Debating “Finance is Ruining America”

This is an ongoing debate with one of my Facebook friends in response to an Atlantic article. (http://www.theatlantic.com/business/archive/2016/09/fairfield-county/501215/)

Steve Wong What rubbish. This lady is living in the ANCIENT past. Blaming bankers has a long history in the US and abroad. They blamed the banks for the Great Depression in America and John Steinbeck argued socialism was the solution. Hitler also railed against capitalism and the banks as well — which he also included the Jews in his this regard. All this article is saying is that capitalism — particularly the banks — should be hampered; and TAXPAYERS should SUBSIDIZE American workers because plants are moving abroad due to the profit motive — pushed by finance. Garbage — if businesses are not supposed to make a profit, then bring in communism (LOL — I’m falling right into your revolution trap).
— There is ONLY ONE outcome in response to automation and global trade according to the experts — use taxation, universal basic income (UBI), free or cheap education, to get people trained in REAL skills and professions — I’ve mentioned in the past that people should forget about careers with a firm or even an industry — they MUST get business skills, learn a TRADE, a profession, and a TECHNICAL skill — and use modern technology, software, and the Internet to become entrepreneurs (free agents, private contractors, consultants, and small businessmen). In the past, that was not possible. Today, you can have an entire accounting staff inside a USB. Without a boss, people will be able to keep more profits for themselves to increase their incomes.

Brookings Institution — **The Future of Small Business Entrepreneurship: Jobs Generator for the U.S. Economy**

https://www.brookings.edu/…/the-future-of-small…/

L Larry Liu Firms should be able to make a profit, but there is no reason why a few owners at the top should absorb almost everything. Your demand for entrepreneurial skills is utopian. What’s wrong with people not being able to monetize their skills? At any moment in history, you only have very few people who are adept in using their organizational skills to become wealthy. To promise everyone to become a businessowner and make it rich too, is nothing short of rubbish.

Steve Wong Those factory jobs are GONE. The Millienials don’t want them. There is no other solution — unless you want to nationalize the economy like Venezuela. People are going to be free-lancers whether they like it or not. That is a FACT of the world of TODAY — today — and tomorrow.

Globe and Mail — **Canada’s shifting job market: the rise of contract work**
http://www.theglobeandmail.com/…/canadas…/article581926/

L Larry Liu Yeah they are becoming free lancers because there is no choice but we were talking about the normative desirability and not the positivistic development.

Steve Wong There is nothing desirable about working for a boss for a fixed wage when technology can make people into small businesses that can make more money for their families. More than software that can put an entire accounting department into a USB, the Internet can create a marketing department and an order-taking and financial department via websites. Did you know that in the past, the mailing costs of major firms were in the tens of thousands per month — making small businesses difficult to handle? Now communications are available to EVERYBODY. What I’ve cited is INESCAPABLE and resistance is FUTILE. The world you are talking about is DYING — at your age and advanced education, I’m surprised you don’t know that.

L Larry Liu Steve, I never advocated for a return to the 1950s. But your freelancing advocacy is also a social nightmare, because people are living through the world of Uber and Mechanical Turk, and they hate it because of the economic insecurity. For that reason freelancing is not a rational policy choice. A rational policy choice is a shortening of the work week and a UBI. If people then still want to do freelancing, so be it, but not without UBI and shortening of regularized work.

Steve Wong To say that some people who freelance have it worse because that is unstable but then to demand that his boss must guarantee his workers’ security is basically unfair and illogical. Their boss’ income is also UNSTABLE! So why should a man who has RISKED his work and money NOT be allowed to reap the rewards? The more the Leftist theorists demand that a man who bangs on the nail with a hammer should reap AS MUCH AS his boss who has RISKED everything that he had, the more the businessman will AUTOMATE and go overseas. Unless you want to also restrict the movement of capital and the development of technology, your ideas are a dead end. The global economic trend until the end of this century is the opposite.

TIME — **Freelancers Make More Than You Think (and Maybe More Than You)**

http://time.com/money/4049276/freelancer-income-pay-rate/

Paul Carr regardless of theory, facts are unequivocal that wealth – especially in the USA, has gone almost exclusively to the wealthiest Americans. Except for a few dozen notable technology wizards, that wealth has gone to those who were already wealthy. Surely you don’t believe that it is pure coincidence that during the same period that changes in the tax rates and tax shelters have enormously favoured the same people. Moreover government programs for education, housing, and all forms of social assistance has been slashed. Once again the wealthy who can live very nicely without any of that not only further reduce personal taxes, but it also reduces their businesses’ expenses further increasing their profits. Surely, you don’t think that is unrelated.
The future is, I fear, grim. The automation of manufacturing will be completed when we go directly from concept to 3D printed products, and we are already far down that path. Automation of so-called white-collar jobs will also follow that path. Their simply won’t be enough left to do to occupy the legions of entrepreneurs, at least not until we redefine ‘productive’ (for pay) work., and that will likely be government guaranteed incomes paid by taxes on the wealthy.
CETA and TPP with their secret, binding investor-state tribunals will be a complete abdication of governance to the plutocrats. The end result of THAT may make us long for the good old, harmless days of Trump (that is irony, not a support for that bigot).
Read Kurt Vonnegut’s PLAYER PIANO, from the 1950s. Without mentioning computes, it was surprisingly prescient.

Steve Wong As you might know, I’m in favour of TPP. In my view, the income equality in the US and around the world is primarily due to global trade, and automation is an offshoot of this. However. The solution is not to blame the free market or the financial system. The solution is a simple and easy one — FISCAL POLICY. Not only am I not against taxation, I’m in favour of it — and that money should be invested in a reasonable universal basic income program as well as into free college. But the gist of this article suggests that the financial system is at fault and Hugo Chavez was right. The main goal of any society is that people’s lives are to be improved. To do that, you have got to let talented and skilled people do their jobs. Then tax them for the less fortunate people.

Paul Carr autimation is the driver of free trade, not the other way around. It will occur with or without free trade. It facilitates the flow of information and money thus making it easier to relocate many jobs. We can debate that all day, but that isn’t the real issue. Corporations play countries against one another which drives tax rates and wages down, cuts regulations, and eliminates the “home” country’s ability to control environmental standards, work ethics, and safety standards — benefitting the owners and nobody else. GDP may increase with free trade but the overwhelming majority of the benefits have gone to the owners. If TPP and CETA are approved with the existing investor-state tribunals, Canada won’t be able to tax or regulate or in any way interfere with the corporations’ loss of potential profits. Your solutions for equalization income distribution will be overruled.

Steve Wong Man, that old stuff you’re talking about was discarded and disproved over 20 years ago. It made a revival ONLY in cyber space now, along with the Flat Earth theory. And it has ZERO weight in global government, banking, and business in the world of TODAY.

The only man that matters is the man who took the RISK. A man who just hits a nail with a hammer has little leverage. All you are saying is that the man who hits the nail should have equal footing with the man who invested everything he owned into his business. After the fall of the USSR, these ideas are DEAD — except in fringe academia and in the Internet.

Paul Carr this brings us back to the investors… they are not taking risks, not personal ones anyway. They risk other people’s money. Lose too many risks, and they lose their job (maybe), but the real loss is felt by others. That definition serves no one except those skimming off their percentages, a very far cry from the idea of the old fashion risk takers who produce REAL products and services.
If they are dead ideas, the new paradigm is gasping for breath. The weight of billions (of people, that is) is an ineluctable force. AS the dangers of global warming become ever more self-evident, the world will have less and less tolerance for the self-serving banker-insurance-investor types.

L Larry Liu You are hiding the financial capitalist behind the productive capitalists, and even the productive capitalists can’t get things done without current labor (the guy hammering nails) and past labor (the people inventing the machines that create stuff). If I am a billionaire, inheriting a fortune from daddy, I would hire you instantly as my lawyer and spokesman. I just hope that the workers out there don’t get fooled so easily.

Steve Wong  I have no idea why this silly Leftist concept of “rent-seeking” capitalist as some sort of parasite is still around — it goes back to Lenin. It makes no sense. Without capital and a promised return in terms of dividends or interest, almost nothing innovative and new in society would occur. Why would anyone invest in a company if an agreed upon return is not first determined — that’s the financial markets. Following your “logic” of equality, EVERYBODY would rather be a worker who would get a fixed wage, take NO RISKS, but would have a more than a fair share of the profits. At the same time, the risk-taker could lose all his money without a corresponding benefit. As I said earlier, profit sharing is coming to North America — but that must be balanced by a lower fixed wage. In the long run, the workers will make more money and morale would be boosted. But you can’t have NO risk, a FIXED wage, AND a high share of the profits at the same time — there would be NO BOSS or shareholder stupid enough to pay such unreasonable demands — result is no JOBS. Would you buy this bond?

L Larry Liu The entrepreneurs must always be able to make more money than the rest of society, but not the financiers. The risk-taker has limited liability laws, by which only the assets in the corporations are liable for loss, not his private assets. Whether the workers get a fair shake out of the economic relation depends on social norms, specifically the power of labor unions and the level of labor law protections. You argue just like libertarians, as if there were some God-given or nature-given rights over profits.

Steve Wong You are arguing against the most fundamental and ancient principles that has built a society with progress. You make a CONTRACT and that must be honoured. And I’m telling you that NOBODY would invest anything without a return. To say that an investor losing everything he invested is not enough and he must also have unlimited liability even with no direct involvement is ludicrous. Society is dead with your ideas. This is not just theory or commonsense, we’ve seen this in direct experience in the USSR, Venezuela, North Korea, and countless other failed states. By the end of Xi Jingping’s term, almost total liberalization of the financial markets are likely to happen in China. Effectively, the world you speak of almost doesn’t exist anymore. Expect Cuba and Venezuela to join the real world in just years or months. But you will always have North Korea.

**China is about to make its boldest financial reform in years**

.http://qz.com/…/china-is-about-to-make-its-boldest…/

L Larry Liu I don’t feel personally attacked, because your examples of Venezuela and North Korea are not defensible by any reasonable person. Your contract talk neglects the fact that there is a financial sector, which generates most of the profits, and contributes nothing to wealth creation and productivity enhancement. This empirical fact is never part of your risk-taker narrative. For any capitalist, who decides to invest it in plants and jobs, I would be all to happy to see that happen, but either much of the investments are entirely tied to the financial sector or they go in labor-saving technology, which allows these few owners to get richer and richer without providing the value themselves. It is a neoliberal lie that a few capitalists create the wealth, and the moochers on welfare take it. It is the entire society which creates the wealth (I did not disparage capitalists, who put the organization together, but they are only part of the wealth creation), and a few people who say, “no, it’s all mine”. A just society would redistribute the inordinate profits, and by now we can easily pay a basic income for all.

Steve Wong Your comments here are wholly Marxist and they are wholly wrong economically. All you are saying is that when investors bet their money and lose, that’s their problem. But when investors win, like with Apple or with the recent rise in the stockmarket and real estate market, it’s unfair and is a plot. You want to renege on the original CONTRACT of the stock shares or bonds. When the stockmarket falls, so will the income of rich people, but average incomes will be much more stable. Ignorant Marxists also say that merchants are also parasites because they don’t produce anything. Again, they don’t account for the effort of bringing the goods to your town and the RISK of poor sales and financial ruin. Without investors there would be no iPhones, no computers, no new drugs. With the knowledge and EVIDENCE we have for almost 100 years on how many tens of millions have died under Marxism, it’s sad that people still pitch this rubbish. The good news is that you are a voice in the wilderness. But long after we’re both dead, Marxism might return and might again kill millions more. In my post above about Chinese financial reform, I think it’s a response to the 40 to 70 million dead under Mao.

L Larry Liu You are saying that I have reneged on the capitalist contract, when I don’t hold the position that I have reneged on the capitalist contract. You are, in effect, only interested in caricaturing my position into a situation (Marxist state) which is not empirical reality. In the mean time, you are denying the empirical reality of an economic system, where some rich folks are not risktakers, but live off the benefits provided to them under the current system. Entrepreneurs who create products and make our lives better off shall be rewarded, but not financial parasites, who just let their money grow, while inequality is getting larger and larger. I am very much a consequentialist and don’t care that inequality gets larger as long as the poor have a great life, but we know that the poor have an awful life, and health data by Angus Deaton and other researchers show that relationship. In that case, why would a rich society have suffering poor people? That is what your anti-Marxist rant tries to suppress, and I don’t mind reminding you of it.

And also there is a justice question for the “guy who hammers the nails”. Why are his contributions massively discounted, when it is only two factors who create wealth: current labor and past labor (the people designing, inventing and creating the machines)? The entrepreneur puts these things together and is paid off more than others, but I am defending against the notion that “I take the risk, so almost all of the wealth belongs to me”. That’s just rubbish.

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