Justino

Does he want savings at 0% or the interest rate? Even if the interest rate is null, people will continue to save because they each have their time preference. It would not be possible to eliminate the time preference unless you eliminate uncertainty about the future; paying interest only encourages, not entirely produces, savings. Regardless, if savings were zero then how would we afford to produce these wonder cities? No one has saved the money to afford expensive capital-intensive machines to build the skyscrapers, which also takes sometimes billions of dollars. I suppose he could argue that this could be done by investments, but that would require people to put off consumption for some time and reap the rewards at a later time. Ask him what he thinks happens to money when it's saved, stuffed into a mattress. It's in a bank, where others who have a more urgent need for the cash, go to spend it somewhere. The money is spent in either case, but in this scenario money is not distributed blindly. They make investments into machinery, increasing worker productivity and therefore earnings. There is no reason to believe acting prudently is something to discourage.

In part he is right: Republicans in general don't know that much about economics. But then he himself doesn't know that much about Keynesianism if he thinks it only requires more spending and not investing. At its heart, Keynesianism is a political solution that makes it the function of government to fool people into acting how they otherwise would not. Take the use of government debt spending to artificially increase demand, which otherwise would not exists and "crowds out" others wanting credit for their projects. It believes people are unthinking machines to be manipulated by false economic signals. This is a simple debate. His is demand-side economics that believes there is an underconsumption by consumers and investors, so someone--government--needs to step in and fill the gaps. But there is no reason to assume such underconsumption exists; there is an unending demand for labor to satisfy needs and wants. Say's Law, which states supply for one product creates demand for the things needed to create it, put the idea of underconsumption to rest long ago. Even ignoring that line of argument, Keynesianism is absurd on its face. Imagine you were Robinson Caruso on a deserted island and you were faced with the likelihood that you would be stranded there, by yourself or with in a group, for a long time to come. Which would be a better plan to survive? Consume all your resources as quickly as possible. Or save some resources for a rainy day in order to use them later in building better tools to survive. Instead, history has shown that the richest nations in history are the ones that have the largest portions of their incomes held in savings. Without savings, you are unable to purchase large capital-goods products like cars and homes. The individual buying the home doesn't even need to be the one doing the savings, so long as others have put money away in banks for example. These capital-intensive goods are responsible for increasing worker productivity and wealth. I suspect your friend could then take the tract that government could just as easily collect those savings through taxes. But that neglects the history of governments, that they are a costly and usually unwise means of transferring property, saying nothing of the ethics of it. Ask him to explain the existence of stagflation in the 1970s, which Keynes did not believe possible. Most liberal economists reject Keynesianism in favor of a "New Keynesianism" that talks of supposedly inflexible wages. That’s good for now.

Almost right. Texas does have the legal power to split into five separate states if it so chooses.

I suppose it depends on how he or she gained that power and how they sustain it. If it was gained through voluntary agreements (trade & commerce), the person must continue using peaceful means to sustain it. If, however, the person rose to the top by force (murder or theft) or uses them to keep his place, then the person must continue that action, lest he be the next to get the axe.

Money is explicitly prohibited under Marxism. To the extent that money-substitutes are used, they are limited only to final, consumption goods. The planners of production and distribution have a monopoly over these input resources, so there is no need for any transactions. Thus, there is no use for any medium of exchange in the production stages of the economy. Even virtually-intergraded companies run up against the same problems to less of an extent. But they evade this by having adopted the labor theory of value as a guide, but that isn’t relevant yet in the debate with your friend.

Well, rest assured. I use Bloglines to subscribe to certain search phrases. One of those is "capitalism." So when that word pops up on in a blog post, I get to see a short summary of the post. And I like practicing to defend my ideas. Also, it helps if you can type fast. [Added] Also, my original post was edited by the moderator to read "Not only does he [not] have the slightest understanding of economics." I could have made my statement clearer; but I meant what I originally said--he does have "the slightest understanding of economics."

It sounds like your friend's real objection to capitalism is that there seems to be no organized structure for planning. Marx called it "market anarchism." There are a couple of steps to take. But first you should challenge the idea that the failure of socialism is the fault of its leaders, and not the system, by pointing out that it is the nature of totalitarian governments for corrupt people to rise to the top in those organizations--just as in organized crime. Hayek made this point in "The Road to Serfdom" nearly 60 years ago. This is a little refresher. To the main point, the two best arguments are the lack of incentives and the inability to calculate costs in a state-run economy, which became very popular after Ludwig von Mises published the idea. (I don't believe he came up with the theory first.) The first one is rather easy to understand. Marx discusses this. He counters that a capitalist-free people will make goods so abundantly that the problem will be come mute and dissolve away. In other words, he completely dodges the issue. The second point takes some time. First, capitalist economies thrive partly because information is more easily understandable and readily available--the main focus here is prices and profits. Both give information as to what is demanded, how well it is served, as well as how is best to provide the product, if at all, and tons more. Further, socialist governments are unable to know the opportunity costs of their actions because there are no prices once money is outlawed. Money provides for common "language" to speak in terms of. In socialist nations, you are literally comparing apples and oranges, with nothing meaningful in common to compare them to. Also, with no private property, any money that did exist would be useless since it is the state that would be both buying and selling the product inputs, rendering the transaction meaningless. It would be like taking money from your left pocket and putting in your right. It is utterly ridiculous to claim a particular economy is superior if it is unable to calculate costs of an act. It is even more surprising someone would be using that line anyhow; most focus is on more egalitarian motives to support the various branches of collectivism. Then there’s the issue of the division of labor, commerce promoting peace, balance of economic powers; the list goes on. I like the following articles myself: Proof That Socialism Cannot Work Socialism vs. Market Exchange National Socialism

This is my first time starting a new thread. Be gentle. The title of this guy's blog post, HERE, was pure gold. Not only does he [not] have the slightest understanding of economics (favoring a pro-business socialism ), he has some overt obsession with toilet paper. I couldn't make this stuff up. So this is what I post in the comments section as a response: I can't wait until he responds. >>>Edited to remove minor profanity, however since the rest of the post was respectful, I allowed it to stand.--Jennifer<<<