Wealth Disparity

CSGnet Archive CSG2010
61

[Martin Lewitt Dec 19, 2010 1303 MST]

    [Shannon Williams (19-dec-2010 09:30 CST)]

[From Kenny Kitzke (2010.12.08.8:45EST)]

              I know of no rich people that have their $

sitting under their pillow. They invest it for a
greater return down the road. And, that produces a
gain in income and wealth whereas a trip to Disney
World is a short term consumption expenditure that
produces no return and no growth and increase in the
economy.

Hi Kenny and Martin L,

      Do you agree that if rich people did have extra $ sitting

under their pillow or they did stop investing their extra
money then this would negatively affect the economy? Also, do
you agree that even if a significant number of poor people
stop spending their income, this significantly affects the
economy.

Money sitting under pillows should be easily replaceable in a fiat

currency, but the main result of the rich not investing their “extra
money” would be the loss of their management skills or the less
resources under the expert management they might employ. But if
instead of investing, the rich started purchasing assets and just
taking them out of production, for instance, turning farmland or
land with oil reserves into nature preserves (ala Ted Turner or the
nature conservancy), then that would be negative for the economy.

If the poor stop spending, that would also be negative for the

economy, as it reduces demand, and would especially be negative if
the reduction in spending was due to a change of values, for
instance becoming less materialistic, and thus not needing to be as
productive in order to sustain their desired levels of consumption.
The money supply today is poorly managed due perhaps as much to
lack of the proper tools as it is to occasional and seemingly
inevitable centrally planned misjudgments. High levels of
involuntary unemployment of people and resources should be avoidable
through better mechanisms of money supply management, but for real
progress in society, people have to want to be productive to the
point of producing the surplus that funds research, development and
exploration. We can’t have everybody satisfied laying around and
going “ouuum” or having sex parties, or we will soon revert to
bonobos, the extra brain power is just a waste, if happiness is our
only goal. Even bonobos do some striving for inequality in their
social hierarchies. It is human nature to strive. However,
evolutionarily speaking, the ultimate wealth is access to more mates
with higher quality genes.

Martin L
···

On 12/19/2010 8:14 AM, Shannon Williams wrote:

Thanks,

Shannon

62

[From Rick Marken (2010.12.19.1600)]

Kenny Kitzke (2010.12.19.10:30EST)--

Those $ under the pillow�are still economic assets, as viewed by both the
individual and society.

Those $ are a claim on goods/services. Those $ are definitely an asset
for their possessor but they are not an asset to the economy until
they are spent. You have to remember that money is part of a circular
flow. This can be seen most clearly at the aggregate level; the
aggregate consumer is paid (in the form of wages and profits) for what
it produces as the aggregate producer; and the aggregate consumer "pay
itself back" as the aggregate producer by using its wages and profits
to but the goods and services that these wages and profits paid to
produce. If some proportion of the wages and profits are kept under
the pillow, the aggregate producer will not get paid back for what it
produced, so it will reduce production to reduce inventory and meet
the new lowered level of demand.

Martin Lewitt (Dec 19, 2010 1303 MST)--

Money sitting under pillows should be easily replaceable in a fiat currency,
but the main result of the rich not investing their "extra money" would be the
loss of their management skills or the less resources under the expert
management they might employ.

Both you and Kenny would benefit from learning to think of the economy
as a closed -loop system. It's control writ large. The economy is not
driven by producers (supply side) and it is not driven by consumers
(demand side). Producers and consumers are, by and large, the _same
people_. As producers people transfer money (in the form of capital
and wages) to themselves as the cost of production. As consumers,
people use this money to pay for the goods and services produced and,
in the process, pay themselves back for the cost of production. If
consumers fail to return some significant proportion of their income
to themselves as producers then they will produce less. There is no
"extra money" in an economy; money is exactly proportional (per the
market determined average cost of goods and services) to the amount of
goods and services produced by the economy.

Best

Rick

···

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

63

[From Kenny Kitzke (2010.12.19.21:00EST)]

In a message dated 12/19/2010 6:58:51 P.M. Eastern Standard Time, rsmarken@GMAIL.COM writes:

[From Rick Marken (2010.12.19.1600)]

Kenny Kitzke (2010.12.19.10:30EST)–

Those $ under the pillow are still economic assets, as viewed by both the
individual and society.

Those $ are a claim on goods/services.
So, what? Does that mean they are not personal assets, you know things people own or owe as in liabilities. Those $ are also legal tender. But, changing the word description does not change the point I made.

Those $ are definitely an asset
for their possessor but they are not an asset to the economy until
they are spent.
I know what you mean but to get anywhere in a scientific discussion, it helps to use terms that have specific meaning in a science. PCT is full of problems like that as you well know when it comes to “behavior,” “control,” etc., that have general meanings different than what PCTers understand. The term “asset to the economy” is not an operational definition in economics to my knowledge. If not, why use it to try to make a point?

You have to remember that money is part of a circular
flow. This can be seen most clearly at the aggregate level; the
aggregate consumer is paid (in the form of wages and profits) for what
it produces as the aggregate producer; and the aggregate consumer “pay
itself back” as the aggregate producer by using its wages and profits
to but the goods and services that these wages and profits paid to
produce. If some proportion of the wages and profits are kept under
the pillow, the aggregate producer will not get paid back for what it
produced, so it will reduce production to reduce inventory and meet
the new lowered level of demand.
I am sorry, but this is rather juvenile in the science of economics. Money flow does not define a national economy. It is part of a national economy. So are assets and liabilities and debts. Oil or gold in the ground or trees on the ground are economic assets owned by people, companies, governments, etc., but no economist thinks of them as spendable money used by consumers to buy things from producers in a circular flow. Like the $ under the pillow, I agree they do not contribute to economic measured money flow until they are produced, sold for $'s and the $ are spent. But, you have made unjustified leaps in your analysis by saying that $ under the pillow deprive a producer from pay back. People are more likely to put the money under the pillow when they do not owe anyone anything. They do reduce demand. But, producers have a choice of reducing production or reducing price. Both are used in a free market system and I like it that way. Producers and consumers have choices. They should not have to get approval from the government of whether or not to spend their money (much less on what kind of vehicle to buy) or put it under their pillow to have some there for a rainy day. I think this is wise policy. And, having wise and prudent citizens is an asset to a strong economy, me thinks.

The history of money, and a governmental monetary system, as a convenient medium and method of exchange compared to a direct barter system is well documented. I think I understand it pretty well. I also understand the concepts of aggregate producers and consumers. If that was all that mattered in a modern national economy, we would not have much to disagree about.

Martin Lewitt (Dec 19, 2010 1303 MST)–

Money sitting under pillows should be easily replaceable in a fiat currency,
but the main result of the rich not investing their “extra money” would be the
loss of their management skills or the less resources under the expert
management they might employ.

Both you and Kenny would benefit from learning to think of the economy
as a closed -loop system. It’s control writ large. The economy is not
driven by producers (supply side) and it is not driven by consumers
(demand side). Producers and consumers are, by and large, the same
people. As producers people transfer money (in the form of capital
and wages) to themselves as the cost of production. As consumers,
people use this money to pay for the goods and services produced and,
in the process, pay themselves back for the cost of production. If
consumers fail to return some significant proportion of their income
to themselves as producers then they will produce less. There is no
“extra money” in an economy; money is exactly proportional (per the
market determined average cost of goods and services) to the amount of
goods and services produced by the economy.
It is amazing how you explain what variables individual producers and/or consumers control in our economy. I contend you don’t know individually and to purport you can extend your knowledge to aggregate economic behavior is mind-boggling. Have you ever wondered why no life-long accomplished economists are flocking to your door to gain your comprehension of things economic? KK

Best

Rick

···

–
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

64

[Shannon Williams (2010.12.20.02:00 CST)]

[Martin Lewitt Dec 19, 2010 1303 MST]

Do you agree that if rich people did have extra $ sitting under their pillow
or they did stop investing their extra money then this would negatively
affect the economy?� Also, do you agree that even if a significant number of
poor people stop spending their income, this significantly affects the
economy.

the main result of the rich not investing their "extra money" would be
the loss of their management skills or the less resources under the expert
management they might employ.

OK. What would happen if to the economy if we 'lost the management
skills' of the rich? Or if we lost the resources under their 'expert
management'?

Thanks,
Shannon

65

[Shannon Williams (2010,12.20.02:30 CST)]

[From Kenny Kitzke (2010.12.19.21:00EST)]

Those $ are a claim on goods/services.

So, what?.

What if one night 15,432 people in a small town go to bed, and during
the night the Grinch steals all of their pillow money, which they were
never going to spend anyway. For the next month, the town grocery
store has no business and eventually closes. Did the Grinch
contribute to the closing of the store? Obviously not. The people
were not going to spend the money that he stole.

Do you agree that the Grinch did NOT contribute to the closing of the
store? Do you agree that the people had no intention of patronizing
the grocery store, and that is why the store went out of business?

Thanks,
Shannon

66

[From Kenny Kitzke (2010.12.20.11:00EST)]

My guess is the Fairy God Mother will steal the money from the Grinch and put it back under the pillows of the 15,432 people where they have it under their pillow to spend or invest when that action helps them maintain some economical or life variable they wish to control.

Seriously, I do not accept your supposition that people (rich or poor) put money “under their pillow” with an intention (reference perception) to “never spend it anyway.” So, I am not going to chase your rather absurd possibility.

BTW, are you just going to ask me questions, or, will you answer my questions also?

In a message dated 12/20/2010 3:38:26 A.M. Eastern Standard Time, verbingle@GMAIL.COM writes:

···

[Shannon Williams (2010,12.20.02:30 CST)]

[From Kenny Kitzke (2010.12.19.21:00EST)]

Those $ are a claim on goods/services.

So, what?.

What if one night 15,432 people in a small town go to bed, and during
the night the Grinch steals all of their pillow money, which they were
never going to spend anyway. For the next month, the town grocery
store has no business and eventually closes. Did the Grinch
contribute to the closing of the store? Obviously not. The people
were not going to spend the money that he stole.

Do you agree that the Grinch did NOT contribute to the closing of the
store? Do you agree that the people had no intention of patronizing
the grocery store, and that is why the store went out of business?

Thanks,
Shannon

67

[From Rick Marken (2010.12.20.0840)]

Kenny Kitzke (2010.12.19.21:00EST)--

Rick Marken (2010.12.19.1600)]

You have to remember that money is part of a circular flow.

Money flow does not define a national economy.

I didn't say it did.

Oil or gold in the ground or trees
on the ground are economic assets owned by people, companies, governments,
etc., but no economist thinks of them as spendable money used by consumers
to buy things from producers in a circular flow.

Neither do I. Oil (I presume you mean crude), gold and trees are among
the many raw materials that go into production of the goods and
services that make up GDP. Producers have to pay the owners of these
resources to use them (mine them, refine them, mill them); it's part
of the cost of production along with labor and capital expenses; it's
all part of GDP. The money paid by the aggregate producer (GDP) to
the owners of the resources, the laborers (including profits for the
owner of the means of production), the producers of capital equipment,
etc. as the cost of production (including profit) is now money (GDI)
in the hands of the aggregate consumer (which is the owners of the
resources, the laborers, the owner of the means of production, the
producers of capital equipment, etc.) that is used to purchase what
was produced by the aggregate producer, thus paying itself back for
the production costs.

But, you have made
unjustified leaps in your analysis by saying that $ under the pillow deprive
a producer from pay back.� People are more likely to put the money under the
pillow when they do not owe anyone anything.

At the aggregate level the amount of saving (including putting stuff
under the pillow) is about the same as the level of drawing down on
savings. But there is a constant net saving rate and that is reducing
demand somewhat. It may be that this net savings is what T. C. Powers
calls "leakage" and so it is can eventually be returned to the
circular flow.

But, producers have a choice of reducing production or reducing price.� Both are
used in a free market system and I like it that way.

Who doesn't? The only problem is that when you have a large amount of
leakage created by wealth discrepancy (as we seem to have now)
producers will want to cut back production due to reduced demand and
that puts people out of work. So it creates unnecessary hardship for
people.

Producers and consumers have choices.� They�should not have to get approval
from the government of whether or not to spend their money (much less on what
kind of�vehicle to buy)�or put it under their pillow to have some there for a
rainy day.� I think this�is wise policy.

Of course. This seems kind of irrelevant to the discussion of the
problems of wealth discrepancy.

It is amazing how you explain what variables individual producers and/or
consumers control in our economy. I contend you don't know individually and
to purport you can extend your knowledge to aggregate economic behavior is
mind-boggling.

Contend away.

Have you ever wondered why no life-long accomplished
economists are flocking to your door to gain your comprehension of things
economic?

No.

Best

Rick

···

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

68

[Shannon Williams (2010-12-20.11:00 CST)]

[From Kenny Kitzke (2010.12.20.11:00EST)]

Seriously, I do not accept your supposition that people (rich or poor) put
money "under their pillow" with an intention (reference perception) to
"never spend it anyway."

The immediate issue is not whether people put money under their
pillow. The issue is whether you believe that putting the money under
the pillow affects the economy. Do you honestly believe that if no
one spent any money for the next 60 days that the economy would not be
affected? Or are you just being ornery?

BTW, are you just going to ask me questions, or, will you answer my
questions also?

1) The term "asset to the economy" is not an operational definition in economics to my knowledge.
If not, why use it to try to make a point?

2) Have you ever wondered why no life-long accomplished economists are flocking to your door
to gain your comprehension of things economic?

I only saw you give two questions above. I did not think that they
were addressed to me, but I will answer them:

1) Rick's basic argument is that the current 'study of Economics' is
inadequate to explain how money flows through society. You should not
be suprised that he has questions and concepts that are not address by
the current Economics experts. He is breaking the mold. If you are
going to follow him, then you must be prepared to debate and analyze
concepts that have never occured to you.

2) No.

Thanks,
Shannon

69

[From Kenny (2010.12.20)]

Shannon,

Not sure how you could miss them, but here were two questions specifically for you from my post of December 19

Now, Shannon, it is my turn to ask you a couple of questions.

  1. If 10,000 poor people spend $10 on a carton of cigarettes, and a rich business man spends $100,00 on a new lathe that performs tasks in half the time (doubling productivity), do you agree that the rich man’s economic action can have a far more positive affect on the economy in the long run than the spending of the poor people of cigarettes?

  2. If 1,000 poor people take $100 and pay down their credit card debt, will that have more of a negative long-run effect on the economy than the 10,000 buying those cigarettes?

Thanks in advance for your answers to my questions and your reaction to my answers. Also, I look forward to any considerations by Martin L.

KK

In a message dated 12/20/2010 12:08:27 P.M. Eastern Standard Time, verbingle@GMAIL.COM writes:

···

[Shannon Williams (2010-12-20.11:00 CST)]

[From Kenny Kitzke (2010.12.20.11:00EST)]

Seriously, I do not accept your supposition that people (rich or poor) put
money “under their pillow” with an intention (reference perception) to
“never spend it anyway.”

The immediate issue is not whether people put money under their
pillow. The issue is whether you believe that putting the money under
the pillow affects the economy. Do you honestly believe that if no
one spent any money for the next 60 days that the economy would not be
affected? Or are you just being ornery?

BTW, are you just going to ask me questions, or, will you answer my
questions also?

  1. The term “asset to the economy” is not an operational definition in economics to my knowledge.
    If not, why use it to try to make a point?

  2. Have you ever wondered why no life-long accomplished economists are flocking to your door
    to gain your comprehension of things economic?

I only saw you give two questions above. I did not think that they
were addressed to me, but I will answer them:

  1. Rick’s basic argument is that the current ‘study of Economics’ is
    inadequate to explain how money flows through society. You should not
    be suprised that he has questions and concepts that are not address by
    the current Economics experts. He is breaking the mold. If you are
    going to follow him, then you must be prepared to debate and analyze
    concepts that have never occured to you.

  2. No.

Thanks,
Shannon

70

[From Kenny (2010.12.20.14:00EST)]

I am not surprised that Rick believes the current system of economic science can’t adequately address money flow in the USA.

Are you surprised that I, and no other economic expert I know of, thinks it does so adequately if not perfectly?

Are you surprised that the only economic “expert” we have had on CSGNet (Bill Williams) profusely discredited the “Leakage” arguments of Bill’s father. And, Bill Williams made some advancement in understanding the economic Giffen Effect be applying PCT behavioral principles. Are you aware that at the CSG Conference in Boston, another economic professional (name I can’t recall right now) was so incredulous about Rick’s explanation of “Leakage” given at the conference, he basically never came back to CSG?

If Rick is brilliantly breaking the mold in the field of economics which he seems to not know much about, I would hope he would be persuading someone with economic credentials also interested in breaking the mold. Then, I might be inclined to listen to Rick invent economic terms and variables that are foreign to those who spend a life-time making a full-time professional living in the evolving science of economics.

While I wait, you are more than encouraged to follow Rick and help him establish Rick’s Economic Theories, like Smith, Keynes, Laffer, Friedman, (and 50 more) have done with extensive, published, documented and peer reviewed theories and data analysis.

With so many yet to be answered, explained, modeled, demonstrated questions about PCT and psychology, I would encourage Rick and you to focus your attention and awareness and consciousness on human control system behavior where I do believe the old molds have been at least cracked. I do try to follow that.

In a message dated 12/20/2010 12:08:27 P.M. Eastern Standard Time, verbingle@GMAIL.COM writes:

···

  1. The term “asset to the economy” is not an operational definition in economics to my knowledge.
    If not, why use it to try to make a point?

  2. Have you ever wondered why no life-long accomplished economists are flocking to your door
    to gain your comprehension of things economic?

I only saw you give two questions above. I did not think that they
were addressed to me, but I will answer them:

  1. Rick’s basic argument is that the current ‘study of Economics’ is
    inadequate to explain how money flows through society. You should not
    be suprised that he has questions and concepts that are not address by
    the current Economics experts. He is breaking the mold. If you are
    going to follow him, then you must be prepared to debate and analyze
    concepts that have never occured to you.

  2. No.

Thanks,
Shannon

71

[Shannon Williams (2010.12.20.20:00 CST)]

[From Kenny (2010.12.20)]

Shannon,

Not sure how you could miss them, but here were two questions specifically
for you from my post of December 19

No! I did not see them! I am so sorry. I love questions and
back-n-forth interaction like that. I am so sorry.

1.� If 10,000 poor people spend $10 on a carton of cigarettes, and a rich
business man spends $100,00 on a new lathe that performs tasks in half the
time (doubling productivity), do you agree that the rich man's economic
action can have a far more positive affect on the economy in the long run
than the spending of the poor people of cigarettes?

I believe that the richman's action will greatly reduce his need for
other people. He will no longer need to share as much of the money
that comes his way. I believe that this is an important goal that
you yourself strive for. I believe that in your vision of a perfect
world, no one would need other people. I believe that in your
estimation the richman's actions are actions that bring the world
closer to perfection.

In my world view, it is fine that the richman now sells twice as many
things to other people. Now though, he must also buy twice as many
things from other people or he must invest the money or in some other
way get the money back into society. If he does not, then he will
reduce the amount of money available for trade.

Regarding the cigarettes: Those 10,000 people give money to just a
few cigarette companies. If those cigarette companies ensure that the
money gets back into society (via employees or whatever means), then
the cigarette smokers provide a positive affect on the economy.

2. If 1,000 poor people take $100 and pay down their credit card debt, will
that have more of a negative long-run effect on the economy than the 10,000
buying those cigarettes?

The cigarette smokers stimulate the economy with their habit.

If the 1,000 poor people pay their credit card debt, and the companies
that they pay then spend the profits or invests the profits, then
they may positively impact the economy. However, if you cannot
visualize a give-n-take circle that the money follows, then the
interactions will negatively impact the economy.

Thanks,
Shannon

72

[Martin Lewitt Dec 20, 2010 1940 MST]

[Shannon Williams (2010.12.20.02:00 CST)]

[Martin Lewitt Dec 19, 2010 1303 MST]

Do you agree that if rich people did have extra $ sitting under their pillow
or they did stop investing their extra money then this would negatively
affect the economy? Also, do you agree that even if a significant number of
poor people stop spending their income, this significantly affects the
economy.

the main result of the rich not investing their "extra money" would be
the loss of their management skills or the less resources under the expert
management they might employ.

OK. What would happen if to the economy if we 'lost the management
skills' of the rich? Or if we lost the resources under their 'expert
management'?

It is nonlinear, it is like asking what if we didn't have a Tesla, or Ford, or Noyce or Hewlett or Packard or James Hill. Perhaps things would have been delayed a little or a lot. The economy might be compounding its growth off a much lower base. I wouldn't assume individuals are expendable. Or are you trying to get at something?

regards,
      Martin L

···

On 12/20/2010 12:45 AM, Shannon Williams wrote:

Thanks,
Shannon

73

[Martin Lewitt Dec 20, 2010 1957 MST]

[Shannon Williams (2010-12-20.11:00 CST)]

[From Kenny Kitzke (2010.12.20.11:00EST)]

Seriously, I do not accept your supposition that people (rich or poor) put
money "under their pillow" with an intention (reference perception) to
"never spend it anyway."

The immediate issue is not whether people put money under their
pillow. The issue is whether you believe that putting the money under
the pillow affects the economy. Do you honestly believe that if no
one spent any money for the next 60 days that the economy would not be
affected? Or are you just being ornery?

That explanation helps, I had not idea you meant that they wouldn't spend ANY money, just the money they put under their pillow. A little money taken out of circulation is easily replaced by the Fed. Of course the economy would be effected. Something similar happened in the wake of 9/11, when people pulled into their families and had priorities other than participating in the economy. Bush was mocked for calling for people to get back to their daily lives including shopping.

Martin L

···

On 12/20/2010 10:08 AM, Shannon Williams wrote:

BTW, are you just going to ask me questions, or, will you answer my
questions also?

  1) The term "asset to the economy" is not an operational definition in economics to my knowledge.
If not, why use it to try to make a point?

2) Have you ever wondered why no life-long accomplished economists are flocking to your door
to gain your comprehension of things economic?

I only saw you give two questions above. I did not think that they
were addressed to me, but I will answer them:

1) Rick's basic argument is that the current 'study of Economics' is
inadequate to explain how money flows through society. You should not
be suprised that he has questions and concepts that are not address by
the current Economics experts. He is breaking the mold. If you are
going to follow him, then you must be prepared to debate and analyze
concepts that have never occured to you.

2) No.

Thanks,
Shannon

74

[From Rick Marken (2010.12.20.1910)]

�Martin Lewitt (Dec 20, 2010 1940 MST)--

Shannon Williams (2010.12.20.02:00 CST)--

OK. �What would happen if to the economy if we 'lost the management
skills' of the rich? Or if we lost the resources under their 'expert
management'?

It is nonlinear, it is like asking what if we didn't have a Tesla, or Ford,
or Noyce or Hewlett or Packard or James Hill.

Hey, those aren't expert management. Those are competent engineers.
Expert managers are people like Carly Fiorina (from H-P) and Meg
Whitman (eBay); talentless people whose only skill is the ability to
act like they are "in charge".

There is no question what would happen if we lost expert management
like this: jobs wouldn't be shipped overseas, management compensation
would be 50 rather than 500 times the average salary of the workers,
wages would be well above minimum with good benefits and job security
because unions would be encouraged, the goal of management would be
the long term viability of the company rather than short term profits
for shareholders. In other words, get rid of the expert managers and
we would be taking a giant step back toward the US economy pre 1980,
when there was still a strong middle class made up of workers who
could support their families with ease, ie., who had control of their
lives.

Best

Rick

···

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

75

[Martin Lewitt Dec 20, 2010 2034]

[Shannon Williams (2010.12.20.20:00 CST)]

[From Kenny (2010.12.20)]

Shannon,

Not sure how you could miss them, but here were two questions specifically
for you from my post of December 19

No! I did not see them! I am so sorry. I love questions and
back-n-forth interaction like that. I am so sorry.

1. If 10,000 poor people spend $10 on a carton of cigarettes, and a rich
business man spends $100,00 on a new lathe that performs tasks in half the
time (doubling productivity), do you agree that the rich man's economic
action can have a far more positive affect on the economy in the long run
than the spending of the poor people of cigarettes?

I believe that the richman's action will greatly reduce his need for
other people. He will no longer need to share as much of the money
that comes his way. I believe that this is an important goal that
you yourself strive for. I believe that in your vision of a perfect
world, no one would need other people. I believe that in your
estimation the richman's actions are actions that bring the world
closer to perfection.

I can definitely see that. The ideal is every family having an interstellar Winnebago complete with virtual doctor and robotic surgeon and Star Trek type synthesizer and exploring the universe, and meeting occasionally to mate. The interdependency is significantly reduced. The robustness of the human species against occasional supernova is increased. Isn't that everyone's ideal? We aren't bonobos you know.

Short of that, the ideal is forest service lookout with internet and satellite connectivity, and family life.

-- Martin L

···

On 12/20/2010 7:16 PM, Shannon Williams wrote:

In my world view, it is fine that the richman now sells twice as many
things to other people. Now though, he must also buy twice as many
things from other people or he must invest the money or in some other
way get the money back into society. If he does not, then he will
reduce the amount of money available for trade.

Regarding the cigarettes: Those 10,000 people give money to just a
few cigarette companies. If those cigarette companies ensure that the
money gets back into society (via employees or whatever means), then
the cigarette smokers provide a positive affect on the economy.

2. If 1,000 poor people take $100 and pay down their credit card debt, will
that have more of a negative long-run effect on the economy than the 10,000
buying those cigarettes?

The cigarette smokers stimulate the economy with their habit.

If the 1,000 poor people pay their credit card debt, and the companies
that they pay then spend the profits or invests the profits, then
they may positively impact the economy. However, if you cannot
visualize a give-n-take circle that the money follows, then the
interactions will negatively impact the economy.

Thanks,
Shannon

76

[Martin Lewitt Dec 20, 2010 2042 MST]

[From Rick Marken (2010.12.20.1910)]

  Martin Lewitt (Dec 20, 2010 1940 MST)--

Shannon Williams (2010.12.20.02:00 CST)--
OK. What would happen if to the economy if we 'lost the management
skills' of the rich? Or if we lost the resources under their 'expert
management'?

It is nonlinear, it is like asking what if we didn't have a Tesla, or Ford,
or Noyce or Hewlett or Packard or James Hill.

Hey, those aren't expert management. Those are competent engineers.
Expert managers are people like Carly Fiorina (from H-P) and Meg
Whitman (eBay); talentless people whose only skill is the ability to
act like they are "in charge".

There is no question what would happen if we lost expert management
like this: jobs wouldn't be shipped overseas, management compensation
would be 50 rather than 500 times the average salary of the workers,
wages would be well above minimum with good benefits and job security
because unions would be encouraged, the goal of management would be
the long term viability of the company rather than short term profits
for shareholders. In other words, get rid of the expert managers and
we would be taking a giant step back toward the US economy pre 1980,
when there was still a strong middle class made up of workers who
could support their families with ease, ie., who had control of their
lives.

At least the private managers of the world must face market discipline and are easily gotten rid of when they fail. Government central planning technocrats with coercive power are harder to get rid of.

-- Martin L

···

On 12/20/2010 8:09 PM, Richard Marken wrote:

Best

Rick

77

[From Rick Marken (2010.12.20.2200)]

�Martin Lewitt (Dec 20, 2010 2042 MST)--

Rick Marken (2010.12.20.1910)--

There is no question what would happen if we lost expert management
like this:...In other words, get rid of the expert managers and
we would be taking a giant step back toward the US economy pre 1980,
when there was still a strong middle class...

At least the private managers of the world must face market discipline and
are easily gotten rid of when they fail. �Government central planning
technocrats with coercive power are harder to get rid of.

Boy, you reactionaries really do live in an alternative universe. It's
"market discipline" that rewards these turkeys for managing (through
lay-offs, mergers, off-shoring labor, etc.) to produce big short term
profits at the expense of the long term viability of the business. And
these managers are very tough to remove since the board of director's
bread is directly buttered by the short sighted actions of these
greedy toadies.

Government "technocrats" can, in principle, be removed from power much
more easily than private managers; all it used to take was an
election. But it's harder to remove the government technocrats these
days because elections can now be legally purchased by corporations.
So it is hard to get rid of government technocrats but it's not the
"central planning" technocrats (I presume you mean New Deal Democrats
like me) that are hard to get rid of these days; it's the right wing,
no regulation technocrats that are stuck in power now; your kind of
people; government workers who hate government.

By the way, it's kind of interesting that all this anti-government
crap from the right wingnuts really only started in about 2008. It
seems that we only get the "blow up the government" types when there's
a Democrat in office. When there's a Repukelican in office it's all
about "respect for the office of President" and "Patriotism" and "God
Bless America".

What gives?

Rick

···

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

78

[Martin Lewitt Dec 20, 2010 2313 MST]

[From Rick Marken (2010.12.20.2200)]

  Martin Lewitt (Dec 20, 2010 2042 MST)--

Rick Marken (2010.12.20.1910)--
There is no question what would happen if we lost expert management
like this:...In other words, get rid of the expert managers and
we would be taking a giant step back toward the US economy pre 1980,
when there was still a strong middle class...

At least the private managers of the world must face market discipline and
are easily gotten rid of when they fail. Government central planning
technocrats with coercive power are harder to get rid of.

Boy, you reactionaries really do live in an alternative universe. It's
"market discipline" that rewards these turkeys for managing (through
lay-offs, mergers, off-shoring labor, etc.) to produce big short term
profits at the expense of the long term viability of the business. And
these managers are very tough to remove since the board of director's
bread is directly buttered by the short sighted actions of these
greedy toadies.

It is short sighted because the tax system bias against equity has them loading the corporations with debt, so they have to make hay before the s**t hits the fan. If the corporations were more dependent upon equity for funding, they would have to respond to the stockholders. In the current situation, if investors don't like the management of a corporation, they don't bother with governance, they just sell and buy a better managed company. There is also some need for governance reforms so that executives and boards don't operate against the interests of shareholders, requiring stockholder votes for golden parachutes and poison pills might help for instance, perhaps poison pills should be sunsetted so they have to be explicitly renewed. Sunsetting is needed in many laws as well.

Government "technocrats" can, in principle, be removed from power much
more easily than private managers; all it used to take was an
election.

Not if they are civil service.

But it's harder to remove the government technocrats these
days because elections can now be legally purchased by corporations.
So it is hard to get rid of government technocrats but it's not the
"central planning" technocrats (I presume you mean New Deal Democrats
like me) that are hard to get rid of these days; it's the right wing,
no regulation technocrats that are stuck in power now; your kind of
people; government workers who hate government.

That doesn't sound like the NASA, FDA. CIA and EPA that I know.

By the way, it's kind of interesting that all this anti-government
crap from the right wingnuts really only started in about 2008. It
seems that we only get the "blow up the government" types when there's
a Democrat in office. When there's a Repukelican in office it's all
about "respect for the office of President" and "Patriotism" and "God
Bless America".

What gives?

The "wingnuts" have been for constitutional super majority constraints all along. It was earlier than 2008, in the 2006 election when the Repubs were ousted that it went mainstream, and with the financial crisis, it became angry. Hey, fanatical fervor for limited government is a fortunate circumstance, imagine if it had been for a centrally planned state with a personality cult leader. It is a strange patriotism on the right, because it is more committed to the constitution than to any personalities. Despite its origins, the Pledge of Allegiance, government employees lead our children in reciting in state run schools, still pledges allegiance to the "Republic" and not to any specific leader.

Martin L

···

On 12/20/2010 11:04 PM, Richard Marken wrote:

Rick

79

[Shannon Williams (2010.12.20.07:00 CST)]

�[Martin Lewitt Dec 20, 2010 1940 MST]

the main result of the rich not investing their "extra money" would be
the loss of their management skills or the less resources under the
expert
management they might employ.

OK. �What would happen if to the economy if we 'lost the management
skills' of the rich? Or if we lost the resources under their 'expert
management'?

It is nonlinear, it is like asking what if we didn't have a Tesla, or Ford,
�or Noyce or Hewlett or Packard or James Hill. �Perhaps things would have
been delayed a little or a lot. �The economy might be compounding its growth
off a much lower base. � I wouldn't assume individuals are expendable. �Or
are you trying to get at something?

Yes. I am trying to get at your image of the details. It looks like
you have not analyzed at the detail level, but that is OK. When you
answer the questions then you are performing the analysis, and that
gives me something to take into consideration. Thank you for
answering the questions.

Right now, my understanding of your thinking at the detail level is
the folllowing: If rich people put their extra income under their
pillow, then society would lose their management skills or would lose
the expert resources that they manage. Do you agree with this
statement?

My question now is, if we lost these expert skills/resources then how
would the loss manifest? Would these expert resources be unemployed?
Would non-expert resources be unemployed? Would the unemployed try to
raise money to start their own companies? Etc. How would the loss
manifest?

Thanks,
Shannon

80

A further note Richard, you make the customary accusation of patriotism against the right, yet are spouting economic nationalism, demonizing the export of jobs. You impune the character of managers in corporate power, yet don’t seem to find the intent of those often elected to office much more to your liking, blaming those elections on corporate money, apparently considering the electorate of low character or easy to deceive. Just where do the people of noble purpose who can be trusted to govern without troublesome constitutional constraints come from, and can they be trusted to obey the constitution and transfer this unconstrained power when someone else is elected?

Martin L from cellphone

···

-----Original message-----

From: Martin Lewitt mlewitt@COMCAST.NETTo: CSGNET@LISTSERV.ILLINOIS.EDUSent: Thu, Jan 1, 1970 00:00:00 GMT+00:00Subject: Re: Wealth Disparity

[Martin Lewitt Dec 20, 2010 2313 MST]

On 12/20/2010 11:04 PM, Richard Marken wrote:

[From Rick Marken (2010.12.20.2200)]

Martin Lewitt (Dec 20, 2010 2042 MST)–

Rick Marken (2010.12.20.1910)–
There is no question what would happen if we lost expert management
like this:…In other words, get rid of the expert managers and
we would be taking a giant step back toward the US economy pre 1980,
when there was still a strong middle class…
At least the private managers of the world must face market discipline and
are easily gotten rid of when they fail. Government central planning
technocrats with coercive power are harder to get rid of.
Boy, you reactionaries really do live in an alternative universe. It’s
“market discipline” that rewards these turkeys for managing (through
lay-offs, mergers, off-shoring labor, etc.) to produce big short term
profits at the expense of the long term viability of the business. And
these managers are very tough to remove since the board of director’s
bread is directly buttered by the short sighted actions of these
greedy toadies.

It is short sighted because the tax system bias against equity has them loading the corporations with debt, so they have to make hay before the s**t hits the fan. If the corporations were more dependent upon equity for funding, they would have to respond to the stockholders. In the current situation, if investors don’t like the management of a corporation, they don’t bother with governance, they just sell and buy a better managed company. There is also some need for governance reforms so that executives and boards don’t operate against the interests of shareholders, requiring stockholder votes for golden parachutes and poison pills might help for instance, perhaps poison pills should be sunsetted so they have to be explicitly renewed. Sunsetting is needed in many laws as well.

Government “technocrats” can, in principle, be removed from power much
more easily than private managers; all it used to take was an
election.

Not if they are civil service.

But it’s harder to remove the government technocrats these
days because elections can now be legally purchased by corporations.
So it is hard to get rid of government technocrats but it’s not the
“central planning” technocrats (I presume you mean New Deal Democrats
like me) that are hard to get rid of these days; it’s the right wing,
no regulation technocrats that are stuck in power now; your kind of
people; government workers who hate government.

That doesn’t sound like the NASA, FDA. CIA and EPA that I know.

By the way, it’s kind of interesting that all this anti-government
crap from the right wingnuts really only started in about 2008. It
seems that we only get the “blow up the government” types when there’s
a Democrat in office. When there’s a Repukelican in office it’s all
about “respect for the office of President” and “Patriotism” and “God
Bless America”.

What gives?

The “wingnuts” have been for constitutional super majority constraints all along. It was earlier than 2008, in the 2006 election when the Repubs were ousted that it went mainstream, and with the financial crisis, it became angry. Hey, fanatical fervor for limited government is a fortunate circumstance, imagine if it had been for a centrally planned state with a personality cult leader. It is a strange patriotism on the right, because it is more committed to the constitution than to any personalities. Despite its origins, the Pledge of Allegiance, government employees lead our children in reciting in state run schools, still pledges allegiance to the “Republic” and not to any specific leader.

Martin L

Rick