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Economic Theories

Started by NatsuTerran, January 21, 2012, 01:32:56 AM

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NatsuTerran

I've taken an interest in the competing economic theories lately. I'm liberal on every issue I know of, but I can't stand to seek out confirmation bias. On every other issue I have been able to use science in some way to justify my views. But economic theories are like comparing between two different religions. They both seem to require faith. Right wingers will say there is no evidence of demand/stimulus economics working in history, and left wingers will say there is no evidence of supply side economics working in history. It's extremely frustrating for me because I can't come to a conclusion no matter how I look at things, and I'd hate to just side with liberals again for the convenience. I am proud to be a critical thinker.

Some key points of this I think is the great depression and ww2. It seems like the general consensus is that ww2 bailed the economy out and had it skyrocket. It also seems pretty clear to me that the laissez faire system in place before the depression is what single-handedly led to the massive bust. The general picture in my head is that consumers purchasing is too risky in such a savage economic environment because it's important to save. One small setback leads you down a slippery slope of death in a free market economy. I think this creates incentive for people to save money and subsequently result in an overabundance of supply, which starts the whole recession. Please comment on my depiction, as that is simply as I understand it in my head. I would love to know if I am accurate or not; economics isn't really my strong suit.

Furthermore, it seems to me that the increased spending from the war is what created jobs and put us back on track. But what are the objections to this? I have thought that perhaps it was just an artificial increase in employment since a large chunk of society was sent away to get mowed down on beaches, and thus wasn't a product of stimulus bailouts saving the day. But then again, we have another chunk of population in the middle east for the past ten years, and that hasn't seemed to produce similar economical booming results. From what I understand, the govt should avoid spending during an economic boom in order to have enough to weather the storm of the coming bust. The boom was the Bush years right after 9/11. So it makes sense to me that we are in bad shape due to all the spending on war during our boom. Again, correct me if I'm wrong in my assessment.

Frankly, I'm really just confused about what to even believe. Like I said, all these economic theories seem to be faith-based and it bothers me to not have any definitive answers. I personally hate the idea of a free market without the leash. I never bought the talking points of right wing fiscal parties. They tend to outright ignore human nature in my mind, such as assuming consumers are actually intelligent/informed. Overall, it makes more sense to try and steer an economy than to take the hands off the wheel and hope some "invisible force" of the free market saves you.

So let me know what you guys think. I'm trying to keep an open mind, but it's hard considering all the nonsense I've already sifted through from the right wing. Just going by the track records of how wrong I consider libertarians/conservatives on most issues, I feel compelled to just side with my liberal brethren again. But I try to keep in mind that even a broken clock is right twice a day.

Tom62

From a logical point of view, the US is bankrupt. The only force that keeps it from collapsing is the Chinese government.
The universe never did make sense; I suspect it was built on government contract.
Robert A. Heinlein

The Magic Pudding

#2
I think economic systems should serve people.
Thinking about this doesn't have to be an abstract thing, you can look at how other countries have gone about making the system serve the people.  Scandinavian countries are often cited as more people friendly societies.  

I think its sensible to assume that amongst people in pursuit of money there will be those who will cheat and steal.  Complete freedom is not possible when people cheat.  I see the worlds current financial woes as due to a failure to regulate adequately.  People in pursuit of money argued for slavery and child labour, resisted moves to make work safer, and wanted to pollute freely.  They've been on the wrong side of arguments before and they often still are.

QuoteScienceDaily (June 4, 2009) — In 2007, before the current economic downturn, an American family filed for bankruptcy in the aftermath of illness every 90 seconds; three-quarters of them were insured. Over 60% of all bankruptcies in the United States in 2007 were driven by medical incidents.

That above doesn't sound very efficient.


Quote from: Tom62 on January 21, 2012, 06:52:53 AM
From a logical point of view, the US is bankrupt. The only force that keeps it from collapsing is the Chinese government.

It helps when your currency is the world standard and you can just print more of it.




Quote from: NatsuTerran on January 21, 2012, 01:32:56 AMFurthermore, it seems to me that the increased spending from the war is what created jobs and put us back on track. But what are the objections to this? I have thought that perhaps it was just an artificial increase in employment since a large chunk of society was sent away to get mowed down on beaches, and thus wasn't a product of stimulus bailouts saving the day. But then again, we have another chunk of population in the middle east for the past ten decades, (years?) and that hasn't seemed to produce similar economical booming results.

With WWII the US had the advantage of selling to warring nations before they entered the war.  With current wars they aren't selling to others so much.

Hopefully Will will come along and add something, he's very good on this stuff.

I think most people support the Keynesian principle of spending in a recession and incurring a deficit, but aiming for a balanced budget over the cycle.  There's just a lot of opportunistic jerks on the right talking crap.

Guardian85

Quote from: The Magic Pudding on January 21, 2012, 09:27:39 AM
IWith WWII the US had the advantage of selling to warring nations before they entered the war.  With current wars they aren't selling to others so much.


Not to mention the fact that after the war the US was the only industrialized country that hadn't had it's industrial infrastructure flattened. With no need to rebuild the US economy from scratch, the US leapt ahead.
The US became a superpower after the war because they were out of the Luftwaffe's range.


"If scientist means 'not the dumbest motherfucker in the room,' I guess I'm a scientist, then."
-Unknown Smartass-

NatsuTerran

I completely agree that the system should put the people first, and not try to glorify some bastardized idealization of survival of the fittest. It makes me sick how people think healthcare should be privatized. The people that need healthcare the most are going to be the ones that have minor problems at the time being (pre-existing conditions). It's absurd to treat it like a business and it is incredibly wasteful for how many people it actually helps.

Yes, conservatives are almost always short-sighted in my mind. They never seem to look at the big picture. And it sickens me how they can possibly think that the rich/successful are that way because of merit and not blind luck, or how all their money (read: 1-3% of taxes) is going to welfare for people who for some reason have no aspirations whatsoever. The government doesn't shape a person's self-sufficiency/dependency and work ethic, the family environment does.

But concerning the whole "print more money" thing, how much of a problem is inflation? And is there a component of inflation to supply side economics as well? I know that the amount of money is irrelevant, it's all about the share of money that people hold. Does this mean that the top 1% are contributing to inflation in a similar manner with their excess share? Or is it only applicable when more money actually gets printed? Another thing to keep in mind is that the rich will often use their tax cuts to outsource, and are thus *removing* money from the system. What effects does that have? I'm largely uncertain about the effects of inflation/deflation and how they work. But I try to keep an open mind and give both parties the benefit of the doubt. It just simply makes more sense to me to allow the govt to keep their hands on the wheel rather than take their hands off it.

Conservatives remind me of religious people quite a bit. There's a certain component of "paranoia" to them. Like they'd really feel safer relying only on themselves in the passenger seat without control. Life is far too complicated with far too many inter-playing variables in order to live efficiently as an individual. For example:

Would you really want the $30 bucks per year that gets taxed towards the EPA and deal with the immense pollution that will result as an individual? Do you really think you are capable of keeping an eye on all the markets and their competitors, doing research on who is partnered with who, where they are outsourcing, making sure you don't get food poisoned with cuts to health safety, making sure you are getting an accurate curriculum because the department of education and higher ed. gets cut, making sure you aren't buying into scams in the market-place due to no regulations, dealing with torn up roads and infrastructure, making sure you don't get killed by stupid crap that could be avoided in the workplace with basic regulations, making sure you save your own social security money and aren't short-sighted of the future, making sure you aren't being price gouged when buying gasoline due to lack of regulations, and the list goes on and on.

I really don't think libertarians and conservatives truly think about the immense amount of factors that the government helps us with on a day to day basis. Life is too interdependent on so many variables to live as an island. Even if you are some rugged individualist idealist, that doesn't mean everyone else can be like that. And even if you think you can handle all of the above and then some while working a 40 hour week, what you think you can handle when breaking it down and what you can actually take care of when it all combines are two different things. Something is going to slip through the cracks, and a free market solution is to let bad things happen to good people, and *then* wait and see if the rest of the consumers are smart enough to boycott. I will never understand how people can think consumers make rational choices. People just guess or go by the most trivial details. True competition doesn't favor the best business-man necessarily. They will cut corners and screw us all.

Sigh, but that's another tangent altogether, lol.

And yes, another thing I can't stand about conservatives (although liberals probably do this too) is blatantly ignoring variables. My dad always harps about how horribly bad European countries are doing, and then blames 100% of it on socialism. What about the war and devastation these countries have been through? That may have some truth to it for Russia, but I believe most of America's luck has been through having two oceans as moats defending them from losing valuable infrastructure. Whereas the UK got blasted by Stukas, Russia got trampled by Panzers, and not to even mention the sheer amount of losses. And that's only from one war. Most European countries have been through a lot more. It's incredibly dishonest to me to cite their government as examples of a poor economy when they had to go through a ton more hardships, and *even then* they still seem to be right around the US, sometimes better sometimes worse, in terms of quality of life in the present day. But according to my dad that makes me a communist sympathizer. Another stupid thing he says is that if you give the govt an inch they will continually grow until it becomes socialism. Oh right, that's why China is becoming more and more capitalistic huh? And countries like Japan, SK, France, Germany have roughly stayed the same. ::)

I guess the thing is I am really reaching to understand fiscal conservatism. It literally makes no sense to me how it's supposed to work, and frankly it reminds me of a pyramid scheme. I've even heard arguments along the lines of "the govt controls all data and facts and has a presence in liberal colleges, therefore all of your knowledge is obsolete because it is a massive ploy by the govt to get you to become dependent on them so they can abuse their power." Lmao, I shit you not. It's exactly the kind of thing you would expect from the religious; they know that they get their asses handed to them when we go by the facts and evidence, so they try and say it doesn't count anymore and we have to go by intuition. Sounds familiar right?

But anyways, I would still like to have a clearer understanding of demand-side economics. It makes sense to  me but I am unsure about how the govt handles inflation that results. It gets pretty tiring just attacking conservative ideas, I would also like to have more knowledge on what is supposed to work. There any econ. experts in this forum that can simplify it for me?

m.condon

There are 2 distinct ways to look at the U.S. economy. You can look at in a global way, our effect and pull from other countries, compare and contrast our economies or you can look at it independently, how the people thrive, change and grow. There is a huge difference between the two. One similarity though is what i would call societal stagnation. Looking at us on a global scale you can see that we have not moved up in the rankings but have gone down or remained the same. Looking at the U.S. indepently you can see that there has been a decline of social mobility within our country, due both to an increase in the gap between the classes but also due to the many factors that contribute to that, which are ever changing based on societal values
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Tom62

Quote from: NatsuTerran on January 21, 2012, 05:41:20 PM
I completely agree that the system should put the people first, and not try to glorify some bastardized idealization of survival of the fittest. It makes me sick how people think healthcare should be privatized. The people that need healthcare the most are going to be the ones that have minor problems at the time being (pre-existing conditions). It's absurd to treat it like a business and it is incredibly wasteful for how many people it actually helps
I don't agree with you. I used to live in Switzerland, where only private healthcare exists. The government provided 1. minimum healthcare standards; 2. the rule that no company is allowed to reject people and the 3. rule that everyone must be insured (the State pays the healthcare bills of the unemployed). Due to the strong competition, the healthcare insurance cost are very low and the quality of the healthcare is very high. The Swiss system is at least three times better than what is on offer here in Germany. The mixture of half private, half government supported systems (like the German one) is a horrible, administrative, bloated and super-expensive nightmare.
The universe never did make sense; I suspect it was built on government contract.
Robert A. Heinlein

NatsuTerran

Well healthcare is like picking poisons. There's going to be flaws in every system. From what you describe of Switzerland, it sounds pretty much identical to Japan's universal healthcare system, which is compulsory. That is my ideal, but I would gladly take the kind in Germany/France over America's. I guess it depends on what you are judging by. To me, the entire point of healthcare is to cover as many people first and foremost, and then to try and do it for as little as possible. America fails massively in both regards.

In terms of percent of people covered, last I checked France and Austria are at 99%. Japan is 100% obviously. Switzerland, Spain, and Belgium are 97%-ish. Germany is 90% and America is...40%. This single-handedly renders it a failure in my opinion. America also spends the most hands down. Switzerland seems pretty model, just like Japan, going by the research I have done. But in terms of UK/Canada/German healthcare vs. what we Americans have now, there is just no way I would turn down a more European system.

Guardian85

The US health care systems biggest problem is the share-holders. The share-holders of the medical companies that want to use as little money to treat people as possible, and the share-holders of the medical incurance companies who want to minimize their payouts.

The above mentioned systems put the patient in the center. In the US it is all a matter of profits. 


"If scientist means 'not the dumbest motherfucker in the room,' I guess I'm a scientist, then."
-Unknown Smartass-