FIRE Economy Explosion Fallout -- Part I: Recession ends, depression begins - Eric Janszen

[Raz]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

there will be no universal justice and peace (i..e, no utopia), at least not until the "lion lays down with the lamb". There may be periods of great prosperity and peace, but those never last; corrupt human nature cannot be trusted and it cannot be kept down without continual supervision and exercising the wisdom that has been handed down to us from our forebearers. But modernism has chucked that wisdom down into the sewer

history is before us; how much more do we need to see that generation after generation, century after century, millenium after millenium, the same sad and sorry "soap operas" are re-played by man. Murder, treachery, deceit and manipulation ... oppression.

Human nature is with us till the end, my friends. The modern man is no different or superior at his core than the ancient man The fallacy is believing that we are "progressing" toward an inevitable "good end".
Look at the facts of history for goodness sake. Technical advances, and raised standards of living, long life spans, etc. are all good, but they have yet to change who we are at the core (and some might argue, they have served as excuses to cut the ties with the past and reason itself).

Have you been reading my thoughts?

About three days ago I began thinking about the appalling ignorance of the "enlightened" class in the United States. The "white wine, Volvo and cheese" set (I know a lot of these people) who aren't even aware of Ptolemy's Amalgest - the astonomical handbook used in the Middle Ages. He stated that in relation to the nearest star outside our own solar system, the earth is so small as to be only a mathematical point.

Yes the ancients were all a bunch of ignoramuses and we are so "enlightened". :rolleyes:

[jk]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

Technology drives this in part. Many jobs in have disappeared because of labor saving devices. The bulk of the jobs that no longer exist did not require any sort of intelligence, ambition, or creativity. These low paying jobs have been marginalized disproportionally because they are the easiest to automate.

As an example I remember an interesting project a few years ago involving warehouse automation. Nobody seemed to concerned with the fate of the forklift drivers.

i think technology and, as i said earlier, financialization and the global labor arbitrage are all implicated. but financialization, in particular, has been a political and cultural choice, not just an economic one. look at ej's lists of the 100's of bankers who got million dollar bonuses in spite of making bad decisions. and the mortgage brokers and real estate hustlers and condo flippers who made bundles. my point is that there's more to income disparities than "ability."

[bart]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

There will always be a fraction of the population that is willing to risk breaking the law for money no matter what the punishment. Many laws currently on the books are simply being selectively enforced. Creating new laws or changing penalties doesn't address this problem.

That's not the problem that I was attempting to address.

What I'm referring to is a quite broad issue. Selective enforcement is a portion of the whole area that also should have much higher penalties.

[dcarrigg]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

I further feel that any forced wealth redistribution would only be a temporary unnatural state. As such, and with all due respect to EJ, I can't agree with his call for doing a better job of wealth equalization during boom times simply because that wealth will (eventually) find its way right back into the hands of the same wealthier (more capable) people from whence it came.

In summation, it is my opinion that uneven wealth distribution is a natural state that results from a free-market society, and that a free-market society is still the best structure/philosophy for maximizing the size of the pie (strength of an economy), even if it means some inequalities OF RESULT (of wealth) are a natural side affect. The greater pie size will offset the smaller portion of said pie for most citizens in my opinion.

Respectfully, I think that you may be missing a big issue in labeling wealth redistribution an "unnatural state." Every society in the history of humanity, bar none, has redistributed wealth. Always. No matter the economic system. It simply must be done.

The older paternalistic-feudal model let the "more capable" (by birthright) be saddled with the responsibility for overseeing the "less capable" (by birthright).

The advent of the bourgeois revolution allowed the third estate to cancel much of the birthright legacy (although not through forms of inheritance and real estate holdings) and allowed for the competitive model of which you now speak.

Of course, this was before standard wage employment. Since the rise of political equality over the last century has occurred concurrently with the rise of standard wage employment, two interesting results have occurred.

1) Wealth redistribution happens de facto through an owner dictating wage to employees based on how much profit an owner wishes to keep in reserve or for personal purposes (owner can be extrapolated to shareholder).

2) Growing income inequality becomes a political issue due to political equality - through labor movements, unionization, and pressure on elected leaders (Since all of the money in the world - while it may buy lobbyists - still only gets you one vote).

So I think that your characterization of wealth redistribution as an "unnatural state" is incorrect considering the realities of living in a modern liberal democracy.

Further, I find that growing wealth inequality can actually result in shrinking the pie you speak of by causing political instability and thereby threatening property rights.

There is no use owning a mansion or jewelry store when you can't keep it safe - no matter how much more productive you are.

[radon]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

you still have not explained how, given the unchanging disparity of abilities among the population over generations, nonetheless the income distribution changes over time. more specifically, you have not addressed the fact that recently incomes have become more unequal than at any time since 1929, yet the distribution of abilities - however defined- over the population is no more extremely dispersed. what's changed?

Technology drives this in part. Many jobs in have disappeared because of labor saving devices. The bulk of the jobs that no longer exist did not require any sort of intelligence, ambition, or creativity. These low paying jobs have been marginalized disproportionally because they are the easiest to automate.

As an example I remember an interesting project a few years ago involving warehouse automation. Nobody seemed to concerned with the fate of the forklift drivers.

[radon]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

And sometimes or even frequently, capital punishment or violence or jail time or similar is far from as good as public shunning or disgrace or penalties applied to one's family or having all or most of one's money taken away, etc.

In other words, "banishment" of some type can easily send a better and more permanent message - just a "time out" with the volume turned way up.

There will always be a fraction of the population that is willing to risk breaking the law for money no matter what the punishment. Many laws currently on the books are simply being selectively enforced. Creating new laws or changing penalties doesn't address this problem.

[jk]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

If you think my arguments are "smug" or that I am implying that I am a better person than someone less wealthy, then you are missing my point completely and you are implying that I am a type of person that I most definitely am not.

I simply feel it's obvious that some people know what it takes to create (and hang onto) wealth, and some people don't. It has nothing to do with character. I, for example, am supremely confident that I could start from nothing today and, within 10 years, could be worth at least $1,000,000. It's not "smug", it's the confidence of having run two businesses (I left the family business for 6 years in '99-'05 to start a completely unrelated business to prove to myself that I could be successful without the family business safety net) coupled with the confidence of having a bit of profound knowledge about what it takes to succeed. There are many others reading this post (a large majority of iTulipers I bet) that have the same confidence. And, importantly, we don't accumulate our wealth by being crooked, dishonest, or taking advantage of others. Here's a simple example...

If the goverment gave everyone a $25,000 tax refund, most of us iTulipers (a group made up primarily of the "more capable") would buy physical gold or pay down debt or stock-up on food or in some way "invest" most, if not all of this unexpected windfall. On the other hand, I'm convinced that the vast majority of others, the "less capable" would buy a car (probably financing some of it) or take a vacation or buy new clothes or some other way to start the process of sending the wealth right back to the wealth creators. This doesn't make these "spenders" worse people, it simply makes them "less capable" of improving their position in life. They may get a real thrill out of the new car, but they're increasing the wealth disparity between themselves and their iTulip-minded, "more capable" wealth accumulators. Nobody took advantage of the "less capable" in this example, they were free to make whatever decision they wished with their $25,000 rebate. The "more capable" didn't steal it from them, however, they did own the car dealership, resort, or clothing store in which the "less capable" spent their refund.

The bottom line is that I simply mean "less capable" of building and holding onto their money, not "less capable" in character, person, charity, honesty or any other way. I remain convinced that wealth disparity is a fact of life and, yes, it is PRIMARILY a result of the concious and free decisions made by each individual. You can take money from the wealthy and give it to the less wealthy over and over and over, and the money will find it's way back to (mostly) the same (type of) people. Do it too often, or too severely, and the wealthy (which are also the wealth creators) will leave the country or retire or in some way cease to create as much wealth. You'll likely lose all of the honest and honorable entreprenuers and business owners, only to be left with the real cheats and opportunists.

you still have not explained how, given the unchanging disparity of abilities among the population over generations, nonetheless the income distribution changes over time. more specifically, you have not addressed the fact that recently incomes have become more unequal than at any time since 1929, yet the distribution of abilities - however defined- over the population is no more extremely dispersed. what's changed?

[ThePythonicCow]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

To my mind, this is the most profound statement of fact that I have ever seen anywhere.

Thank-you for the kind words.

[c1ue]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

1] It is true, I am not a minority.

Minority itself isn't necessarily a handicap - being a Jew comes to mind. But being say a black male in Oakland...now that's a little different.

2] I do NOT have a college education.

Having an official college education were it an Ivy league is helpful, but having the background of being able to go to college is equally helpful. Gates comes to mind. But again the point is having been part of a successful family business, you already have an education in many parts of running a business: figuring out cash flow, hiring practices, regulatory compliance, etc etc.

3] I did not have "friends" in the business I started or in that market.

So you never sold anything to anyone you knew? You never dealt with any advertising/accounting/local government/customers you knew?

Well, that's tough to do even if you are trying.

4] I did not have a "reputation" in the market. My family business is in refrigeration, whereas the business I started was in audio/video and home wiring.

Again, unless you've moved to a new state, it is impossible to say that your previous work had no impact.

But if you choose to think that everything you've done was value created in a vacuum, that is your own choice.

From my point of view, it is impossible to separate your past from your present unless you move to somewhere where literally no one knows who you are. In these days of LinkedIn and what not, that also is becoming really difficult - the good old boy network of yesteryear is nothing compare to the internet enabled cliques of today.

Even understanding basic accounting is something which the typical college graduate doesn't get - much less the federal/state/local business regulatory environment.

[bart]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

I agree with that bart. Were is not for societal retribution for killing others, I might well have killed a couple of people over my lifetime, and given similar provocation and the presence of a fatal disease I could see myself taking certain types out, or at least trying.

T above asked why the state should have the right to kill? My answer is some people deserve to be killed and not necessarily in a humane fashion.

I also agree with clue that some white collar crimes are so egregious, the perps should face the death penalty. Easily Madoff comes to mind.

And sometimes or even frequently, capital punishment or violence or jail time or similar is far from as good as public shunning or disgrace or penalties applied to one's family or having all or most of one's money taken away, etc.

In other words, "banishment" of some type can easily send a better and more permanent message - just a "time out" with the volume turned way up.

[rjwjr]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

I think part of what you may not be admitting is that your own circumstances are not identical to everyone else.

Being a part of a successful family business means you have reputation and connections. This matters when it comes to trust in your new businesses products, getting loans, knowing who to talk to and where to go, understanding tax and regulatory issues, etc etc

To say that you did all this without any assistance is bulls**t of the highest order. Your education, background, friends, social tier, etc etc all had influence in this.

Try doing the same as minority without a college education, friends, or reputation.

c1ue,

Specific to my situation, you are making a number of unfounded assumptions...
1] It is true, I am not a minority.
2] I do NOT have a college education.
3] I did not have "friends" in the business I started or in that market.
4] I did not have a "reputation" in the market. My family business is in refrigeration, whereas the business I started was in audio/video and home wiring.
The fact is I started from scratch as much as I could when I ventured out on my own. I didn't get any loans from family, use any connections or contacts related to the family business (other than the same accounting firm for the benefit of continuity on tax matters).

You state that I'm not admitting that my own circumstances are not identical to everyone else. I retort that your mindset is defeatist and bullshit. Everyone has the same opportunity to start a business like I did. The fact that you even bring-up the issue of me not being a minority reflects a mindset of barriers and excuses. I don't have that mindset and I am not alone. I can tell that the vast majority of fellow iTulipers also possess it.

Starting from scratch, a positive, can-do, capable mindset will outearn a defeatist, scared, excuse-ridden mindset everytime, so no matter how much of my earnings the government takes from me, I'm always going to get it back from mindsets like yours. But as I stated early in this thread, I can understand why your mindset keeps yelling for a more level playing field, government assistance, and protection from the "rich", but honestly, it would never be enough, would it?

[Jim Nickerson]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

Appropriate penalties virtually always stop or control undesired or unwanted behavior.

I agree with that bart. Were is not for societal retribution for killing others, I might well have killed a couple of people over my lifetime, and given similar provocation and the presence of a fatal disease I could see myself taking certain types out, or at least trying.

T above asked why the state should have the right to kill? My answer is some people deserve to be killed and not necessarily in a humane fashion.

I also agree with clue that some white collar crimes are so egregious, the perps should face the death penalty. Easily Madoff comes to mind.

[bart]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

I don't think there is a solution available now, due to the fact that it's human nature for a certain percent of the population to be greedy and feel a sense of entitlement.
...

Appropriate penalties virtually always stop or control undesired or unwanted behavior.

[raja]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

There is a whole lot of bitching going on here about lack of morality in business and politics, but no one is suggesting a possible answer, and I keep thinking about what is the answer, and I flat out don't know. It would seem that the answer isn't election of more who run on family values, in that "family values" seems to encompass lying a whole lot when it applies to those in politics.

I don't think there is a solution available now, due to the fact that it's human nature for a certain percent of the population to be greedy and feel a sense of entitlement.

The rich are probably not wise enough to refrain from pushing things too far. When that happens, there will be a revolution . . . mostly non-violent, but still injurious in other ways to the rich. Of course, those with similar inclinations (but previously lacking opportunity) will rise to the top to take their place, starting the cycle over again.

The only real solution I see is the discovery of a source of free (or nearly free) energy made available to every human on the planet . . . .
There will still be the usual corruption and greed, but the intensity level will be ratcheted down considerably . . . like decriminalizing drug use, which would cut the crime and violence rates dramatically.

[bart]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins - Eric Janszen

Folks whinge about the fallibility of govt. and its investment choices... I fail to see it killing any more effectively.
Someone please explain to me why state should have the right to kill.

Self defense, just like individuals.