Haven - cutting welfare

Well worth reading.

http://thecrux.com/bill-bonner-the-real-reason-we-have-a-welfare-state/

Whether it is correct

From: The Stansberry Digest

But value? Here is where it gets interesting… Because when you drop money from helicopters, values tend to drop, too.

What shoemaker will still take pride in a making a good pair of walking boots when his money floats down from Heaven with no effort at all?

What company will still sweat and strain to produce the best possible products when its revenues no longer come from demanding customers?

What analyst sharpens his pencil to find the best companies to invest in… when there is no longer any connection between money and quality performance?

In rich neighborhoods or in poor ones, giving away money causes trouble.

Quality declines… as fewer and fewer people are willing to put in the time and trouble to produce it.

And why should they?

The ancient and sacred tether, connecting quality to wealth, effort to reward, has been severed.

IIRC, Spain, getting large amounts of cheap gold from South America, moved from a major nation to a minor one in about a century.

The ending of welfare, whether in fictional Haven or in reality, requires a re-linking of effort and results. In Haven, it is too bad that Cordelia Ransom didn't have rants to encourage a situation where welfare takers only lost part of the difference, when they went to work outside the black market.
In reality, Scientific American, several decades back, reported on an experiment in New Jersey, where a group of families had their welfare decreased by half of what they earned, instead of all of the earnings. All except one of them wound up doing productive work. It is too bad the experiment was discontinued instead of expanded

DDHv wrote:From: The Stansberry Digest

But value? Here is where it gets interesting… Because when you drop money from helicopters, values tend to drop, too.

What shoemaker will still take pride in a making a good pair of walking boots when his money floats down from Heaven with no effort at all?

What company will still sweat and strain to produce the best possible products when its revenues no longer come from demanding customers?

What analyst sharpens his pencil to find the best companies to invest in… when there is no longer any connection between money and quality performance?

In rich neighborhoods or in poor ones, giving away money causes trouble.

Quality declines… as fewer and fewer people are willing to put in the time and trouble to produce it.

And why should they?

The ancient and sacred tether, connecting quality to wealth, effort to reward, has been severed.

IIRC, Spain, getting large amounts of cheap gold from South America, moved from a major nation to a minor one in about a century.

The ending of welfare, whether in fictional Haven or in reality, requires a re-linking of effort and results. In Haven, it is too bad that Cordelia Ransom didn't have rants to encourage a situation where welfare takers only lost part of the difference, when they went to work outside the black market.
In reality, Scientific American, several decades back, reported on an experiment in New Jersey, where a group of families had their welfare decreased by half of what they earned, instead of all of the earnings. All except one of them wound up doing productive work. It is too bad the experiment was discontinued instead of expanded

It didn't help that the Armada was one expensive blunder. After that Spain started its decline and England started its rise to a world power that it would hold for three centuries.

saber964 wrote:It didn't help that the Armada was one expensive blunder. After that Spain started its decline and England started its rise to a world power that it would hold for three centuries.

The decline had started long before the armada, more like afterwards it entered free fall status.

Spain is exactly the wrong example to use if you want to prove the supposed 'evils' of the welfare state. It was, until relatively recently historically-speaking, a feudal state in which the vast majority of the people were bound to the land and forced to toil for the benefit of the hidalgo class in what amounts to a master-slave caste system.

The gold it imported from its colonial empire was wasted on the Spanish Habsburgs' struggles against the Church, as well as in Spain's endless wars against various European opponents as it tried to establish itself as the dominant European dynasty. Instead of, you know, using that wealth to modernize the economy and infrastructure of the kingdom.

Nico wrote:Spain is exactly the wrong example to use if you want to prove the supposed 'evils' of the welfare state. It was, until relatively recently historically-speaking, a feudal state in which the vast majority of the people were bound to the land and forced to toil for the benefit of the hidalgo class in what amounts to a master-slave caste system.

The gold it imported from its colonial empire was wasted on the Spanish Habsburgs' struggles against the Church, as well as in Spain's endless wars against various European opponents as it tried to establish itself as the dominant European dynasty. Instead of, you know, using that wealth to modernize the economy and infrastructure of the kingdom.

At that point, modernization as we know it hadn't even been thought of as a possibility. Feudal or not, societies then were primarily as described below.

The book, "Zero to One." By Peter Thiele with Blake Masters can make a very important contribution here.

Peter Thiele wrote:New technology has never been an automatic feature of history. Our ancestors lived in static, zero-sum societies where success meant seizing things from others. They created new sources of wealth only rarely, and in the long run they could never create enough to save the average person from an extremely hard life.

Some may remember Thiele as a co-founder of Paypal and Palantir. Others may know him as an investor in many start-ups.

He plainly is writing on a subject he knows very well.


IMHO, a state where welfarism is important, like one where feudalism is a major force, tends toward a static, zero-sum state with all the effects of that. Pun intended.

The major difference between modern and premodern economies is, of course, that premodern economies were entirely dependent on natural, physical resources to generate wealth. Modern economies are not thusly dependent.

Another difference was that in premodern economies those few people who controlled the means of violence were able to direct the flow of wealth towards themselves. That is, for instance, why a true middle class could not emerge until towns and cities developed the ability to defy the power and authority of the landed aristocracy. This is not the case today. Nowadays, at least in the Free World, we have a political system in which the means of violence is de jure as well as de facto regulated by a sociopolitical contract - a constitution or basic law - that places the ultimate power of the state in the hands of the general populace.

What this means is that those who seek the power to formulate and enact government policy are required to convince the general populace of the rightness of the policy proposals they espouse, and to win approval at the ballot box. As such, it is ultimately the general populace that determines to what extent a country will adopt a system of social justice.

And let's face it, despite all the excesses that a welfare state can be capable of, I much prefer our more compassionate, liberal society over the kind of class-based caste society that is the inevitable outcome of an unfettered capitalist system.

Except of course that the modern political parties that are against social welfare are pushing hate campaigns.
Or outright falsehoods.
Thus avoiding social welfare being a consideration in peoples voting.
At least that is the perception down here from the ladt couple of elections.


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DDHv wrote:
At that point, modernization as we know it hadn't even been thought of as a possibility. Feudal or not, societies then were primarily as described below.

The book, "Zero to One." By Peter Thiele with Blake Masters can make a very important contribution here.

Peter Thiele wrote:New technology has never been an automatic feature of history. Our ancestors lived in static, zero-sum societies where success meant seizing things from others. They created new sources of wealth only rarely, and in the long run they could never create enough to save the average person from an extremely hard life.

Some may remember Thiele as a co-founder of Paypal and Palantir. Others may know him as an investor in many start-ups.

He plainly is writing on a subject he knows very well.


IMHO, a state where welfarism is important, like one where feudalism is a major force, tends toward a static, zero-sum state with all the effects of that. Pun intended.

I call complete and utter bullshit.

That book quote is so far from correct that it´s not even funny. It completely ignores 99% of history to use the last % as "proof" for something that was only true in Hollywood style history. And probably not even there.

What kind of stupid idiot can look at history and see it as a zero-sum game?

Oh yeah, just that terribly HARD LIFE...
So, tell me why is it that people TODAY have more work hours per year than in medieval times then?

Or why was it that >95% of viking journeys were for reasons of trade or settling if robbery was the only way to get anything?

Humanity has never lived in a "static zero-sum society". The notion is so glaringly idiotic that it´s painful to read.

Tenshinai wrote:

DDHv wrote:
At that point, modernization as we know it hadn't even been thought of as a possibility. Feudal or not, societies then were primarily as described below.

The book, "Zero to One." By Peter Thiel with Blake Masters can make a very important contribution here.

"="Peter Thiel" New technology has never been an automatic feature of history. Our ancestors lived in static, zero-sum societies where success meant seizing things from others. They created new sources of wealth only rarely, and in the long run they could never create enough to save the average person from an extremely hard life."
Some may remember Thiel as a co-founder of Paypal and Palantir. Others may know him as an investor in many start-ups.

He plainly is writing on a subject he knows very well.


IMHO, a state where welfarism is important, like one where feudalism is a major force, tends toward a static, zero-sum state with all the effects of that. Pun intended.

I call complete and utter bullshit.

That book quote is so far from correct that it´s not even funny. It completely ignores 99% of history to use the last % as "proof" for something that was only true in Hollywood style history. And probably not even there.

What kind of stupid idiot can look at history and see it as a zero-sum game?

Oh yeah, just that terribly HARD LIFE...
So, tell me why is it that people TODAY have more work hours per year than in medieval times then?

Or why was it that >95% of viking journeys were for reasons of trade or settling if robbery was the only way to get anything?

Humanity has never lived in a "static zero-sum society". The notion is so glaringly idiotic that it´s painful to read.

Correct several ways. It depends on how you define static and zero-sum. Honest trading is never zero-sum, unlike raiding, and often either was used, depending. IIRC, the resistance to the viking settlement in N.A. was triggered when the vikings did some raiding - the settlement wasn't large enough to hold off the native americans. And the "hard life" is attractive to many who don't want the newest and latest - look at the Mother Earth News magazine.

I think Thiel defines static as not having large scale technical innovation as a social default, and zero-sum as when raiding or taxing are defaults for large successes. This is not always correct: Venice developed as a trade center when their laws encouraged a person to become a working partner without supplying capital. They changed the laws in a way that made it harder for people without funds to work their way up, and Venice slumped.

For the last few centuries, knowledge growth and use have been big trends. With only incremental technical improvements, there will be unsustainable problems. Pollution in China is a reason the chinese are pushing solar and other new technologies.

The primary point he makes, with which I agree, is that the first step in making any new kind of business, whether by technical or business plan change, is the critical one. Once it works, knock offs and incremental improvements appear. Any investor should carefully consider a company's moat. In solar PV, many companies have failed because copying the technology or business plan are too easy. This happened with automobiles also.

He is worth reading, but: being a start-up man, he has the hammer problem. When the hammer is your primary tool, you see everything as a nail