How do we fix the economy???

Bring back those businesses that create value - manufacturing. "Services" do not create value; only the primary economic functions - farming, mining, manufacturing and construction - can produce goods that are worth more than the materials and labor costs. These are the foundation of any economy. When you try to pile too much stuff onto too small a foundation, the whole thing collapses and you get crashes, recessions and depressions.

Reduce the government to what the primary economy can support, because government does not produce, it only consumes.

Tax non-productive activities [hrrrmp ***STOCK TRADING!!*** hrrrf] higher than productive ones, instead of the reverse.

Stop forcing corporations to sell voting stock to every Tom, Dick and Harry. Who decided it was a good idea to let the passengers fly the plane?
------------------
If you tried to run a business the way they run the government, you would be in jail or the poor-house within six months.

This is an incredibly simplistic view of what the problem is, and where the solutions are. Yes, getting back into manufacturing is a good step, but the jobs created this way have to be proper middle-class jobs, and there's just no way in the current US economic framework for that to happen. Any measure you'd have to take to get back into manufacturing (like, for example, instituting high import tariffs, disincentivising cross-border money transfers etc) will have adverse effects in the short term, and no guarantee of long-term success.

In essence, you have to first address and disspell several of the american labor myths that have brought you into this mess (like, for example, that unions are always bad, that private healthcare is the way to go, that unemployment is a failure of the individual, not a consequence of forces beyond any single person's control etc etc). Only then can you find a new equilibrium that can actually support more people.

Imaginos1892 wrote:Bring back those businesses that create value - manufacturing. "Services" do not create value; only the primary economic functions - farming, mining, manufacturing and construction - can produce goods that are worth more than the materials and labor costs.

These are the foundation of any economy. When you try to pile too much stuff onto too small a foundation, the whole thing collapses and you get crashes, recessions and depressions.

Reduce the government to what the primary economy can support, because government does not produce, it only consumes.

I'd like to address that last part, since it shows a massive misunderstanding of what the state does as an economic actor.
Yes, to a first approximation, the state is nothing but a subtractive influence. Taxes, regulatory requirements, all of those things that businessmen piss and moan about, are impediments to prosperity.
But that's too simplistic a view. As individuals, we have no recourse against businessmen who wrong us. We need institutions that, because they're funded through taxes and empowered by a public mandate, have the power to go toe-to-toe with the sociopathic aliens that we call "Corporations".
We also need economic actors who are not bound by having to show quarterly profit increases; We need actors who have a strong incentive to take the long view, and states are those actors (Understand that this is an idealized view and should not be taken as a statement of fact about what real states in the real world are doing).
Reducing governments to their subtractive effects does them a disservice, and leads to conclusions that invariably favour entities who are not interested in building or maintaining communities.

But what does the Government do that is additive? It invests. It creates incentives. It creates security buffers for people (also known as social security). All of those activities, while not generating value directly, have a multiplicative effect.

Tax non-productive activities [hrrrmp ***STOCK TRADING!!*** hrrrf] higher than productive ones, instead of the reverse.

Stop forcing corporations to sell voting stock to every Tom, Dick and Harry. Who decided it was a good idea to let the passengers fly the plane?

Since when are corporations forced to sell stock? Genuinely curious here; I always assumed that selling stock is something a corp does to generate capital that can be invested into expanding the scope of what the corporation does. As far as I am aware, there is no legally mandated requirement for corps to issue stock at all.

If you tried to run a business the way they run the government, you would be in jail or the poor-house within six months.

The same is true for any private citizen who behaves the way businesses behave.
You're comparing apples and oranges. Businesses exist to generate profit for their stakeholders. Governments exist to ensure a common playing field for businesses and private people alike, and to take care of those fields that businesses will not touch because little profit can be made in them (Like, for example, expanding and maintaining common infrastructure. There's a reason why privatizing rail networks, for example, is a uniformly bad idea; The necessity for a rail company to build and maintain a large number of assets which cannot easily be sold off when necessary makes profit margins too small to be attractive).

There are some cases where it is more efficient for government to provide services.
In telecommunications having competing private enterprises providing services is the way to go, but fixed infrastructure like fibre and copper lines needs to be supplied in a monopoly to avoid wasteful duplication, and such monopolies are best in govt hands.
Similarly many remote service industries are uneconomic so have to be supplied by govt. By international standards the US health sector is inefficient due to all the unproductive overheads in multiple fund management.

Cutting out restrictive red tape and stupid rules aids efficiency, as paradoxically does restricting unfair business practices like price fixing.

The high number of prisoners in the USA must be a drag on your economy, as must your military expenditure.

There are some cases where it is more efficient for government to provide services. In telecommunications having competing private enterprises providing services is the way to go, but fixed infrastructure like fibre and copper lines needs to be supplied in a monopoly to avoid wasteful duplication, and such monopolies are best in govt hands.

In the US natural monopolies such as this are pseudo-private, they are "owned" by private industry but are very heavily regulated (far far more so than other industries) such that rate increases etc require government approval. So they aren't truly private. Regulation is at the state level, rules vary extensively state by state. It seems to work in two party states. In one party states the government utility regulatory boards always seem to find themselves staffed by relatives of the politically connected.

One other area where the government could be of more help than it is, is areas of medicine in which there is no profit motive. I can name 3 drug development ones off the bat.

1. Antibiotics
2. Medicines for the seriously mentally ill
3. Tropical diseases

Antibiotics aren't profitable because the medical need is for antibiotics that combat extremely drug resistant bacteria. But infectious disease specialists don't want to use those antibiotics against anything they don't have to to keep resistance from developing against them too. Low sales = no profit -> no motive for capitalist companies to spent a billion or two developing them. Of course not developing these drugs potential has profound societal costs - pandemic comes to mind.

In the case of the seriously mentally ill, I am taking about those whose mental illness is so severe that they are non-functional. The US has a lousy mental health system so most of these guys live on the streets and a large percentage self medicated with the illegal drugs found there. Combining severe mental illness with drug addition. These guys are also a poor market for profitability. They don't work and a significant percentage of them couldn't work even if medicated on current drugs. Medicaid reimbursements combined with the severe lack of knowledge about just how the brain biochemistry works aren't sufficient to drive drug development. Societal costs are huge here as well, prison costs, etc etc

Tropical medicines for 3rd world countries with no $$$ is another area, Bill Gates is paying for TB and malaria but even he can't fund all of them. And of course if those disease (or worse a mutant more virulent version) enters the first world we are in trouble....

Similarly many remote service industries are uneconomic so have to be supplied by govt.

Agreed

By international standards the US health sector is inefficient due to all the unproductive overheads in multiple fund management.

In the US the government run ones are even worse...

Cutting out restrictive red tape and stupid rules aids efficiency, as paradoxically does restricting unfair business practices like price fixing.

We need to do both.

The biggest problem with the regulations is when they don't actually work. Basically the process tends to work as follows. Problem X occurs - law A is passed to solve the problem, law A doesn't solve the problem, so law B is created to solve the problem but law A's regulations aren't repealed, law B doesn't work, so law C is passed to solve the problem but law AB regulations aren't repealed etc etc. Eventually companies wind up with piles and piles of regulations and the compliance costs associated with them, many of them are duplicative and/or don't work to solve the problem they were created for. Eventually the burden becomes bad enough that de-regulation kicks in and sweeps away both good and bad regulations together and problem X reoccurs.

There appears to be a function of scale with this problem, the bigger the government the worse it is.

We actually do need some rules(the price fixing example you mentioned is one) but there are many others. Capitalism like baseball, football, soccer etc functions best when there are a few clear simple rules to make game play fair for all.

The high number of prisoners in the USA must be a drag on your economy,

Yes and no. High crime is an even worse drag. So some things which add to the prison population actually did help the economy. The original 3 strikes laws were a good example of this (then the politicians expanded the definition of what counts as a strike....). As were the original broken windows techniques in NYC. Same problem there, the policy was a victim of it's own success. It worked so more of it would work even better, right (I'm being sarcastic).

as must your military expenditure.

Leaving aside the significant effects of the military on national security etc. It is actually the best anti-poverty program in the USA. Kids from families at the bottom of the economy who join the military learn 2 things: 1) most learn a marketable skill, 2) they learn marketable soft skills. One of the most critical things in getting a decent job is the soft skills (attitude, punctuality, etc etc). Most people learn these things from their parents. But all too many kids have parents who lack those skills themselves. And frankly for many of these kids, their best chance at joining the middle class is the military.

And yes we spend a ton of money on non-military anti-poverty programs. A few work, most of them don't work well. We really need to do some intensive auditing and eliminate funding for most of these, funding only those which actually work. But once a program is established it is very very hard to kill. Too many advocates.

In essence, you have to first address and disspell several of the american labor myths that have brought you into this mess (like, for example, that unions are always bad, that private healthcare is the way to go, that unemployment is a failure of the individual, not a consequence of forces beyond any single person's control etc etc). Only then can you find a new equilibrium that can actually support more people.

- Unions aren't ALWAYS bad. Most of them are but not all of them.

1. Many of the unions have the same types of sociopaths at the top as the corporations do. They tend to care primarily about themselves and nothing about anyone else. So they do things which make themselves look good at the expense of the long term interests of their members.

2. For some reason US unions tend to push for very rigid work rules. Most of these things are as damaging to companies as over-regulation is. Both are similar problems just put in place by different entities.

- private healthcare is a thread in and of itself and there are several existing threads on it.

- unemployment is a failure of the individual, not a consequence of forces beyond any single person's control

You actually have a very good point here, but take it a bit to far. There is tremendous individual variance with this one. In some cases it IS the failure of the individual, in others it is the consequences of forces beyond a single person's control. Unfortunately in the USA, the default response is the former, which makes it extraordinarily difficult for the long term unemployed to find a new opening. Basically they have to find someone willing to take a chance on them, which is not particularly easy.

But what does the Government do that is additive? It invests.

Not very wisely. We let them borrow $1 trillion to invest at the beginning of the recession and they wasted it. We are NOT giving them any more money. However, in theory you are correct, if properly managed investment could stimulate the economy. Politicians that actually are capable of properly managing such investments are extraordinarily rare. So based on past performance we need to keep them out of this area.

It creates security buffers for people (also known as social security).

Which is on the verge of bankruptcy due to government mismanagement. In theory you are correct again but as with the above you forgot the human factor, specifically the type of humans that become politicians. They can't seem to manage this program well either.

All of those activities, while not generating value directly, have a multiplicative effect.

Certain programs can have that effect. The classic is infrastructure, building a road in an underserved area allows Joe widgetmaker and his fellow widgetmakers to get more widgets to market enabling them to make more widgets, hire more staff etc. Unfortunately instead of spending $1 trillion on this sort of thing the politicians wasted it. We are NOT giving them more money.

Since when are corporations forced to sell stock? Genuinely curious here; I always assumed that selling stock is something a corp does to generate capital that can be invested into expanding the scope of what the corporation does. As far as I am aware, there is no legally mandated requirement for corps to issue stock at all.

The key to the original comment is not selling stock but selling voting stock. There are tons of financial regulations in this area and some of them result in companies who would rather sell non-voting stock being forced to sell voting stock. Not exactly my area of expertise, I'm aware the problem exists but that's about the extent of my knowledge.

If you tried to run a business the way they run the government, you would be in jail or the poor-house within six months.



The same is true for any private citizen who behaves the way businesses behave.

Technically true, but the basic point still stands. Government is horribly mismanaged (at least in the USA).

Excellent post and discussion and thank you. Now a very conservative point of view completely, (well, kinda) based upon experience. United States.

Government is too big. Too many non tax paying people vote. Too many total voters vote their own self $interest$ and not the interest of the nation.

We need fewer or no politicians. We need more statesmen. About they only way I see it playing out right now, since we are on that slippery downward slope, is down.

Return to original intent of the US Constitution. Start repealing bad laws. Now this is strange ... we have too many non deserving people voting for themselves;

But not enough people voting to serve the nation and not them selves. I think only tax payers should vote. If one pays federal taxes, then you vote in federal elections.

Same thng with state, local, district and other elections. You pay into the system, you get to vote about it. If you do not pay taxes, you do not vote. Very simple.

Try to reduce taxes. Do it even to the point where government infrastructure is reduced greatly. Private enterprise can do it cheaper and better than any government.

This would include public service like education. Attempt to reduce the tax load of the tax payer to something reasonable. Keep the money in the citizens pockets.

Our US Constitution says the feds job is only the military, needed infrastructure, the post office and tariff collection. No more. The 10th amendmend is quite easy to understand.

Outlaw professional lobbiests. Create special meetings of congress to eliminate laws, not inact them. Get the government out of the tax payers pocket.

Require a period of national service before you get the right to vote. That and paying taxes into the system. Yep! Anything else is doomed to failure. It may be too late.

Somehow try to get the US citizen to work for him self. The harder he works, the greater the reward. No more free lunch. The best government is the least. HB of CJ

Paying down all the debt would be a start. Stopping the starve the beast idiocy would also help.

HB of CJ wrote:Try to reduce taxes. Do it even to the point where government infrastructure is reduced greatly. Private enterprise can do it cheaper and better than any government.

There may be less overhead with private enterprise, but wouldn't their desire for a profit end up cancelling out any cost savings? Government isn't a business. While there are cuts that need to be made, the purpose of government is to provide needed services to the people, not turn a profit.

HB, generally I agree with you, but not here. Many task are best left to private enterprise, but many others (particularly in health, education, and welfare) are best provided by a strong central government.
I know RFCs views, but disagree with limiting voting rights to tax payers. Many people contribute to society in various ways, and some of the smartest people don't earn much. Do we go back to white, Male, rich, land owners, with military service? I'd qualify, but those are the ones who set up much that is unfair now and in need of fixing.

Starsaber wrote:

HB of CJ wrote:Try to reduce taxes. Do it even to the point where government infrastructure is reduced greatly. Private enterprise can do it cheaper and better than any government.

There may be less overhead with private enterprise, but wouldn't their desire for a profit end up cancelling out any cost savings? Government isn't a business. While there are cuts that need to be made, the purpose of government is to provide needed services to the people, not turn a profit.

The profit motive limits the amount of assets used. The incentive of most government agencies is to grow bigger. Small agencies can eliminated without inconveniencing many employees or constituents. Large agencies cannot be eliminated without serious dislocation problems. Agencies that do not spend their budget get their budget reduced next budget cycle, so every agency spends every cent their budget as allocated for them to spend.

The combination builds incentives that are not predicated on providing services, but justifying spending more money.

There is no way to know what is going on in someone else’s mind. But sometimes their behavior tells you more than their words.

The political left’s great claim to authenticity and honor is that what they advocate is for the benefit of the less fortunate. But how could we test that?

T.S. Eliot once said, “Half the harm that is done in this world is due to people who want to feel important. They don’t mean to do harm — but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.

This suggests that one way to find out if those who claim to be trying to help the less fortunate are for real is to see if they are satisfied to simply advocate a given policy, and see it through to being imposed — without also testing empirically whether the policy is accomplishing what it set out to do.”

From: http://humanevents.com/2015/07/23/the-f ... ampaign=nl


Tests are more important than any idea. If an idea sounds good, but has no other connection with reality, it is fantasy.

I once found:

The statement immediately below is true.
The statement immediately above is false.

Note that both statements refer only to other words - there is no link to reality This makes them both fantasy statements. Any statement implying that a fantasy statement connects to reality is false: therefore both statements are false.

This recognition of fantasy statements in addition to the true/false duo has helped me analyze many things.