Billionaire Tells Us We Need To Live More Modestly

[realibrad]

Fine, but what does that have to do with citing someone who admits his own theorem rarely applies to the real world? The citation seems irrelevant, at best, and potentially deceptive.

Nope. You have it wrong, and likely because you don't understand the theorem.

The theorem states that if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.

The context of my comment was about the very stupid hypothetical about being able to shit in your neighbor's yard. There is something to be gained by not shitting in your neighbor's yard which is not apparent to some. See, if I shit in your yard and not mine, it is because there is a negative if the shit is in my yard. If I want to displace my negative onto another, then I must make sure that the negative does not come back to me. But, if there is lawlessness, then how can I stop my neighbor from shitting in my yard?

Solution! How about I formalize an agreement that if my neighbor does not shit in my yard, I will not shit in his. The transaction cost would likely be very low, as I would only have to talk to my neighbor to set up this deal. Wait, holy crap, that is like totally related to the link I posted.

 

[Bowfinger]

Nope. You have it wrong, and likely because you don't understand the theorem.



The context of my comment was about the very stupid hypothetical about being able to shit in your neighbor's yard. There is something to be gained by not shitting in your neighbor's yard which is not apparent to some. See, if I shit in your yard and not mine, it is because there is a negative if the shit is in my yard. If I want to displace my negative onto another, then I must make sure that the negative does not come back to me. But, if there is lawlessness, then how can I stop my neighbor from shitting in my yard?

Solution! How about I formalize an agreement that if my neighbor does not shit in my yard, I will not shit in his. The transaction cost would likely be very low, as I would only have to talk to my neighbor to set up this deal. Wait, holy crap, that is like totally related to the link I posted.

No, not really. It's a pretentious appeal to authority fallacy, and a bit of a straw man to boot. The issue isn't literally shitting in someone else's yard. That's a simple metaphor for a host of poor behaviors, all far more complex. Refuting the simple metaphor in no way invalidates the much larger real-world issue. Again, as Coase, himself, explicitly acknowledges, his theorem rarely applies in the real world. Are you sure you understand it?

 

[realibrad]

No, not really. It's a pretentious appeal to authority fallacy, and a bit of a straw man to boot. The issue isn't literally shitting in someone else's yard. That's a simple metaphor for a host of poor behaviors, all far more complex. Refuting the simple metaphor in no way invalidates the much larger real-world issue. Again, as Coase, himself, explicitly acknowledges, his theorem rarely applies in the real world. Are you sure you understand it?

So, yes I understand its a metaphor, which is why I called it a metaphor. The point I was making, is that people are willing to do simple things for simple problems. If your yard is getting shit in, and you would like it to stop, you must compensate the shitter in lieu of property rights. You would in turn offer up not shitting in their yard.

If there were property rights, they would not be able to shit in your yard, unless they offered you payment to do so. If for some reason it was worth it to you to get paid more than not have shit in your yard, that is an option too. The only issue is when transaction costs are high, but in the stupid metaphor of shitting in someone else's the cost would not be high enough to be a problem.

 

[Bowfinger]

So, yes I understand its a metaphor, which is why I called it a metaphor.

Point of fact, no you did not. You did not call it a metaphor until now.

The point I was making, is that people are willing to do simple things for simple problems. If your yard is getting shit in, and you would like it to stop, you must compensate the shitter in lieu of property rights. You would in turn offer up not shitting in their yard.

If there were property rights, they would not be able to shit in your yard, unless they offered you payment to do so. If for some reason it was worth it to you to get paid more than not have shit in your yard, that is an option too. The only issue is when transaction costs are high, but in the stupid metaphor of shitting in someone else's the cost would not be high enough to be a problem.

None of which addresses the fact that Coase, himself, recognized that real world transaction costs are almost invariably high enough to render his "theorem" inapplicable to real world situations. You continue to attack the simple metaphor while refusing to address the real world examples it represents. You are arguing fallacies. It's the same issue with the right's mythical free market: simplistic theories make great dogma but they rarely apply in the real world.

 

[spacejamz]

So this is like the speakers at the Davos conference warning you that Climate Change is bad while they travel around in their private jets....or in terms that liberals "might" understand, do as I say, not as I do....

 

[realibrad]

Point of fact, no you did not. You did not call it a metaphor until now.

You are right, I used hypothetical and not metaphor. I stand corrected on that.

None of which addresses the fact that Coase, himself, recognized that real world transaction costs are almost invariably high enough to render his "theorem" inapplicable to real world situations. You continue to attack the simple metaphor while refusing to address the real world examples it represents. You are arguing fallacies. It's the same issue with the right's mythical free market: simplistic theories make great dogma but they rarely apply in the real world.

NO, Coase said "rarely". You say invariably, which is an absolute, but that is not correct. Coase was trying to say that many times the costs are too high, but in the situation where you have someone shitting on your yard, its not likely to be too high. When the system is defined as simple as person A shitting on person B's yard, its going to be a simple small transaction cost.

This is all unimportant though. My point still stands that capitalism and free markets do not lead to someone shitting on your yard. A person that thinks that is the invariable outcome is ignorant and should be called out.

 

[Bowfinger]

[ ... ]
NO, Coase said "rarely". You say invariably, which is an absolute, but that is not correct.

No, once again. Point of fact, I said "almost invariably" which is a reasonable antonym to "rarely."

Coase was trying to say that many times the costs are too high, but in the situation where you have someone shitting on your yard, its not likely to be too high. When the system is defined as simple as person A shitting on person B's yard, its going to be a simple small transaction cost.

This is all unimportant though. My point still stands that capitalism and free markets do not lead to someone shitting on your yard. A person that thinks that is the invariable outcome is ignorant and should be called out.

You continue to try "win" by narrowing the discussion to the point of absurdity. Nobody but you cares about literally shitting in someone's yard. Yet again, that was merely a metaphor for the real world examples that started this tangent. Continuing to flog that misdirection suggests you have nothing relevant to offer.

The question is -- and always was -- how well capitalism and free markets work in the real world. You seem to claim they work great in the real world as long as government stays out of the picture (a position even Adam Smith rejected, by the way). You've offered nothing beyond mere assertion to support that position, however.

 

[realibrad]

No, once again. Point of fact, I said "almost invariably" which is a reasonable antonym to "rarely."


You continue to try "win" by narrowing the discussion to the point of absurdity. Nobody but you cares about literally shitting in someone's yard. Yet again, that was merely a metaphor for the real world examples that started this tangent. Continuing to flog that misdirection suggests you have nothing relevant to offer.

The question is -- and always was -- how well capitalism and free markets work in the real world. You seem to claim they work great in the real world as long as government stays out of the picture (a position even Adam Smith rejected, by the way). You've offered nothing beyond mere assertion to support that position, however.

Wait what? Who is saying that the government needs to stay out of the picture. The government is great at enforcing property rights. I would argue that that is the most important government function. I don't see a private way to do that either.

When did I say that the government needs to "stay out of the picture" in any context?

I think you might be mixing what I was saying, with someone else. The government has a very important role in society. I dont think the government needs to decide on morality. I dont think the government needs to decide to compensate people for attempting to do good. You may need to look over where I was coming from in my posts.

 

[Bowfinger]

Wait what? Who is saying that the government needs to stay out of the picture. The government is great at enforcing property rights. I would argue that that is the most important government function. I don't see a private way to do that either.

When did I say that the government needs to "stay out of the picture" in any context?

I think you might be mixing what I was saying, with someone else. The government has a very important role in society. I dont think the government needs to decide on morality. I dont think the government needs to decide to compensate people for attempting to do good. You may need to look over where I was coming from in my posts.

Fair enough. You've made several comments in this thread and the other thread implying that the only reason the (not-so-)free market doesn't work is government meddling. If I've misunderstood your position from those comments, I apologize. Please clarify, then, what you feel is government's legitimate role in capitalism and the market.

 

[Jhhnn]

So, yes I understand its a metaphor, which is why I called it a metaphor. The point I was making, is that people are willing to do simple things for simple problems. If your yard is getting shit in, and you would like it to stop, you must compensate the shitter in lieu of property rights. You would in turn offer up not shitting in their yard.

If there were property rights, they would not be able to shit in your yard, unless they offered you payment to do so. If for some reason it was worth it to you to get paid more than not have shit in your yard, that is an option too. The only issue is when transaction costs are high, but in the stupid metaphor of shitting in someone else's the cost would not be high enough to be a problem.

The premises of the metaphor do not reflect real life in our current economic system. That's because the shitter owns the yard & charges the rest rent to live in it. He owns lots of yards, makes money from all of 'em collectively so he can buy even more. He'll shit anywhere he wants based on his property rights. All the yards operate on the same principle- most people will never own their own yard. Obviously, they should have no say in who shits where, should they?

 

[realibrad]

Fair enough. You've made several comments in this thread and the other thread implying that the only reason the (not-so-)free market doesn't work is government meddling. If I've misunderstood your position from those comments, I apologize. Please clarify, then, what you feel is government's legitimate role in capitalism and the market.

Capitalism does allow for some to become more wealthy relative to the masses. There is not any doubt or contention there.

The thing that many people have a problem with, is the assumption that this is somehow bad, or that its only possible through unfair tactics. The mistake is to believe that this comes from the structure of Capitalism. All forms of how you structure an economy will have issues with corruption. Capitalism is not perfect, but its by far the best system.

Inequality is a product of not being equal. The mistake is believing that its a zero sum game, or that in any way the rich took something from the poor. It can happen, but not because of Capitalism and Free Trade. It happens when people try and corrupt the system. It would be far too expensive to try and allow the Free Market to solve all problems (Coase admitted this) so thats when the government can step in.

The governments role is very important. Enforcement of property rights is very important. A world with out property is a tragic world where people use resources and do not pay for the use. So burning fuel that pollutes the air is an example. The company would gladly not internalize the externality, as it would represent an expense. The government can play a role by taxing the company to try and apply the externality to the company.

My argument is that when you see the rich taking advantage, its almost always because they did it through government. Inequality is not a problem, taking unjustly is.

 

[realibrad]

The premises of the metaphor do not reflect real life in our current economic system. That's because the shitter owns the yard & charges the rest rent to live in it. He owns lots of yards, makes money from all of 'em collectively so he can buy even more. He'll shit anywhere he wants based on his property rights. All the yards operate on the same principle- most people will never own their own yard. Obviously, they should have no say in who shits where, should they?

The problem of your metaphor is it does not take into account competition. If a world exists where you dont have any other choice, its almost always because governments have set up a monopoly.

Maybe I am wrong. If I am, please show me where a company has been able to stop competition without government backing. All the companies that I have seen try to, have lost that market. Its only been with government help have they been able to keep out competition.

 

[piasabird]

Hate and envy are in full swing.

 

[Bowfinger]

Capitalism does allow for some to become more wealthy relative to the masses. There is not any doubt or contention there.

The thing that many people have a problem with, is the assumption that this is somehow bad, or that its only possible through unfair tactics. The mistake is to believe that this comes from the structure of Capitalism. All forms of how you structure an economy will have issues with corruption. Capitalism is not perfect, but its by far the best system.

Inequality is a product of not being equal. The mistake is believing that its a zero sum game, or that in any way the rich took something from the poor. It can happen, but not because of Capitalism and Free Trade. It happens when people try and corrupt the system. It would be far too expensive to try and allow the Free Market to solve all problems (Coase admitted this) so thats when the government can step in.

The governments role is very important. Enforcement of property rights is very important. A world with out property is a tragic world where people use resources and do not pay for the use. So burning fuel that pollutes the air is an example. The company would gladly not internalize the externality, as it would represent an expense. The government can play a role by taxing the company to try and apply the externality to the company.

I assume you recognize I've not disputed any of that. I've stated several times that I have no problem with wealth per se, nor even great wealth ... as long as it is obtained legitimately.

My argument is that when you see the rich taking advantage, its almost always because they did it through government. Inequality is not a problem, taking unjustly is.

My argument is that the system today is corrupt, allowing illegitimate accumulation of wealth. Contrary to some straw man slayers (no, I don't mean you), I am NOT saying all wealth today is illegitimate, only some of it. My argument is that government contributes to this corrupted system, though often due to its absence rather than its presence. I disagree that the "free" market would significantly mitigate this corruption sans government meddling. Instead, I argue that it is an inevitable result of capitalism without government enforcing the checks and balances required to keep power from concentrating in fewer and fewer hands. Sufficiently powerful interests can effectively suppress fair competition through many means, only some of which involve government.

 

[werepossum]

Capitalism does allow for some to become more wealthy relative to the masses. There is not any doubt or contention there.

The thing that many people have a problem with, is the assumption that this is somehow bad, or that its only possible through unfair tactics. The mistake is to believe that this comes from the structure of Capitalism. All forms of how you structure an economy will have issues with corruption. Capitalism is not perfect, but its by far the best system.

Inequality is a product of not being equal. The mistake is believing that its a zero sum game, or that in any way the rich took something from the poor. It can happen, but not because of Capitalism and Free Trade. It happens when people try and corrupt the system. It would be far too expensive to try and allow the Free Market to solve all problems (Coase admitted this) so thats when the government can step in.

The governments role is very important. Enforcement of property rights is very important. A world with out property is a tragic world where people use resources and do not pay for the use. So burning fuel that pollutes the air is an example. The company would gladly not internalize the externality, as it would represent an expense. The government can play a role by taxing the company to try and apply the externality to the company.

My argument is that when you see the rich taking advantage, its almost always because they did it through government. Inequality is not a problem, taking unjustly is.

Well said, sir.

I assume you recognize I've not disputed any of that. I've stated several times that I have no problem with wealth per se, nor even great wealth ... as long as it is obtained legitimately.


My argument is that the system today is corrupt, allowing illegitimate accumulation of wealth. Contrary to some straw man slayers (no, I don't mean you), I am NOT saying all wealth today is illegitimate, only some of it. My argument is that government contributes to this corrupted system, though often due to its absence rather than its presence. I disagree that the "free" market would significantly mitigate this corruption sans government meddling. Instead, I argue that it is an inevitable result of capitalism without government enforcing the checks and balances required to keep power from concentrating in fewer and fewer hands. Sufficiently powerful interests can effectively suppress fair competition through many means, only some of which involve government.

While I don't disagree with anything you've said here, I'll raise two points. First, by supporting confiscatory tax rates you're effectively calling all wealth accumulation illegitimate because some is. Corruption should be fought with law enforcement, not with tax policy.

Second, I'm guessing that today most Americans would agree that government is more likely to set up and enforce illegitimate accumulation of wealth than to prevent it.

 

[Bowfinger]

While I don't disagree with anything you've said here, I'll raise two points. First, by supporting confiscatory tax rates you're effectively calling all wealth accumulation illegitimate because some is. Corruption should be fought with law enforcement, not with tax policy.

Where have I said a single word about confiscatory tax rates? I'm smelling more straw.

Second, I'm guessing that today most Americans would agree that government is more likely to set up and enforce illegitimate accumulation of wealth than to prevent it.

Perhaps, which is why fixing the corruption in government in a key requirement for fixing corruption in our economic system.

 

[realibrad]

My argument is that the system today is corrupt, allowing illegitimate accumulation of wealth. Contrary to some straw man slayers (no, I don't mean you), I am NOT saying all wealth today is illegitimate, only some of it. My argument is that government contributes to this corrupted system, though often due to its absence rather than its presence. I disagree that the "free" market would significantly mitigate this corruption sans government meddling. Instead, I argue that it is an inevitable result of capitalism without government enforcing the checks and balances required to keep power from concentrating in fewer and fewer hands. Sufficiently powerful interests can effectively suppress fair competition through many means, only some of which involve government.

So your argument is that through Capitalism, power can be concentrated which could lead to a few controlling others. I agree that if that were true, it would be bad.

My argument is that you never see that type of power consolidation without government as the muscle behind it. Competition is a great tool to stop that type of activity too. When people try to consolidate power, they do so by giving up efficiency. That loss in efficiency is potential profits for another. So as long as governments are not enforcing a monopoly, competition will come in.

I have asked others many times, but look for a monopoly that does not use government to sustain itself.

 

[realibrad]

Where have I said a single word about confiscatory tax rates? I'm smelling more straw.



Perhaps, which is why fixing the corruption in government in a key requirement for fixing corruption in our economic system.

2 things there.

You said this...

... The government's role in capitalism is restraining harmful excess and protecting the many from the malfeasance of the few. Our government is increasingly failing that role.

Harmful excess is where that comes from. It makes it seem like you are saying that too much wealth is bad. The obvious conclusion would be to limit that wealth, which would be done through taxes. I also though like War this is what you meant.

2nd is that the corruption of the government is the issue. Remove corruption of the government, and you remove all of the economic corruption I see. Ill wait for an answer because I already asked this in my last post, and you may not have had enough time to answer. Not everyone is as active as me :awe:

 

[ivwshane]

The problem of your metaphor is it does not take into account competition. If a world exists where you dont have any other choice, its almost always because governments have set up a monopoly.

Maybe I am wrong. If I am, please show me where a company has been able to stop competition without government backing. All the companies that I have seen try to, have lost that market. Its only been with government help have they been able to keep out competition.

I guess you aren't up on history.

Feel free to read up on robber barons and the people who were called that and why or watch the history channel's "America the story of us".

http://en.m.wikipedia.org/wiki/Robber_baron_(industrialist)

http://www.history.com/shows/america-the-story-of-us


Regulations and government sanctioned monopolies weren't created in a vacuum and came about for the very things you think the free market will take care of.

 

[ralfy]

In order for the rich to remain rich or become rich, everyone else has to spend more.

 

[DrDoug]

I guess you aren't up on history.

Feel free to read up on robber barons and the people who were called that and why or watch the history channel's "America the story of us".

http://en.m.wikipedia.org/wiki/Robber_baron_(industrialist)

http://www.history.com/shows/america-the-story-of-us


Regulations and government sanctioned monopolies weren't created in a vacuum and came about for the very things you think the free market will take care of.

Exactly, those laws and regulations didn't happen for no reason at all. The robber barons were ruthless and they mowed the competition over, one way or another. The thinking that a "free market" sans regulations will create more competition is a pipe dream. Power would eventually concentrate into a few hands.

"Those who cannot remember the past are condemned to repeat it."

 

[realibrad]

I guess you aren't up on history.

Feel free to read up on robber barons and the people who were called that and why or watch the history channel's "America the story of us".

http://en.m.wikipedia.org/wiki/Robber_baron_(industrialist)

http://www.history.com/shows/america-the-story-of-us


Regulations and government sanctioned monopolies weren't created in a vacuum and came about for the very things you think the free market will take care of.

I am fully aware of the term. What you posted is not an example though. Give me a company or organization, not a link to a term. Then, explain how or why you believe they were monopolies.

 

[Abwx]

The mistake is believing that its a zero sum game, or that in any way the rich took something from the poor.

Then tell us who became wealthy by his own and only means, you wont found a single one because this is not possible.

Say that i invent a usefull thing, i wont make money out of it if i dont create a business where i recruit guys that work for me, could i build this facility myself and run it alone.?.

What will make me wealthy is that i can use a little part of the production to pay the workers and i keep all the rest for me, but for sure i didnt produce this money, that s all the fallacy of capitalism and was explained and proved in Marx s The Capital, notice that not a single captalist friendly economist did disapprove his findings or claim that he was wrong.

 

[realibrad]

Then tell us who became wealthy by his own and only means, you wont found a single one because this is not possible.

Say that i invent a usefull thing, i wont make money out of it if i dont create a business where i recruit guys that work for me, could i build this facility myself and run it alone.?.

What will make me wealthy is that i can use a little part of the production to pay the workers and i keep all the rest for me, but for sure i didnt produce this money, that s all the fallacy of capitalism and was explained and proved in Marx s The Capital, notice that not a single captalist friendly economist did disapprove his findings or claim that he was wrong.

First, I would just like to point out to SPY, that yet another person believes you cannot get wealthy without making another person poor.

Also, Marx was wrong about a lot. There is a reason why the vast majority of economist dont advise policy that Marx suggested.

Wealth is created, and here a little example of how.

If one person has to hunt, cook, clean, make clothes ect, then he does not have the time to become great at all skills. He must survive first, and can only use spare time to refine his skills. A solitary person will be consumed with tasks and will not likely be able to become very skillful at anything. He may be born with a natural talent, but he will have to focus on doing other things to survive.

So, now add in a 2nd person. Person 1 is great at hunting, and Ok at everything else. Person 2 is great at making clothes, but ok at everything else. If Person 1 huts for both, then Person 2 can focus on making clothes for both. Because they both are better at their jobs, there is either a reduction in time, or an improvement in quality. That is what economists consider wealth. Both are now better off, and they had either more time, and or better quality that could then be leveraged to further improve their lives. Now, add a whole village, and you get even more wealth.

Now, I will explain how some can become wealthy while others do not.
Sometimes, some people are really really good at something. Maybe he was born with a natural talent. Maybe he was born in an area that had a lot of very skilled people, and he was able to train and refine his talent.

So, in this tribe, his skill is making clothes. Lets say this person can make 5 shirts a day, whereas another avg person would be lucky to make 1 shirt a day. This 1 person can save 5 people time that they could be working on something else. Because this person is so productive, he is able to sell many shirts. The people buying the shirts are happy, because not having to make shirts allows them to focus on things they are more productive at. Its a win win, but the majority of the benefit is likely to go to 1 person.

The person did not have to steal for his wealth. Also, it was not a zero sum, as the market actually increased because of his productivity. Further, the whole tribe would likely see improvements in their productivity because they could work on things they were better at, instead of having to try and make shirts.

As for an example of someone who made a billion dollars who did not have to steal, look up Jonathan Koon.

http://en.wikipedia.org/wiki/Jonathan_Koon

 

[ivwshane]

I am fully aware of the term. What you posted is not an example though. Give me a company or organization, not a link to a term. Then, explain how or why you believe they were monopolies.

So you are aware of them and yet you need specific examples? Clearly you aren't aware of "them".