Socialism: What Has Gone Wrong?

How should society be organised, if at all?

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FlashDangerpants
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Re: Socialism: What Has Gone Wrong?

Post by FlashDangerpants » Sun Apr 24, 2016 1:26 am

Gary Childress wrote: On paper the above sounds much better than a single person (a virtual monarch in all but name) having complete authority over the means of a community's production. You would think that most ordinary people would be in favor of socialism over the private ownership of the economy. After all, in a democracy a million votes from ordinary workers should outweigh a handful of votes from a few wealthy business owners. But in practice none of this seems to be the case, (at least not in the US). In a sense it really does seem odd.
Ownership of means of production was a an outdated concept when Marx was writing about it (I am aware that socialism pre-dates Marx).
The primary role in adding value (wealth creation) has long since passed to designers, R&D chappies, entrepreneurial types and bean counters.
The sweat of manual labour and low skilled inputs only adds significant value in a handful of industries such as garment manufacture and food service - and in most cases that won't last many more decades either.

Whether income or consumption distribution seems fair or not, the US economy has grown to be something like 12 times as productive today as it was in the late 30s and by most reckoning every sector of society has benefited (unevenly, and with some omissions that strike the rest of the world as fairly barbaric).

There's a cut off point in economic development, before it, you can achieve wealth creation by building more factories (means of production). But once you have plenty of steel mills, building more of them has bad consequences as resources that could have gone elsewhere are wasted, and then you have to keep them open to pour steel that nobody needs.

It's when you hit that cut off point that things get tricky. The Soviet Union hit it in the mid 50s. They had plenty of factories, and all the people they needed to work them. But they never made the factories better at making stuff, they just set quotas for how much stuff to make. If they'd had a mechanism to promote Total Factor Productivity, their factories would have been upgraded, their washing machines and cars would have been workable, useful and maybe even desirable objects. And they might still be in business.

In recent times the best performing version of socialism (although one unworthy of the title in many eyes) is the Social Democracy practised in Scandinavia. But they are realists who seldom try to socialise the means of production (Norway's Statoil being the obvious exception). They let Nokia and Saab face the music for bad business decisions whereas socialists in most other countries would have demanded nationalisation. Taxes in the region are eye-wateringly high, but the public services are amazing (it's important that are also far from wasteful - otherwise there would be backlash tbh). Workers who lose their jobs get great retraining, and they never go on strike to prevent job losses the way British, French and American workers so often do.

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Gary Childress
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Re: Socialism: What Has Gone Wrong?

Post by Gary Childress » Sun Apr 24, 2016 2:08 am

FlashDangerpants wrote:Whether income or consumption distribution seems fair or not, the US economy has grown to be something like 12 times as productive today as it was in the late 30s and by most reckoning every sector of society has benefited (unevenly, and with some omissions that strike the rest of the world as fairly barbaric).
The US economy has created a lol of wealth. Of course the Federal Government has been intervening in it since the New Deal. So it's difficult to say what is the result of "private" enterprise vs what is the result of public subsidy. "Reganomics" was essentially what some have called "military Keynesianism". The Regan administration spent an enormous amount of money on defense spending which maybe broke the Soviet Union's bank in trying to respond in kind. Lasers, computers, The Internet, superconductors; a lot of R&D was done by government funded programs for the defense department.

Unfortunately in the US we seem to have a phenomenon of privatization of profit and socialization of cost. When the economy is doing well, the lion's share of profits are reaped by a few private profiteers and when things go wrong, tax payers are forced to bail them out. As citizens we are of course allowed to complain when our taxes are used to bail the profiteers, but it's sort of seen as an absurdity for us to complain that the profits should go to the public as well. Hence there isn't as much talk about socializing profit. Just the natural complaints about socializing cost. Unfortunately socializing cost is possibly a requirement to stay out of the worst financial crises. Not sure if there's much of an alternative, especially when our economy is one big stock market / gambling casino.

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Re: Socialism: What Has Gone Wrong?

Post by FlashDangerpants » Sun Apr 24, 2016 4:02 am

That's a fairly cvommon way of discussing these things, but it misses a number of important details.

For one: socialisation of profits. There's a complete myth that we the normal folks don't benefit from all this capitalism. We don't do the same kind of work our grandaddys did, certainly not in the same way, we don't buy the same stuff they did. Take a car that you might buy today for X number of months' worth of the median wage, compare it to its equivalent from 1976 (at X month's medium wage), there is a world of difference in safety, performance, miles per gallon and what have you. The same is true of any number of goods and services. Many of those goods and services are stupid crap like selfie sticks and vajazzling. But others are Ebola vaccines and wonderful computers that can win board games.

Another myth is the very notion that we could or should try to disentangle the relative economic contributions of the private and public sectors. Everybody knows that the public sector provides a huge array of essential services that the private sector requires (Educated workforces who can make complicated products. Educated consumers who are able to use complicated products. Roads to deliver goods with). And in that mix are some R&D functions such as most of the basic science that leads to interesting products being possible. But we also know that the state is absolutely useless at designing products that people want to buy, it doesn't reform busted industries very well, it makes political decisions when commercial reality is required.

A healthy economy isn't one that barges either public or private sectors aside. It's one where the public sector handles stuff that it is definitely better at, the private sector handles the stuff it can clearly do better, and a lot of grey areas in between have to be handled with pragmatic discretion.

The DoD funded microchip devlopment to make better fighter planes and develop nastier nukes, it would never have made the iPad or Google Earth without the private sector taking over.

As for the socialisation of costs. You can quibble about whether TARP made your government a small loss or a small profit (in raw numbers it was a profit, but with opportunity costs it was a small loss). Wall Street actually does you a lot of good and it was worth the bailout either way. That's true even if some of the people receiving those bailouts are complete dicks - and even if some of them really deserve prison (they didn't really, they thought quite reasonably in most cases they were making sound bets - not also that most of theose toxic assets that were rated AAA have performed exactly as designed and deserved their AAA ratings).

It's a complicated subject, but you can easily manipulate people by describing their activities as 'Casino Banking' and 'making money by just moving money'. You aren't taking into account the usefulness of currency hedging, securitisation of future income streams, the issuance of shares and bonds or the simple value of asset liquidity and countless other stuff that Wall Street does and that people don't understand, but bitterly object to.

I'll tell you one thing that may give you some hope for the future though... You know all that talk about how robots are going to take all the jobs? Well Wall Street is going to lose more of them that way than most. And that's great news because it means the Total Factor Productivity (already pretty high) of the financial services industry is set to go up fast, which means better pensions with lower management costs for the rest of us. (Another myth that needs exploding is this idea that capitalism is a giant conspiracy that protects insiders. It's not, Wall Street is piling cash into Fin Tech businesses in the complete knowledge that it will kill lots of their own jobs).

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Gary Childress
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Re: Socialism: What Has Gone Wrong?

Post by Gary Childress » Sun Apr 24, 2016 5:51 am

FlashDangerpants wrote:For one: socialisation of profits. There's a complete myth that we the normal folks don't benefit from all this capitalism. We don't do the same kind of work our grandaddys did, certainly not in the same way, we don't buy the same stuff they did. Take a car that you might buy today for X number of months' worth of the median wage, compare it to its equivalent from 1976 (at X month's medium wage), there is a world of difference in safety, performance, miles per gallon and what have you. The same is true of any number of goods and services. Many of those goods and services are stupid crap like selfie sticks and vajazzling. But others are Ebola vaccines and wonderful computers that can win board games.
There really is no "myth" that normal folks don't benefit form economic activity. We all pretty much acknowledge it. In some circles it's called "trickle down" economics. The term has been around at least since the Regan era here in the US.
Another myth is the very notion that we could or should try to disentangle the relative economic contributions of the private and public sectors. Everybody knows that the public sector provides a huge array of essential services that the private sector requires (Educated workforces who can make complicated products. Educated consumers who are able to use complicated products. Roads to deliver goods with). And in that mix are some R&D functions such as most of the basic science that leads to interesting products being possible. But we also know that the state is absolutely useless at designing products that people want to buy, it doesn't reform busted industries very well, it makes political decisions when commercial reality is required.

A healthy economy isn't one that barges either public or private sectors aside. It's one where the public sector handles stuff that it is definitely better at, the private sector handles the stuff it can clearly do better, and a lot of grey areas in between have to be handled with pragmatic discretion.
The public and private sectors do appear to compliment each other at times. Perhaps it is wrong headed to try to do away with either one or the other. I don't know. (I only studied economics in college for about a year before I changed majors to something I was more interested in.) It sounds like maybe you are advocating what is called by some a "mixed economy"; one with both private and public sectors actively participating in it. That is basically the status quo here in the US (much to the chagrin of so called "conservatives" and "libertarians"). "Laissez faire" economics certainly never made much sense to me. I was more enamored with Keynesianism.

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Re: Socialism: What Has Gone Wrong?

Post by FlashDangerpants » Sun Apr 24, 2016 6:37 am

Trickle down economics is a very different notion. It's based on supply side assumption that radically restructuring the tax system for the exclusive benefit of the wealthy will somehow benefit the poor. I definitely do not wish to be seen as advocating something so patently unrealistic.

What I am describing is entirely in keeping with Keynes. In fact it is pretty much cribbed from his work Economic Possibilities for our Grandchildren(PDF) which, written in 1930, pretty accurately predicted the extent of economic growth for the next few decades. Many consider it a fantasy due to predictive shortcomings in the text given that it predicts drastically reduced working hours in the rich world which never came true - I am among those who regard that criticism as missing the point. He shows here that increasing productivity will generate greater wealth and provide more goods and services and more incomes with which to afford them (it's not his fault that much of the incomes have been spent on labour saving devices, and enjoying the resultant leisure time, rather than directly upon leisure time as he assumed in 1930).

Either way, check out his opening para and tell me if you have heard or even expressed similar sentiments yourself recently
Keynes wrote:We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress which characterised the nineteenth century is over; that the rapid improvement
in the standard of life is now going to slow down --at any rate in Great Britain; that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us

Obvious Leo
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Re: Socialism: What Has Gone Wrong?

Post by Obvious Leo » Sun Apr 24, 2016 8:02 am

It's also worth bearing in mind that advances in technology of themselves also have a direct impact on living standards. For instance when I was a child a black and white TV set cost something like eight times average weekly earnings. When I bought my first computer with all the trimmings it cost me nearly eight weeks pay for a piece of kit which the cheapest of today's smart phones could outperform.

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Gary Childress
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Re: Socialism: What Has Gone Wrong?

Post by Gary Childress » Sun Apr 24, 2016 5:03 pm

FlashDangerpants wrote:Trickle down economics is a very different notion. It's based on supply side assumption that radically restructuring the tax system for the exclusive benefit of the wealthy will somehow benefit the poor. I definitely do not wish to be seen as advocating something so patently unrealistic.

What I am describing is entirely in keeping with Keynes. In fact it is pretty much cribbed from his work Economic Possibilities for our Grandchildren(PDF) which, written in 1930, pretty accurately predicted the extent of economic growth for the next few decades. Many consider it a fantasy due to predictive shortcomings in the text given that it predicts drastically reduced working hours in the rich world which never came true - I am among those who regard that criticism as missing the point. He shows here that increasing productivity will generate greater wealth and provide more goods and services and more incomes with which to afford them (it's not his fault that much of the incomes have been spent on labour saving devices, and enjoying the resultant leisure time, rather than directly upon leisure time as he assumed in 1930).

Either way, check out his opening para and tell me if you have heard or even expressed similar sentiments yourself recently
Keynes wrote:We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress which characterised the nineteenth century is over; that the rapid improvement
in the standard of life is now going to slow down --at any rate in Great Britain; that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us
The opening paragraph sounds good to me. :)

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Re: Socialism: What Has Gone Wrong?

Post by bobevenson » Sun Apr 24, 2016 11:17 pm

vegetariantaxidermy wrote:
bobevenson wrote:
FlashDangerpants wrote:Stop cashing the social security checks then.
You obviously don't understand the U.S. Social Security System that merely gives back part of the money that people have already put into it.
That's bullshit. Your taxes never went into a fund for your retirement.
Ma'am, you're dumber than shit, a stupid foreigner acting like she knows how the American Social Security System works. Payroll deductions are made for Social Security. So before you go shooting your mouth off, educate yourself! But you are correct in that social security deductions don't go into a social security fund. The criminal U.S. government just signs an I.O.U. and uses the money for whatever it wants.

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Re: Socialism: What Has Gone Wrong?

Post by bobevenson » Sun Apr 24, 2016 11:33 pm

FlashDangerpants wrote:The Soviet Union never made the factories better at making stuff...
They invented and manufactured the AK-47, the greatest personal arms weapon of all time, and used around the world.

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Re: Socialism: What Has Gone Wrong?

Post by bobevenson » Sun Apr 24, 2016 11:49 pm

Gary Childress wrote: As citizens we are of course allowed to complain when our taxes are used to bail the profiteers .
Exactly what is it that you have against profits and free market capitalism? Your use of the term "profiteer" is a dead giveaway of your prejudice against the system that made America great.

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Re: Socialism: What Has Gone Wrong?

Post by vegetariantaxidermy » Mon Apr 25, 2016 12:04 am

bobevenson wrote: Payroll deductions are made for Social Security. So before you go shooting your mouth off, educate yourself! But you are correct in that social security deductions don't go into a social security fund. The criminal U.S. government just signs an I.O.U. and uses the money for whatever it wants.[/size][/b]
Oh, forgive my extreme ignorance of the intricacies of the US tax system. I'm sure you would be fully cognizant of mine. I just assumed that your country wouldn't have a social security fund, paid for by workers, since that would be an encroachment of your LIBERTY to do what you want with your own money. I mean, someone could die before their retirement and then whatever they had put into the fund would benefit others. That sounds like a commie plot to me.

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Re: Socialism: What Has Gone Wrong?

Post by bobevenson » Mon Apr 25, 2016 12:10 am

vegetariantaxidermy wrote:
bobevenson wrote: Payroll deductions are made for Social Security. So before you go shooting your mouth off, educate yourself! But you are correct in that social security deductions don't go into a social security fund. The criminal U.S. government just signs an I.O.U. and uses the money for whatever it wants.[/size][/b]
Oh, forgive my extreme ignorance of the intricacies of the US tax system. I'm sure you would be fully cognizant of mine. I just assumed that your country wouldn't have a social security fund, paid for by workers, since that would be an encroachment of your LIBERTY to do what you want with your own money. I mean, someone could die before their retirement and then whatever they had put into the fund would benefit others. That sounds like a commie plot to me.
No, it's not a Commie plot, just a Socialistic plot. Oh, I'm sorry, I meant a "liberalism" plot!

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Gary Childress
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Re: Socialism: What Has Gone Wrong?

Post by Gary Childress » Mon Apr 25, 2016 12:14 am

bobevenson wrote:
Gary Childress wrote: As citizens we are of course allowed to complain when our taxes are used to bail the profiteers .
Exactly what is it that you have against profits and free market capitalism? Your use of the term "profiteer" is a dead giveaway of your prejudice against the system that made America great.
Hi Bob,

Can you explain in a little more detail how bailing out Wall Street is an example of "free market capitalism"?

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Re: Socialism: What Has Gone Wrong?

Post by bobevenson » Mon Apr 25, 2016 12:27 am

Gary Childress wrote:
bobevenson wrote:
Gary Childress wrote: As citizens we are of course allowed to complain when our taxes are used to bail the profiteers .
Exactly what is it that you have against profits and free market capitalism? Your use of the term "profiteer" is a dead giveaway of your prejudice against the system that made America great.
Hi Bob,
Can you explain in a little more detail how bailing out Wall Street is an example of "free market capitalism"?
The government bailing out companies is not free market capitalism, it's crony capitalism, and the AEP would abolish it overnight. Now, maybe you can explain what you mean by "profiteering"?

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Re: Socialism: What Has Gone Wrong?

Post by Gary Childress » Mon Apr 25, 2016 12:41 am

bobevenson wrote:
Gary Childress wrote:
bobevenson wrote: Exactly what is it that you have against profits and free market capitalism? Your use of the term "profiteer" is a dead giveaway of your prejudice against the system that made America great.
Hi Bob,
Can you explain in a little more detail how bailing out Wall Street is an example of "free market capitalism"?
The government bailing out companies is not free market capitalism, it's crony capitalism, and the AEP would abolish it overnight. Now, maybe you can explain what you mean by "profiteering"?
So what would the AEP have done (were it in power in 2008) when the market was seriously unstable?

Profiteering: "make or seek to make an excessive or unfair profit"

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