Tuesday, November 02, 2010

America's Turning Point?

NY Times:
In a CNN interview, Rand Paul, the newly elected Senator for Kentucky, defends extending the Bush tax cuts by saying that "we all work for rich people or sell stuff to rich people."

Really, is there any reason not to give up on America right now? I'm very, very serious about this -- is there any longer a reason for a rational, thinking person to stay here, to expect that the future is going to be better than the past?

Do any of you really believe that life in America is going to get better in the near future and not worse? -- that it's not going to continue on the path it's taken for 3 decades now -- middle-class wages absolutely stagnant, and about a 1%/yr decline in the population with health insurance?

I know not everyone can just pick up and leave. But some of us can....


SBVOR said...

“middle-class wages absolutely stagnant”

Really? Seriously? And, you have the audacity to call yourself a “journalist”?

Try taking your head out of the so-called “Progressive” class warfare rhetoric and examine the freaking data!

Click here for the source data.

Click here for more data and commentary.


rhhardin said...

The rich are the ones that spend the smallest percentage of their wealth on consumption.

Extra money is capital.

Capital is the reason that the ditch digger with power equipment earns a lot more than the ditch digger with a shovel.

Taxing the rich removes capital and therefore kills middle class wages.

Trickle-down isn't dimes falling from the pockets of the rich. It's capital raising the productivity of the rest of the population.

Economics is actually more interesting than populism.

David Appell said...

It's amazing, rhardin, how you always have it all figured out.

Your thoughts are being wasted on the blogosphere, when you could be directing world agencies.

rhhardin said...

There's enough math in economics so that a little effort pays off.

I don't see how it's boring.

rhhardin said...

There's some folk wisdom to start with, like "Don't eat the seed corn."

Capital is seed corn, both literally and figuratively.

David Appell said...

I thought the whole point of capital was to invest it, not save it.

rhhardin said...

Saving, unless you stick money in the mattress, is investing.

It goes at worst to the bank, and the bank lends it out to somebody who thinks they can make a return on it by doing something. Like buying power equipment for ditch diggers.

If you put savings in the mattress, the Fed notices that the active money supply has fallen, and prints money to replace it until such time as you decide to spend it. Money in the mattress is an interest free loan to the government; but it displaces the sale of a government bond, and so that displaced money goes to investment instead of government consumption.

David Appell said...

> Saving, unless you stick money in
> the mattress, is investing.

You are trying to sound wise, but you are wrong. Money saved is not money put to work, by you, but only (maybe) put to work by someone else.

> Like buying power equipment
> for ditch diggers.

You try to sound profound, but you are very transparent.

rhhardin said...

I don't understand your objection.

It doesn't matter who puts the money to work, only that it goes to work as capital.

The money is money you got by doing something for somebody. That credits you with the ability to say what the economy does next, in the amount of that money.

If you save the money, that ability to say what the economy does next transfers to the person who borrows your credit from you.

If you directly invest the money, they you tell the economy yourself what to do next, presumably producing. power equipment for you.

Either way, the economy produces power equipment rather than starbucks lattes for your consumption.

That difference is the important one - you're using the economy to make something to increase productivity. That's how saving - investment - works as seed corn.

You postpone lattes for more next year's lattes.

Government spending doesn't go into increasing productivity, mostly.

rhhardin said...

I try to explain economics using factors that avoid any temptation to the fallacy of composition ("If everybody stands on their toes, everybody can see better.")

That would be a good career for a writer, it seems to me, if one would get interested.

David Appell said...

> Government spending doesn't go
> into increasing productivity,
> mostly.

Why not?

Like all money, it goes for wages and material. People get that that money, in wages or in prices, and buy soap and food and cars. How does that not help the economy?

rhhardin said...

It's badly directed money.

It's badly directed because the incentives are all wrong.

The economy is set doing the wrong things.

Each transaction lowers your standard of living, as a result.

Here's the opposite: the economy is based on disagreement over value.

X trades with Y when X values something he has less than Y values it, and Y values something he has less than X values it.

They trade and both come out ahead. There's a profit on both sides of every voluntary trade.

Add that profit up over the nation, and the nation's standard of living rises.

How do we know what trades to make for the nation to achieve this? We don't. The individuals have to direct the decisions, and they're all based on disagreement in the first place.

If you force trades which are not voluntary, you're necessarily lowering the standard of living.

And everybody's amazed every time this happens.

Dano said...

Young Genius SBVOR, lad, with inflation those wages are almost stagnant for the bottom three quintiles. There is growing income inequality in the States. Everyone seems to know this but you, strangely.

You should be careful who you call a moron, son, when you can't seem to marshall appropriate (real wages) data to address the assertion.

But thanks for the chuckle at your expense, boy.



rhhardin said...

The usual mistake about income inequality is not noticing that it's not the same people in the same quintiles over time.

Older people are richer.

First job people are poorer, having just moved out or still living in their parent's home.

Income mobility is pretty high in the US.