agrippa1
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Posts posted by agrippa1
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What were the characteristics of the Long Depression? And how did we get out of it?
According to one school of thought, the long depression was caused by continued government experimentation (FDR's word) with the economy. The communists who surrounded FDR could not get their theories to work, and continued tinkering, that is, redirecting capital from its natural, efficient course, to sectors of the economy chosen by the gov't. The real effect of this was to continuously change the rules of the game in markets. Businessmen could not plan beyond the horizon of FDR and his red circle's next whim. So they stopped taking chances and effectively went Galt.
WWII changed the situation by forcing the government to adopt consistent market policies towards the clear ends of winning the war. Smart businessmen could anticipate market trends by anticipating war requirements, and were able to plan at least a year or two into the future. By the time the war had ended, FDR was dead, and the needs of rebuilding Europe and Asia provided more incentives for businesses to self-direct towards those ends.
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The "cause" of child labor was work that children could do, thanks to industrial era machinery. Imagine an eight year old doing the work that a decade before took a full-grown adult, and doing it twice as fast and efficiently as the adult did with the old equipment. This freed adults to do other productive work, increased the total productive output of society and made everyone better off. To paraphrase Chairman Mao-Mao, "when you spread the work around, everyone's better off."
I'm not sure what work collies did during the industrial revolution, but the same principle probably applied.
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Providing "free" health care is inflationary because it eliminates the natural economic restraints on seeking health care.
Forcing people to purchase insurance is inflationary because it incentivizes people to make it worth their while, and seek health care (i.e., seek returned value) for their forced investment.
Insurance itself is inflationary because any pooling of risk reduces the inherent risk of any one person, and leads them to take risks they might not otherwise take. Since everyone increases their risk-taking, the overall risk (cost) for the population increases. (see the subprime mortgage meltdown)
Eliminating lifetime limits on insurance payouts increases the cost of insurance by increasing the actuarial costs calculated by the insurance companies.
Forcing young healthy people to buy insurance is inflationary because it shifts health care costs from the old/infirm to the young, decreasing the cost of insurance for the old, and thus increasing their coverage, and thus their care costs.
A public option, which is necessarily subsidized with taxpayers dollars, increases costs for the same reason.
The only thing government can do to decrease costs is put a gun to the heads of doctors and force them to take less payment. This is what they do with Medicare, and you can see the results: doctors are refusing Medicare patients, and even Walgreen's is refusing Medicare prescriptions. The doctors who do take Medicare, or provide free care to the indigent, simply charge more to insured patients, which is a major cause of the so-called medical inflation in recent years.
The effect of limited price controls is always a black market to balance supply with demand. The effect of universal price controls is always the same, it increases demand and decreases supply. Since actual demand must necessarily equal actual supply, the elimination of price signals to regulate this balance will lead to other mechanism: waiting lists and death panels (Call them what you may).
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The correlation between CPI and M2 is oversimplified. The chart in the article shows two lines that trend up over time. Problem is CPI trends up ~33% over the time scale, while M2 trends up ~75%. The Y-axes are not aligned!!!
You can choose virtually any two financial statistics and find the same "correlation," i.e., long term growth. If you want to show true correlation, you must compare the rates of growth over the period. I don't think you'll find the same correlation once you do that.
CPI is inherently flawed because it incorporates tricks such as "owner's equivalent rent" which effectively hid the inflationary impact of housing costs in the mid 00's. It also failed to account for the reduction in manufacturing costs due to ballooning imports from China. Those cheap goods should have had a deflationary impact on CPI, but instead, CPI continued to grow at a moderate rate overall, with pockets of high inflation, including (gasp) medical costs, which originate almost entirely within the U.S., and energy costs, which are not related to third-world production costs.
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I have read this entire post and it really doesn't answer my question.
What I am asking is at the fundamental level. Producing is moral, destroying is immoral. Betting on production is moral. Investing (making an informed and rational bet) in production is moral. Betting on failure is...
If a moral man produces more than he consumes, a man betting on the failure of production, by selling short is producing what? How can he be producing more than he consumes?
I understand the relationship, and the role of short sellers in the stock market as it exists today. I am not asking if it is necessary in order for our present market system to function. I am asking a question of ethics. I suppose I posted this in the wrong sub-forum then, huh?
Remember what investing is: It is taking capital from non-productive use, and putting into a productive use. Betting, yes, but betting that the business in which it is invested will prove to be among the most productive uses of capital.
Short selling is taking capital out of a business that one thinks will prove among the least productive uses of capital, and transferring it to an investment elsewhere. A short seller takes money out of a business and invests it in other business, or just keeps it as cash. Later, he puts a smaller amount (if he's right) of money back into that business, at a time when he believes that the near term will prove to be more productive for that company, or at least less non-productive.
Investment is the quest to move money from less productive ventures to more productive ventures. The ability to make that judgment and to move the money correctly is as important as the ability to produce. When the government outlaws short selling, they are preventing the efficient movement of capital away from less productive businesses; in effect, subsidizing failure.
Subsidizing failure is what all non-Capitalist governments do. Failure is the obliteration of economic power, which is necessary for the dominance of political power.
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Yes, I actually have the clipping from the local paper from when she died.... shortly after I discovered Objectivism. Just didn't want to cloud my joke with references that would have reminded someone of Jeebus, who as we all know comes up out of the ground on Easter, and if he sees his shadow, it's six more weeks of Lent.
"To whom, and for how long?"
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This may be taking the topic a little off topic from the OP's post, the phrase "too big to fail" has been used before in debate against me. I maintained that anyone good enough to compete with the big businesses would be able to, but I was told that the big businesses would just lower their prices until any new competition has gone out of business, and then raise their prices again. Is there any argument against this, or is there even anything wrong with that in the first place?
The main argument against this is that products and companies are not homogeneous, with few exceptions. Competition usually arises in niches ignored by a major player, not directly at their core product, and competitors often enter based on differences in quality or improvements in processes. If a competitor can make widgets 10% cheaper than the Widget Monopoly, it will have no trouble finding investors to bankroll it through WM's attempt to dump at a lower price, or a buyer may contract the competitor to provide long term supply, below what it knows the big business can sell at over a long term. And if it makes rechargeable widgets, WM can dump all the plug-in widgets it wants and not make a dent.
An exception would be a product that is homogeneous, like, oh, say, aluminum. You can't produce a much "better" aluminum than aluminum, so if a company folds profits back into innovations in aluminum production it could maintain a significant cost advantage over any comers, and thereby maintain a non-coercive monopoly without the need to dump product. That's exactly what happened at Alcoa, America's only non-gov't-sponsored monopoly, and the result was very high quality and low cost aluminum. The gov't prosecuted them, of course.
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The underlying problem is that the U.S. government (via the FDIC) has insured bank deposits up to $250,000. In addition to this, the U.S. government recently underwrote quite bit of bank debt. Finally, there are all sorts of implicit though fuzzy guarantees from the government. Those are the things that need to change.
If the government is underwriting financial firms, it will want to hold them to certain standards. There are already lots of such standards in place, and this idea of limiting what banks can do will be one more. Government standards are usually bureaucratic and inefficient. Still, it is the underlying guarantee that needs to be undone.
There are a lot of underlying problems. In this mess, it was the gov't guaranteeing risk for Fannie and Fred so they could sell MBS to Wall Street that was a big problem. Once Fan and Fred allowed banks to short circuit the reserve limits on total mortgage loans, all bets were off. And if that wasn't bad enough, when the loans started falling off because credit demand dried up, the gov't loosened lending standards, created exotic loans that were not really loans but gov't-sponsored speculative leveraging, and talked up that speculation:
Calculations by market analysts of the "option adjusted spread" on mortgages suggest that the cost of these benefits conferred by fixed-rate mortgages can range from 0.5 percent to 1.2 percent, raising homeowners' annual after-tax mortgage payments by several thousand dollars. Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade-Alan Greenspan, Feb. 23, 2004
This from the man who held the controls of interest rates over that decade.
It wasn't long before FHA was opening up Option ARM's with nothing down to first time homebuyers with barely enough income to cover the minimum payments and no assets to fall back on, save what they could gain from equity inflation after the purchase.
If the government had consciously engineered a massive bubble and credit collapse, they could not have been more effective than the Fed, FHA, Congress and the GSE's were in this case. They did everything exactly right.
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It's going to be a grand test of Keynesian economics, with the world's top expert in the Great Depression (I) as the lead experimenter.
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True, although (in compensation) in the last two years, it has been showing consumer price-rises as being higher than they actually are. When taking out the OER one ought to substitute some other measure for home-ownership costs. If one uses the Case-Schiller as a proxy, the CPI calculation during the peak of the housing boom works out to about 3% higher than the CPI with OER.
Case-Shiller is problematic because it accounts for CPI in its algorithm, so you'd have to count CPI again, but that defeats the purpose. In fact, the real power of C-S is that it uses sale pairs from the same houses, adjusted for differences in CPI between the sales dates, to calculate real price changes (averaged among thousands of sale pairs) over time. So you can see house prices hovering above and below the index value of 100 for the past hundred years or so. Shiller was the first to raise the alarm, in 2003 (!) when he saw his index rise to 150% of its long term average. (it eventually hit 226% before the bottom fell out) Anyone who says you can't see a bubble 'til it bursts is a liar or a fool.
I used the median home price index, which I know has its own problems, but is at least in the ball park, and probably conservative because the volume of sales tended towards the lower priced houses during the boom as lower-cashed folks took advantage of the situation, and because the conforming loan max restricted incentives and risk subsidies down into houses still selling below $417k. I substituted a percentage of housing CPI's OER with the home price index, based on home ownership rates for each period. This was probably also conservative because the amount of money actually being spent on home mortgages rose so quickly during that time and shifted so much money from disposable income to mortgage payments, that the share of CPI taken by housing probably should have expanded.
The cost of housing having gone down in the past two years doesn't have as much bearing on true CPI as one might think, because the volume of homes purchased at those lower prices is a small fraction of the sales at the peak (new home sales are at about 400,000/mo from a peak of over 1,200,000/mo). Most people who bought in the surge are still paying the same monthly mortgage payments, and it will take years for the overall actual cost of housing to retreat, so the marginal decline in home prices does not translate to a proportional decrease in the cost of housing, or even close to it.
Even with declining home prices forcing some (small) price deflation, the gov't's only solution is to inflate the currency until home prices cover mortgage amounts, so we are in an inflationary trend right now to just break even on the mortgage situation. Stimulus helps that cause somewhat, but focusing it on ideological goals and increasing the regulation of businesses is going to drive down production, which will take the inflation trend out of the gov't's hands. I don't see any good escape from this situation, and I think it's the govt's plan to hope that the economy just rights itself, as it always has. Hope as a plan. What a concept.
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Some suggested Reicht (sp?).
Robert Reich. Yeah, a genius. I heard Reich defend the minimum wage once on the grounds that higher wages would get higher performing workers and would make businesses work more efficiently. He is of the same ilk as Krugman, equally on par with Rand's worst villains in AS. This mentality, that a one-size solution from an intellectual* can better serve all businesses than individual solutions for each business devised by its owner, is typical of the Leftist, elitist mindset. Well-intentioned, arrogant idiocy at best; disingenuous, cynical tyranny at worst. I lean towards the latter explanation.
*Pseudo-intellectual actually. An pseudo-intellectual is a man who confuses sophistication - knowing something no one else knows - with the false sophistication of believing something no one else would believe.
(edit: typo)
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If you look at stock prices since the end of the gold period (1971), you notice that prices diverged from book value at that point and started tracking to earnings. More specifically, the earnings to price ratio (inverse of P/E) tracks very well with interest rates over the past 40 years. It's as if we started considering stocks as interest bearing securities rather than investment in companies. If interest rates drop, people transition to stocks to try to improve their returns, until the E/P is driven down in line with interest rates.
Interest rates are very low right now, and everyone agrees that at some point inflation will force the Fed to increase those rates. If interest rates pop up, the market will crash.
So stock prices are being kept up because of deflation, not inflation!
The scary thing is that the gov't is keeping interest rates low right now by lending billions to banks at near 0% and having them take advantage of the carry-trade, bidding Treasury yields down, and in the process making risk-free profits (with which to pay back their TARP funds!!), and depressing overall interest rates.
It's one gigantic shell game - and that's not even counting the $3B per day the gov't is spending on MBS's. It can't go on for long, and when they finally run out of blind alleys, the whole thing collapses. And the longer it does go on, the worse it will be when it finally does blow up.
If you think they have a plan to unroll everything for a soft landing, just watch the fireworks that are already starting in White House discussions on the economy and banks. Giethner is in revolt over the new bank policies, and Bernanke is close to getting the boot. Who do you think Obama will nominate in his place? Paul Krugman, maybe?
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I agree that we may not be headed to hyper-inflation. My point was simply that, just based on the nature of trade, it's possible that the greatest damage from inflation can be done before the majority even notices that inflation is occurring.
Interesting you mention that. The CPI is terribly flawed for short term measurements in that it counts "Owner's Equivalent Rent," rather than homeowner's cost in its computation. This means that as house prices were skyrocketing in the mid 00's, the resulting glut in rental units depressed the CPI, and further, the loss of disposable income depressed the demand & price of all other goods (although you could argue that the latter was offset by increased equity income and spending). In the long run, rental costs will tend to meet up again with homebuying costs, but for the past ten years, we've been duped into thinking inflation was below 4%. If you make a simple adjustment to cancel out the OER bias, you find that inflation (CPI annual growth, that is) hit a peak of over 10% in late 2005 and stayed near there for about a year. It wasn't until early 2008 that the OER adjustment began having a negative (overestimate) effect on CPI. At its peak, the OER adjustment was hiding almost six percentage points of CPI annual growth.
And when did they start OER? 1983, right around the time they were "getting a handle" on inflation. Right.
Had the Fed seen the CPI increasing at 10% in 2005, they would have put the brakes on lending and effectively popped the RE bubble more than 25% below its eventual peak.
The only reason we won't see hyperinflation is that the government has ways of letting us down gently, so rather than 100% inflation for a year, we'll see 15% inflation for five. But ask yourself which does the most damage, and which is harder to recover from.
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Ayn Rand wrote as much in "Government Financing in a Free Society". It's a basic Objectivist position that ALL taxation is IMPROPER. Go read and come back when you know something useful if you want to be included in the discussion.
What Rand actually writes is:
In a fully free society, taxation—or, to be exact, payment for governmental services—would be voluntary.That is, taxation is not necessarily involuntary. A sales tax - required by law on dollar transactions - would be voluntary if the government allowed the use of alternate currencies for transactions, which would not be taxed.
The individual making the choice between U.S. dollars and Galt Dollars (to invent an alternate exchange medium) would have to decide whether the protection afforded him from fraud, etc. by the U.S. Government, was worth the extra burden of tax on top of the price of the good purchased. This would be a natural way to fund government, while pressuring the government to provide value greater than its cost to the people.
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It's important to understand that the journal entry in question was written in 1928, when Rand was 22 or 23 years old, and just two years after she escaped the collectivist hell of the Soviet Union.
It's also important to note that Hickman's demeanor (both physical and in his writings) is what inspired Rand, and that she apparently shifts freely, in her journal notes, between her descriptions of Hickman and those of Renahan, the character she distilled from parts of Hickman's personality. When she fleshes out the fictional Renahan's character to be "a wonderful, free, light consciousness" Prescott implies that all of Renahan's characteristics are derived from Hickman, and that she therefore see Hickman this way.
Similarly, when Rand describes Hickman's statement, "What is good for me is right," as "the best and strongest expression of a real man's psychology I have heard," Prescott draws the conclusion that Hickman is therefore Rand's "epitome of a 'real man.'" No argument against Hickman's statement is given, just an ad hominem using Hickman to attack Rand's favorable opinion of that statement, which is quoted out of any context of Hickman's sociopathic nature.
That all said, it is still more than a little disturbing that Rand would have idolized, even in limited context, a character such as Hickman. His behavior is so clearly and grotesquely at odds with Rand's philosophy that one is left with the inescapable conclusion that her philosophy developed over time as she matured from the state of a slave.
Gasp!
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This royalty thing is a red herring, regardless of how you look at it...
Rand could have gone to another publisher and tried to negotiate more favorable terms, but she made an economic decision - to lose a small amount of her per-copy royalty - in the belief that her total royalties would be far greater because of higher sales of the book. Her publisher believed the Galt speech added no value to the book and would have been an unnecessary cost incurred on his business. His request that she cover that cost was perfectly rational, from his point of view, and her decision to agree was also rational, given her belief that Galt's speech was, quite literally, worth more than the paper it was printed on. When she turned out to be right, she didn't quite out-smart her publisher - he increased his profit margin through the expanded printing of the same book - but she showed herself to be a shrewder judge of value. Had Atlas Shrugged not included Galt's 75-page monologue, it would have been greatly diminished, as I think most would agree.
That "contradiction" of Rand's, as Kirsch describes it, ended up making a huge amount of money for Miss Rand, in spite of Kirsch's judgment of its inherent economic irrationality. Sucks being proven wrong by your own argument, but what do you expect from poet and critic "of some distinction," as his wiki page generously describes him.
Here's an interesting exercise in infinite regression, written, unwittingly, by the critic. A latter day Toohey, if ever there was.
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We learn more about Kirsch than we do about Rand. Certainly he has no "undeserved self-esteem." None whatsoever, from what I can gather.
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Try to think of it as like Zenos dichotomy paradox(lol, obviously not the Tortoise and achilles one, I am tired) without an appeal to infinity but the fact that our senses cannot perceive the absolute detail of anything as it exists.
I would suggest scoping your questions a little better. You asked some pretty open questions when what you really wanted to know was, how can you objectively know reality, if you can't (completely) know any single thing. (If I understand your gist)
You're right, you can't know even a dust speck completely. But you can know that it is "that" dust speck (i.e., its identity). And you can know that it is "a dust speck" (i.e., a concept which subsumes all of a certain perceived type). Or failing that, you can know it is a "speck" of "something" (a broader concept).
The point of knowledge is not to know; it is to know in the context of understanding. Understanding is our means of organizing knowledge so that we can create, evaluate and choose our actions to best serve our values. If we are rational, our highest value will be that which allows us to serve all of our other values, that is, our life.
The reason objective knowledge of reality is important is so our actions may be chosen rationally to serve our values. Knowing everything to the nth level of detail is of no value to us, if we can make rational choices at the first or second level of detail. So if someone just shot you, would you get down and call 911, or, to quote the great philosopher, Mona Lisa Vito, "would you give a fuck what kind of pants the son-of-a-bitch who shot you was wearing?"
The question of free will is really one of determinism, on which there are many threads here. The point of view I presume you have is that all particles behave at some level as predictable billiard balls, bouncing around in a predictable manner, and therefore all of our perceptions, choices and actions are, at some level, predictable. Therefore free will does not exist. The counter argument is that we choose to do things, therefore free will exists. For instance, I choose to look at the lamp over there. QED. The counter-counter argument goes that my choice just now to look at that lamp was predestined by the exact locations, velocities, angular momenta, charges, spins, etc. of the particles that were brought into existence at the instant of the big bang. (I assume you don't believe that God forced me to look at the lamp.)
Okay. Say the universe is a big billiard table. Now "choose" to believe that or not. If you do "choose" to believe it, then you have no ability to control your next "choice" which may just be to go up to the attic and eat the sights of your dad's trusty 1911. That didn't go so well. So "choose" not to believe in the billiard balls. Your next choice is to close Firefox and get to work on that paper you've been putting off. Hmmmm... So if you believe in free will, you act rationally, but if you don't, you don't. Which is the rational conclusion to make, that free will exists, or that it doesn't? Which serves your un-chosen values better? Which is more consistent with your perception of reality?
Which is "true?"
Which reminds me, I've got that damned paper to finish. Cheers.
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I'll pick up here.
Strictly transforming "all existents are ravens" into "all non-ravens are non-existents" leads to a contradiction because some non-ravens (yellow pens) are existents. Here the reason is that the initial premise is just false.
Strictly transforming "all ravens are existents" into "all non-existents are non-ravens" leads to a contradiction because some non-ravens (yellow pens) are existents.
You're mixed up here. You validate "all non-existents are non-ravens" by surveying non-existents, not non-ravens.
Here the initial premise is false by the requirement of logic. A proposition in the form "All P is Q" works when P and Q are concepts, an open-ended set of referents that meet some criterion. If 'raven' is a concept as opposed to a particular or an enumerated set of particulars, then it also refers to past and future ravens which are not existents. If 'raven' is only the ravens we know of, or only the ravens that exist right now then the 'all' fails to invoke the universality that makes logic work.This is a strange definition of universality. If a raven is a raven, whether it is a past or future raven, it is an existent, in the context of its existence. Outside of the context of its existence, it is not a raven. That is, A is not A outside of the context of the existence of A, qua A. A past or future raven is only a raven by virtue of its past or future existence.
The general caution about reasoning about existence is that existence is not an attribute. 'Attribute' is logically dependent on prior existence. Treating existence as a separable attribute commits the stolen concept fallacy.Therefore, God exists.
I rest my case.
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The confusion is yours. Using the Ravens example: if an attribute of a raven is that it is black, than all ravens are black!!
If you refuse to accept that conclusion, than you cannot fully define a Raven. That impedes concept formation.
Your concern about "all" is misplaced. Your distinction between all Ps and the concept of P is meaningless here: the concept comes from the integration of all the Ps observed.
This "debate" is concluded.
Maybe for you. Attributes of man are: two hands, two feet, ten fingers, ten toes, sighted, hearing, verbally communicating, rational. etc. Your argument is that these are not attributes of man because you can point to some men for whom each of these is not the case. Okay, then, name one attribute of man that is the case for every man. If you can't, or if the attributes you can come up with are not sufficient to identify the concept "man," then your argument results in the negation of the concept "attribute."
"A concept is a mental integration of two or more units which are isolated by a process of abstraction and united by a specific definition." That definition does not need to be "exact," it needs to be sufficient for the concept to be communicated from one consciousness to another such that the receiving consciousness integrates the same set of units, in context of that communication.
If you and I agree that "two eyed" is one of many attributes of man, but both see a one-eyed man walking down the street, we would both understand, by a common understanding of the nature of "definition" that he is a man, though, perhaps, a "one-eyed man" for purposes of maintaining strict adherence to the concept.
So, you're right, you can not "fully define" a raven, or any other thing, if I understand what you mean by "fully." Good thing you don't have to "fully" define concepts to sufficiently define them.
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(on edit:) I disagree with the premise of the question.
"All P are Q" and "all non-Q are non-P" are logically equivalent.
Each time you find a P that is Q (and don't find a P that is not non-Q), you gain evidence of the truth of the statements. The first time (if ever) you find a P that is non-Q, you've proven conclusively that the statements are false. ("conclusively" being used in its correct meaning in this case)
The question here is why finding a non-Q item that is non-P does not similarly bolster the truth of the statements.
Problem is, it does.
First, finding a non-Q that is non-P provides evidence that "non-Q" is a valid concept, so right off the bat, it is necessary to find at least one non-Q that is non-P in order to validate the statement "all P are Q." For example, "all ravens are existent" would require you to find ravens that are existent, but also to find non-existents that are non-raven. Finding no non-existents whatever, you conclude that the statement has a problem. I'll leave it someone else to tell us if the statement is false, untrue, invalid, meaningless or whatever the technical term is, but you get the idea.
But further, the finding of additional non-Q which are non-P also leads you towards the conclusion that the statements are true. If you were to survey all non-Q thing to test for their non-P-ness, and found the affirmative, you would conclude that all non-Q are indeed non-P, and that all P are Q...
But wait! Just because all non-Q are non-P, doesn't mean that all P are Q, unless you can find at least one example of P, or, in other words, that P is a valid concept. For instance if my hypothesis is that "all unicorns are white," then surveying every thing in the universe and finding that all non-white things are non-unicorns is not sufficient to conclude that all unicorns are white.
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For the sake of argument, isn't it possible that workers could be broadly exploited by businesses working in collusion to keep wages low? Marxists believe that profits by a business entity are derived by undervaluing the worker contribution. In reality, don't workers have very little leverage in salary negotiations for most low to mid wage jobs? And without leverage, how can workers negotiate for the true value of their labor, and thus avoid exploitation?
If they are exploited, why don't they move on to some other job?
Why would they accept less than the "value" of their contribution?
Think about what you are saying. Workers provide their time to a productive job, but not the total productive value of that job. If the employer provides the tools and raw materials and training to a worker, then the productive contribution of that worker is more than just his time, but also includes the value added by virtue of him using the employer's tools and access to raw materials.
As with any voluntary exchange of value, both the employer and the employee profit from the exchange of the worker's time for a paycheck. Which means the employer gets more from the worker's time than what he pays the worker, and the worker gets more in pay for his time than he could in any other effort. Therefore, by definition, the employer is "undervaluing" the worker contribution, and the worker is "undervaluing" the pay he receives from the employer. Who is exploiting whom?
As long as the exchange of time for money is voluntary on the part of both parties, neither is exploiting the other, both are receiving more value (to them) than what they are giving, and both are profiting from it.
Is a grocer "exploiting" you when he sells you a product for more than it cost him to buy and stock, or are you "exploiting" the grocer when you purchase that product for less than what you would be willing to pay?
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I've raised this question before on this forum, to much ridicule (and admittedly well deserved). Is Greenspan John Galt or is he Francisco D'Anconia? Rand may have provided a clue to the answer, in the final line of one of her most important essays, Egalitarianism and Inflation.
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Great movie. DVD is $35.99 on Amazon.
the Laffer Curve?
in Economics
Posted
There's an argument that the producers and protectors of money and money-based contracts deserve compensation for the value they provide in facilitating efficient market transactions (as opposed to the non-monetary barter system). Imposing a transaction tax would seem a fair method of collecting for the value provided. But it would only be moral if the use of gov't-created money was voluntary. In such a system people could choose to use private bank currency to transact business without a tax, but they would be taking a risk that their transactions would not be protected by the gov't from fraud.