Forum Settings
       
Reply To Thread

Mommy, why are poor people poor?Follow

#252 Nov 05 2013 at 8:13 PM Rating: Default
Encyclopedia
******
31,554 posts
Timelordwho wrote:
Quote:
Singular. I'm specifically excluding larger scale macro economic effects here (hence, my statement that "nothing else changes"). The point is to show that just because one person's earnings increase more than another person's over a given period of time does not mean that the second person is "worse off" as a result. I'm disproving Smash's assumption by presenting a simple case where his assumption fails. That's it.


No, you're not, because his assumption is in the context of macroeconomic analysis.


Wrong. That's my point. There is no macroeconomic analysis when someone simply says "Our economy is going in the wrong direction because the gap between rich and poor has grown".

A macroeconomic analysis would be something like what I asked him to provide: Show me that this actually makes things worse for "the poor", "the working class", "the middle class", etc. Show me in real terms. At each economic level, are the people within that percentile better or worse off today than at some point in the past where the income gap was smaller.

More importantly, in order to prove the assumption, you'd have to show that each of those groups are worse off at every point in history where that income gap was smaller. If this is not true, then the assumption that an increased gap is "bad" is false.


Quote:
Currency isn't wealth. Wealth is not currency. Fiat currency is most especially not wealth.


Sure. But when someone talks about relative earnings, they are talking about currency. I'm more than happy to talk about other factors that measure real relative standard of living over time. But other people (like Smash) just want to talk about relative dollars and call it a day.

Quote:
Stop conflating them and you'll understand this discussion better.


I'm not conflating them. I'm specifically arguing that relative dollars of wealth/income isn't how we should measure true economic status. How about targeting that argument at the folks making the simplistic "rich vs poor" arguments?


Quote:
There are, and various arguements have been toss into the ring in this very thread. "The gap between the rich and poor has increased" is data analysis not a qualitative judgement.


Except it is almost always used as a blanket proof of something "wrong" with the US economy.

Quote:
There are studies out that show the correlation between a Gini skew and various social Ills. If you are lazy you can look at wikipedia


I think there's a difference between measuring rates of various social ills and comparing them to rates of income inequality within given geographical areas at the same point in time, and making a broad claim about changes in income inequality over time. One does not lead logically to the other. Saying that areas in which income inequality are high have higher social problems than areas that have lower income inequality does not mean that if income inequality increases over the next 50 years, that the rate of social problems will be higher in 50 years than today.

I also happen to disagree with the simplistic conclusions arising from most of those studies. I think they tend to be examples of how to manipulate social statistics to support an argument you already want to support rather than allowing the stats to lead you to a conclusion. In the US, it's likely that the areas with the largest income inequality are not going to be the areas with the most rich people, but the areas with the most poor people. The correlation is more likely to be between poverty and social problems. A fact which no one is disputing. That this happens to also correlate to areas with high income inequality is simply a fact of math, not causation.


Let's not forget that when people usually talk about this, it's within the context of a gap growing over time. And usually with the assumption that because the rich are getting relatively richer, that this makes the poor relatively poorer. I don't think that assumption stands up to reality.

Edited, Nov 5th 2013 6:14pm by gbaji
____________________________
King Nobby wrote:
More words please
#253 Nov 05 2013 at 8:30 PM Rating: Good
Avatar
*****
11,953 posts
Quote:
Wrong. That's my point. There is no macroeconomic analysis when someone simply says "Our economy is going in the wrong direction because the gap between rich and poor has grown".

A macroeconomic analysis would be something like what I asked him to provide: Show me that this actually makes things worse for "the poor", "the working class", "the middle class", etc. Show me in real terms. At each economic level, are the people within that percentile better or worse off today than at some point in the past where the income gap was smaller.

More importantly, in order to prove the assumption, you'd have to show that each of those groups are worse off at every point in history where that income gap was smaller. If this is not true, then the assumption that an increased gap is "bad" is false.


No, that's not what you have to prove to show that an increased disparity has negative economic, political and social implications. It's very bizarre that you believe this to be the case.
____________________________
"India black magic anal sex zionist blow job terrorism child rape bicycle"
Just as Planned.
#254 Nov 05 2013 at 8:37 PM Rating: Decent
Encyclopedia
******
31,554 posts
Timelordwho wrote:
No, the focus was not on wealth creation, at least insofar as the consumer markets, the focus was on creating control, and generating certain ideological outcomes.


Which is arguably true of all command economies. They cannot "focus on wealth creation". The very concept is alien to a command economy.

Quote:
China uses same sort of command apparatus to create enormous wealth, because, shockingly, it's one of their objectives.


I suspect we're using different definitions of wealth. China has not created enormous wealth. It can barely feed its population. What China has done, similarly to what the Soviets did, is focus the nations productive capacity into a single location, while minimizing the amount of that capacity which is used for more than basic subsistence for its people. This allows it to appear to have a whole lot of wealth, but it's really an illusion. It's not sustainable. Over time, the percentage of that capacity required for that basic subsistence will grow until that excess wealth shrinks to nothing. Then their system will collapse.

Barring significant change, there is no other outcome they can expect.

Quote:
The US used strategies of a command economy to create wealth during one of it's largest booms.


Er? Are we using different definition of "command economy" as well? What the US did to create the boom of the 50s was remove significant amounts of government controls over the economy. They freed up the market, eliminated the "excess profits tax", lowered tax rates overall, and in general allowed the rich people to do what they wanted with their money and reap a greater percentage of the profits. The result was the biggest economic boom the world has ever seen.

That was not a command economy. It was the opposite.

Quote:
Quote:
You're completely missing my point. I'm simply saying that there is a cost for social benefits and we should not lie to ourselves about it.


And there is an opportunity cost to not do so.


Only if you can show that it will actually cost more dollars than otherwise. I'm talking specifically about economic cost. I think that a lot of people talk about this, but very few succeed in actually showing that such costs exist, much less that they are greater than the cost of enacting their social programs.

Quote:
If economic conditions were such that it was not a good bargain this could be a very different discussion.


Give me an example then. If you're so sure that economic conditions are such that it is a good bargain, then show me this.

Quote:
We could manage to agree on things then but you'd still not know why.


That's not a terribly helpful comment.

Quote:
Since you're fond of analogies, would you purchase gold if it's price was going to grow exponentially (in the positive direction) assuming it's fungible and liquid?


Everything else staying the same? Yes. But then you're assuming external factors that you're not defining in the question, aren't you? That's somewhat pointless, isn't it? I mean, anyone can ask a question with what appears to be an obvious answer and then go "haha! You're wrong, because these other factors I didn't mention happen, making your choice a bad one!!!". Um... What's the point?

But you do highlight part of the point I'm trying to make. People present simplistic claims and assumptions, separating them from external factors, and applying them absent those factors. But then when someone challenges those claims, they fall back to arguing that some unmentioned factors will magically appear that make them work. But that's pointless as well, right?
____________________________
King Nobby wrote:
More words please
#255 Nov 05 2013 at 8:43 PM Rating: Decent
Encyclopedia
******
31,554 posts
Timelordwho wrote:
Quote:
Wrong. That's my point. There is no macroeconomic analysis when someone simply says "Our economy is going in the wrong direction because the gap between rich and poor has grown".

A macroeconomic analysis would be something like what I asked him to provide: Show me that this actually makes things worse for "the poor", "the working class", "the middle class", etc. Show me in real terms. At each economic level, are the people within that percentile better or worse off today than at some point in the past where the income gap was smaller.

More importantly, in order to prove the assumption, you'd have to show that each of those groups are worse off at every point in history where that income gap was smaller. If this is not true, then the assumption that an increased gap is "bad" is false.


No, that's not what you have to prove to show that an increased disparity has negative economic, political and social implications.


Huh? If you're making that argument, then you have to show that those negative things are both happening and that they are happening because of the claimed cause. If I can show one case where those negatives do not occur despite the claimed cause occurring, then I have disproved your claim.


Quote:
It's very bizarre that you believe this to be the case.


Why? It's how logic and proofs work. If you claim that X causes Y, all I have to do is show a case in which X is true and Y is false, and I've disproved your claim. What part of this is confusing for you?
____________________________
King Nobby wrote:
More words please
#256 Nov 05 2013 at 8:53 PM Rating: Excellent
Meat Popsicle
*****
11,709 posts
gbaji wrote:
Huh? If you're making that argument, then you have to show that those negative things are both happening and that they are happening because of the claimed cause. If I can show one case where those negatives do not occur despite the claimed cause occurring, then I have disproved your claim.
Um, it doesn't work that way either. Smiley: dubious

Just because X doesn't cause Y 100% of the time doesn't mean X doesn't cause Y at all. Every time I stab someone with a knife they don't die, but people can die if I stab them with a knife.

Edited, Nov 5th 2013 6:53pm by someproteinguy
____________________________
That monster in the mirror, he just might be you. -Grover
#257 Nov 05 2013 at 9:03 PM Rating: Decent
Encyclopedia
******
31,554 posts
someproteinguy wrote:
gbaji wrote:
Huh? If you're making that argument, then you have to show that those negative things are both happening and that they are happening because of the claimed cause. If I can show one case where those negatives do not occur despite the claimed cause occurring, then I have disproved your claim.
Um, it doesn't work that way either. Smiley: dubious

Just because X doesn't cause Y 100% of the time doesn't mean X doesn't cause Y at all.


Correct. Which means you have to start with a conditional: X sometimes causes Y. Actually, to be more correct, we'd say that X doesn't cause Y at all, but that X and <some other factor(s)> do. But I don't think we need to be quite that specific here.

Quote:
Every time I stab someone with a knife they don't die, but people can die if I stab them with a knife.


Correct. Which means that if someone says that if someone is stabbed with a knife, they must be dead, their statement is false. Right?

So if someone says that since the gap between rich and poor has grown, our economy must be bad, their statement is false unless they can prove that economies are always "bad" if the gap between rich and poor grows. If they can't prove that, then the best they can say is that the economy might be bad as a result of that gap growing. See what I'm saying?


Of course, this assumes that we can even show that most of the time, things were better off at some earlier point in time when the gap in question was smaller than it is today. I would argue that the case really runs the other way. For the most part, economic prosperity across the board has been highest when that increase in gap has been highest. It's more like the exception is the other way around. Sometimes, when the gap increases, economic conditions get worse. But usually? They get better.

Edited, Nov 5th 2013 7:07pm by gbaji
____________________________
King Nobby wrote:
More words please
#258 Nov 05 2013 at 10:00 PM Rating: Good
Avatar
*****
11,953 posts
Quote:
I suspect we're using different definitions of wealth. China has not created enormous wealth. It can barely feed its population. What China has done, similarly to what the Soviets did, is focus the nations productive capacity into a single location, while minimizing the amount of that capacity which is used for more than basic subsistence for its people. This allows it to appear to have a whole lot of wealth, but it's really an illusion. It's not sustainable. Over time, the percentage of that capacity required for that basic subsistence will grow until that excess wealth shrinks to nothing. Then their system will collapse.

Barring significant change, there is no other outcome they can expect.


Have you been to China?

There is real wealth being created by central command. There is a lot to dislike about their authoritarian policies, but they are moving China forward, economically.
____________________________
"India black magic anal sex zionist blow job terrorism child rape bicycle"
Just as Planned.
#259 Nov 05 2013 at 10:16 PM Rating: Good
Avatar
*****
11,953 posts
Quote:
Of course, this assumes that we can even show that most of the time, things were better off at some earlier point in time when the gap in question was smaller than it is today. I would argue that the case really runs the other way. For the most part, economic prosperity across the board has been highest when that increase in gap has been highest. It's more like the exception is the other way around. Sometimes, when the gap increases, economic conditions get worse. But usually? They get better.


With all your demands for data, I'll assume you've got it.
____________________________
"India black magic anal sex zionist blow job terrorism child rape bicycle"
Just as Planned.
#260 Nov 05 2013 at 11:00 PM Rating: Excellent
Lunatic
******
29,304 posts
For the most part, economic prosperity across the board has been highest when that increase in gap has been highest. It's more like the exception is the other way around. Sometimes, when the gap increases, economic conditions get worse. But usually? They get better.

Nope, unrelated. Not an open question. Income inequality has pretty much zero net effect on economic growth. Over-performing economies can have a wide disparity, under performing economies can have a wide disparity, etc. The idea that there's a structural link is a marketing ploy, quite literally. There is, let me state...once again, no economic model that shows how wealth is distributed by a society is tied to that societies overall economic growth. In layman's terms, a society can choose to have a tiny ruling class and a large serf class or it can choose to have a broader distribution of wealth and a large middle class. The choice is basically an ethical one and not one of economic outcomes (there does actually seem to be a net benefit to more even distribution particularly in high income per capita systems, but it's fairly technical and you won't understand it, so let's ignore it for now) Given that, the reasoning for choosing the tiny ruling class option is fairly lacking. The primary reason it somehow succeeds to the degree it has in the US is largely the big lie of success = money = hard work = talent, which, of course, isn't at all how that works. It's a compelling fantasy, though.

Commence hand waiving and "simple" ""explanations"" of how this isn't the case, I guess.

____________________________
Disclaimer:

To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a whore. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.

#261 Nov 05 2013 at 11:32 PM Rating: Good
Avatar
****
7,465 posts
Timelordwho wrote:
Quote:
I suspect we're using different definitions of wealth. China has not created enormous wealth. It can barely feed its population. What China has done, similarly to what the Soviets did, is focus the nations productive capacity into a single location, while minimizing the amount of that capacity which is used for more than basic subsistence for its people. This allows it to appear to have a whole lot of wealth, but it's really an illusion. It's not sustainable. Over time, the percentage of that capacity required for that basic subsistence will grow until that excess wealth shrinks to nothing. Then their system will collapse.

Barring significant change, there is no other outcome they can expect.


Have you been to China?

There is real wealth being created by central command. There is a lot to dislike about their authoritarian policies, but they are moving China forward, economically.



Chinese currency value is growing very very fast in China. The average people in China now earn near equal value to part time/minimum wage earners who work 24hr/wk. Which is a far cry from the average they held in the 80's of 1/3 that amount. Relatively speaking the average Chinese person earns an equal amount to about the average american person. While their currency can not yet compete internationally with the USD at home in China the average citizen is about equal in terms of at home purchasing power.

One thing that Chinese people have that Americans people do not is Health Care. Arguably if you took all costs associated to a Chinese Citizen and an American Citizen (earning similar value salary) the Chinese Citizen ends up with more disposable income due to less overall cost of living.

Also China is currently debating whether they should back their currency in Gold or not. Which instantly makes their currency much more attractive to international investment than any major currency out there namely the USD. This would result in widespread increase of international value of Chinese currency, likely surpassing the USD as the dominant world exchange. Meaning Chinese Citizens if incomes stayed the same and cost of living stayed the same would have more value than the average American at home and internationally.

Finally, China has backed up its currency through its largest competitor and trading partner. By purchasing so much US Debt China has essentially attached a siphon to the US economy. If the USD maintains its status quo, China is still heavily invested in that and their currency grows alongside that investment. Ultimately Chinese value is going up, and will likely out pace USD within the next decade. Maybe sooner if they go to the Gold Standard, and attract Oil countries like Iran, Iraq, and Libya who all expressed desires to sell in Gold and not USD. (Iran does not sell in USD, hence why Iran is a constant opponent of US foreign policy.)

If the petrodollar collapses US equity wouldn't much matter as the floor in the USD would drop out and the 1% guys would simply have Billions more worthless pieces of paper than the 99%ers.
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#262 Nov 05 2013 at 11:55 PM Rating: Decent
Lunatic
******
29,304 posts
Also China is currently debating whether they should back their currency in Gold or not. Which instantly makes their currency much more attractive to international investment than any major currency out there namely the USD

No. No, they aren't. Given their policy of manipulating CNY to control balance of trade, the idea they'd peg it to any commodity is beyond comical. Now, if I were trying to sell abject suckers bullion or coins or whatever, it does sound like something I'd probably make up out of thin air.
____________________________
Disclaimer:

To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a whore. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.

#263 Nov 06 2013 at 12:16 AM Rating: Decent
Avatar
****
7,465 posts
Smasharoo wrote:
For the most part, economic prosperity across the board has been highest when that increase in gap has been highest. It's more like the exception is the other way around. Sometimes, when the gap increases, economic conditions get worse. But usually? They get better.

Nope, unrelated. Not an open question. Income inequality has pretty much zero net effect on economic growth. Over-performing economies can have a wide disparity, under performing economies can have a wide disparity, etc. The idea that there's a structural link is a marketing ploy, quite literally. There is, let me state...once again, no economic model that shows how wealth is distributed by a society is tied to that societies overall economic growth. In layman's terms, a society can choose to have a tiny ruling class and a large serf class or it can choose to have a broader distribution of wealth and a large middle class. The choice is basically an ethical one and not one of economic outcomes (there does actually seem to be a net benefit to more even distribution particularly in high income per capita systems, but it's fairly technical and you won't understand it, so let's ignore it for now) Given that, the reasoning for choosing the tiny ruling class option is fairly lacking. The primary reason it somehow succeeds to the degree it has in the US is largely the big lie of success = money = hard work = talent, which, of course, isn't at all how that works. It's a compelling fantasy, though.

Commence hand waiving and "simple" ""explanations"" of how this isn't the case, I guess.



While I don't contest your point, there has also never been significant wealth equality. Since the 20's a very small % of people have held the majority of wealth. So while you can say no models show it affects economy, that is because no real models can really exist. There are really 5 distinct periods relative to Wealth Distribution and economy. (from just looking at a couple graphs, havent really sat down to map out a detailed response.)

1920's wealth inequality (top 5% = over 70% of wealth) ended in Market Collapse Depression
1960's wealth inequality (top 5% = under 65% of wealth) ended with OPEC
1980's wealth inequality (top 5% = over 75% of wealth) ended with Savings and Loan recession
1990's wealth inequality (top 5% = under 60% of wealth) ended with Tech Boom slowing
2000's wealth inequality (top 5% = ~75% of wealth) ended with Derivatives recession

While obviously not enough to make a strong case, in periods where wealth inequality was high the boom ended as a result of Market failures each time, in periods where wealth inequality was lower economic booms ended when either the boom was over (late 90's) or parameters outside national control affected it (OPEC).




____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#264 Nov 06 2013 at 12:20 AM Rating: Decent
Lunatic
******
29,304 posts
While obviously not enough to make a strong case

This realization would have been a good starting point. The US economy isn't the only economy to exist. There are many, many, examples of differing states of wealth distribution and the impact on growth, per capita GDP, etc. There just isn't much impact.
____________________________
Disclaimer:

To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a whore. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.

#265 Nov 06 2013 at 12:28 AM Rating: Decent
Avatar
****
7,465 posts
Smasharoo wrote:
Also China is currently debating whether they should back their currency in Gold or not. Which instantly makes their currency much more attractive to international investment than any major currency out there namely the USD

No. No, they aren't. Given their policy of manipulating CNY to control balance of trade, the idea they'd peg it to any commodity is beyond comical. Now, if I were trying to sell abject suckers bullion or coins or whatever, it does sound like something I'd probably make up out of thin air.


Well they are, perhaps not a formal Gold Standard (its actually not allowed by the IMF as of 1978). But China has been buying up gold like crazy, they even running incentive programs for citizens to buy up gold for the state.

Why would a nation attempt to hit a target of 66000T of Gold (or about 1/3 of the global supply) if not to back its 2.84T if foreign held reserves?
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#266 Nov 06 2013 at 12:34 AM Rating: Decent
Avatar
****
7,465 posts
Smasharoo wrote:
While obviously not enough to make a strong case

This realization would have been a good starting point. The US economy isn't the only economy to exist. There are many, many, examples of differing states of wealth distribution and the impact on growth, per capita GDP, etc. There just isn't much impact.


Actually I would love to see these models you have talked about. I am interested in knowing which relevant economies have wealth equality. Not even China has wealth eqaulity. The reason there is no impact is because we have no data.

Unless of course you have data from a country that has had wealth equality in their past...no?

Edited, Nov 6th 2013 1:41am by rdmcandie
#267 Nov 06 2013 at 12:45 AM Rating: Decent
Lunatic
******
29,304 posts
Well they are, perhaps not a formal Gold Standard (its actually not allowed by the IMF as of 1978). But China has been buying up gold like crazy, they even running incentive programs for citizens to buy up gold for the state.

Why would a nation attempt to hit a target of 66000T of Gold (or about 1/3 of the global supply) if not to back its 2.84T if foreign held reserves?


They wouldn't, and they aren't. Really. They aren't. It literally makes no sense, even as an idea. The only people *in the world* who would create, let me emphasize again, *create* such a story are people selling gold. Considering the collapse of the price of gold, I guess you can't really blame them. They have to pedal something. "Buy gold and lose money" probably doesn't work that well.

____________________________
Disclaimer:

To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a whore. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.

#268 Nov 06 2013 at 12:46 AM Rating: Decent
Lunatic
******
29,304 posts
Actually I would love to see these models you have talked about. I am interested in knowing which relevant economies have wealth equality. Not even China has wealth eqaulity. The reason there is no impact is because we have no data.


Not true. I'm not going to post 10,000 words trying and failing to explain it. Google scholar exists, you can type. Carpe deim.
____________________________
Disclaimer:

To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a whore. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.

#269 Nov 06 2013 at 2:52 AM Rating: Excellent
Everyone's Oiran
Avatar
*****
15,917 posts
This short talk shows that for each of the 50 US states, and for nations, that dozens of life benefits do NOT have ANY relationship to total wealth, but ARE correlated strongly with less wealth inequality. The Japanese achieve this with Gbaji's dream of low taxes, and little wealth redistribution between rich and poor, BUT also by having the wealthy 20% of population having initial incomes* that are only 5 times higher than the poorest 20%. Disturbingly, the wealthy of nations with high income inequality, like the USA and Australia, also share most of the negative life qualities that afflict the poor and the middle class in their nations.


[youtube=http://www.ted.com/talks/richard_wilkinson.html]


*incomes from all sources
____________________________
<3

http://www.reddit.com/r/Forum4/
#270 Nov 06 2013 at 7:13 AM Rating: Good
Avatar
****
5,643 posts
I just can't believe some of the things that get debated here sometimes-- and the sheer amount of **** you can pay people to write to spoon feed to all the John Galt zealots of the world to help them rationalize their cult-like devotion to a true "free market" and all the depravity that comes with it.

To clarify, I've been reading on this topic outside of this thread, and some of the things I am seeing makes me really want to punch the **** out of someone.
____________________________
my Tumblr
Pixelmon Server Info
Rust Server Info
#271 Nov 06 2013 at 7:43 AM Rating: Excellent
Liberal Conspiracy
*******
TILT
Smasharoo wrote:
Considering the collapse of the price of gold, I guess you can't really blame them. They have to pedal something. "Buy gold and lose money" probably doesn't work that well.

The commercials on Rush are "Did you know right now you can buy silver for less than the cost of mining and production? That's right... you can buy silver on sale!"
____________________________
Belkira wrote:
Wow. Regular ol' Joph fan club in here.
#272 Nov 06 2013 at 7:48 AM Rating: Good
******
43,650 posts
Needless to say, during an economic downtrend the only wise investment is in porn.
____________________________
George Carlin wrote:
I think it’s the duty of the comedian to find out where the line is drawn and cross it deliberately.
#273 Nov 06 2013 at 7:51 AM Rating: Good
Skelly Poker Since 2008
*****
15,852 posts
lolgaxe wrote:
Needless to say, during an economic downtrend the only wise investment is in porn.

Twitter shares go on sale tomorrow.
____________________________
Alma wrote:
Post and be happy!
#274 Nov 06 2013 at 9:29 AM Rating: Decent
Avatar
****
7,465 posts
Smasharoo wrote:
Actually I would love to see these models you have talked about. I am interested in knowing which relevant economies have wealth equality. Not even China has wealth eqaulity. The reason there is no impact is because we have no data.


Not true. I'm not going to post 10,000 words trying and failing to explain it. Google scholar exists, you can type. Carpe deim.



So you can't even direct me to one nation that has had true wealth equality, Shocking.
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#275 Nov 06 2013 at 10:10 AM Rating: Good
Everyone's Oiran
Avatar
*****
15,917 posts
My link a few posts back has some nations with some rather good wealth equality. In that the top 20% possess no more than 5 times the amount the bottom 20% possess.
____________________________
<3

http://www.reddit.com/r/Forum4/
#276 Nov 06 2013 at 4:21 PM Rating: Default
Encyclopedia
******
31,554 posts
Timelordwho wrote:
Quote:
I suspect we're using different definitions of wealth. China has not created enormous wealth. It can barely feed its population. What China has done, similarly to what the Soviets did, is focus the nations productive capacity into a single location, while minimizing the amount of that capacity which is used for more than basic subsistence for its people. This allows it to appear to have a whole lot of wealth, but it's really an illusion. It's not sustainable. Over time, the percentage of that capacity required for that basic subsistence will grow until that excess wealth shrinks to nothing. Then their system will collapse.

Barring significant change, there is no other outcome they can expect.


Have you been to China?


Yes. And done business there. Have you?

Quote:
There is real wealth being created by central command. There is a lot to dislike about their authoritarian policies, but they are moving China forward, economically.


I'll have to respectfully disagree with you on your use of "real wealth". They've created a large pool of capital which their government can use because they've concentrated their economic output into the hands of that government, while allowing nearly zero to be held in the hands of their citizens (more or less the same as the soviet model, just implemented differently). This concentration gives the appearance of "vast wealth", and to be fair they are at least being somewhat smarter with it than the Russians were, but the very model they're using is essentially doomed to failure. It's just a matter of how long it takes to fail, not if it will.
____________________________
King Nobby wrote:
More words please
#277 Nov 06 2013 at 4:49 PM Rating: Good
Everyone's Oiran
Avatar
*****
15,917 posts
China has been an aggressive Capitalist nation for over 15 years now. It's not a Capitalist Democracy, but whatever hybrid Socialist-Totalitarian-Oligarchy it's been running since the Cold War is also running in tandem with a capitalist economy. The wealth is not confined to government members. Private Mainland Chinese citizens have bought up 5% of Australian real estate in our capital cities, and are making large inroads into Australian farmland. As well as owning huge portions of American treasury bonds.

It's true that the absolute numbers of poor Chinese are still devastatingly huge, but their Middle Class and Wealthy counterparts have been growing exponentially. There are now more Middle Class and Wealthy Chinese than Middle Class and Wealthy Americans...both populations measured in US$. Things change drastically around the world in 5 years, let alone 10 years.

Russia and China's trajectories have been very different over the past 70 years.
____________________________
<3

http://www.reddit.com/r/Forum4/
#278 Nov 06 2013 at 4:58 PM Rating: Default
Encyclopedia
******
31,554 posts
Smasharoo wrote:
For the most part, economic prosperity across the board has been highest when that increase in gap has been highest. It's more like the exception is the other way around. Sometimes, when the gap increases, economic conditions get worse. But usually? They get better.

Nope, unrelated. Not an open question. Income inequality has pretty much zero net effect on economic growth.


Wrong. Sigh...

FACT 1: While specific outcomes in any given period of time can vary based on a number of factors, as a general trend, macro economic growth for a given economy over time is a function of the relative amount of money put into investment within that economy (the "I" in a basic macro-economic formula). This is contrasted to money spent on production, consumption, and government. While elements of each of those can influence economic growth positively or negatively, money in the investment category has by far the greatest direct impact on future economic growth.

FACT 2: As a rule, the wealthier someone is, the greater the percentage of that persons money will be put into investment rather than consumption. Should be somewhat obvious that a guy who earns $100k/year will invest a larger percentage of his earnings than someone earning $20k/year or $30k/year. Similarly, the guy with a billion dollar net worth must have a larger portion of that worth in investment than someone with less net worth. Therefore, the division of real dollars within a given economy directly affects what percentage of those total real dollars will be invested versus spent on consumption.

Simple example: Let's assume in our economy there are 10 people, and a total of $500k dollars. If we equally divide that money up, each person gets $50k. Assuming a minimum living cost of $20k, each person *could* put the other $30k they have left over into investment (things that increase total dollars available later). But we all know that those people will most likely spend the other $30k on nice things for themselves. No one wants to live at the minimum level, right? So they'll buy TVs, and nicer homes, and nicer food, etc for themselves and very little will be invested. Take the same economy and give 9 of those people $25k and the 10th person the rest ($275k), and something very different happens. The 9 "working class" people will have enough for their basics ($20), and a little extra to spend for themselves ($5k), the "rich" guy will have enough for basics, and quite a bit for luxuries. Hell. Let's say he spends $100k on himself cause he's a greedy sob who likes to live well (5 times better than everyone else, right?). But that means that this economy will have $175k put into investment. Thus, it'll grow faster than the one in which we divided the wealth evenly.


CONCLUSION: What we find if we actually stop and do the math, is that in all cases, everything else staying the same, the more unequal the income distribution is, the greater the percentage of the total dollars in an economy will be put into investment. And the greater the percentage of dollars in investment, the greater the relative economic growth. Ergo, you're not just wrong, you're completely backwards. Greater income inequality is directly related to increased economic growth within an economy. It has to be. There physically cannot be as much money spent on things which grow the economy if there's less money available for that purpose. And that money is most going to be available when it's in the hands of people who don't need it just to provide basics for themselves. It's only when someone has the basics, and some luxuries, and maybe even a bit more luxuries, that they start putting significant amounts of that money into investing. So the more money they physically have beyond that needed to live, the larger the percentage of that money will be invested rather than consumed.

This is not speculation. It's basic human nature.

Quote:
Over-performing economies can have a wide disparity, under performing economies can have a wide disparity, etc.


There can be other factors that cause one economy to outperform another Smash. But within any given economy, that economy will *always* grow faster if more relative dollars are used for investment than if they are not. Period. It's axiomatic because "investment" in this context is defined as "money spend on future economic growth". And the maximum amount of money in an economy will be put into investment when a maximum amount of money is available to be invested. And that will almost always happen when that money is unequally distributed (I'm granting the possibility that a command economy could actually invest money, although they rarely actually do, and it usually doesn't last).

Quote:
The idea that there's a structural link is a marketing ploy, quite literally. There is, let me state...once again, no economic model that shows how wealth is distributed by a society is tied to that societies overall economic growth.


False. Demonstrably false. Anyone who's taken any college level economics course knows that this is false. Why you keep repeating this falsehood in the face of actual facts is beyond me. Actually. Scratch that. I know why you do. Your political ideology requires that people believe falsehoods about economics in order to succeed, so you must do things like tell people that investment doesn't create economic growth even though it's a core assumption of every single economic model in existence that this is the actual definition of the word in macro economics.


The only way your claim can be true is if we assume that more dollars will end out in "investment" if those dollars are spread evenly than if they are spread unevenly throughout the economy. And I think that's also pretty easy to show to be incorrect. Hell. Even the command economy model spoken of earlier (with regard to China) requires an unequal distribution of wealth. In China's case though, its the government which has the bulk of those dollars, thus allowing them to focus on economic growth at the expense of luxuries and standard of living for their citizens. And while I personally believe that command economies can't sustain that long term, even that model assumes that it's an unequal distribution which creates economic growth.


Quote:
In layman's terms, a society can choose to have a tiny ruling class and a large serf class or it can choose to have a broader distribution of wealth and a large middle class. The choice is basically an ethical one and not one of economic outcomes (there does actually seem to be a net benefit to more even distribution particularly in high income per capita systems, but it's fairly technical and you won't understand it, so let's ignore it for now) Given that, the reasoning for choosing the tiny ruling class option is fairly lacking. The primary reason it somehow succeeds to the degree it has in the US is largely the big lie of success = money = hard work = talent, which, of course, isn't at all how that works. It's a compelling fantasy, though.


This is a false dilemma though. Income inequality in the US is not driven because we have a small number of "rich" and everyone else is "poor", but because we have a large and wealthy middle class. It's the comparison of the poor to the middle that drives our income inequality, not the poor and the rich. We *also* happen to have some very very rich people relative to our poor, but there's a huge amount of wealth in the middle as well.

This is part of the strawman argument though. The verbalization of the argument takes the form of "rich vs poor", but the calculations are often really about "poor vs middle". Let's not forget that Marx defined the middle class as the enemy to socialism because they give the poor hope for their own economic future. This is why international calculations of poverty tend to be a function based on the median income within a given economy (percentage of that median defines the poverty line). There is no comparison of the poor to the rich when calculating poverty. The comparison is to the middle. The presumed solution isn't to eliminate the rich, but to lower the middle relative to the bottom.

Once you understand this objective (destruction of the middle class), the arguments of socialists become really obvious and their falsehoods become equally obvious. No one (at least not me) is arguing for a rich/serf economy. But that's the strawman you want to attack, so that's what you attack. Income inequality in the US isn't about rich/poor. It's about too many people making a couple hundred thousand dollars a year being allowed to keep too much of it, and invest it in stocks, and *gasp* hand it down to their children in various ways. How unfair!!! We must make everyone "equal", and the way you do that is to make everyone equally poor. And that's the part of the socialist agenda you don't like to talk about.
____________________________
King Nobby wrote:
More words please
#279 Nov 06 2013 at 5:01 PM Rating: Excellent
Meat Popsicle
*****
11,709 posts
Smiley: banghead

Linky.

Smiley: rolleyes
____________________________
That monster in the mirror, he just might be you. -Grover
#280 Nov 06 2013 at 5:05 PM Rating: Default
Encyclopedia
******
31,554 posts
Aripyanfar wrote:
China has been an aggressive Capitalist nation for over 15 years now. It's not a Capitalist Democracy, but whatever hybrid Socialist-Totalitarian-Oligarchy it's been running since the Cold War is also running in tandem with a capitalist economy. The wealth is not confined to government members. Private Mainland Chinese citizens have bought up 5% of Australian real estate in our capital cities, and are making large inroads into Australian farmland. As well as owning huge portions of American treasury bonds.

It's true that the absolute numbers of poor Chinese are still devastatingly huge, but their Middle Class and Wealthy counterparts have been growing exponentially. There are now more Middle Class and Wealthy Chinese than Middle Class and Wealthy Americans...both populations measured in US$. Things change drastically around the world in 5 years, let alone 10 years.

Russia and China's trajectories have been very different over the past 70 years.


I'm not arguing that this can't/hasn't happened in China. I'm arguing that the command model is not sustainable over the long term. The inherent problem with command economies is that the route to wealth/power becomes abstracted within the political arena, and will eventually become separated from "real" economic factors. In a free market, in order to become rich you *must* produce some goods/services which are in demand. Thus, whatever you do *must* benefit others to a sufficient degree that you experience economic gains. Which means that your economic gains are tied to "real" economic growth.

In a command economy, you can fake this for awhile, but you can become rich by doing whatever the government will choose to spend money on. And this is often easier than doing something that actually produces economic benefits for both the producer and consumer. Over time, the number of people gaining wealth/power via things that the government (which recall will tend to be influenced by those with wealth and power) chooses to reward rather than those with real positive economic benefits will grow. Those taking the easy route to wealth and power will take control of the government, and the command nature of the economy will allow them to easily reward themselves for doing this.

And that will appear to work, sometimes for decades, before the whole thing must collapse. I honestly don't think it's possible for a command economy to last for any significant length of time. Not in any sort of modern economic environment.
____________________________
King Nobby wrote:
More words please
#281 Nov 06 2013 at 5:06 PM Rating: Default
Encyclopedia
******
31,554 posts
someproteinguy wrote:


Fine. Smash is wrong. I'm right. Happy?
____________________________
King Nobby wrote:
More words please
#282 Nov 06 2013 at 5:17 PM Rating: Excellent
Meat Popsicle
*****
11,709 posts
gbaji wrote:
someproteinguy wrote:


Fine. Smash is wrong. I'm right. Happy?
No, try this for the first part:

summarized gbaji wrote:
Fact 1: While it can vary macro economic growth is largely a function of investment, as opposed to production, consumption, etc.

Fact 2: People with more money can put more of that money into investments, as they need less of it to live on (i.e. the consumption part).

Conclusion: Because of this greater income inequality leads to greater economic growth.

This is not speculation. It's basic human nature.


Edited, Nov 6th 2013 3:18pm by someproteinguy
____________________________
That monster in the mirror, he just might be you. -Grover
#283 Nov 06 2013 at 6:25 PM Rating: Default
Encyclopedia
******
31,554 posts
That takes all the fun out of it though. ;)
____________________________
King Nobby wrote:
More words please
#284 Nov 06 2013 at 7:23 PM Rating: Excellent
Meat Popsicle
*****
11,709 posts
Smiley: lol

Whatever floats your boat down the moat with a goat.
____________________________
That monster in the mirror, he just might be you. -Grover
#285 Nov 06 2013 at 7:34 PM Rating: Excellent
Avatar
****
7,465 posts
gbaji wrote:

"A lot of words emphasizing that I don't know how investments work within the economy"

First off, Consumption > Investment always. Consumption breed investment. Apple didn't hold over 50% of the market in smart phones because of investment. Their product and consumers did that, Apples stock and investment rose because the consumer was buying Apple products en masse, Consumers didn't buy Apple product because the stock marched to $400+ they bought the product because they desired it.

Investment is tertiary at best in the economy, behind Consumption, and Government Spending. Your little example emphasizes this, with scenario A putting 300K directly into the economy, and Scenario B adding only 135K. The 175K from investment is irrelevant because its existence entirely depends on consumerism. Since there is now 165K less consumption dollars being spent the 175K in investments represent a lot less value to the economy, since people are buying much less stuff.

A clear example of that in real world economy would be GM, who saw its market share decline, and thus its sales decline through the 00's. GM turned to their Investors for money, in order to maintain similar production levels through the lull in consumer spending. They restyled their products and spend billions trying to revive the GM name. Then when the man came to collect his return on investment...GM had no money, had to declare bankruptcy, had to lay off a majority of its work force, had to cut its product line, had to sell its investments in other companies, had to beg Government for money, and essentially had to rebuild the companies identity from scratch.

Did investment cause this to happen. No, it actually helped buoy GM for about 4 years in the 00's, which helped to keep peoples jobs, and keep money flowing. But when the money dried up and the consumer still wasn't buying, GM was left with Airport tarmac filled with unconsumed vehicles....when this happened Investment left Billions of dollars sitting at Airports to devalue.

Yet Toyota, and Honda were having great times, consumers were buying their products, production was expanding not staying stagnant, and their market share was rising. Even the Buy American campaigns could not slow the rise, even massive investment in the American Auto industry could not compete with the rise of consumer confidence in Asian autos. Despite record investments into GM market share dropped, their contribution to the economy dropped, and they now operate at less than half of their early 00's capability in terms of staff and production capability. Investments are not net contributors to growing economy. They are an insurance policy for when the consumer is no longer purchasing. The problem is when you overdraw on your investments as GM did. Instead of working out the kinks in their product they continued with the status quo eventually evaporating Billions from the economy, and forcing Government to pick up the tab or watching many more people lose their jobs than the some 55% who did anyway.

Consumption will always be the biggest contributor to economic growth and more people being able to consume means more money directly entering the economy, and flowing through it. Investments will always be the biggest security blanket for the economy because in times of no consumption, there is no money flowing through the economy.


Economy
^^^^^^^^^^^^
Consumption <=> Production => Investment.
^^^^^^^^^^^^^^^^ ___________ ^^^^^^^^^^^^^^^
Government ___________ Government
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
PEOPLE PEOPLE PEOPLE PEOPLE PEOPLE

One side Grows, One side maintains. Both are required for healthy economy, but only 1 is an expert at growing it.

Back to you example:

Scenario C. I say bring 10 more people to the Island.

So now we have 20 people living on Asylum Island instead of 10. They all agree to divide the 500K equally because it is the most fair option. This leads to positive growth, more over the original 10 members couldn't be happier, because they were shouldering the costs of living themselves it was getting kind of expensive, thankfully with a doubling of the population the cost of living was spread across 20 people and not 10 people. Now it only cost them only 10K to live on Asylum Island, a savings of 10K

Armed with now 15K in extra money the people of Asylum Island decided to invest their new 10K, after all they could already buy everything they wanted with 5K, and the 10K was just extra to tuck away for a rainy day. So now Asylum Island looks like this.

20*10K (cost of living) = 200K
20*10K (investment) = 200K
20*5K (Consumption) = 100K

Which was a good thing, their strongest trading partner went into an economic recession. Dictator Kaolin rose to power in the far off land of Oot and banned all foul language. The good people of the Asylum's leading export. Fortunately because they had foresight to invest their jobs were not immediately lost they had enough money banked up that they could fund everyones cost of living for a full year...which thankfully was enough for them to find other exports to +1 across their network of trading partners.




Edited, Nov 6th 2013 8:39pm by rdmcandie


I mean you hate taxes right. I am sure we all do. Well if everyone had more money and over 50% wasn't dependent on Government for money...then everyone in the nation could pay less taxes. If everyone had enough money to pay for cost of living and have 5K to spend how they wanted, there would be no welfare, or obama phones, or food stamps, or living shelters. Which means less tax needed, which means more money at home, which means more money to buy sh*t, so more need to make sh*t.

Investment does not do that. Only consumption can, and the only way you can generate consumption is if everyone has money to consume with...

*note making **** doesn't specifically mean more jobs...see robotics in industry as to why*
Edited, Nov 6th 2013 8:50pm by rdmcandie

Edited, Nov 6th 2013 8:59pm by rdmcandie
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#286 Nov 06 2013 at 9:12 PM Rating: Default
Encyclopedia
******
31,554 posts
rdmcandie wrote:
gbaji wrote:

"A lot of words emphasizing that I don't know how investments work within the economy"

First off, Consumption > Investment always.


Lolirony!

It's not a competition. I think this is a mistake that far too many people make. They think it's about which is "best" and doing that thing. Thus we get eternal arguments about "supply side versus demand side", when that's the wrong way to look at it. Each component of the economy has its own purpose. None is inherently more valuable than another, and it's wrong to think so.

We were talking about economic growth. In macro economic terms, economic growth is caused by investment, not consumption. It's not about which is "better". It's about the fact that the two do different things.

Quote:
Consumption breed investment. Apple didn't hold over 50% of the market in smart phones because of investment. Their product and consumers did that, Apples stock and investment rose because the consumer was buying Apple products en masse, Consumers didn't buy Apple product because the stock marched to $400+ they bought the product because they desired it.


Consumption is necessary for the people within the economy to live, incomes to be earned, products to be built and sold, etc. That's not the question we were examining though. The question is about economic growth. How do you make the economy as a whole "bigger"? You put money into doing things that doesn't create earnings today (so consumption and production is not relevant), but which increases the amount of total production and consumption in the future. That is what "investment" is (within this context at least).

Quote:
Investment is tertiary at best in the economy, behind Consumption, and Government Spending. Your little example emphasizes this, with scenario A putting 300K directly into the economy, and Scenario B adding only 135K. The 175K from investment is irrelevant because its existence entirely depends on consumerism. Since there is now 165K less consumption dollars being spent the 175K in investments represent a lot less value to the economy, since people are buying much less stuff.


There's no "into the economy" though. It's all in the economy. It's a matter of what the money is doing within the economy. Do we allocate resources increasing the number of TVs that people have in their living rooms today? Or increasing the number of TVs (or other things) they can have tomorrow?

Quote:
A clear example of that in real world economy would be GM, who saw its market share decline, and thus its sales decline through the 00's. GM turned to their Investors for money, in order to maintain similar production levels through the lull in consumer spending. They restyled their products and spend billions trying to revive the GM name. Then when the man came to collect his return on investment...GM had no money, had to declare bankruptcy, had to lay off a majority of its work force, had to cut its product line, had to sell its investments in other companies, had to beg Government for money, and essentially had to rebuild the companies identity from scratch.


This has nothing to do with macro economics though.


Quote:
Back to you example:

Scenario C. I say bring 10 more people to the Island.

So now we have 20 people living on Asylum Island instead of 10. They all agree to divide the 500K equally because it is the most fair option. This leads to positive growth, more over the original 10 members couldn't be happier, because they were shouldering the costs of living themselves it was getting kind of expensive, thankfully with a doubling of the population the cost of living was spread across 20 people and not 10 people. Now it only cost them only 10K to live on Asylum Island, a savings of 10K


Huh? Just declaring that this "leads to positive growth" doesn't make it true. If you double the number of people, while keeping the total amount of resources the same, the people will have less, not more. They will be poorer. And you will have created economic shrinkage, not growth (at least as a function of population). You just toss out an assumption that their costs will magically be cut in half. Why? If it costs $20k for one person to live before, it will cost the same now. Why assume otherwise? If anything, doubling the population would increase the per-person cost because of overhead involved in providing sufficient goods and services for more people.

Your scenario makes no sense at all. Doubling the number of people would presumably also double the amount of "wealth" in the society (assuming the 10 new people do the same average amount of work as the original 10). It should be a complete wash. Certainly, for the point I was making, there's no reason to care how many people are involved. All that matters is the ratio of people to wealth, and the relative distribution of that wealth. The point I was making was purely that by dividing that wealth unequally, you are more likely to have a larger portion of that wealth allocated to investment rather than consumption.

We can debate which is "better", but the point I was making is completely valid.


Quote:
I mean you hate taxes right. I am sure we all do. Well if everyone had more money and over 50% wasn't dependent on Government for money...then everyone in the nation could pay less taxes. If everyone had enough money to pay for cost of living and have 5K to spend how they wanted, there would be no welfare, or obama phones, or food stamps, or living shelters. Which means less tax needed, which means more money at home, which means more money to buy sh*t, so more need to make sh*t.

Investment does not do that. Only consumption can, and the only way you can generate consumption is if everyone has money to consume with...


Huh? This makes absolutely zero sense. I honestly have no clue what you're trying to say here or why you think it means anything. You may as well have just typed a paragraph of random characters and it would make just as much sense.

Edited, Nov 6th 2013 7:13pm by gbaji
____________________________
King Nobby wrote:
More words please
#287 Nov 06 2013 at 9:21 PM Rating: Excellent
Meat Popsicle
*****
11,709 posts
rdmcandie wrote:
*note making sh*t doesn't specifically mean more jobs...
Exactly, consumption is horrible. You buy all that food, and what does society get? A big pile of ****

Paying your rent is better, at least that get recycles through the system, services are nice.

What you should really do is give all your money to the scientists, talk about a good return on investment, we tend to create all kinds of new stuff. Smiley: waycool
____________________________
That monster in the mirror, he just might be you. -Grover
#288 Nov 06 2013 at 10:25 PM Rating: Good
Avatar
****
7,465 posts
Actually I have a true story about investing.

Last Summer I bought about 1K shares in RIM they were trading at about 6 bucks at the time so it seemed like a good deal. Here was a company siting on a very small market share, having been smacked down by every ones new favorite Apple. The stock had basically just free fell from its lofty price "as far as cell companies were at the time" of about $150. But they had 200M in the bank, still a pile of shares being traded, and 2 new phones set to enter the market and compete.

By Christmas the stock was at about 16 bucks....I cashed out about 500 shares and made a good chunk of change. Since the phone was not out yet I figured why not split and take a chance of it hitting about 40 (as it was being projected to do, based on its 200M in the bank, and its increasingly positive trading trend, and 2 phones). Well by march the Shares were in decline the phones both bombed, and generated no traction in the market, the money in the bank dried up and the stock went down to about 8 bucks, and rebounded to about 9.20 (I sold there) RIM (now BB) laid off about 5K people and began shopping. A deal was in place up until last week to sell BB to a group of interests and go private. The CEO was let go with a massive bonus on his way out the door, the deal fell apart, and now BB stock is continuing to decline, they have gained no market share, they have no longer got 200M in the bank, and they are 5K people shorter on staff than they were previously.

Now what could have saved BB in this case.

Well there was investment, I was one of many people who traded millions of shares of the company over about a 8 month period.
They had money in the bank.
They had decent product.

But...they had no consumer confidence, and their product didn't sell, despite it being every bit as capable as an Iphone and arguably better, their product didn't sell, they became insolvent quickly...and then investment left.

Now could these be investment in a failed company...sure, but on the other hand you are betting for them to lose as well. For example despite not having a market share, despite having no money, and despite not having much investment....BB is still a very well off company with potentially billions in patents. For all purposes as a competing company in the cell phone market blackberry is dead...its last heave was the BBM app for Android and IOS, essentially giving up the last bit of itself to the dominant market holders....but there is still a fortune to be made when the company inevitably is forced to begin selling its patents off to Samsung and Apple, and other competitors....and of course there is the coveted encryption that is more than likely to land some big Government offers namely from the US the UK and Canada.

No amount of investment can save BlackBerry, no amount of investment will return those 5K people to work...because the company has no market. Investment propped the company up for 8 months, and collapsed. But if say the 100M phones they expected to sell sold to the consumer...then BB would be just fine, their projections were never met at the consumer level, despite millions of investment moves being done over an 8 month period.

We should all invest in BB right now. We have the power to save them. They have no market share, but the power of investment trumps all! It is gospel it is truth!....And even if it does fail anyway despite our efforts we can still make money on the patents. We can be economic heroes guys help those 5K little guys who lost their jobs!

(and its true Ive made a lot of money on BB twice. The first time when it went up to 150 (I sold well before that) I used about 1K shares over several years to pay for school and sh*t., this time I just put it all in my bank...I think Im going to buy property in Detroit to sell in 5-10 years. Actually to elaborate more the guy they have coming in as CEO is some dude he took an insolvent company in Germany and turned it into a $5.8B Sale of ownership. If the shares hit under 5 bucks I am getting back in the game...there is no losing here...well for me... thousands of people still have jobs to lose.)



Edited, Nov 6th 2013 11:43pm by rdmcandie
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#289 Nov 07 2013 at 2:17 AM Rating: Good
Avatar
*****
11,953 posts
holy **** you are ****
____________________________
"India black magic anal sex zionist blow job terrorism child rape bicycle"
Just as Planned.
#290 Nov 07 2013 at 10:08 AM Rating: Decent
Avatar
****
7,465 posts
Timelordwho wrote:
holy @#%^ you are batsh*t.


Because I make money like rich folks?
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#291 Nov 07 2013 at 4:13 PM Rating: Default
Encyclopedia
******
31,554 posts
Was there a point to all that?

I'll also make a macro economic point. That 100M phones that BB expected to sell, but didn't? Someone else sold them instead. That money you made on their stock? Someone else lost the exact same amount of money betting in the other direction. Those effects cancel themselves out. They may change the precise location of money within the economy, but doesn't affect the "total value" equation.

When speaking of investment on a macroeconomic scale, it only increases if the actual value of the entire market grows. And there are really only a few things that make that market grow. It really has nothing to do with how well one single company or industry does and you're failing to grasp what I'm talking about if you think differently.
____________________________
King Nobby wrote:
More words please
#292 Nov 07 2013 at 5:56 PM Rating: Decent
Lunatic
******
29,304 posts
When speaking of investment on a macroeconomic scale, it only increases if the actual value of the entire market grows. And there are really only a few things that make that market grow.

Right, it's just Y=C(Y-T(Y))+I(r)+G+NX(Y). Just kidding, it's clearly wishes and fairy kisses and low taxes on the wealthy.
____________________________
Disclaimer:

To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a whore. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.

#293 Nov 07 2013 at 6:14 PM Rating: Decent
Avatar
****
7,465 posts
gbaji wrote:
Was there a point to all that?

I'll also make a macro economic point. That 100M phones that BB expected to sell, but didn't? Someone else sold them instead. That money you made on their stock? Someone else lost the exact same amount of money betting in the other direction. Those effects cancel themselves out. They may change the precise location of money within the economy, but doesn't affect the "total value" equation.


Actually it has an impact on total value, the 1B debt reduces the value of all the currency in the system. Now this might not sound like much, but GM comparatively had over 300B in debt before its collapse was unable to pay it off and had to dive into some bankruptcy.(something BB is attempting to avoid at present) The US has 17T in debt. All that money that is "debt" all devalues currency. Which is why people are poor, and many more are becoming poor. More Americans can not afford to pay basic cost of living because the amount of wages has not kept up with the value of increases.

Also for the record your point had nothing to do with macroeconomics, no where in it did you account for the 5000 people who used to earn 70K/yr, you don't account for their spending habits and thus decline in money at places they shop at, nor did you account for the fact that if these people lose homes as a result it devalues their neighbors property prices. You didn't acknowledge that these people may be required to go on Government assistance (EI) and thus add strain to the government, which may or may not run a deficit...if they run a deficit they need to make more money to cover the gap thus devaluing the entire base of the currency...which impacts buying power globally and ultimately leads to increased prices at home as trade gaps widen. Which causes peoples money to become a lot tighter meaning they no longer go and buy stuff locally, this causes more people to lose hours at work as actually selling product (and not investing in the idea of selling) it begins to bog down.

^ Were you able to follow along because thats macroeconomics in a nutshell. The easiest and most simple way to stop that from happening, purchase actual product, and in order for that to be accomplished you need a value rich consumer society, something 'murica hasn't had in over a decade.

(also for the record although I am sure its been said a dozen times now. The amount of dollars one has is not the amount of wealth value one has)

Just to add because I thought about it over dinner. GM currently is operating at -4.5B and is currently shopping for investors to help shore up its loses. This is because people are not buying vehicles at the rate of production...If GM were to lay people off and reduce production they could shore up the difference, but this would be 4.5B in Consumer market income removed from the system...so they look to investment to bridge the gap...this is how investment "creates" jobs. The market says those jobs should not exist, investment is keeping those jobs in existence because the investors know (the big ones) that economic growth begins at the consumer level.



Edited, Nov 7th 2013 9:36pm by rdmcandie
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#294 Nov 07 2013 at 8:56 PM Rating: Default
Encyclopedia
******
31,554 posts
rdmcandie wrote:
Also for the record your point had nothing to do with macroeconomics, no where in it did you account for the 5000 people who used to earn 70K/yr, you don't account for their spending habits and thus decline in money at places they shop at, nor did you account for the fact that if these people lose homes as a result it devalues their neighbors property prices. You didn't acknowledge that these people may be required to go on Government assistance (EI) and thus add strain to the government, which may or may not run a deficit...if they run a deficit they need to make more money to cover the gap thus devaluing the entire base of the currency...which impacts buying power globally and ultimately leads to increased prices at home as trade gaps widen. Which causes peoples money to become a lot tighter meaning they no longer go and buy stuff locally, this causes more people to lose hours at work as actually selling product (and not investing in the idea of selling) it begins to bog down.

^ Were you able to follow along because thats macroeconomics in a nutshell.


Um... No. It's not. Macroeconomics does not look at how a specific businesses success or failure affects the larger economy. Macroeconomics looks at how success or failure of all businesses in the economy affect the economy. It looks at factors that affect everything. So things like lending rates, interest rates, inflation, monetary flow periods, distribution of resources, and a host of other factors. You're cherry picking this business or that business and trying to extrapolate from those examples some claimed larger macro economic effect. That's not how it works though.

As I said, even if BB fails to build and sell those phones, some other business will instead (assuming demand in the market supports those sales). And that business will employ people to make those phones. And guess what? If demand doesn't exist for those phones then it will shift to something else, and some other company in some other industry will fill that demand (and employ people doing it). What you're talking about literally does not matter. I know that this is hard for some people to wrap their heads around, but the production and consumption within a given economy tends to be relatively constant across that economy, with gradual changes over time. While the specifics of what is produced and what is consumed changes gradually (and specifics like who makes a given product can change quite quickly), the overall results tend to not change that quickly.

A **** of a lot of the specifics going on within an economy really do get washed out at the macroeconomic level. There are trends that affect things (like say relative percentages of resources used for investment versus production say), but something like one company failing and firing a few thousand workers? Has more or less zero macroeconomic impact. Because the total capital in the system didn't change. Just how its distributed. Don't feel bad though, most people don't ever actually "get" this. Even people who've taken multiple courses in economics. It's just enough alien from what we see and know about economics around us every day that it doesn't feel right somehow. But if we're asking questions like "what causes an economy to grow over time", you have to stop looking at the details and look at the bigger picture.


Quote:
(also for the record although I am sure its been said a dozen times now. The amount of dollars one has is not the amount of wealth value one has)


Gee. Thanks for reminding me! I would never have known. Smiley: lol

Quote:
Just to add because I thought about it over dinner. GM currently is operating at -4.5B and is currently shopping for investors to help shore up its loses. This is because people are not buying vehicles at the rate of production...If GM were to lay people off and reduce production they could shore up the difference, but this would be 4.5B in Consumer market income removed from the system...so they look to investment to bridge the gap...this is how investment "creates" jobs. The market says those jobs should not exist, investment is keeping those jobs in existence because the investors know (the big ones) that economic growth begins at the consumer level.


Sigh. Again. This has nothing to do with macroeconomics. It's frustrating to try to explain this to you over and over and have you just not get it. Maybe this time? Let me give you a hint. The second you are talking about any specific company or even industry you are *not* talking about macroeconomics.

Edited, Nov 7th 2013 6:58pm by gbaji
____________________________
King Nobby wrote:
More words please
#295 Nov 07 2013 at 9:55 PM Rating: Decent
Avatar
****
7,465 posts
gbaji wrote:


Um... No. It's not. Macroeconomics does not look at how a specific businesses success or failure affects the larger economy. Macroeconomics looks at how success or failure of all businesses in the economy affect the economy. It looks at factors that affect everything. So things like lending rates, interest rates, inflation, monetary flow periods, distribution of resources, and a host of other factors. You're cherry picking this business or that business and trying to extrapolate from those examples some claimed larger macro economic effect. That's not how it works though.


I never said I was making a macroeconomic case. I was simply posting an experience I had investing in a company that has failed. You said you were going to make a macroeconomic statement you didn't. You just said that the money I made came from someone else's pocket. I pointed out how you were wrong.

Also does it ever bother you being wrong?

Macroeconomics is the method of tracking all economic data in a given region, a nation, and globally. Your city practices macroeconomics, your state, your country. 5000 people being laid off is a macroeconomic event. It isn't "well thats just money going from one pocket to another"...its 5000 consumers in a regional market, losing 5000 incomes directly impacts the consumer market, it directly impacts potential investment market, it affects value of the local housing market, and it could lead to increased cost of living for those who live in the region.

That is the macroeconomic impact on the Hamilton region. Then the Province of Ontario does their economic assessment at the macro level of Ontario...Then the Government of Canada does its economic assessment at the macro level of the nation. So no a **** of a lot of specifics don't get washed out. The specifics are all there. Its just as you go up in scope you lose sight of each smaller region. This is why looking at National economy is quite misleading. The trends could be absolutely garbage throughout regions in the nation, but if the overall trend is positive then the regional information gets lost...who cares to look at the Detroit Region if the US GDP is up and unemployment is down across the nation.

Well Im sure some folks in Detroit care now that their properties are essentially worthless, and the City is bankrupt. But hey 04-07 was a pretty good ride eh, Bush had that economy bumping...we even felt it in Canada, and now the garbage regional trends that went ignored are national trends that can't be ignored (although people still try). So just because you choose to ignore data, doesn't mean it is lost. Detroit was bleeding money through the 00's, but no one cared because y'all was getting rich making the most amount of paper in US history! while its value was being bled out by failing economics throughout the nation. All your states are broke, most counties are broke, the US governments broke, the people are broke...and im talking about wealth...not number of pieces of paper. Your country is broke, and the data was all there showing the trends the whole time and now Uncle Sam is stuck with his hand out bumming off the nations of the world...who have bought up nearly 30% of all American wealth.

You don't think a region like Hamilton or Ontario take note when 5000 people are laid off. You don't think a city like Detroit, or a State like Michigan take note when it becomes public one of their biggest business announces that they are 300B in debt. Just because you ignore city and state economic health, doesn't mean they don't track it, and you can bet your **** the nation takes note when thousands of workers might lose their jobs.



Quote:
Sigh. Again. This has nothing to do with macroeconomics. It's frustrating to try to explain this to you over and over and have you just not get it. Maybe this time? Let me give you a hint. The second you are talking about any specific company or even industry you are *not* talking about macroeconomics.


How did you get macroeconomics out of that? Oh I know because you don't know what macroeconomics is. GM is about as macro level as you get in business why do you think it was bailed out at a bi-national level you don't get that kind of cred unless you are responsible for moving a lot of cash.


Edited, Nov 7th 2013 10:59pm by rdmcandie

Edited, Nov 8th 2013 12:24am by rdmcandie
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#296 Nov 07 2013 at 10:20 PM Rating: Decent
Avatar
****
7,465 posts
Also I have a question for you. What do you think the biggest factor is in determining the health of the economy?
____________________________
HEY GOOGLE. **** OFF YOU. **** YOUR **** SEARCH ENGINE IN ITS **** SHITTY BINARY ASS. ALL DAY LONG.

#297 Nov 08 2013 at 3:13 AM Rating: Excellent
Avatar
*****
11,953 posts
Quote:
The US has 17T in debt. All that money that is "debt" all devalues currency. Which is why people are poor,


dear lord, the level of whack is too **** high.

Quote:
Right, it's just Y=C(Y-T(Y))+I(r)+G+NX(Y). Just kidding, it's clearly wishes and fairy kisses and low taxes on the wealthy.


Don't bring equations into this. It's obvious that Macro is just like a household budget.
____________________________
"India black magic anal sex zionist blow job terrorism child rape bicycle"
Just as Planned.
#298 Nov 08 2013 at 3:16 AM Rating: Good
Avatar
*****
11,953 posts
rdmcandie wrote:
Timelordwho wrote:
holy @#%^ you are batsh*t.


Because I make money like rich folks?


With an unhedged bet on a random company that you "feel good about"?

That's how rich folks make money. Yep. Genius.
____________________________
"India black magic anal sex zionist blow job terrorism child rape bicycle"
Just as Planned.
#299 Nov 08 2013 at 4:20 AM Rating: Decent
Avatar
****
8,954 posts
TLW wrote:
Don't bring equations into this. It's obvious that Macro is just like a household budget.


You don't use equations to balance your budget?
____________________________
Demea wrote:
Almalieque wrote:

I'm biased against statistics
#300 Nov 08 2013 at 5:04 AM Rating: Excellent
Avatar
*****
11,953 posts
I see that the joke has alighted atop you, and moved on. Ephemeral things, these. Life imitates itself.
____________________________
"India black magic anal sex zionist blow job terrorism child rape bicycle"
Just as Planned.
#301 Nov 08 2013 at 7:16 AM Rating: Good
Skelly Poker Since 2008
*****
15,852 posts
A local economist gave a talk yesterday at a tax conference. Some of his comments about our current economic problems....

Quote:
“The gap between where we are now and pre-recession levels of employment is almost entirely explained by federal fiscal policy,” Colgan said Wednesday afternoon at the Augusta Civic Center. “Not quite all of it, but about 90 percent if it. That’s a really heavy-duty set of problems we have to deal with here....

Colgan said fiscal uncertainty at the federal level has restricted the country’s economic output and made economic recovery more difficult.

Since the end of 2009, fiscal policy uncertainty has reduced the growth of the U.S. economy by 0.3 percent per year, according to a study by Macroeconomic Advisors, leading to about 900,000 people not being hired, Colgan said.

That, coupled with reductions in discretionary spending as a result of fiscal action, such as the sequester cuts, has led to about 2.1 million jobs not being created since the end of 2009, close to the amount not yet regained from the Great Recession, Colgan said

He said the latest economic crisis — the battle about the debt ceiling in October, which led to a 16-day federal government shutdown — further damaged the economy’s growth, and another possible showdown is right around the corner. Congress passed a continuing resolution Oct. 16 to fund the government until Jan. 15 of next year and suspended the debt ceiling until Feb. 7. Colgan told the audience to mark their calendars.”


A solution...
Quote:
When asked what he would do if he could control Congress, Colgan said he would get rid of the requirement of a debt ceiling, which gives permission to the executive branch to spend money Congress already has approved.

He said it has never been effective because fiscal policy is made in the budget and not in debt ceiling legislation.

“The debt ceiling has essentially become a nuclear weapon in the hands of both parties, which neither party can really be trusted with,” Colgan said. “I would eliminate that entirely,” he added. “It makes no difference in fiscal policy whatsoever and (eliminating it) would unilaterally disarm everyone from having to threaten to destroy the world economy in order to make their policy preferences enacted.”


And on tax policy....

Quote:
In terms of tax policy, Colgan said the federal government needs to come up with a way to raise tax revenue through online sales. An increasing amount of purchases are made online, and the sector will make up 30 percent of all sales by the end of the decade, Colgan said.

“Online sales are going to pose a major threat to revenues by increasing the reliance on very volatile base in cars and building supplies services,” he said.

He advised that states should try shifting the source of tax revenue more toward consumption-based, such as sales tax, from income and capital gains taxes.


STORY
____________________________
Alma wrote:
Post and be happy!
Reply To Thread

Colors Smileys Quote OriginalQuote Checked Help

 

Recent Visitors: 41 All times are in CDT