401K or bust...

[Trinidad]

I find it interesting that "job creation" is not listed in this economic system, although "full employment" is a goal of the Federal Reserve. My guess is employment in the system you describe would be considered part of production but that is certainly not a guarantee, is it? Suppose we had ultimate technology and could produce everything we need with only 10% of the current workforce - where in the system do those out-of-work people fit and how are their needs addressed?

 

Without jobs there is lowered demand. Without demand, capital is hoarded rather than invested. Changing demographics and improving technology creates a difficult scenario for the working class - and there is no simplistic solution. Regardless, job creation should hold a prominent place on any list of economic activities, IMO.

Why would job creation be a goal in itself? Suppose that we have production and distribution fully automated. Everything is done by robots running on solar power. We get to play bridge, golf or online poker all day. Why would we need jobs? The robots can provide us with "money" (probably in the form of electronic credits) to order our pizza to be drone delivered at 5:30 PM.

 

I really cannot see why job creation should be an economic goal in itself. I would think that "economic independence and sustainability" on all levels (national, local and individual) is a goal, but if work/labor is not needed to produce what we need (and want), I fail to see why we need jobs (from an economical point of view).

 

Rik

[Winstonm]

Why would job creation be a goal in itself? Suppose that we have production and distribution fully automated. Everything is done by robots running on solar power. We get to play bridge, golf or online poker all day. Why would we need jobs? The robots can provide us with "money" (probably in the form of electronic credits) to order our pizza to be drone delivered at 5:30 PM.

 

I really cannot see why job creation should be an economic goal in itself. I would think that "economic independence and sustainability" on all levels (national, local and individual) is a goal, but if work/labor is not needed to produce what we need (and want), I fail to see why we need jobs (from an economical point of view).

 

Rik

 

To understand why "job creation" is necessary one must first look deeply into the nature of money. At its basis, money is nothing more than a proxy for a unit of work, either physical labor or intellectual labor. Economic system are systems of action not inaction. In the system you propose, there is no demand as only the owners of productivity have the ability to pay for goods - and without demand, there is no reason to produce outside of personal need and use.

[barmar]

"If wishes were horses..."

 

Yes, job creation is not a goal in and of itself. It's based on the realistic assumption that people working is necessary for things to happen. If we lived in a world where all our needs could be taken care of by automation, economics would be different. But we don't -- our economic theories and policies are based on the real world, not some theoretical world.

 

Actually, that's not quite correct. Some economic theory is based on misunderstandings about the real world, such as assuming rational consumers.

[ArtK78]

To understand why "job creation" is necessary one must first look deeply into the nature of money. At its basis, money is nothing more than a proxy for a unit of work, either physical labor or intellectual labor. Economic system are systems of action not inaction. In the system you propose, there is no demand as only the owners of productivity have the ability to pay for goods - and without demand, there is no reason to produce outside of personal need and use.

No, money is a means of exchange. It is a proxy for goods or services and the value of them. Looking into the history of money one finds that many items deemed valuable - gems, precious metals, salt (the origin of the word "salary" comes from sal, or salt), etc. Coins are a surrogate for precious metals. Paper money at one time explicitly represented a note good for exchange into gold or silver. Now it is just a promise backed by the government.

 

Money has nothing to do directly with any unit of work.

 

Why would job creation be a goal in itself? Suppose that we have production and distribution fully automated. Everything is done by robots running on solar power. We get to play bridge, golf or online poker all day. Why would we need jobs? The robots can provide us with "money" (probably in the form of electronic credits) to order our pizza to be drone delivered at 5:30 PM.

 

In the year 2525...

[barmar]

Money has nothing to do directly with any unit of work.

Not directly, but indirectly. Where money is being used as a proxy for goods, the assumption is that you had to do some work to get the goods that it represents. We don't live in a utopia where you can get things without working for them.

[ArtK78]

Not directly, but indirectly. Where money is being used as a proxy for goods, the assumption is that you had to do some work to get the goods that it represents. We don't live in a utopia where you can get things without working for them.

Again, money is not a proxy for anything - it is a means of exchange. It can be used to purchase goods or services assuming that the seller recognizes the value of the money.

 

As an example, look at Bitcoin. It is in more and more circumstances a recognized currency. Yet it can be obtained through "bitcoin mining," which can be accomplished by answering questions. There are computer programs available to mine for bitcoins.

 

Yes, money is often exchanged for services (work). But money does not represent work.

[Winstonm]

No, money is a means of exchange. It is a proxy for goods or services and the value of them. Looking into the history of money one finds that many items deemed valuable - gems, precious metals, salt (the origin of the word "salary" comes from sal, or salt), etc. Coins are a surrogate for precious metals. Paper money at one time explicitly represented a note good for exchange into gold or silver. Now it is just a promise backed by the government.

 

Money has nothing to do directly with any unit of work.

 

 

 

This is why I stated one must look deeply into the situation. IMO the fact of the inherent value in some of the different types of commodities that have been exchanged as money is irrelevant - even then, work is involved in finding the gold, digging out the salt, etc. There have also been examples of non-precious commodities being used: seashells and such.

 

The very reason for the success of non-backed fiat paper money is that it is accepted - it does not represent gold or silver but it is an expression of the value of labor, either physical labor or mental labor. The fact that the past has used some valuable commodities as units of exchange is only a sideshow. The only difference between exchanges of gold-backed dollars and non-gold backed dollars is trust - but in both examples what produces the value of the money is labor.

 

Without a unit of exchange, we are left with barter. Money makes barter more accessible to all types of economic activity. But is still must, as its basis, represent labor. Without something being done there is no value creation.

[barmar]

Once upon a time, there was no money. People bartered for everything -- I gave you something or did some work for you, you gave me something back or did some work for me. But as society became more complex, this became inconvenient -- maybe you didn't have anything I needed, or you didn't have it at that moment so we'd have to keep track of the fact that you owe me some chickens. This became especially true when governments were formed and they started taxing people -- the tax on a cow herder would be different from the tax on a farmer.

 

Money was created as a way to simplify this. The barter system still underlies it, but money stands as a proxy for the actual goods and services that would have been exchanged in those days.

 

The fact that you can exchange and speculate in money all by itself is a side effect of this. It's similar to the way investments have evolved. Originally, when you bought shares of a company you were just looking for ownership, and would be reimbursed from the earnings of the company. Eventually it turned into speculation, and stock shares became a form of currency in themselves. And this then begain stock options and other derivative markets, further distancing the players from actual ownership of things.

[32519]

So where do politicians fit into the labour market? I’m not convinced that they actually add anything of value. Tensions within the ruling ANC government in my own country are at an all time high because of the steady decline in support for the party. For the politicians, getting elected or not is literally the difference between having your snout in the feeding trough (taxpayers money) or falling back into abject poverty. Assassination of rival politicians happens quite often here in order to set up a by-election for the hopeful “next-in-line.”

[Winstonm]

 

 

Money was created as a way to simplify this. The barter system still underlies it, but money stands as a proxy for the actual goods and services that would have been exchanged in those days.

 

 

 

Maybe the distinction we seem to have trouble with is this: money does not represent a rocking chair (goods). The rocking chair is the effect of the labor required to produce it. Money expresses this relationship between work and goods. So, in essence, when I buy your rocking chair I am paying for the labor to make it and I am using my labor to pay for it.

 

Even in barter, the goods/services exchanged are still representative of the labor involved to them. No good or service can come into being without first being produced by labor, either physical labor or intellectual labor.

[1eyedjack]

Even in barter, the goods/services exchanged are still representative of the labor involved to them. No good or service can come into being without first being produced by labor, either physical labor or intellectual labor.

Bitcoins?

[Winstonm]

Bitcoins?

 

They do not create themselves - any medium of exchange is simply a representative of creation, either physical or intellectual creation, i.e., labor.

 

Btw, my ideas about money are from simply thinking critically about economic transactions - when a society can use something totally worthless (sea shells on an island) as the unit of money then money must represent some human activity rather that some thing with inherent value. The only thing that makes sense is the human activity of production, i.e., labor, either physical or intellectual. IMHO.

[barmar]

Money is essentially an IOU. Like I said, people originally bartered goods and services. But sometimes you didn't have the item on hand, or the service isn't needed at that moment. So you would promise to provide it at some future time -- that's an IOU. Instead of everyone keeping a ledger saying who owes them something, money was created as a way of keeping track of all these debts in an abstract form. So instead of me giving you a piece of paper saying "I owe you 2 oxen", I give you a bunch of bills or coins that we have agreed represent the value of the oxen. Later, you can give me back that money and I give you the oxe. Or you can give the money to someone else, and they can give them to me and I'll give them the oxen.

 

It all does eventually represent work, although sometimes it can be many times removed. If you have a farm, you might have inherited it from your parents, rather than doing work of your own to create it. If you go back far enough, we're really all just trading solar energy, since that's where all the energy of life eventually comes from.

[blackshoe]

I don't think "promote the general welfare" means "become a welfare state". I do think that's what the US has become.

[ArtK78]

I don't think "promote the general welfare" means "become a welfare state". I do think that's what the US has become.

That comment was both beneath you and greatly insulting to the American People.

 

But it is typical of the attitude of the political right.

 

 

[32519]

Quote: "The business model of banks and brokers is not designed to make finance safe or sound. Too often it allows investors to maintain greedy fantasies. The industry’s high pay is a reward for nurturing those fantasies."

[onoway]

One of the recurring themes I keep running across, obviously from people who are (economic) doomsday people to one degree or another, is the gloomy statement that "all fiat currencies have failed. Each and every society which has tried them has been forced to go back to using a system based on something tangible (usually gold)." Or words to that effect. Anyone more knowlegeable than I care to comment?

[hrothgar]

One of the recurring themes I keep running across, obviously from people who are (economic) doomsday people to one degree or another, is the gloomy statement that "all fiat currencies have failed. Each and every society which has tried them has been forced to go back to using a system based on something tangible (usually gold)." Or words to that effect. Anyone more knowlegeable than I care to comment?

 

too soon to tell

[kenberg]

One of the recurring themes I keep running across, obviously from people who are (economic) doomsday people to one degree or another, is the gloomy statement that "all fiat currencies have failed. Each and every society which has tried them has been forced to go back to using a system based on something tangible (usually gold)." Or words to that effect. Anyone more knowlegeable than I care to comment?

 

To my mind, virtually all currencies have some artificiality about them .Gold really is not worth 1600 bucks an ounce, or whatever it is it is selling for. And gold is only theoretically tangible. It really is not practical to keep it. One way or another, money has worth because people expect it to hold its worth. And really, I have more faith in the dolllar than I have in a pound of gold. I do not have absolute faith in either, but if I had to choose I would go with the dollar.

 

This may sound like saying it is all built on air. Well, to some extent I think that this is so. I don't expect that tying it to gold would help.

[blackshoe]

That comment was both beneath you and greatly insulting to the American People.

 

But it is typical of the attitude of the political right.

Spoken like a true Welfare Liberal.

[blackshoe]

To my mind, virtually all currencies have some artificiality about them .Gold really is not worth 16K an ounce, or whatever it is it is selling for. And gold is only theoretically tangible. It really is not practical to keep it. One way or another, money has worth because people expect it to hold its worth. And really, I have more faith in the dolllar than I have in a pound of gold. I do not have absolute faith in either, but if I had to choose I would go with the dollar.

 

This may sound like saying it is all built on air. Well, to some extent I think that this is so. I don't expect that tying it to gold would help.

Monetary theory is apparently not as simple as it seems like it ought to be. Whether going back to a gold standard would be the Good Thing™ that the Austrians and others seem to think it would be I don't know, but it seems clear that the current fiat money situation is not the panacea that Lord Keynes and others think (or thought) it is.

[Vampyr]

Spoken like a true Welfare Liberal.

 

Right. This makes your assertions much more credible.

[Winstonm]

I don't think "promote the general welfare" means "become a welfare state". I do think that's what the US has become.

 

This website shows the actual numbers. 4.1% of the U.S. population is on welfare. Total welfare payments are less than 150 billion annually.

 

There are some genuine concerns, though. In 8 states welfare payments exceed salaries to teachers.

[kenberg]

Is "on welfare" a well-defined phrase? The site lists "on welfarte" and (more than three times as many) "on food stamps" as separate categories. Perhaps "on welfare" means recieving money under Temporary Aid to Needy Families (TANF)?

 

The definition above the numbers says

Welfare is the organized public or private social services for the assistance of disadvantaged groups. Aid could include general Welfare payments, health care through Medicaid, food stamps, special payments for pregnant women and young mothers, and federal and state housing benefits. The Welfare system in the United States began in the 1930s, during the Great Depression. Opponents of Welfare argue that it affects work incentives.

 

This mentions Medicaid and food stamps but I suppose the 12 million are for what they call "general welfare", whatever that means. And of course a big deal right now is the expiration of long term unemployment payments.

 

 

It appears to me that there are a lot of people, far more than 12 million, who are seriously in need of help. My idealistic notion of help is that it is provided to help people need less help later on. In reality, it sometimes works that way, sometimes not. It's my understanding that there has been some progress in getting people so that eventually they can become more self-supporting, but I am not prepared to argue this with numbers. Of course there will always be cases where a person simply will never be able to be self-supporting. But we should try to keep the number of such results down as much as possible. better for everyone, most especially the person directly affected.

[mycroft]

Blackshoe: I can't say what I want to say to your very blinkered thoughts, because that would be mean for no reason. However, people as far on the Overton Window as you are seem mean to me.

 

Because of the true welfare state, which the U.S. isn't even approaching (frankly, my country isn't even approaching, but at least this hole was filled), I am allowed to be the successful IT player in a niche and very desirable field. I make my company a large amount of money, a significant amount of which (but not enough), they pay me, and a significant amount of which (too much, of course) I pay the governments. Some of that (not enough, again, but you know) goes to providing the welfare state...

 

That made it possible for me to get the training I needed to be that successful IT player (at $450/semester tuition, that was extra because I was engineering, for instance).

 

Oh, and saved my life. Literally. And didn't crush me to death or bankruptcy - which would probably be the same thing, given what they saved my life from - while doing it. And which I will never be able to pay back, even if a majority of the taxes I pay for the rest of my life are earmarked for it. So I graciously pay my "too much" taxes -

 

Even if it goes to help people who think I should be dead. Of which, unfortunately, there are too many in my city and province. Some of whom play bridge, and are happy to tell me that the world should be different; more like your world.