest reward to people who do no actual productive work, thereby decreasing the pool of wealth and resources available to everyone else. It keeps employment up only by constantly growing, ensuring rapid environmental destruction and unnecessarily stressful lives for everyone but the upper 0.01%, with some people working 40-50 hours a week and others working none at all.

This would all be easy to fix - and far from socialistic idealism, doing so would require less government intervention, and more free markets.

The trick is to remove all those government creations whose sole purpose is supporting capitalism.



Stop issuing deeds for investment property.  Everyone should be able to have the opportunity to own the land on which they live - having a place to exist is as much a fundamental human need as water and air.  And, like water and air, we can choose to place limits on what an individual can claim ownership over.  No one can buy a river, and no one can claim title to a chunk of atmosphere.  If government refused to issue titles, and refused to enforce claims of ownership of property which the owner was not personally using, there would be no such thing as investment property.  Each individual could own exactly 2 parcels of land - one on which they live, and one for a business.

Stop issuing corporate charters- or at least look at them on an individual case-by-case basis, as the Amish would, and approve them if - and ONLY if - it is determined to be in the best interest of society as a whole.
Instead of issuing a corporate charter of indefinite length to anyone who applied, a charter could be (as they originally were) for a fixed period of time - say 1 year.  After a year, the corporation is dissolved.  For any time longer than that, the applicants would have to demonstrate that its existence would not just profit the shareholders, but would provide some tangible benefit to society that could not be provided any other way, and which more than compensates for it's inherently anti-competitive, anti-free-market nature.

Never allow any corporations to merge, and severely limit the ability of privately held companies to buy each other - this last is a government regulation, but it is one that preserves the integrity of competition, which is a prerequisite for free markets to operate efficiently.

Tie working hours to productivity.  If, for example, the invention of computers increases the overall average productivity per worker by 100%, then overtime law should be adjusted to begin paying time and a half at 20 hours per week.  Again, this preserves an existing regulation, but it is necessary to offset the effect that technology has on income inequality and the labor market (and it isn't a new regulation, but merely an adjustment to an existing one - does anyone really want to go back to before there was such a thing as a "weekend"?)

Instead of copyright lasting for an entire lifetime after the author dies, it could be based on compensation - once the creator has sold enough to make back their investment plus living expenses, maybe a nominal percentage profit on top (10%?  maybe even be generous, and say 25%), once that threshold has been reached, the copyright would automatically expire, and it would enter the public domain.
In the age of the internet, an investment in technology or software or media can become profitable within months, sometimes days, of going public.  There is no reason to leave technology to profit a single individual for 20 years - the moment the investment pays off, there is incentive to have made the investment.

Stop underwriting the finance industry.  Not just the occasional bailout, but ongoing stuff like free insurance and below market rate loans, give banks and investment firms a huge advantage using tax payer dollars.

Tax unearned income at a rate at least as high as earned income - in our current system, money you get just because you already have money - snowball money - is actually taxed  less than money you earn by going to a job, working hard, and producing something of tangible value to society.  Although it is not the biggest reason for income inequality, it is certainly one of the most blatant ways we have set up rules to benefit the already rich at the expense of everyone else.


All these steps would serve to level the playing field, so to speak.  If the playing field is level, then snowballs can't take off under their own weight.  No one would be limited from getting rich - people could make their snowballs as large as they want - but a person would have to roll it themselves.  We would have a true merit based society, where the rich earned not just their seed money, but every penny along the way, by producing value and contributing to society.
Economic growth would slow, but that would be ok, because we have enough already.
With all the excess wealth no longer going to the investment class, there would be plenty left over to raise per hour wages, which would allow everyone to make a decent living with far fewer working hours, which would more than compensate for jobs lost due to less economic growth.  If working hours were reduced proportionately to how much productivity has increased since the 40 hour week was instituted...

  

 ...the standard work week would be 5 hours, increasing job openings by 800% - there would be no unemployment, and the market would naturally drive up wages as employers competed for employees.
Instead of some working overtime (plus long commutes and mandatory lunch breaks), some collecting government checks, and others living on investments, everyone who could work would work, but no one would have to work more than an hour a day.

This vision is so far from today's reality that it seems idealistic, utopian, downright silly.  But the numbers work.  It only seems unrealistic because it is so hard to conceptualize just how enormously much wealth the upper 0.1%  skims off the top of the productivity of everyone else.
Eighty-five people control the same amount of wealth as half the world's population.
That is 85 people compared with 3.5 billion.  That's all snowball money.  All those resources being so concentrated is the reason everyone else has to work 40 hours a week, despite all the gains that technology have brought to production.

(What a funny coincidence, this looks just like those last graphs!)

This didn't "just happen".  It isn't the inevitable consequence of the free market. It began when government started instituting laws and policies which were, in theory, pro "business" and growth, but in reality which much more specifically pro "large corporation", at the expense of small independent business.  The citizenry has gone along with it, seduced by the claim that what is good for giant corporations is good for America as a whole.  Because the effects are gradual, and diffuse in a very complex system, most never noticed the consequences as they happened - and those who did usually jump to a reactionary opposite extreme such as anarchy or communism, and as a result get written off altogether.

If we recognize that the free market and capitalism are not the same thing, that capitalism is better for growth but the free market is better for equality of opportunity, average standard of living, the environment, and the well being of everyone (even those who would only be wealthy instead of rich, since additional money has zero marginal utility to the already wealthy, but they would live in a world with more stability and less crime) - then the solutions to the problems of capitalism are obvious.


The only question left is, how do we go about actually instituting them?


[UPDATE: A friend who read this asked me for any ideas on how, as an individual, we might work towards a free market future.  This is what I came up with: http://biodieselhauling.blogspot.com/2014/06/walk-talk.html ]

Free Market VS Capitalism (Market Corrupting Capitalism, Part 3: Intellectual "Property")

[Part 8 of 10, Free Market VS Capitalism essay series.  Part 1 here]

The Colbert Report
Get More: Daily Show Full Episodes,Indecision Political Humor,The Colbert Report on Facebook

I don't know if that video will come through on blogger properly.
Here's a link, in case it doesn't: http://www.colbertnation.com/the-colbert-report-videos/433578/march-06-2014/warner-music-s--happy-birthday--copyright?xrs=share_copy



It seems kind of funny, and fairly trivial, but the implications are really kind of profound.

The tune to the traditional birthday song was created by two school teachers in 1893.

The lyrics were created by their elementary school students (there are only 5 words).

It was published 20 years later in a music book.

Then, in 1935 a company randomly decided to copywrite it - which they could do since no one else had ever tried to.  This company had no connection with the original authors, or even the first people to transcript the notation.  They simply claimed it.  For some bizarre reason, our legal system considers "finders keepers" and "I called it first" as a legitimate grounds for ownership of something which has already been established as being in the public sphere.

Flash forward 50 years (95 years after it's creation, the people who actually created the tune aren't even alive anymore) - and Warner Brother's buys the company that "owns" the song.

Technically speaking, if you sing "Happy Birthday to You" at a birthday party, you own Warner Brothers a royalty.  They don't go to the extent of enforcing that at individual parties, but they really will demand payment if the song is played in any form of media or at any commercial venue.

And the law supports them in this!  Remember, the people who came up with it were not under contract to Warner Brothers.  They were not Warner Brother employees.  Warner did not purchase the song from the people who wrote it.  They purchased it from a company that simply decided to claim it, on the grounds that no one else had.

They took something that was freely available to everyone, and make a profit from it.

The story of Microsoft is not nearly as bad, as Gates and Allen did make significant technical changes to the software they used to monopolize the market - but similar to claiming a freely available song, their first operating system was based on free, open source, existing software (BASIC), adapted to new hardware.  Later DOS was a modification of other existing software (CP/M), which they purchased, they did not create from scratch.

The entire idea of having "intellectual property" is supposed to be to facilitate the compensation of the creative and innovative, to encourage things like art and research which might not be cost effective to invest the time or money into otherwise.

Isn't it?

That would make sense, and its the reasoning most frequently encountered.

The rather bizarre reality is, though, that copyright extends to 70 years AFTER the creator dies!

If its a corporation instead of an individual taking credit, it lasts 120 years after creation (since a corporation may never die).

That kind of undermines the idea that the purpose is to support the creation of creative works and invention.  A dead person can't receive royalties.  This system GUARANTEES that someone is going to get income that they did nothing to earn, whether its the creator's descendants or the corporation that buys the rights to something they didn't create in the first place (because, of course, a corporation isn't actually a person, its just a concept, and it can't create anything).

It's reasonable that a person should be entitled to compensation for the hard work that goes into creating a creative work.  It's less clear how one's heirs are entitled to compensation for their creative work.  Or, to be more direct: they aren't.  Not morally, anyway.

But even aside for the whole "royalties go to some random person for an entire lifetime after death" thing, even extending profits for a single lifetime is a questionable practice.

Labor with tangible products requires just as much effort, and frequently just as much skill and/or creativity.

A fine custom furniture maker, for example, puts in physical labor, needs special skills and tools, and artistic creativity.  When they are done they can sell the product of their labor and creativity.

But they can only sell it once.  They don't get residuals from that one creation for the rest of their life.  Once the piece has been sold, the new owner is free to do what they like with it, including turn around and sell it to someone else.
Intellectual "property" isn't like actual property.  Media industry has popularized the word "piracy" to describe the sharing of media, but in actual piracy or theft the original owner is deprived of something.  At one point they had some physical object in their possession, now they don't have it anymore.  If a person burns a copy of a CD and gives it to a friend, the record company hasn't actually lost anything.

When the concept of government protected intellectual property rights was first developed, your potential consumers consisted of the town you lived in, or however many people you could personally stand in front of and pitch to.  As a writer or composer that was unlikely to be any different.  Without some guarantee of protection, an author would get no compensation at all, as people could copy your work freely.   But even with it, if it was reproduced by someone who brought it to some other country, you would never even know about it. 
Your income from any one creative work was limited by the distribution network - as in, there was no such thing as distribution networks, therefor it was quite limited.

Today distribution networks reach every part of the globe (thanks to mobile computing, one in three people in the developing world has internet access in 2014), and the per unit production cost of (e)"books", video, software, etc is essentially zero. 
Consequently, any of the ways a person can get extremely rich involve creating something which can be infinitely reproduced, and a small to moderate fee charged to each of a virtually unlimited audience.
Examples range from software developers to musicians, movie stars and athletes - any form of media creation; all examples of a zero or negligible additional cost per consumer, and millions of user.

In 1710 it might actually take an entire lifetime to make back the cost of producing a book.  In 2014, with our virtually universal distribution networks, a movie which cost $70 million to produce can make back its entire production budget on opening weekend.  And movies make most of their money not in theaters, but from DVD sales and TV licensing!

Its not that people who produce intangible goods are actually more valuable to society than those who create tangible goods. Its just that the concept of intellectual property was developed before "unlimited consumer audience" was even conceivable, and human (and Americans in particular) have trouble with the concept of "enough".  Especially when the topic is money.

Patents are not nearly as bad as copyright.  Far from lasting an entire lifetime after the creator dies, a patent generally lasts only 20 years.  The rational behind having patents is valid: without them, innovating wouldn't be profitable, and so many innovations, especially those that take significant investment in time or money, are unlikely to be made, and unlikely to result in an actual end product even if they are invented.  Furthermore, without formal protection, even if an invention were made, its creator is likely to keep its function as secret as possible, to prevent copycats.  When applying for a patent all the details must be revealed to the patent office, which means that once the term of patent is up it becomes public knowledge that others can build upon.

Fair enough.

But, like with copyright, times have changed much since the standards were set, and twenty years is a very very long time in the internet age.  Given how soon an invention can break even on production costs, it leaves a lot of time where further innovation building off the first is impossible.

How much further back would human technology be today if the process of deliberately making fire had been patented, and the idea was not allowed to be spread or built upon for an extra 20 years?  What if the wheel had been patented?  How about writing, or the idea of planting certain edible plants? 

When a drug company scientist discovers a cure to a horrible debilitating disease, her employer can charge whatever they want for it for 20 years, even if they already made a profit over and above all of their research and production costs in year 5.  The net result of such a situation is that executives and shareholders of the company can become extremely rich, while humanity as a whole suffers unnecessarily.

How much faster would science, technology, human knowledge grow if patents were only 5 years - or tied to profit, rather than time?  What if, instead of an arbitrary fixed length of time, a patent lasted until the inventor made back no more than 20% above development costs?  There would still be economic incentive to invent and innovate - 20% is a much larger return on investment than you can expect from the stock market or real estate.  Profit just wouldn't be unlimited.



[Next up: Government Intervention]

How to get to the Top (without actually having to work for it)

[Part 5 of 10, Free Market VS Capitalism essay series.  Part 1 here]

Pro-capitalists generally take it as a given that anything someone has they must have earned, and therefor must deserve.

Of the 20 wealthiest people in the world, 1/2 of them inherited their snowballs.  At best, they get credit for keeping it rolling, for not finding a way to stop it, but they got it already large, already moving.

More to the point, nobody actually creates a truly massive snowball of wealth by their own productivity.

Nobody has ever gotten to the top 0.01% via hourly wages.  One would have to average $25,000 per hour for an entire full-time working lifetime in order to actually earn a billion dollars.

Nobody gets 0.01% rich on salary either - not even CEO or sports legend level salary. 

For the most part CEOs of successful companies are still just in the relatively lowly 1%, maybe the top half a percent.

The most reliable way to get even just to the 0.1% is setting up conditions so that you make money without having to work for it: rent, investment dividends, royalties - or, of course, just having employees.

Acquiring a disproportionate amount of world resources tends to involve one or more of the following - lending out existing capital so that other people give you a percentage of their own labor productivity, or producing something with low marginal cost (something cheap to reproduce) that can be widely distributed - music, movies, sports, software.

I'll come back to the second later.

Pro-capitalists generally justify investment returns on the grounds that the person paying the interest is benefiting from the use of capital that they didn't have to save up on their own.

But that argument is circular.

If some people weren't hoarding all the wealth to begin with, there would be more left over to go around, and people wouldn't need to borrow so much in the first place.

Imagine if a rich man moves into a tiny country and buys the entire nation's mining land. 

His miner's extract ore, it is delivered to his smelters and forges, and he builds all sorts of metal tools.

Then he opens tool rental places.  Anyone who wants to build anything has to rent all their tools from him.

He claims he deserves all the rental fees he gets, because he put down the capital investment in the mines and factories that create the tools.  But before he showed up, the metal ore was still there, the mines were a public good, and competition between lots of little tool makers kept prices competitive.  The fact that he rents the tools instead of selling keeps supply limited and his income high.

In short, if he weren't hoarding resources in the first place, people wouldn't be dependent on his capital.

Perhaps the best example of this is in land, which will be the topic of the next installment.

[Next up: Market Corrupting Capitalism Part 1: Investment Property]

Free Market VS Capitalism (Current State of Affairs; or: Why Should We Care?)

[Part 4 of 10, Free Market VS Capitalism essay series.  Part 1 here]

 A Historically Unprecedented Concentration of Wealth

There are a number of independent ways our system tilts the field and gives an unfair advantage to those who already have capital. This makes things much easier for those who need the least help.  At the same time, by encouraging resources (remember, financial wealth, like paper curranecy, is just a convenient placeholder for actual tangible resources) to be concentrated in a few hands, the system makes it substantially harder for those without capital to make a living. 

Pro-capitalists will often point out that wealth is not finite - value can be created, both by extracting primary resources from the Earth (farming, mining, logging), but notably via technology - an iphone has more value than the plastic glass and metal it is made of. 

However, at any given moment there is a finite amount of wealth currently in existence.   If one person were to have 220 trillion dollars, that is another way of saying that one person controls 98% of all the (currently available) resources on the planet.  This means that the other 7 billion humans would have to divide the remaining 2% among them. 

Gross world product (GDP of all countries combined) grows by approximately 3-5% per year.  But our one insanely rich individual is getting 98% of that 3-5%.  So the growth that goes to everyone else would be .08%  Less than a 1/10th.

This is just a thought experiment - reality is not quite that bad - but it demonstrates why the "wealth can be created" argument is meaningless.  For one, it is impossible to live on hypothetical future growth.  For two, under capitalism, those who already have enough are the ones who get the vast majority of that new growth anyway.

My analogy of one person owning everything is extreme... but it is not as far off as most people would assume.

I think this is one of the primary reasons this issue isn't taken more seriously by more people.  Most people don't realize just how extreme wealth inequality really is.  It's nearly impossible, because the numbers are bigger than the human brain is able to conceptualize.  It's like trying to really understand, on an intuitive level, the size of galaxies, or the distances between them, or the age of the universe, or how everything is made of subatomic particles.  It is humanly impossible to have an idea in our minds of exactly how big the number one googol is (yes, it was a number, before it was a brand name). In reality it is a specific number, but as far as the human mind is concerned, it is interchangeable with infinity.  The number one billion is trillions and trillions of times smaller a number, but it is already inconceivable.  Go ahead, try it: try to picture one billion people.  Or a billion stars.  What does it really mean?  It just gets blurred together as "lots and lots".

We tend to think of emperors, pharaohs , sultans, railroad barons, as having extreme wealth and power compared to the people they lived among. 

In reality there is currently the most extreme wealth inequality there has ever been in human history.

Eighty-five people control the same amount of wealth as half the world's population.

That is 85 people compared with 3.5 billion.

Imagine 85 people.  They could all fit in one large room.  You know more than 85 people by first name.

Now imagine half of all humans in the entire world. 

See, I wasn't exaggerating when I said my analogy wasn't actually that far off from reality.

Those 85 people each have (on average) over 41 million times as much as each of half of the human population has (on average).

Almost half of the world’s wealth is now owned by just one percent of the population - $110 trillion.

Most people know that there is wealth inequality.  But few people realize the extent:

But even this graphic is extremely misleading - the smallest division it shows is 1% of the population.  Within the 1%, if you subdivide it even further to 0.1% or 0.01%, that set of subgroups is just as unequal as the 1% is to everyone else:

See that pink square about 3 or 4 squares down from the top on the right? There is more or less your successful 1%er.
See how much closer it is to the rest of the 99% than it is to the top square? 

The lower 1% is made up of doctors, lawyers, CEOs, frugal computer programers, small business people, and others who actually earn their wealth through direct productivity. 
They actually have a closer amount of wealth to the poorest 50% than they do to the handful of billionaires in the top 0.01%

These graphs are all only showing the distribution in the US.

Granted, the US has some of the most extreme inequality in the developed world, and the country as a whole has disproportionate wealth for its population size compared to most of the world.  But these same graphs would be far more extreme if they included the entire human population.

Now go back to my thought experiment near the beginning of this page.  There is a finite amount of material resources at any one time.  If one person - or 31 thousand (the top 0.01% of America) - holds the majority of everything, then everyone else has to divide up whatever is left.  This means that the the concentration of wealth directly impacts poverty.  You can not ever eliminate poverty while leaving such massive wealth concentration in tact.

Go back to my analogy from a previous page - some people's snowballs have gotten so large that they pick up ALL of the snow as they pass, so that there is basically nothing left for anyone else.

[Next up: How to get to the Top (without actually having to work for it)]

Free Market VS Capitalism (What is Capitalism?)

[Part 3 of 10, Free Market VS Capitalism essay series.  Part 1 here]

When people point out the extreme income inequality, the corruption of politics, the dissolution of labor protections, environmental degradation, and all the other similar and related injustices we see occurring, they are not referring to free market economics.  These things are almost all due directly to capitalism.

The best analogy for capitalism I've come up with was during a spirited debate about the ethics of capitalism on the Mr Money Mustache forums:

A person makes a snowball.  In order to make a snowball, you have to physically go outside, scoop up some snow, and mush it together.  You produce it by your own physical labor.  Once you have it, you can put it down in the fresh snow and start rolling it around, and more snow will stick to it.  That makes it a lot easier to get more snow on your ball more quickly.  And the bigger it gets, the more it collects with each revolution.

The assumption I always made - the one that most make - is that capitalism arises naturally from the free market.  One person produces more income than they spend, they save the difference, they invest it, it earns them more income, which they reinvest. 

This really does happen, and could happen in even the most primitive and simple society.

So the extremes we see today must be the natural extension of that process... right?



But that is equivalent to saying "When I work out, I get stronger and more muscular - therefor body builders and power lifers must have gotten to where they are just by working out even harder, for more years" - neglecting that all of the top athletes have some degree of genetic gifts, professional coaches, extremely strict diet plans, and most use some form of biochemical assistance that would get them banned from most professional televised sports.

Its the same with capitalism - the extremes we see today are not just from some people working harder and investing more wisely.  There is another element being introduced.  That element is the state.
The State is the coach, diet plan, and performance enhancing drug of capitalism.

In my analogy the person making the massive snowball is still out there in the field, pushing the ball around the field with their own arms and legs.  The increases come faster, but they are still contributing to the process.

But what happens if they find themselves at the top of a hill?  Push it to the edge, and it takes off on its own.  At that point they have stopped contributing any labor.  They have stopped contributing anything at all.  If the hill is big enough, it may get enormous, gobbling up any snow in its path (and perhaps crushing anything that gets in its way - but lets not take this analogy too far just yet...) much faster than any person could possibly collect it by actual productive labor.

What the state does, in this analogy, is control the angle of the hill.

By default, the part of capitalism that is built into the market - if you earn more than you spend, you will have excess, and that excess can be invested - can tilt the field inherently. 
But what we see today is a massively tilted field, and that is due to specific policies and laws and rules that - although we take many of them for granted - are choices we, as a society, have made. Choices which we could change any time we, collectively, decide to.


[Next up: The Current State of Affairs; or: Why Should We Care?]

Free Market VS Capitalism (What is a Free Market?)

[part 2 of 10, Free Market VS Capitalism essay series.  Part 1 here]

So, what do I mean by the assertion that capitalism and the free market are different things?

The key feature of a free market is that all individuals are free to participate and make their own decisions.

We treat the term "capitalism" as if it's key feature were the same, but the real key feature of capitalism is that some people accumulate wealth - capital - and use that wealth in ways that allow them to leverage additional wealth out of existing wealth, without having to personally contribute any additional productivity. 

The easiest way to think of a free market is imagining a literal market: a flea market or farmer's market.

You have a big empty lot partitioned into more or less equally sized parcels.  A bunch of different independent vendors rent one, and sell whatever they want, for whatever price they want.  Customers wander around and buy whatever they want.  Seller and buyer can negotiate prices, and sellers with better product will sell more and/or can raise prices, but as long as each seller does better than break even, they will likely show up again next week, keeping competitive pressure on every one else and keeping variety available for the consumer.

Under capitalism any one vendor which has any form of advantage - maybe they have a better product or a more efficient process that allows them to lower prices (or maybe they just have an advertising guy with a degree in psychology, or they are friends with the market manager, or they inherited a million dollars from Great Uncle Giles, or they use slave labor; the point is it really doesn't matter what the advantage is, and there is no reason to assume it is always a better product) - can use that initial advantage to first buy 5 or 6 different stalls in the same market (but as likely as not, give them all different brand names so that customers don't know), and then 1/2 of all the stalls, and eventually all of them, so that its really just one single vendor (pretending to be many small vendors, for marketing purposes).  At that point they can set prices and lower quality, because there is no competition, and consumers no longer have any choices.

Really, in the real world that process would be simpler and more straight forward - the big empty lot that once housed the market would become the parking lot to the new WalMart, done and done.

When Adam Smith talked about the invisible hand of the free market, he was explicitly talking about the former scenario, and not the latter.  When people point out the efficiency of markets, how many people acting independently can produce complex things more efficiently than central planning can, whether they realize it or not, its the free market they are talking about.

Remember this the next time you hear anyone use the "invisible hand" analogy, or support the notion of the efficiency of individual self-interest in the context of capitalism - these concepts were never meant to apply to capitalism.  They are referring specifically to a free market.

There are a bunch of individual factors that are necessary for the "invisible hand" of individual self-interest to actually maximize efficiency and utility for a society:

-Virtually unlimited buyers and sellers - any industry which has seen significant corporate consolidation is out

-No barriers to new sellers opening up shop - anything which requires major investment in infrastructure or equipment doesn't count

-Complete transparency of information - the internet has gone a long way to providing this one - in the past this one made the entire idea purely hypothetical. 
So, score one for Free Markets.

-Zero transaction costs - any purchase made by credit card isn't a free market transaction.  Also all financial industry transactions, stocks purchases, loans, by definition, don't operate in a free market

-Non-increasing returns to scale - as soon as you outsource manufacturing because you can't keep up with demand, you have left the free market, and transitioned into capitalism.

-Rational buyers - the entire $44 billion advertising industry is devoted almost entirely to preventing rational buyers. Pre-Edward Bernays advertising was generally of the format: "This product exists.  These are its features.  This is what it costs."  Post-Bernays marketing is about using psychology to manipulate individual behavior; getting people to buy something which they wouldn't without the ad, even if they knew about it.

-No externalities - anything that produces pollution or draws on common goods can not be claimed to operate in the free market.

Obviously that doesn't leave much left. 

Even in the best of circumstances, its very unlikely that all of those conditions would apply.  The entire thing was a theoretical framework to begin with. But it is certainly possible for an economy to lean more in one direction than the other.  The more we set things up to encourage capitalism, the further we get from a free market.

There are a few other factors in addition to the ones above, but if you don't want to enroll in an economics class before finishing this blog post, there is one very easy and quick way to tell whether a particular industry or company is actually operating in a free market, in the original Smith use of the term:

In a free market, sellers make zero profit.

Read that last sentence again a couple times.

Think about all it implies.

Understand - this is not my own personal opinion or interpretation.  This is what Adam Smith, father of economics, wrote in his famous, oft quoted, book, The Wealth of Nations.

Perfect competition dictates that sellers will sell at the lowest possible price that allows them to break even.

This does not make being in business pointless.

Profit is what is left over after paying not just costs for materials and rent and advertising and loan payments, but also paying the employees, including management.

People are still making money.  If the manager is the owner, the money they make is not profit, it is salary.

That is the point in running the business.  There is even still a point in investing, as the company could still pay interest on their loans.  Profit is what is left over after all costs.

Any industry or company that has more than zero profit is not operating in the free market.

[Next up: What is Capitalism?]

Free Market VS Capitalism

7 years ago I wrote about how, contrary to almost universal belief, democracy and the free market not only don't necessarily go hand-in-hand, but they are actively opposed to each other.

That they are two parts of a single whole comes from a extremely successful deliberate public relations campaign by US government and corporations, going all the way back to inventor of manipulative public relations and advertising, Edward Bernays.

The next year I pointed out parallels between capitalism and anarchy - but I got it wrong.  I should have compared the free market to anarchy.

I was making a similar mistake myself.  American propaganda has basically everyone assuming that the terms "free market" and "capitalism" are interchangeable.  I realized quite some time ago, in arguing with anarchists, libertarians, conservatives, and capitalists that the two meant distinct things.

But what I've realized only recently is that, just like democracy and capitalism, the two are actively opposed to each other.

You can not have a free market under capitalism.  And you can not have our current degree of capitalism without a significant amount of State power actively manipulating the market, which inherently means it is no longer "free".

Of course, even though modern America treats them as interchangeable, this idea is not new.

The person who basically invented the entire discipline of economics, the person who's words capitalists use more often than any other, Adam Smith, recognized that the two were actively opposed, and even that it was the role of the State to intervene to prevent capitalism from corrupting a truly free market.  Unfortunately, few of the people who claim to follow his model actually read his book...

In my next couple posts I'll get into explanations, examples, problems and (hypothetical) solutions.

For now let me just point out that realizing this distinction reconciles a lot of the apparent conflict between the arguments of people with various political/economic outlooks.  One side points out the (legitimate) benefits of the free market, while the other is focused on the (legitimate) problems of capitalism.  Its only because both sides assume (incorrectly) that the two are the same that they are stuck at an impasse.  I propose there is no valid reason we could not set up society in such a way to continue to receive (the majority) of the benefit of a free market economy, while avoiding (the majority) of the problems of capitalism.

[Next up: What is a Free Market?]

Something is wrong here

Is it just me, or is this circular reasoning?

-Corporations should be allowed to outsource jobs so that they can stay competitive.

-It is important that American corporations stay competitive in order to support the economy.

-It is important to support the economy because it provides American jobs.

Why OWS and the 99% is THE fundamental issue, which lies behind all others:

[This is another of those things I wrote years ago, and has been lost in draft form.  I think I originally planned to add more list items, and elaborate further on all of them, but of course I don't remember what exactly I had in mind]


-War: Some of the largest corporations, (Boeing, Lockheed Martin), profit enormously from war

-Civil Rights: Corporations are not citizens, and therefor should have no civil rights - they are granted right anyway.  They violate the rights of individuals without consequence.  Income and wealth inequality are the single largest factor for the different life experiences of American whites and blacks, and wealth inequality is a direct result of our economic policies.

-Gay rights, abortion, etc etc: Directly mutual relationship between corporate political power and the religious right, as they are both "conservative".  The only reason the religious right is taken seriously is because they support the politicians who are funded by corporate money.

-Environment: EPA doesn't work on shutting down your backyard BBQ.  It is corporations which cause massive pollution.  Corporations decide which power sources to tap into and what type of cars are manufactured.  It was corporations which deliberately destroyed public transit across America.

WTO / NAFTA / etc: this should go without saying

35 hour work week petititon

I tried this once before, but wasn't able to build enough momentum in time.

Different platform this time.

Click, sign it, make the world a better place:

http://petitions.moveon.org/sign/a-35-hour-work-week-will

Read more about why this is a fantastic idea on my post about the first attempt:
http://biodieselhauling.blogspot.com/2011/10/dramatically-reduce-unemployment-by.html

If I Were Elected King of the Country

My new friend asked me a few weeks ago, "what would you change about the world, if you had the power to?"

She said she tried to ask all new people she met that question.

She said it was surprising how many people didn't have an answer because they had never thought about it.

I couldn't answer, but for a very different reason.

I just couldn't sum up, couldn't choose from the list what to say first.

I've been thinking about it ever since then, and I still can't find any way to tie all the various things together, so, instead of going into the detail about how and why for each one, I think I'll just list as many as I can think of.

(and if anyone wants elaboration on any in particular, ask me as a comment, and maybe I'll make that one its own post)

These are in no particular order:

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Election day would be a national holiday.  No one could be forced to work more than a 4 hour day on election day. 

Anyone not registered to vote would pay a small annual penalty with their taxes.

Judges would be subject to recall by popular vote.

Congressional, presidential, and governor terms 6 years.

All term limits would be eliminated.

All elections would be instant run off type (or another equivalent to eliminate "lesser of two evils" votes).

Party, primary, and electoral college systems eliminated.

Voter initiative process on federal level, and all 50 states.

All campaign related ads would be banned from TV, radio, print, direct mail, and billboards, starting 1 year prior to any election.  Each candidate or initiative would receive expanded space in the official election guide.  All statements made that could not be verified by an independent 3rd party fact checker would be marked with an asterisk.

No individual could donate more than $500 to any campaign or political organization in a year.  No company or corporation could donate any amount to any campaign or political organization.  No union, church, or other group could donate without 100% unanimous consent of all members, and then no more than the equivalent of $100 per member.  For any amount an individual spent out of pocket for a campaign, they would have to contribute an equal amount to the public campaign fund. 
All of this would be less important, giving the ban on media ads.

Media (of any form) which reports any mistaken information or error as factual, would be required to report the correction with equal or greater prominence and length of time as the original mistake (if error was headline for 3 days, retraction must be headline for 3 days)

Public school would be paid at the national level, by number of students (regardless of performance).  Any outside income (gifts of cash or supplies by parents for example) would reduce funding by 50% of the amount of income (i.e. parent donates $100, then federal funding is reduced by $50), used for the pool, to benefit schools with less generous parents.

Teacher training and classroom curricula would be evidence based

No multiple choice test could be used for assessment.  Guiding principal should be teaching for understanding, not just retention of facts.

Preschool and kindergarten would both become mandatory and free.

2 and 4 year college / university would be voluntary, free for any family below median national income.

All college finals would be administered one semester after the end of the class (to test for long-term retention)

Public school teacher salaries would be cut by roughly 5-10% (approximately the amount private school teachers make), principals and administrators by 25-50% (to be within 25% more than teachers).  All of this extra money would go to hiring more teachers to reduce classroom size. 

Teachers would have at least 15min of prep time for each 55min of instruction.
They would be eligible for overtime after 112 hours per month(equivalent annual hours to other jobs, considering summer and other breaks - after reduced work hours, (see below))

Cognitive biases, logical fallacies, and predictable irrationality would be a required course in middle school, high school, and college (beginning, intermediate, and advanced, respectively).

Drug use would be decriminalized.  Selling without a license would not be.  Prostitution and gambling would also be legal, (though regulated and taxed).

No law or regulation could stay in effect unless it can be shown to tangibly benefit some individual or society as a whole.

No censorship of "indecency" (nudity, sex, language)

Sex ed would be taught in preschool, 5th grade, and 12th grade, each class more advanced and in-depth (the first would be similar to current Jr High level, the last would be equivalent to college Human Sexuality course).  It would be a graduation requirement, so no opt out.

It would be illegal to formally teach any child below the age of 18 any form of religion, (other than in a historical or sociological context).  This would include attending services.

Churches would no longer be tax exempt.

No government recognition of religion or God, even in a neutral, non-specific way (e.g. "...One Nation, Under God..." or "In God We Trust")

All pronouns would be replaced with gender neutral ones.

All restrooms and locker rooms would be unisex (with individual stalls, and/or separate areas of the room optionally)

Combat and infantry roles would be available to women in the military.

No government or business could mandate different dress codes by gender.

This would include that women could be topless anywhere that men could.

Public beaches and parks would be clothing optional.

All laws on sexual assault, age of consent, marriage, etc would be gender neutral (this would, among other things, inherently legalize gay marriage).

No cosmetic surgery (including circumcision and pierced ears) before the age of 18

All subsidies and price controls for feed crops would be eliminated.

Minimum standards for animal welfare would include daily access to outdoors and a diet resembling a "natural" one - i.e. herbivores could not be fed animal by-products, nothing would be fed manure, nor its own specie, nor a reciprocal specie (i.e. Animal A is fed animal B, and animal B is fed animal A)

All new cars would be governed to a maximum of 65mph, or to the maximum of the state is is sold in, whichever is lower.

Each lane on any highway with 2 or more lanes in each would direction would have specified lane speeds. A two lane would have a maximum speed of 65 and minimum of 55 in the left lane, and max of 55 and minimum of 40 in the right. 
For a 3 lane, from the left, the speeds to maintain would be 60mph, 50, and 40 (each +/- 5mph).  A 4 lane would be 60, 55, 50, and 45 (+/-5).  A 5 lane would be 60, 55, 50, 45, 40 (+/-5). 

Speeds on all highways would be monitored by randomly placed, (and periodically moved) radar machines - a combination of the radar systems that say "your speed is:" and the camera detection system that catch red light and toll violators.  Like the latter, they would look up registration by plate number, and mail you your ticket.

The first 2 violations would be warning.  The 3rd would be a $100 fine.  The 4th would be a $500 fine.  The 5th would be one week mandatory community service.  The 6th would be license suspension for a year.

No one could get a drivers license without an intensive driver's ed class (50 hours minimum).  It would cover all the basics, plus: changing oil, checking tire pressure / fluid levels, changing a wheel, and safety check - cone tests, parallel parking, driving in reverse - calculating speed, distance, and time, as well as braking distance and impact force at different speeds - fuel economy, basic hypermiling - safe and legal bicycle operation - auto crashes, causes and prevention - practical accident avoidance, using simulator - poor weather handling, rain, ice, snow, fog, and glare - driving with manual transmission.  The final test could not contain any multiple choice questions, and would cover all topics, some as hands on skills tests.

Driving class (as above) would have a 2-3 day mandatory refresher course every 10 years - every 5 years before age 25 and after age 60, as well as after every moving violation or accident

No communication device while driving (including hands free) except 2-way radios used in the course of a job which involves driving (truck and taxi drivers, emergency services)

Public safety tax based on weight for all motor vehicles, added to annual registration (i.e. one pays for the additional risk to everyone else caused by their choice to buy a 3 ton SUV rather than a 1 ton car) - based on the grand total public cost of all accidents, divided by the total number of registered cars, proportioned by weight.

Anyone found to be 1% or greater at fault in any auto "accident" would be automatically charged with criminal negligence.

Revoke mandatory airbags, seatbelts, crash rating standards.

Traffic lights would flash green before turning yellow (as in Mexico).  They would flash red before turning green (so you know to turn your engine back on)

Stop signs would be considered yield signs for bicyclists (as in Ohio)

All 4-way stop sign intersections would be converted to either a 2-way stop, a traffic circle, or a stop light.

All major one-way streets would have timed / synchronized stop lights.

50% tax on retail gasoline, money used to subsidize public transit.

At rush hour, instead of a carpool lane, the left most lane would be for commercial vehicles (being used for work, not for commuting), transit, emergency services, and people with permanent disabilities only.  On highways with 3 or more lanes, the next one over from the commercial / handicapped lane would be for carpools of 4+ people, plus toll road paid by electronic RFID tag

Upper limit of inheritance or gifts of $10,000.  The government income from estates would replace all (or at least most) of the income tax.

The rate for any remaining income tax would be at least half for earned income (wages / salary / commission) as for unearned income (dividends, capital gains, gifts, prizes).

The tax rate on unearned income would be steeply progressive, with a maximum rate of 99% after $100,000.

One may only own land which you personally live and/or work on - i.e. a maximum of two parcels (one for work, one for home) per person.  They can be any size, so long as they are a) continuous and b) actively and directly used by the owner in some way.

No one could have more than 2 households as tenants, and then only if the tenants share the same parcel that the landlord lives on.

Corporate charters would only be granted for very specific circumstances, where it is demonstrated that the product or service offered could not be provided by a privately held company, and that it is of overall benefit to society.  Any charter application which met those standards and was granted would be for a specific and limited time period - 1 year by default, 5 years with requested extension, 10 years considered with an explanation of the need for a longer time period.

Patents and copyright would be good for 10 years, or until a 25% return on investment was made by the patent/copyright holder, or until the applicant dies whichever came first.

Business licenses and fees would be by percentage of net income, not flat amounts.

Business insurance companies would be required to offer a broad range of coverage and deductible amounts, so that small scale and hobby businesses with low maximum potential risk could afford coverage.

Any form of business could be run out of one's residence unless a specific risk or harm to the neighbors could be demonstrated.  "Lowering property values" would not in-and-of itself be a valid form of harm.

Employers would not pay for the employees' payroll taxes.  The employee would cover the full amount of their own social security and medicare taxes.

Employers would also not cover medical insurance, but that would be irrelevant, because there would be nationalized, single payer, health care.

1/2 of company profit would be distributed equally among all employees, without regard for title or position.  Any increase in efficiency due to improved technology that were not passed on to the consumer would be distributed to employees either in the form of fixed hours and increased salary, or fixed salary and decreased hours.

No one could sue for loss of profit.

A company with more than zero profit could not lay off employees.

Overtime would be anything over 86 hours per month, would pay time and a half, no exceptions by profession, would apply to salary and commission as well.  Double time after 172 hours in one month.

No company or corporation could buy another.

No company could have more than one location, except in those cases where the nature of the company required multiple locations (such as delivery service).  Exception could be made on a case by case basis, if the expansion could be shown to benefit society as a whole enough to offset the anti-competitiveness.

Any company based in the US, or with a majority of US shareholders, or with 1% or more of product exported to the US, must follow all US wage, safety, and environmental laws and regulations, regardless of the location of production.  (For example, if a company builds a factory in China, they still must pay US minimum wage if they want to export the product into the US)

No US military protection of private property, on US soil or abroad.  For example, US oil companies would have to pay for their own private security to guard pipelines.  Private corporate interests could not be considered "national interests", even if the product they produce is of value to the nation.

Any action of military or CIA is automatically war, whether or not it is officially declared.

Any action longer than 5 days must be approved by congress.  Any action longer than 60 days must be unanimously approved by all 50 states (via senators and/or governors).  Any action longer than one year requires majority vote of all US citizens.

Military budget reduced by 90% (give or take).  It could never be increased to more than 10% less than whatever nation has the highest military budget.

Universal conscription of all citizens at 18, both genders, deferments for medical issues, but no other reason.  Everyone must attend bootcamp.  After that, choice of 2 years of either military service, or civil service.

In middle school, high school, and college, reversible long-term birth control would be provided at no cost to both genders (yes, the technology exists).  This would be voluntary, and either child or parent could choose to opt out for any reason, however it would be the default - everyone would get it unless they actively choose to opt out.

(Voluntary) permanent sterilization would be provided at no cost to all adults.

All forms of contraceptive would be covered in full through health care.

Child tax credits would be eliminated.

Welfare would provide a fixed amount per household - it would not increase with additional children.

Universal, single payer healthcare - however, in order to engage in certain high risk activities, you would have to opt out.  You would present your opt out card before buying cigarettes, and to get a registration sticker with a stripe which indicates you may drive a car without a seatbelt of ride a motorcycle without a helmet.  Possibly also for purchasing more than a certain quantity of alcohol at one time, and certain foods.  Anyone who opted out could be refused service at any hospital unless they pay in full in advance, even in emergencies.  They could still purchase private health insurance, if any private insurer wanted to cover them.



Citizenship would not be automatic:
At age 18, each person would need to pass the same citizenship exam that immigrants have to pass (this would be covered in high school). 
They would  have to go to military bootcamp, and then either serve in the military or in civil service for 2 years.  They would have to register to vote. 

Anyone choosing not to apply for citizenship would be considered a native resident. 

Native residents would not have to pay any taxes.

They also could not vote or run for office.  They would not be eligible for public assistance, including health care and (college level) education.  They could not drive motor vehicles on public roads, nor sue in court.  They would be responsible for the labor, fuel, and expenses if using emergency services such as police or firefighters. 

One could apply for citizenship at anytime, up to age 40, however, once revoked, you could not get it back for 15 years, and would have to begin the process from the beginning.

Comments from the MMM Forums Part 5: OWS / 99%

The 5th of the 5 part series of blog posts taken from the Mr Money Mustache discussion boards, on the politics, economics, ethics and philosophy, of building wealth through frugality.
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By COguy:

Your thoughts on the we are the 99% blog?

« on: November 13, 2012, 01:51:08 PM »

At the risk of seeming insensitive, I wanted to see what all of you folks thought of this.  Is it just complaining? 

http://wearethe99percent.tumblr.com/

It seems to me that if one followed mustachian principles they should get out of sticky financial situations much easier.  Ride a bike, in source everything, etc...Yet, I know I was lucky to be born to good parents and some of these people were not and I feel that that stacks the deck against them. 

Obviously, the medical expenses make sense as being very hard to overcome, but what about the rest?

…

[lots of posts, mostly agreeing that it is in fact mostly whiny pants complainers who dug their own hole and now want bailouts]

…

By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #18 on: November 15, 2012, 12:58:30 PM »

In a just world, instead of the ridiculously excessive wealth of the top 0.01% being redistibuted among the American middle class, who have plenty enough already, it should be distributed among the people of the 3rd world.

I think that's two places where the OWS people get it wrong.  The "1%" share more in common with the 99 than they do with the 0.01, and the 99 really don't need nor particularly deserve a portion.

…

By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #26 on: November 19, 2012, 09:36:10 AM »

Quote from: tooqk4u22 on November 19, 2012, 08:09:11 AM

Quote from: Adventine on November 16, 2012, 07:54:58 PM

I completely agree. Everyone all over the world has a right to decent food, shelter and education. Everything else is pretty much optional. If only there was a way to funnel the excess to those in need... but that is a completely different topic.

I completely disagree.  These are not rights, they are needs

In the most objective sense, there is no such thing as a "right" in the first place.  Its something granted by a government.  In the real world a deer has no "right" to not be eaten by a wolf.  Nor do you have a "right" to not be murdered by a mugger.  Then of course you have no right to "property", never mind privacy or representative government.
For that matter, the rich don't have a "right" to any of their wealth, so perhaps it should just be them and their hired militia to stand between the masses and their stuff, not government sponsored police.

However...

We have all collectively decided to organize society into this thing called "civilization", and we get to decide that basic necessities should be rights. 
If you want to be all philosophical and say that morality is a purely human mental construct, that's one thing (and then rape, murder, whatever you want is ok, so long as you don't get caught), but if we accept the existence of morality as an axiom, then letting some people have yachts and Bentlys with inherited money while others are born into homelessness is wrong.

…

By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #27 on: November 19, 2012, 09:53:56 AM »

Yes, a lot of middle class people make stupid choices and think they are poor.  Yes, a lot of people have an undeserved sense of entitlement.  Whatever random people decide to post a pic to a 99% website don't define the entire movement.  The simple fact is the US has the 2nd highest level of wealth inequality of any first world nation, and the 5th highest in the world.
Its not because we have an unusually extreme distribution intelligence and work ethic (that some Americans are smarter and work harder than anyone else in the world, but most are stupid and lazy), its because we have laws set up that specifically reward already having money, and therefor naturally concentrate wealth to extremes. 

See: http://en.wikipedia.org/wiki/List_of_countries_by_distribution_of_wealth
And especially see the last 5 of the external links at the bottom of that page:
http://en.wikipedia.org/wiki/List_of_countries_by_distribution_of_wealth#cite_note-2008april-1

That is what OWS is about.  Not just some whiny self-entitled middle class people with internet connections and a camera.

Comparisons with the American working class and other nations are not apples-to-apples.  There is a big difference between a nation not providing for its people because there simply is no money available, and having an enormous excess of wealth available which is just hoarded by a few people.
Certainly for any given individual personal responsibility and talent and work ethic and frugality all play into success, but for society as a whole there is a finite amount of material resources at any given time, and when 12 people - literally twelve - hold as much wealth between them as the poorest 150 MILLION Americans (thats about 1/2 the entire population) then that limits how much is available to everyone else. That level of wealth is obviously outside of any possible amount that could be justified by differences in natural talent and work ethic. 
We don't have anything remotely resembling a level playing field.

There was once a time where in most of the world the King owned everything, and everyone was his subject.  He got the position by being born into it.  Most of the world has gone out of their way to move away from that model.  Some of us see the current extreme concentrations of wealth (and the influence of money on government) as being a step back towards an aristocracy.
Personally, I'm a fan of democracy, so I feel that is a bad thing.

…

By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #37 on: November 19, 2012, 01:25:24 PM »

Quote from: KGZotU on November 19, 2012, 10:33:05 AM

It's no foregone conclusion that wealth-inequality is immoral.

I never said "everyone should have exactly the same level of wealth".  There is an enormous range between "12 people hold the same wealth as 300 million people" and "everyone must have the exact same amount, no more and no less".  That is a false dichotomy.
What I said was immoral was some people being born into billions, and other people being born into homelessness.  Exactly how is that situation made better by free market principals?  Are infants poor only because of their own lack of work ethic?  Is it by their own poor choices that toddlers fails to enroll themselves in preschool, which has the largest impact of any variable on future school performance, all the way to college?

Quote from: sheepstache on November 19, 2012, 11:03:25 AM

You seem to feel a system is bad if it results in inequality. 

I feel a system is bad if it specifically fosters and encourages additional inequality, or it has inequality built in to begin with.  If every human being started out life with access to the same education and medical care, and the same level of inheritance (or lack-there-of), then most of the differences in success can actually be attributed to personal choices, talent, etc.  Of course there will always be differences in the values instilled by parents, there will be nepotism and networking advantages, but we could certainly make a much better effort to live up to the "land of opportunity" mantra.

Quote from: KGZotU on November 19, 2012, 10:33:05 AM

Capitalism should in theory produce both wealth for the masses and wealth-inequality. This is what we've seen through the decades: a rising standard of living for all and an increase in wealth-inequality. If wealth-inequality is the price of an increased standard of living, then as a society it's worth it to live in envy of a few rich people.

Post-hoc ergo prompter hoc?  On what do you base the assumption that one is a necessary prerequisite for the other?  The big things that have been changing recently are technology growth, outsourcing of labor and importing of goods, and corporate consolidation.  The first leads to raised standards of living for everyone, and does not necessitate any increased inequality (though our system is set up so that it does in fact).  The second two increase inequality, but don't necessarily raise overall standard of living for everyone.  That both are happening simultaneously seems like happenstance to me.  Why look at a timeline of decades?  Historically the gap between royalty and serfs was enormous, but that didn't make the serfs standard of living higher than it would have been otherwise.

Quote from: KGZotU on November 19, 2012, 10:33:05 AM

Part of the drive towards success or to drive a company to success is the ability to do whatever you want with the reward for your success. That includes the ability to pass those rewards on to your children for their use. The guarantee of a good life for their children is part of the price we willingly pay to those who increase the prosperity of the nation... the system, which motivates individuals by allowing them to accumulate large amounts of wealth, has in general increased wealth and standards of living for the rest of us.

Exactly who are these people who's actions created a higher standard of living for America who, if they had been limited to, say, 1 billion dollars, instead of 10, would have said "fuck it, its not worth it, I'm just going to take a part time job at Denny's instead"?  I don't think they ever existed.  I think that's a story that rich people came up with in order to get the middle class to vote for tax breaks and lax business regulations.  If the only reason people get rich is to pass it to their children, then why do some rich people never have kids, and why are almost a third donating most of it to charity rather than passing it down? http://money.cnn.com/2012/06/18/pf/rich-inheritance/index.htm

Quote from: KGZotU on November 19, 2012, 10:33:05 AM

We could argue that a lot of our economic activity harms the prosperity of the nation rather than adding to it. The solution there might be regulations on business, but not on the wealth of individuals.

I largely agree with that.  I was never actually suggesting some arbitrary fixed cap on wealth.  I think the vast majority of the problem has to do with regulation - or lack-there-of - on business.  I would just add to that a progressive tax rate that continues to graduate just as far as the levels of wealth and/or income they apply to (i.e. the progressive tax rate curve should look more or less like the wealth inequality curve, rather than leveling off at less than 400k so that the 0.001% pay the same top rate as the 1%)

Quote from: Jamesqf on November 19, 2012, 10:36:58 AM

Rights in the classical sense - freedom of speech & religion, the right to bear arms or pursue happiness - are things people enjoy unless someone else (usually a government) actively takes them away.  That's the diametric opposite of "rights" to food or medical care, which are things that don't exist unless people work to produce them.

Its only "usually a government" BECAUSE we have the privilege of the protection of government to take for granted.  Otherwise anyone who has the bigger muscles / gang / firepower can take away anything they like from you at any time, up to and including your life.  Besides, religions and firearms don't exist unless people work to produce them either.  That's one of the main reasons we have government in the first place - the chances of deliberate premature death at the hands of another person are far lower if you live within a centralized government.  You have no speech or religion if you are stabbed in the back by someone who wants your food or your girlfriend.

Quote from: Jamesqf on November 19, 2012, 10:50:32 AM

Does it really limit how much is available to the rest of us?  I assume those 12 people are the top of the Forbes list?  Yet if you look at that list, you'll find that many of the people there CREATED their wealth, and enriched many other people in the process.  Wealth isn't a fixed quantity: it's continually created (and sometimes destroyed).

How are we defining "wealth", and how are we defining "created"?  What did they create it out of?  Are you suggesting that the value of tangible goods and services would simply never have existed if not for those specific individuals? 
Farming, mining, and other natural resources extraction creates value to humans that was unavailable previously.  Yes, technology can allow the value of raw materials to increase, essentially creating entirely new value that was never there.  In that sense economic growth is not a zero sum game.  This does not mean that any money that anyone acquires increases the total available value for everyone.  Some (individual) wealth generation is just a reorganization of existing value from one individual to another. 
In any event, while the total pot can grow over time, we only live and eat and shop in the present, and at any given moment their is a finite amount of resources that exist.  No matter how smart and hard-working 300million Americans are, there is no possible way they could divide a GDP of 15 trillon and have 1 million each.

Quote from: Jamesqf on November 19, 2012, 10:50:32 AM

Yet looking at the Forbes list, at least 4 of those 12 (Gates, Buffet, Ellison, and Bezos) started from the middle class at best, 4 others (the Waltons) inherited their money from a man who started in the lower middle class.  So maybe the problem is the quality of the players rather than the levelness of the field?

HA!  I'm not following you.  I assume you are disagreeing with me that our playing field is unlevel, but you basically acknowledged that of the richest people in our society, 2/3rds started with a significant advantage - and wait, weren't you the same one who in a different thread said that Obama going to a private primary school and ivy league colleges on scholarship meant he wasn't working class?  But Bill gates went to a private prep school and ivy league college not on scholarship, but paid for by his parents, yet he was "middle class at best"?



The idea that the existence of wealth inequality in itself somehow generates total wealth for society is certainly what the people who benefit most from the arrangement want everyone to believe, and obviously the view has become mainstream, but I'm not convinced that the trickle down theory ever had any merit to it to begin with.
The implication here seems to be that the only reason some people work hard or innovate is because they have the chance to become multi-trillionairs - and pass 100% of those trillions on to their kids.  Therefore, if we had any form of limitation on wealth accumulation or inheritance, no one would ever invent anything, or discover anything, or work more than the least they could get away with to make ends meet.

Except that looking at the scientists and inventors through history who made significant advances to human technology, a lot of them never even tried to get rich from their work.  They did the work out of scientific curiosity, or for the betterment of humanity, or just to see if they could.  No one thought they could patent and sell the invention of fire, or the wheel, and get rich from them. Many scientists and inventors in more modern times have deliberately made their discoveries public for the explicit reason of the betterment of society.
In many cases, if anyone did get rich from the idea, it wasn't the person who actually invented it.
Communist USSR managed to build a satellite before we did - and even our own moon landing was entirely publicly funded.

The mere fact of generating income for one's self does not mean you are actually making society richer.  A good example is an advertising executive.  They are not producing a good for society.  They are merely redirecting existing wealth from consumers to their particular client.  The competition may have a better product, but a good advertiser can overcome the competition's value by using psychological manipulation tricks.  The client will pay them a percentage of the money they generate for them, but society as a whole is actually worse off than if they had done nothing.   I don't understand where this crazy idea comes from that anyone who makes money must be causing the creation of an equal value for society as a whole that would never have existed otherwise.  Gates, for example, didn't create transistors and operating systems in a bubble, one man's genius giving us computers.  If he hadn't come up with MS DOS, we would have one of the other many operating systems that existed at the time, or we would have more competition than just MS and Apple.  There is no equivalent to Gates and Jobs for linux because the hard working innovative people who created it choose not to patent it and create semi-monopolistic corporations.  There are thousands of free open-source software programs, made by thousands of developers who make their work available for voluntary donations who should call into question the theory that people only generate value for society because of the promise of unlimited wealth.

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #40 on: November 19, 2012, 02:06:49 PM »

Quote from: sheepstache on November 19, 2012, 11:03:25 AM

But the existence of concentrations of wealth sure as hell isn't a sign that we're "a step back towards aristocracy."  "Aristocracy" and "democracy" are words that have actual meanings (hint: they are both political systems and while you can have combinations with bits of each they are not on some vague sort of spectrum).*

I don't think its so vague;
I was thinking of how more than half the presidencies in my lifetime were of men who were wealthy before going into office, or that the median senator's net worth is 2.6 million with a total of 57 members of congress in the "1%".  As much as $30 billion was spent on lobbying in the US last year, $6 billion was spent on the presidential election, of which over 10% was nearly unregulated superPAC money.
Money has significant influence on politics.  If the means to who has access to wealth is determined in large part by which parents you are born to -  http://www.nationofchange.org/self-made-myth-and-our-hallucinating-rich-1348495606 - it makes for a "form of government in which a few elite citizens rule"

In fact, the very idea of an unregulated economy implies that the major decisions of what goods and services will and will not be produced and how they will be distributed is in the hands of the market.  More money = more influence over the collective choices and direction of a society.  This is in contrast to the principal of democracy "in which all eligible citizens have an equal say in the decisions that affect their lives".  The economy - i.e. goods, services, and jobs, most certainly affects peoples lives.

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #54 on: November 19, 2012, 08:04:16 PM »

Quote from: tooqk4u22 on November 19, 2012, 03:30:01 PM

Is it immoral to bring a child into this world if you can't afford it - god damn right it is! Where the heck is the accountability part of your beliefs.  Here is a thought, don't have a kid if you are broke, and guess what the result would be - oh yeah, no one being born into poverty. 

I agree with you on that 100%
And how exactly is it reasonable to blame the child for being born into poverty?  If it isn't, why is it reasonable for the child to receive the punishment for their parent's lack of responsibility.  It's a bit like saying to a crack-whore seeking an abortion that she should of thought of that before she had sex with her dealer.  How is forcing the child into uneducated poverty making up for a lack of accountability?
Since the answer is "it isn't", your point, however valid, is entirely irrelevant to this discussion.

Quote from: tooqk4u22 on November 19, 2012, 03:30:01 PM

Eventual commercialization of all these things is the result of investment and many of these things (technology, medicines, etc.) would not have happened without.  Gates/Jobs are monopolies because of this commercialization not in spite of it.  I agree that others could have done it, but disagree that they didn't do it because they didn't want to "sell out", and that it their perogative but they can't bitch about it after the fact.

um, but, others DID do it.  Computer operating systems already existed prior to Apple and MS.  Linux exists today, and is used by many despite the near monopolies - and it is still free and open-source today.

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Even the advertiser is doing good, maybe not in your eyes, but they are still facilitating commerce resulting in jobs for people at all levels.  Also, advertising and marketing is necessary at all levels.  The startup needs to get the word out about their new product or service - can't just sit in your room and wait for it to happen (this isn't Field of Dreams - "If you build it they will come").  The established company may be launching a new product or building its brand or reinforcing its product.

What percentage of advertising penetration is by independent start-ups compared to  established large corporations?  The net effect is to make it harder for small business to compete, not easier.  Another example of capitalism, where the amount of income potential is related to the amount of capital you already have.

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #55 on: November 19, 2012, 08:18:50 PM »

Quote from: Sylly on November 19, 2012, 03:48:15 PM

Have to echo others here. Total BS. Why do you think people from other countries are so intent on emigrating to the US if they don't see upper mobility?

Because as a whole the US has much more resources to go around, with its enormous GDP?  Because, regardless of distribution, the working poor here have much more than the poor in the 3rd world?  Which is why I said earlier that the most just option would not be to redistribute the wealth of the top 0.01% of Americans to the middle class or even the poor in America, it would be to redistribute it to the 3rd world.

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #57 on: November 19, 2012, 09:06:18 PM »

Quote from: KGZotU on November 19, 2012, 06:42:20 PM

Quote from: Bakari on November 19, 2012, 01:25:24 PM

On what do you base the assumption that one is a necessary prerequisite for the other?

I don't make that assumption. I'm just leaving it as a hypothesis.

Fair enough.

Quote from: KGZotU on November 19, 2012, 06:42:20 PM

It is true that our current system, the whole liberal democracy moderately-regulated capitalism thing, is the greatest known engine of wealth creation, which makes the assumption reasonable.

depends, I suppose, on how moderately regulated.  I wasn't proposing eliminating the free market entirely in favor of communism.   The version we have in the US is actually not "the greatest known engine of wealth creation" - several other nations have higher GDP per capita than we do.
Note that there is not a strong correlation between average standard of living
http://en.wikipedia.org/wiki/List_of_countries_by_inequality-adjusted_HDI
and economic freedom http://en.wikipedia.org/wiki/Index_of_Economic_Freedom

Quote from: Bakari on November 19, 2012, 01:25:24 PM

In your scenario where personal wealth is limited to 1b, there would be people who would stop generating wealth once they reached a personal wealth of 1b. They would forgo generating 9b worth of personal wealth, in the process depriving the rest of us of all the wealth that the rest of us would have gained in the process.

I question whether anyone can truly "generate" 9b worth of wealth.  When someone initially comes up with a brilliant idea, they are generating wealth that never existed.  When someone is the CEO of a corporation and has hundreds of employees, or is collecting rent on real estate or dividends on investments, or collecting royalties on a patent or book, or whatever, they are no longer generating new wealth, they are simply leveraging their existing capital to skim a portion of the value of the labor of others off the top of each transaction.  If a person stops accumulating wealth after 1b, fine.  I don't understand how them making 9b more benefits anyone other than themselves and their heirs.  If they weren't making it, that wealth would be available to others.  If a CEO only makes 100k a year instead of a million, it can afford to give the employees a raise.  How is them making a million causing the nations GDP as a whole to rise?  Again, sounds like trickle down theory to me, which I just don't see any evidence for.

Quote from: Bakari on November 19, 2012, 01:25:24 PM

I think that could be a good idea. It would do both some good (more tax revenue) and some harm (discouraging the production of wealth, etc.). Like you, I suspect that right now a hike in taxes would be a net gain in terms of tax revenue.

However, I also value stasis in government, mostly because static government policies help people make good, confident decisions about their future. If you want to change tax rates, I put a high burden of proof on you because there are people who have made plans under the existing tax rates.

Basically, I agree with you that it is wrong for some to be fantastically wealthy while others starve. But a government solution could destroy wealth for the rest of us. It might be worth it to forgo a certain amount of global wealth in order to forcibly spread what's left more equally, but you could only come to that conclusion after setting a lot of premises and considering the positives and the negatives.

Agreed.  I think one place to start looking might be one of the 22 nations which manages to have a higher standard of living than us, in most cases even despite a lower GDP per capita:
http://en.wikipedia.org/wiki/List_of_countries_by_inequality-adjusted_HDI

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #60 on: November 20, 2012, 09:21:48 AM »

Quote from: KGZotU on November 19, 2012, 09:52:05 PM

I agree that the American system specifically is probably not the best. But for us, it could be the best system we can stably achieve.

Non-sense!  We had a more equitable system for most of our history, becoming increasingly unequal in the past few decades, and during that time the economy has become less stable.  That may not be a direct cause and effect relationship (though I believe - and there is evidence to suggest - that it is) but it certainly doesn't imply that the trend we are on is making things more stable.

Quote

Quote from: Bakari on November 19, 2012, 09:06:18 PM

If a CEO only makes 100k a year instead of a million, it can afford to give the employees a raise.  How is them making a million causing the nations GDP as a whole to rise?  Again, sounds like trickle down theory to me, which I just don't see any evidence for.

The idea is that there are a bunch of these potential CEOs around, and more money will buy a better CEO. You hope to buy a CEO who will produce more wealth for the company than his salary. If you can hire a CEO for $100k who will produce $400k in wealth for the company, that's great. But if you could hire a CEO for 1M who will produce 2M for the company, why not do that?

I know what the idea is.
And, like with so many of the ideas floating around that attempt to justify massive wealth inequality, the idea doesn't reflect reality:
http://www.businessweek.com/investor/content/sep2009/pi20090923_783858.htm
http://eon.businesswire.com/news/eon/20100624005334/en
http://en.wikipedia.org/wiki/Executive_pay_in_the_United_States
CEOs are like Tulip bulbs in the Netherlands in 1637 - they are expensive because they are expensive.


And again, generating wealth - even if it is not only for yourself, but also for your shareholders - does not mean new wealth was created.

Say I work hard and live frugally for years, use my savings to buy a multi-unit rental house, keep working with my new faster savings rate, and using that income plus leverage existing equity, I buy more rentals.

Eventually, with all the savings from passive income, I buy out a small company that is doing well, from an owner that wants to retire. A few years later I use company funds to buy out our main local rival. I eliminate redundant jobs, increasing profit margin. Now that the company is large and has greater reach, I can invest in automation equipment, which makes the workers more productive, which in turn allows positions to be eliminated. A few years later I buy out another, larger company increasing both our market and market share at once, and again, eliminate redundant jobs. As time goes on I may outsource entire departments, buy out more rivals or companies in different fields, or even hire a lobbing firm to try to get our taxes reduced. All of these steps would be justified in the same of "staying competitive".

When people look at my story, I had no inheritance, therefore I am "self-made".

From the point of view of any shareholders or investors, I have increased efficiency thereby potentially generating higher dividends for them.

Since I own the means of production, I may even be called a "job creator"


But what have I actually created? In the beginning, when I still had a 9-5 I was being compensated for creating something of value. But the rest of the story I am just redirecting existing cash flow to myself. I didn't build new houses (or have them built), I simply purchased houses that were already there. I did not create a business from the ground up, I purchased one that already existed, and then grew by consolidating other existing businesses. All the jobs those businesses provided were already there. In fact, the main way I increased efficiency was by eliminating jobs.


I am not saying that there isn't also some true wealth generation happening at all levels, or that this example represents all upper level economic activity, but its meant to illustrate that the mere fact of making money is not in itself evidence of creating any benefit for society as a whole.

I propose that this sort of thing really does happen, and in fact represents a significant portion of what justified as "staying competitive", "increasing efficiency", "self-made", and "job creator".


Take workplace automation, corporate consolidation, and outsourcing, for example. This done on a large scale would likely result in median wages stagnating, as scarce jobs depress competition for employees, and eventually would drive up unemployment. This would make the overall average productivity per American worker increase, without passing the value of their own productivity to them

At the same time it would result in increases in the stock market, and potentially increases in GDP, though those increases would be concentrated almost entirely at the top of the existing wealth curve.

This isn't a new trend

but you can see sharp increases in the disparity at key times in political history. What happened just before the spike in disparity in the mid 80s? Reagan, with his policies of supply-side economics and laissez-faire capitalism, deregulation and large high-income tax cuts. Then it goes even steeper, with Clinton encouraging outsourcing with NAFTA, corporate consolidation with the telecommunications act, and the repeal of Glass–Steagall

Of course those are only looking at the top 1%, which have done well, but as I've said before, the disparity between the top 0.1% and the top 1% is greater than between the 1% and the 99% (and between the top 0.01 and the 0.1 is even greater still)

Given the number of nations who have less inequality and more socialist policies, yet a higher median standard of living, and given that median income has not in fact grown proportionately with GDP in the US, what reason is there to believe that policies that help the already to rich to become super rich somehow benefits society as a whole?


…

By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #76 on: November 20, 2012, 04:00:22 PM »

Quote from: Jamesqf on November 20, 2012, 02:32:59 PM

The problem is that most people in such situations have bought into a culture that devalues education,

I'll acknowledge that, totally.  I grew up in that culture.  But I don't think its so clear which is cause and which is effect.  I think a large part of the reason for that culture is that public education has failed the communities that have it for generations, going all the way back to "separate but equal" which was never in fact remotely equal.  More recently we had (have?) a system where a school which is in need of more resources is given less, while a school which is already doing ok is given more (test score based funding).  I don't know if you have ever been a public school teacher in a poor inner city neighborhood, but suffice it to say there is a reason there is such high turn-over.  From a student's point of view, its extra challenging to be enthusiastic about learning when the teacher's two main focuses are discipline and standardized test scores (though the teachers themselves don't deserve the blame for this, as they don't really have a choice).  The educational system failed the parents 20 years ago, and they don't see any relevance to science or literature or algebra in their day to day lives, so they don't encourage their children.  Of course there are individual exceptions, examples of people who ignored the culture around them and had intelligence to succeed, but there is a systemic reason the culture exists

Quote from: Jamesqf on November 20, 2012, 10:36:54 AM

So if you want to correct this, there are two alternatives: either you give the poor people more money, or you take the kids out of the poverty culture.  But if you give them money, do you suppose for a second that it will cause them to raise their children with more respect for education?  Or will they just spend the extra money on consumer goods?  And if you try to take the kids out of the culture... why, you're committing cultural genocide!

Those are not the only alternatives.  How about mandating and fully funding pre-school and kindergarten, so that kids who's parents can't afford private pre-school don't enter 1st grade two full years behind? 
How about extending FASFA so that it fully funds everything but living expenses for 4 years of college for anyone who can't afford it?  How about changing the welfare laws so that a parent can go to college without being cut-off
(as it is, anyone on AFDC is required to look for work - any work they can find - or else they are cut-off.  Going to college is not an acceptable alternative.  I know this because it is what happened to my family. My mother just gave up the benefits so she could finish her degree)
How about making education more relevant by, for example, teaching kids about financial management? 
How about fully funding schools on the federal, or at least the state, level, so that schools in poor neighborhoods have the same resources as ones in wealthy neighborhoods (I know of public schools that have a computer for every student, and others where the teachers have to literally bring in their own paper from home in order to make copies), and making that funding increase (or at the very least not decrease) if the students are struggling?

The money for all these programs can come from the savings they would create in the prison and welfare budgets, as well as the increasing GDP from having an entire sub-set of the population become productive members of the economy.

Its easy to point blame at specific individuals, but when its as wide-spread as it is, eventually you have to look for the systemic root and fix it.  Talking about "individual responsibility" doesn't make anything better. 

Sure, history does not force any particular individual to, for example, commit a crime, every individual is responsible for their own choices, and they should be held accountable for their actions.  But when you look at a population as a whole on the macro level, you have to take the big picture into account.  Black people as a whole have a higher crime rate.  And to focus entirely on individual choices while ignoring 250 years of slavery (reparations for which were never paid) followed by almost 100 years of segregation and Jim Crow, with the civil rights movement being only ONE SINGLE generation ago, is well, ignorant.  Literally.  Obviously, regardless of the existence of overt racism or who we elect as president, the effects of this, which has spanned the majority of the history of the country, are not going to simply disappear overnight, especially considering that as a society we have done next to nothing to try to make up for it.  So we continue to see a disparity in poverty rates, crime rates, and, yes, cultural views of education.

Just like tooqs comment that poor people shouldn't have children, blaming individual susceptibility to culture does nothing to improve anything for anyone, so why even bring it up?

…

By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #83 on: November 20, 2012, 07:30:13 PM »

Quote from: Jamesqf on November 20, 2012, 04:40:08 PM

Quote

I think a large part of the reason for that culture is that public education has failed the communities that have it for generations, going all the way back to "separate but equal" which was never in fact remotely equal.

If "separate but equal" was the cause, why would we see almost exactly the same process at work in the overwhelmingly white redneck/hillbilly areas, such as the one in which I grew up? 

Because my example was just an example.  Its really more about class than race.  Note my mention in the last post of locally funded education, with any federal assistance being test score based.  These both serve to make things more challenging for any community which is already poor, of any color.  Poor rural areas are at a disadvantage just like poor urban areas are.


Everyone keeps pointing out that upward mobility is possible for an individual.  There is no question that this is better than a straight caste system or serfdom, but the point is that some people have to work very hard at it, while others have everything handed to them.  Inequality thats due to differences in talent and work ethic are fine, the problem is a political and economic system designed specifically to help the already rich get richer and make it especially challenging for the poor.

Quote from: liquidbanana on November 20, 2012, 11:55:11 AM

As far as immigrants who have achieved upper mobility, how many of these already had college educations and middle class status in their countries of origin before the immigrated here?

Basically all of the legal ones, at least for the past few decades.

"People who want to become immigrants may apply... according to the following employment based preferences:

First Preference: Priority Workers, including aliens with extraordinary abilities, outstanding professors and researchers, and certain multinational executives and managers
Second Preference: Members of professions holding an advanced degree or persons of exceptional ability (including individuals seeking a National Interest Waiver)
Third Preference: Skilled Workers, professionals and other qualified workers
Fourth Preference: Certain special immigrants including those in religious vocations
Fifth Preference: Employment creation immigrants (investors or entrepreneurs)"
http://www.uscis.gov

The very fact of having been allowed to immigrate to the US is evidence of already having a head start.  Otherwise they don't let you in. 

…

By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #93 on: November 21, 2012, 09:05:17 AM »

Quote from: KGZotU on November 20, 2012, 07:19:13 PM

Well, we haven't agreed yet that the most equitable system is the best system.

That would be communism, and I don't think it is the best system.  I was pointing out that increased inequality has not been accompanied by increased average standard of living.

Quote from: KGZotU on November 20, 2012, 07:19:13 PM

In your get-rich scenario, I see you absorbing risk in the housing market--which makes a greater standard of living possible for those who can't afford to buy

How is it making a greater standard of living possible?  The house was already there, and already being rented out.  If I built a new house, then I could be lowering rent slightly by supply and demand, but from the point of view of the renter, the purchase transaction seems irrelevant.  Besides, if 1/2 of all homes weren't investor owned, homes to live in would be more affordable.

Quote

--and identifying and eliminating inefficiencies in local production.

hows that?

Quote

You freed up labor to engage in activity in which it would be more needed.

? By laying people off?  There's a nice way to justify it!  If the unemployment rate was 0, and there was a shortage of labor, that would probably be true, but there isn't, and hasn't been in this country.

Quote

You probably also lowered costs for the consumer in the process.
For automation, consolidation, and other domestic efficiency gains, the benefits are definitely passed on to the average American. On the consumption side, goods are now cheaper to produce and cheaper to buy. Families then need to work fewer hours to maintain the same standard of living, driving down competition for employment to compensate for fewer work-hours available.

Between 1935 and 1946, unions were formally legalized, minimum wage was instituted, and the 40-hour work week began.  These things, in theory, should have caused greater inefficiency, depressing economic output.  GDP actually raised faster than average during that period. http://www.multpl.com/us-gdp-inflation-adjusted/
The main effect was, as intended, to distribute more of the gain in GDP to the working class.

On the other hand, the 80s and 90s saw deregulation, NAFTA, and the lifting of anti-monopoly laws, which should in theory have driven prices down due to increased efficiency. Yet CPI rose roughly 3.5% during this time, just about the average rate since 1914 http://www.bls.gov/data/#prices
As I already showed in previous graphs, these trends did NOT raise  (inflation adjusted) median income.  In fact, as a percentage of production, wages fell sharply during that time


So if efficiency increased, yet wages didn't, and prices didn't drop, where did all the extra money go?



Corporate profits - i.e. CEOs and shareholders.

Quote

Basically, classical economics has an answer for everything except public goods.

If observed reality fails to match up with theory, it is not reality that's wrong.  Its the theory.  Although in this case I think its more a matter of the application of the theory not taking all factors into account.  Smith's classical economics was meant to apply to a system of individuals and small businesses trading directly, with perfect competition, perfect information, etc.  Not a system of multinational conglomerates, stock markets, and lobbyists.

…

By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #104 on: November 21, 2012, 11:20:34 AM »

Quote from: Jamesqf on November 20, 2012, 10:10:40 PM

Quote from: Bakari on November 20, 2012, 07:30:13 PM

Everyone keeps pointing out that upward mobility is possible for an individual.

But individuals are what matter.

Would it be possible for everyone who is currently below it to simultaneously reach the median income level, while the upper 1% still maintained there current level of wealth?  If not, then any individual who does so is necessarily an exception, and no matter how culture changed it would not be possible for everyone to succeed.  If it is not possible for everyone to do so, then the promise of upward mobility for any given individual does not make the system fair.

Quote

Quote

Inequality thats due to differences in talent and work ethic are fine...

How come?  According to your logic, shouldn't we be handicapping those born with (or who have acquired through effort) above-average levels of talent, looks, physical fitness, etc?

What specifically have I said that gives you the impression that this is my opinion?
To be clear:  I am not advocating wealth re-distribution in the communist revolution sense, where property is confiscated from the wealthy and handed to the poor, which seems to be what you and others are arguing against.

What I am advocating is policies that are designed to facilitate upward mobility for the lower classes, and temper the rate at which the already rich get an increasing share of all available wealth. 

Examples on the poor individual's side include the educational suggestions I made earlier (free and mandatory pre-school, needs based funding as opposed to needs based de-funding, free 4 years of college), providing daycare to parents in college, and making enrollment in college an acceptable alternative to job seeking for public assistance.

Examples on the other side include preventing corporate consolidation (which destroys competition and is a gross corruption of the free market), providing disincentives for outsourcing, supporting unions, making minimum wage a "living wage", taxing unearned income (inheritance, dividends, capital gains, rent, business profits, etc) at least as high as wage and salary income, if not higher (instead of taxing them less, as it currently is, which is a very obvious mechanism by rich the already rich will tend to get even richer, as it requires capital to have passive income), and perhaps even mandating some level of profit sharing with employees of corporations.

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...the problem is a political and economic system designed specifically to help the already rich get richer and make it especially challenging for the poor.

You claim this, but evidence shows that it is not true.  The rich do not, in general, get richer.

Did you not see the graphs I posted earlier, or do you think the numbers are just made up?  I'm not talking about any particular family.  As a group, the rich are getting much much richer, at a rate faster than any time in the past century.
Here, I'll post it again, so you don't have to find it:

That red line represents "the rich".  Its getting bigger over time.

And of that, the very rich have gotten the majority of those gains

Between 1976 and 2008, US average income increased $12k.  Of that the richest 10% got 100% of it.  The lower 90% got 0% of it.

Those gains have not been due to just increases in real wealth, as the rate of gain of the top 0.01% has significantly outpaced the rate of GDP growth.  The difference has to actually come from somewhere.  Where it comes from is everyone else.
In other words, not only are they getting richer, but they are getting an increasing portion of the total available wealth.



Given that this is population wide, and covers all 300 million of us, and that it changed dramatically at a specific point in time, it can't be explained by individual go getters suddenly generating their own wealth and individual consumers suddenly getting dumber. 
During the 30s and 40s, when government policy changed to encourage relative equality of opportunity, the share of wealth became more evenly distributed.  During the 80s and 90s when government policy was focused on making conditions optimal for big business, wealth became less evenly distributed.

This is why the wealth of the top 0.1% and 0.01% matters.

Quote from: totoro on November 19, 2012, 03:12:07 PM

I don't really get too uptight about the super-rich/elite. 

When wealth is concentrated, it is, by default, not available to everyone else.  Total wealth can grow over time, but there is a finite amount of material resources in existence at any given moment. 

Quote from: tooqk4u22 on November 19, 2012, 03:51:51 PM

A part time store clerk may not make that much, but store manager makes pretty good coin, and a district manager makes really good coin, and so on and so on.

Nobody gets to the Forbes 400 on only hourly wages.  Its people in upper management, investors, inventors, real estate holders, and other forms of passive income and/or having employees who work for you.  It would not be possible for everyone to do that, because then no one would be doing any of the actual work that creates wealth. 
Since there is no possible way that everyone can be a supervisor, "become the supervisor" is not a valid method by which the working class could succeed.  Same for any of the other methods of passive income.  See first paragraph of this post, above.

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #119 on: November 22, 2012, 12:36:11 PM »

Quote from: Jamesqf on November 21, 2012, 01:39:37 PM

No?  Seems that is exactly what you are arguing for, when you suggest that large amounts of money be extracted from "the rich" via higher tax rates, and given to the poor. 

Quote from: Jamesqf on November 22, 2012, 10:48:45 AM

In short, about 60% of those on the list in 1989 were replaced by 2001.  Even between 1998-2001, turnover was almost 25%.

You seem very intent on disproving the straw man arguments you keep projecting onto me - even after I explicitly stated that was not my argument, and spelled out exactly what it was.  No one claimed things should be made more equal by giving cash hand-outs to the poor, and no one claimed "the rich" was a static group of specific individuals.  Nobody makes those arguments, they are always straw men that conservatives and libertarians project onto "liberals" so that they can seem more credible.  It doesn't even address the actual points I've made, which I won't repeat, because I've written too much on it already.

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #133 on: November 24, 2012, 10:28:22 AM »

Quote from: Jamesqf on November 22, 2012, 10:37:53 PM

So it seems that one of three things must be true:

  1) You are not expressing what you mean well enough for me to understand it;

  2) You're expressing what you mean to say well enough, but I'm too stupid to understand it.

  3) You're saying what you mean, and I understand it, but then when I draw the obvious/inescapable conclusions, you repudiate them because they don't sound so nice in plain language.

You've been claiming that it's more difficult to get on the upward mobility ladder, because - your implication - "the rich" are in some sort of conspiracy to game the system and keep getting richer.  I point out that this is not the case; that "the rich" aren't a fixed group, and that it is if anything ]u]easier[\u] to become upwardly mobile now than say when I graduated from high school, and that if large numbers of people aren't upwardly mobile, it's because they chose other paths in life.  Seems to me as though the third alternative is the best match.

What you believe are "obvious/inescapable conclusions" I see as neither.
I never said anything about a conspiracy!! 
I never said anything about gaming the system.  I never even said it was the rich themselves causing the changes that concentrate wealth.  I pointed out a few very specific federal government policy changes - changes based on an ideology much like your own - which had the effect of encouraging a greater concentration of wealth.
I never said "the rich" is a fixed group - in fact I acknowledged it wasn't the first time you mentioned it, and have again since then.  It doesn't change my point that government policy can make it easier to get super rich based on already being somewhat rich, and that a large portion of that wealth comes from transfers from lower down, not just newly created wealth.

Maybe I can explain it better with an analogy:
Wealth is represented by snow.  Everyone can go outside and make a snowball.  The harder they work at gathering, the bigger their snowball is.  That's just fine, people who work harder deserve bigger snowballs.  The government should not take large hand built snowballs, and give them to people who are just laying around making snow angels. That's what you are arguing against, and I agree with it.  But that's not the whole story.
Some people happen to be born in areas with 6inches of snow, while others just have a light dusting.  This has nothing to do with individual choices (unless pre-concieved spirits decide which parents to have).  Even then, the people born to snow poor areas (for example, with crappy public schools) could still make big snowballs, they just have to work harder at it.  In your mind, that is still fair, because it is possible.  Fine.
In addition, the entire landscape can tilt.  It is tilted steeply to one side so that once a snowball hits a certain threshold, it just starts rolling downhill and gathering snow all by itself.  This is how people get enormous avalanche size snowballs.  In the popular vernacular, these are "self-made", because the core was hand-built. 
What I am saying is that these run-away snowballs take up entire fields of snow with them, leaving less available for others to hand build there own.  I am also saying that government policy determines the slope of the landscape.  If government chooses to, it can make it level, so that everyone has to make their own snowballs by hand.
This will have the effect that less snow is captured in snowballs overall (lower GDP), but I don't see why increased GDP is necessarily a good thing if (as has actually happened) 100% of the increase goes to the very people who don't actually need any more.

Whether or not all the snow melts each summer is irrelevant (as is whether or not the rich are a static group).  Whether or not the rich influence the government (although we all know they do) is irrelevant.
All I am arguing for is government policy that corrects for the inherent inequality and inefficiency of a purely free market, to create as closely as possible the "perfect" market that Adam Smith envisioned.

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #143 on: November 30, 2012, 11:04:55 AM »

Quote from: tooqk4u22 on November 26, 2012, 10:34:37 AM

Quote from: Bakari on November 24, 2012, 10:28:22 AM

Maybe I can explain it better with an analogy:

Loved the analogy...it is spot on for both sides of the argument.  The problem is that the two sides fundamentally disagree.  Just because someone was born into a snowy area doesn't mean it wasn't accumulated from the prior generation, and just because it rolls faster down hill doesn't mean that it is wrong.  By stopping this rolling snow ball would be doing exactly what you said you were against that is - dropping a snowball in front of those making snow angels.

haha!  I wasn't suggesting "stopping" the snowball, I was suggesting leveling the field so that it doesn't begin to roll in the first place.  The person who started making it would still keep it, and they would be allowed to make it as big as they wanted.  The only change is it wouldn't take off under its own weight.
Also: I don't accept the implication of a family as a unit, as opposed to an individual.  I think that line of reasoning leads to the justification of caste systems and aristocracy, and undermines equality of opportunity and upper mobility.  Let each generation - each person - earn their own way.

Quote from: tooqk4u22 on November 26, 2012, 10:34:37 AM

Quote from: Bakari on November 24, 2012, 10:28:22 AM

Whether or not all the snow melts each summer is irrelevant (as is whether or not the rich are a static group).  Whether or not the rich influence the government (although we all know they do) is irrelevant.

The snow melting is exactly what matters if you are saying that upward mobility doesn't exist. And besides the poor influence politicians as much as the rich - one is trying to get more from the government so they can stay poor and the other is trying to give less to government so they can stay rich - these rich people pay 70% of the taxes.

!!!! but I am NOT saying upward mobility doesn't exist, and I never said that!  I have been saying that there is not an equal opportunity of upward mobility.  The poor may want to influence just as much, but that doesn't mean they do.  In 2010 $3.5 billion was spent on political lobbying alone, not even considering campaign donations.  All a poor person has to bargain with is their vote.  A rich person has their vote, plus up to 117 thousand dollars in "donations".

Quote from: tooqk4u22 on November 26, 2012, 10:34:37 AM

Quote from: Bakari on November 24, 2012, 10:28:22 AM

All I am arguing for is government policy that corrects for the inherent inequality and inefficiency of a purely free market, to create as closely as possible the "perfect" market that Adam Smith envisioned.

There is no such thing as a perfect market because there will always be winners and losers - and losers will never see it as perfect.

That's not what I meant by "perfect".  I mean the conditions under which market theory is supposed to operate: perfect information (i.e. no false advertising, no "fine print"), perfect competition (no monopolies, no corporations, nothing to give any one business a competitive advantage other than a superior product and/or more efficient production), and rational consumers (who only make choices that are in their own best self interest), along with other similar theoretical conditionals.
If these conditions don't apply, even the theory predicts market inefficiencies.  And in the real world, these conditions are in fact never there.  What I'm saying is that government can either take steps to move conditions in the direction of a more "perfect" market, or it can take steps to distort it even more.  Sometimes a lack of regulations causes a more distorted market.

Quote from: tooqk4u22 on November 26, 2012, 10:34:37 AM

Capitalism isn't perfect but it socialism is far from perfect...look at Europe...you can't go on and on allowing people to live off the government at the expense of the people making money - ultimately it collapses, we are on that trajectory.  Canada looks ok but it would be a disaster if not for its natural resources.

What does "look at Europe" mean?  Europe is a big place, with lots of individual countries with their own individual balance of socialism and capitalism.  So, yes, lets look at Europe: of the 22 nations which have an average standard of living higher than the US, 18 of them are in Europe http://en.wikipedia.org/wiki/List_of_countries_by_inequality-adjusted_HDI
If you ignore distribution and take the society as a whole (where the super rich drag the average upwards), and take into account nothing except gross GDP per capita, there are still 7 European nations ahead of us
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29_per_capita

More to the point, the list of nations that outranks us for GDP per capita have a variety of economic systems, many socialist, with all but 4 of the 13 having less "economic freedom" than the US http://en.wikipedia.org/wiki/Index_of_Economic_Freedom

Near the top of the list for nearly every measure of standard of living is Norway:

"The Norwegian economy is an example of a mixed economy, a prosperous capitalist welfare state featuring a combination of free market activity and large state ownership in certain key sectors. The Norwegian welfare state makes public health care free (above a certain level), and parents have 46 weeks paid parental leave. The income that the state receives from natural resources includes a significant contribution from petroleum production and the substantial and carefully managed income related to this sector. Norway has a very low unemployment rate, currently 2.6%. 30% of the labour force are employed by the government, the highest in the OECD. 22% are on welfare and 13% are too disabled to work, the highest proportions in the world. The hourly productivity levels, as well as average hourly wages in Norway are among the highest in the world. The egalitarian values of the Norwegian society ensure that the wage difference between the lowest paid worker and the CEO of most companies is much smaller than in comparable western economies. This is also evident in Norway's low Gini coefficient. The state has large ownership positions in key industrial sectors... the government controls approximately 30% of the stock values at the Oslo Stock Exchange. When non-listed companies are included, the state has even higher share in ownership..." http://en.wikipedia.org/wiki/Norway#Economy

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #146 on: November 30, 2012, 09:13:27 PM »

Quote from: Jamesqf on November 30, 2012, 04:29:31 PM

And as already mentioned, much of the economic factors in the Norwegian standard of living are the result of it just happening to be located right next to the North Sea oil fields.  By that same measure (and for the same reason) Saudi Arabia and the Gulf Emirates have very high per capita incomes, but that doesn't translate to quality of life.

I figured someone would mention that.
Indeed, most of the countries with high per capita GDP have large oil reserves. 
Including the US.  Which is #3 in the world for oil production
http://en.wikipedia.org/wiki/List_of_countries_by_oil_production
So, if having oil reserves invalidates a countries economic system as the reason for it's prosperity, then our own high GDP may be despite our economic system, not because of it, as well.

I agree that gdp alone does not translate to quality of life - thats the whole reason the HDI, which measures life expectancy, literacy, education, standards of living, and quality of life, was created.
I suppose if you don't like those factors, you could use this one http://en.wikipedia.org/wiki/Quality-of-life_Index or http://en.wikipedia.org/wiki/Satisfaction_with_Life_Index
I included the GDP per capita because of the sentiment expressed here that wealth generation is inherently valuable.

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I think it'd be pretty easy to come up with a better quality of life measure: just use the (population-adjusted) migration ratio.  If 1% of the population of Outbackistan emigrates, but only 0.01% immigrates, then it seems pretty obvious that the perceived quality of life in Outbackistan must be pretty low.

That's an interesting idea, however, I don't know how much that would really tell you.  Some people have more opportunity to travel than others, whether due to having the money to do so, or because of government policy (relatively little emigration from Cuba).  Proximity is often a factor in choosing where to go (i.e. we have more Mexican immigrants than sub-Saharan African).  People are more likely to go where they have family, so a history of immigration may lead to a continuation of it.  Many people decide where to move to without ever having lived there, so they may not really know what it is like until they get there.  Just like using what people buy as an indication of what is most valuable, looking at trends in human choice assumes perfect information, perfect competition (or access to a country), and rational actors, none of which can be consistently guaranteed in the real world.

That said, once again, the US is not at the top of the list
http://en.wikipedia.org/wiki/List_of_countries_by_net_migration_rate
Notice that every single one of the countries that out ranks us in the human development index has a net positive immigration rate, including 5 with higher immigration rates than the US.
So while I don't think your measure is necessarily accurate, it does generally support the same points I made before

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By Bakari:

Re: Your thoughts on the we are the 99% blog?

« Reply #149 on: December 01, 2012, 06:20:10 PM »

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Quote from: Bakari on November 30, 2012, 11:04:55 AM

haha!  I wasn't suggesting "stopping" the snowball, I was suggesting leveling the field so that it doesn't begin to roll in the first place.  The person who started making it would still keep it, and they would be allowed to make it as big as they wanted.  The only change is it wouldn't take off under its own weight.

I get what you are saying - how do you define this point when it starts rolling on its own and why can't it roll on its own, afterall that is the whole point of starting a company and investing and taking risk.  I think we'll just have to disagree.

It can roll on its own - that is, afterall, the literal meaning of capitalism.  I just think the government shouldn't be making rules that accelerate it even more than the market would naturally.

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Quote from: Bakari on November 30, 2012, 11:04:55 AM

Also: I don't accept the implication of a family as a unit, as opposed to an individual.  I think that line of reasoning leads to the justification of caste systems and aristocracy, and undermines equality of opportunity and upper mobility.  Let each generation - each person - earn their own way.

This too. The whole point is to do as much as possible so your kids have it better than you do - so when a mom who works three jobs so she can afford to live in the suburbs or send her kids to private school so her kid can get a better education and then that kid goes to college gets a good job saves money then pays for their kids college and that kid starts a business and makes millions and has three kids - one takes over the family business, one becomes an artist, and one says I have a trust fund so I will volunteer all my time to charitable endeavors..and so on and so on. 

So it looks like we disagree here as well because I don't see how doing things to better the next generation is bad. 

I'm not saying its "bad" for someone to try to help out their kids.  Just like it isn't bad for a fisherman to fish on a communal lake.  The problem is that when everyone does it, at some point the lake runs out of fish, and everyone suffers. 

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  Hopefully that is one thing we can agree on - LETS TAKE THE MONEY OUT OF POLITICS.

Yup. :)

Quote from: tooqk4u22 on November 26, 2012, 10:34:37 AM

There is no such thing and sometimes the lack of regulations do distort the markets but more often then not the government creates (maybe not intentionally) a distorted market.  Take banking right now - the government created huge regulation in Dodd-Frank (btw-the details of all the regs are still being written) to cure the ills that caused the financial crisis - except that the big players went from too big to fail to too bigger to fail, many of the things that caused the mess are still going on, and smaller institions are not being created or going under because they can't afford to comply with the regulations.  The small banks are historically what funds small businesses.  Whoops. 

But those problems wouldn't have happened in the first place if the regulations put in place after the Great Depression hadn't been rescinded in the first place.  The big banks could have never become so big in under pre-Regan/Clinton laws.

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Politicians have no clue - they are either career politicians and never really worked or they are ridiculously wealthy people (by earning it, marrying into it, or inheriting it) - they can't solve anything.

What do you propose in its place?  Anarchy?  A benevolent dictator?  Direct democracy?

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You know what Europe looks like - don't be koi.  Sure there are a lot of countries but almost every large (really all except Germany) is financially defunct. 

Yes, and many of the countries have market economies, similar to our own.  Their decision to try to make trade even freer between them all by adopting a common currency meant that the downfall of any one affected the others more.  The whole global downturn was led by the US is 2008.

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And Norway, really, that is your argument...isn't the population of Norway like a small state in the US and it is a positive that half the population is works for the government, is unemployed or on disability.  Sounds great!  I would love to be business owner there and watch 70% of my income supporting that - awesome, real motivating.  Unlike some of the other European nations Norway gets away with it because it is rich with natural resources - that is the only reason.  Canada similarly benefits from this currently.

Exactly!!  This is why I used it as an example.  You've always implied (or stated outright) that conditions like that would stifle innovation, investment, and production, which would retard the growth of wealth and the end result would be everyone, both the rich and the middle class, would suffer.  And yet, here this place is, not just hypothetical but actually existing, and it has exactly the sort of system you think would be terrible, yet it has consistently had a higher standard of living for its middle class the the US for at least as long as comparisons have existed.
And like I mentioned to Jamesqf, the US has higher oil production than they do, so, if their economic sucess doesn't count for that reason, neither does ours.

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Your points are well taken but at the end of the day I think it is you just are against significant wealth however that is defined.

:P
Well, I suppose you can think whatever you like, but I think I've been pretty consistent, through this thread and the ethics threads, about my actual beliefs and reasoning.

Anyway, I guess this is probably as close as we come to agreeing, so, I'm happy with that! :)

http://biodieselhauling.blogspot.com/2012/12/comments-from-mmm-economics-philosophy.html
http://biodieselhauling.blogspot.com/2012/12/comments-from-mmm-forum-part-2-pursuing.html
http://biodieselhauling.blogspot.com/2012/12/comments-from-mmm-forums-part-3-lets.html
http://biodieselhauling.blogspot.com/2012/12/comments-from-mmm-forums-part-4.html
http://biodieselhauling.blogspot.com/2012/12/comments-from-mmm-forums-part-5-ows-99.html