What Obama Does Not Know

[Sharky]

Re: What Obama Does Not Know

Demonstrating that all alternatives fail does not demonstrate that the particular system you recommend will be successful.

Historically, the closer societies have been to laissez-faire capitalism, the more successful they've been. Look at Hong Kong, Taiwan and Japan vs. most of the rest of Asia for the second half of the 20th century, for example. Or US vs. Europe in the 19th century.

However, you can measure "success" in several different dimensions. For me, the strongest argument in favor of laissez-faire capitalism is the moral one. Even if it's not economically successful, I want to live in a moral society. People living under monarchs didn't want to be dominated by them; they just wanted a chance to succeed or fail on their own; they wanted freedom. It's the same argument today, except instead of a monarch, we have an oligarchy.

Individualism is the answer; the alternative really comes down to some form of gang warfare, with people just hoping their gang is the one that ends up in control.

[c1ue]

Re: What Obama Does Not Know

There was a time when democratic republics were but a dream.

Democratic republics were invented thousands of years ago. They didn't work out too well. Besides hanging unsuccessful admirals and fiscal deficit spending, they just couldn't survive when faced with dictators.

Historically, the closer societies have been to laissez-faire capitalism, the more successful they've been. Look at Hong Kong, Taiwan and Japan vs. most of the rest of Asia for the second half of the 20th century, for example. Or US vs. Europe in the 19th century.

I fear your Asian examples are all completely wrong.

Hong Kong was neither a democracy nor capitalist in any real sense of the word: it was a possession of another nation, heavily subsidized, and was a political refuge thus was able to take advantage of a large labor force with literally nowhere to go. Its present status is primarily due to it having been a primary entry port into an otherwise closed nation - and now it has morphed into a financial center for same.

Taiwan - also heavily subsidized by the US. Beginning with the Chiang Kai Shek being kicked out of China and taking all portable and international China assets to Taiwan (hence a disproportionate presence of capital), further along to the ruling party for the first several decades being of one family, onwards to US military protection and presence of a large labor force a la Hong Kong with nowhere to go.

Japan - laissez faire capitalism? :eek::eek::eek: You've GOT to be kidding me:

Keiretsus. Toyota, Honda, Mitsubishi, all of these names can be traced hundreds of years back to the upper crust of Japanese society.

Full employment. That ain't laissez faire, that's socialism.

Socialist national health care.

Geopolitical issues: nuked by US. No formal military for many years. Multiple US bases.

[Sharky]

Re: What Obama Does Not Know

Democratic republics were invented thousands of years ago. They didn't work out too well. Besides hanging unsuccessful admirals and fiscal deficit spending, they just couldn't survive when faced with dictators.

And yet, the strongest countries in the world today are democratic republics.... As I said: things change; when a system doesn't work, people evolve.

I fear your Asian examples are all completely wrong.

Hong Kong was neither a democracy nor capitalist in any real sense of the word: it was a possession of another nation, heavily subsidized, and was a political refuge thus was able to take advantage of a large labor force with literally nowhere to go. Its present status is primarily due to it having been a primary entry port into an otherwise closed nation - and now it has morphed into a financial center for same.

Hong Kong was successful primarily because of things like:

-- Strong property rights
-- A predictable, just and stable rule of law
-- Low or no taxes
-- A minimally-invasive government and regulation (moreso in the early period)

Those are all aspects of laissez-faire capitalism.

The other factors you mentioned are all secondary. For example, there are ports that are in much better locations for entry to mainland China, which also had access to potentially much larger labor pools. Why weren't they more successful than HK?

Taiwan - also heavily subsidized by the US. Beginning with the Chiang Kai Shek being kicked out of China and taking all portable and international China assets to Taiwan (hence a disproportionate presence of capital), further along to the ruling party for the first several decades being of one family, onwards to US military protection and presence of a large labor force a la Hong Kong with nowhere to go.

Taiwan has very strong property rights, unlike many Asian countries. Property rights are the foundation of capitalism.

Japan - laissez faire capitalism? :eek::eek::eek: You've GOT to be kidding me:

Keiretsus. Toyota, Honda, Mitsubishi, all of these names can be traced hundreds of years back to the upper crust of Japanese society.

Full employment. That ain't laissez faire, that's socialism.

Socialist national health care.

Geopolitical issues: nuked by US. No formal military for many years. Multiple US bases.

Japan has very strong property rights, particularly after WWII.

The other similarity these countries have is a strong focus on profit as a moral goal. The focus on China is still not on profit, and property rights are weak: two reasons why they are not likely to ever be the giant they aspire to be.

The US and UK have subsidized many other economies; subsidies do not fuel economic success. Hong Kong in the 20th century was in some ways more successful economically than the UK, which was the source of some of its support (at least at first).

There are countries other than Japan which have wealthy and dominant families. Why haven't they succeeded like the ones in Japan have?

Capitalism and socialism exist on a spectrum. I'm not saying those countries were examples of pure laissez-faire capitalism; they definitely weren't. But their leanings in that direction are what allowed them to succeed as much as they did.

Check out the following chart, which shows the relative strength of property rights in Asia. Notice how the more successful countries tend to have stronger property rights.

prop.jpg

Source:
http://www.globalpropertyguide.com/A...-rights-index/

[c1ue]

Re: What Obama Does Not Know

And yet, the strongest countries in the world today are democratic republics.... As I said: things change; when a system doesn't work, people evolve.

Democratic Republics are the strongest countries NOW.

A reading of Super Imperialism will give a much different reason as to why: it isn't the political governance so much as the economic and financial provenance due to WW I and WW II combined with a large, populous, and industrialized nation.

The other factors you mentioned are all secondary. For example, there are ports that are in much better locations for entry to mainland China, which also had access to potentially much larger labor pools. Why weren't they more successful than HK?

Taiwan has very strong property rights, unlike many Asian countries. Property rights are the foundation of capitalism.

Japan has very strong property rights, particularly after WWII.

I fear you are wrong.

For western goods entering China prior to around 1994, Hong Kong was the primary port of entry. Guangzhou was the equivalent of Nagasaki in Tokugawa Japan regarding trade with the West.

Any brief examination shows that Hong Kong's rise was long before China's domination of high labor trade - indeed Hong Kong was the founding member of the Asian Tigers of the '70s.

Examination of the other nations you note: Taiwan and Japan - whatever the property rights are now, in the '60s and '70s things were vastly different.

The cars exported from Japan in the '70s were not using originally developed engines, for example.

Similarly Taiwan and Hong Kong were the original Chinese crap source.

Furthermore the Asian Tigers (Hong Kong, Singapore, Taiwan, and South Korea) plus Japan also comprised the US bulwark against Communism in Asia. These nations were given preferential trade status as a direct economic subsidy - as well as direct monetary and military subsidies.

Certainly a great deal of the Tigers' success was due to hard work and thrift - the Phillippines for example enjoyed many similar privileges without corresponding economic gains. But then again, the Phillippines had a rebellion against US annexation and then was suppressed by Marcos' reign post 1972.

From my view, your case that property rights are a cause of prosperity is less clear - especially given the possibility that property rights are an effect of prosperity.

The failure of other Asian economies to keep up: Vietnam, North Korea, Indonesia, Thailand, etc etc can just as easily be ascribed to a relative lack of access to capital; proximity to China (bulwark purposes), relative trade favoritism by the US, and/or presence of a stifling dictatorship or junta. To say these are secondary factors is to betray your relative lack of familiarity with the geopolitical realities of the '50s, '60s and '70s.

The focus on China is still not on profit, and property rights are weak: two reasons why they are not likely to ever be the giant they aspire to be.

This is amusing - are you seriously trying to tell me that all those companies utilizing cheap Chinese labor are not focusing on profit?

What then the rationale for melamine contamination? diethyl glycol? lead paint on toys?

As for being a giant - China's economy is already 3rd or 4th largest in the world depending on source. Unquestionably it will be the 3rd largest this year. Sure, the per capita numbers are low, but that is irrelevant just as turn of the century France was more per capita wealthy but overall equivalent economically to Tsarist Russia: both were Great Powers.

[Sharky]

Re: What Obama Does Not Know

Democratic Republics are the strongest countries NOW.

A reading of Super Imperialism will give a much different reason as to why: it isn't the political governance so much as the economic and financial provenance due to WW I and WW II combined with a large, populous, and industrialized nation.

If it was "financial provenance" due to the wars, then why are the two countries that lost the war among the more successful countries of today? The Marshall Plan alone isn't enough to explain it.

Any brief examination shows that Hong Kong's rise was long before China's domination of high labor trade - indeed Hong Kong was the founding member of the Asian Tigers of the '70s.

Yes -- which again supports my view that there was special about Hong Kong, that was distinct from mainland China, that gave it an edge.

Examination of the other nations you note: Taiwan and Japan - whatever the property rights are now, in the '60s and '70s things were vastly different.

The cars exported from Japan in the '70s were not using originally developed engines, for example.

Similarly Taiwan and Hong Kong were the original Chinese crap source.

By "property rights," I don't mean the quality of the stuff they produce or the source of the associated inputs. I mean the right to retain ownership of what they earn. To own, control and dispose of personal property, businesses, etc.

Furthermore the Asian Tigers (Hong Kong, Singapore, Taiwan, and South Korea) plus Japan also comprised the US bulwark against Communism in Asia. These nations were given preferential trade status as a direct economic subsidy - as well as direct monetary and military subsidies.

Yes, but those subsidies were only a very small fraction of their economies.

Certainly a great deal of the Tigers' success was due to hard work and thrift - the Phillippines for example enjoyed many similar privileges without corresponding economic gains. But then again, the Phillippines had a rebellion against US annexation and then was suppressed by Marcos' reign post 1972.

And the Philippines has terrible property rights, a corrupt government that was hip-deep in graft, etc, etc.

From my view, your case that property rights are a cause of prosperity is less clear - especially given the possibility that property rights are an effect of prosperity.

Property rights in HK were in place at the time the UK took it over as a possession. In Japan, it happened with the new constitution after WWII. With Taiwan, after the political upheaval there. All of those events happened well before those countries were significantly prosperous.

The failure of other Asian economies to keep up: Vietnam, North Korea, Indonesia, Thailand, etc etc can just as easily be ascribed to a relative lack of access to capital; proximity to China (bulwark purposes), relative trade favoritism by the US, and/or presence of a stifling dictatorship or junta. To say these are secondary factors is to betray your relative lack of familiarity with the geopolitical realities of the '50s, '60s and '70s.

Ah, but *why* was there a relative lack of access to capital? Without solid property rights, a stable rule of law, etc, investors had no assurance that they would get their investments back. In addition, things like low taxes and reduced regulation increased the probability that investments in those areas would be profitable.

This is amusing - are you seriously trying to tell me that all those companies utilizing cheap Chinese labor are not focusing on profit?

I'm saying that profit isn't the Chinese government's primary motive; they are after something else. As one indicator, if they were after profit, they would allow the yuan to float. They also wouldn't dictate stupidity across the land.

The companies themselves do try to earn a profit, but only to the extent that they don't get in the way of some government plan or unpredictable whim.

I've heard about several companies in China that radically changed their business approaches, not for any sound profit-oriented reason, but simply because some government minister said "do this," with no thought to the consequences. Also, as in other non-capitalist countries, corruption is rampant (I'm not saying corruption doesn't exist in more capitalist economies, just that it isn't as pervasive).

Also, some companies have land and other resources just given to them by the government (after being taken from someone else [weak property rights]), so they get to escape the real economics of profit and loss.

What then the rationale for melamine contamination? diethyl glycol? lead paint on toys?

It certainly wasn't profit! You don't make money by producing crappy products that damage your customers.

As for being a giant - China's economy is already 3rd or 4th largest in the world depending on source. Unquestionably it will be the 3rd largest this year. Sure, the per capita numbers are low, but that is irrelevant just as turn of the century France was more per capita wealthy but overall equivalent economically to Tsarist Russia: both were Great Powers.

China's GDP is still going up. But GDP increases even if you do something like build an office building that no one ever occupies; it has no relation to profit or wealth. As things are now, China has most of the world's excess production capacity. They built a whole lot of capacity based on demand that was being fueled by unsustainable debt. They are still building factories and power plants (800 coal-fired plants, I think?) in anticipation of even more future growth. If that growth doesn't materialize, what then?

History shows that powerful countries that get there for the wrong reasons can crash as easily as they rise, and even more quickly.

[Milton Kuo]

Re: What Obama Does Not Know

What then the rationale for melamine contamination? diethyl glycol? lead paint on toys?

It certainly wasn't profit! You don't make money by producing crappy products that damage your customers.

I can assure you that the use of melamine and DEG in lieu of protein and glycerine was purely profit-driven.

[ViC78]

Re: What Obama Does Not Know

As one indicator, if they were after profit, they would allow the yuan to float.

If the Chinese govt allowed the yuan to float, it would appreciate keeping in line with its trade surplus status and this would make chinese products uncompetitive causing it lose its export markets. It seems like a profit motive to me.

[raja]

Re: What Obama Does Not Know

The system you're describing sounds like what the US already has: progressive taxation, laws that limit the wealthy, anti-trust laws, a system to care for the poor. How's that working out for you?

Sharky,

I will only enter into a discussion of this type if I think there is at least a chance that either my mind or the other person's mind will change in some way. Otherwise what's the point?

I see from your post that your views and mine are so divergent that neither one of us will profit from further discussion. However, I will respond for the benefit of others who may read these posts . . . .

The point of my post was that we need to reign in the rich, because they are greedy parasites lacking in human compassion. Largely left to their own devices, they are turning the American People into Debt Slaves.
You say, "the US already has: progressive taxation, laws that limit the wealthy, anti-trust laws, a system to care for the poor."
So, how's that working out for the America People? It looks to me like it's making the already-rich wealthier, and the rest of us poorer:

• The difference in median net wealth between the 10% of families with the highest incomes and the 20% of families with the lowest incomes jumped 70% from 1998 through 2001, the Fed said in its consumer finances report
• The wealthiest 10 percent of Americans now have a larger share of total income than they ever have in records going back nearly a century — an even larger amount than during the Roaring Twenties, the last time the US saw such similar disparities in wealth.
• The contrast is even starker for the super-rich. The top 0.01 percent of earners in the US are now taking home six percent of all the income, higher than the 1920s peak of five percent, and a whopping six-fold increase since the start of the Reagan administration, when the top 0.01 percent earned one percent of all the income.

[blazespinnaker]

Re: What Obama Does Not Know

I don't think us humans know a long term viable healthy solution.

Here here, well said. Just because the current system is not working so well doesn't mean system X is going to work better.

I do think, though, a world where everyone is working hard and innovatively towards making the world a better place is probably a better system.

I am not so sure what the banks are doing right now is particularly productive but we seem to have a system which rewards them rather well for it.

[Shakespear]

Re: What Obama Does Not Know

Raj, lets throw in here the fact that median incomes have not shared in the astronomical rises that the rich have enjoyed. They have decreased when adjusted for inflation and to make things worst as things stand if two bread winners are not in a typical family than the family is in trouble.

http://economix.blogs.nytimes.com/20...o-income-gain/

So things are bad and not likely to change on this front. Too many Liberals in the US are dragging the country into the toilet according to Beck's and Lymbaugh's.

Here we find some inflation adjusted data.

http://www.opednews.com/populum/diarypage.php?did=13950

:rolleyes::rolleyes:

[iyamwutiam]

Re: What Obama Does Not Know

The problem it appears is that one can not think outside a particular paradigm. Whether one chooses the 'left' or 'right' the paradigm is locked into false concepts which are not inherent in nature -such as property rights.

I can hear the clicking of the reply buttons pointing out that 'animals' exercise sovereignty over their territory -and they shall be proven wrong -as pack animals do tend to migrate and do not use abstractions to solidify their hold on tangible reality.

I highly recommend everyone to do a search on Ivan Illich and read his 50 page epilogue called Vernacular values. The analogy -at present -I can think of at the top of my head -would be the humors a seen by ancient physicians.

Air/Water/Phlegm etc. Which today we may interpret as gas (indigestion/poor oxygenation), Water (odema/hydration), Phlegm -irritants that produce increased mucus production -pollution, digestive irritants. When taken with out proper consideration one can state this paradigm to be incorrect-yet it is just another explanation of phenomena we call symptoms.

Production to a scale that is many multiples of subsistence causes externalities (which may not be present for short sighted profit driven fools) - such as mountains of waste in the ocean and arabale land, pollution seeping into the environment in ever increasing levels via the food chain or ecosystem (dioxin/pcbs/mercury) etc. Also internalities -of frustration , internal strife, the resistance to be 'standard' in language and behavior and particularly outcome.

We speak with an assurance and certainity that certainly must brand us as biased and most importantly ignorant.

[Sharky]

Re: What Obama Does Not Know

I can assure you that the use of melamine and DEG in lieu of protein and glycerine was purely profit-driven.

Assure me based on what?

There are many other factors besides profit at work in China. For example, things like meeting production quotas -- which translate into rewards for managers, ministers or others. Those rewards are not the same as "profit." "Graft" is a better word.

A company that seeks real profit seeks to make their customers happy, not to screw them.

If the Chinese govt allowed the yuan to float, it would appreciate keeping in line with its trade surplus status and this would make chinese products uncompetitive causing it lose its export markets. It seems like a profit motive to me.

An artificially weak yuan means that Chinese products are being sold in the open market for less than they are really worth. It also means that Chinese companies are having to pay more for their imports than they should have to. The combination means that they aren't earning as much profit as they should.

Instead, what happens is that production is kept at a high level as a result of export demands (there's plenty of demand for stuff that's priced well below what it's worth). That, in turn, helps keep unemployment low and GDP growth string. But GDP growth, lots of production and low unemployment doesn't mean the associated businesses are profitable.

If the yuan were allowed to float, Chinese goods could sell for their true value in the open market. Companies in China that are relying on artificially low prices would go out of business -- as they should! Companies that are creating products of value would flourish. Chinese purchasing power would increase, allowing them to drive down materials costs -- which would further add to profitability. More profit would then increase the demand for skilled labor, which in turn helps drive up wages and the cycle of wealth creation.

[Sharky]

Re: What Obama Does Not Know

I will only enter into a discussion of this type if I think there is at least a chance that either my mind or the other person's mind will change in some way. Otherwise what's the point?

I agree that we're far enough apart that we're not likely to influence each other's thinking. I think egalitarianism is evil, plain and simple.

However, my approach here is never to try to change what others think. Instead, I am mainly trying to understand other's points of view, and to try to communicate mine so that it is understood as well. Agreement may or may not happen; it's never a goal for me.

You say, "the US already has: progressive taxation, laws that limit the wealthy, anti-trust laws, a system to care for the poor."
So, how's that working out for the America People? It looks to me like it's making the already-rich wealthier, and the rest of us poorer:

Maybe I missed the point somewhere. Weren't those the laws you were advocating? Are you saying that doing them differently will somehow make them better?

In other words, progressive taxation isn't working because it's not progressive enough? Anti-trust isn't working because it's not enforced enough? The system to care for the poor isn't working because it doesn't do enough for the poor?