Links to Quora

Back, and it's been two whole days!  So  I'm going to post links to (some of ) my answers in economics on Quora, here, just so they're all in one place.  In no particular order.  For your convenience.

https://www.quora.com/Would-the-world-economy-benefit-or-suffer-from-a-sudden-revival-of-the-Gold-Standard/answer/Charles-St-Pierre  Mostly suffer


https://www.quora.com/Do-you-think-that-a-Robot-tax-should-be-used-to-curb-automation-taking-too-many-jobs/answer/Charles-St-Pierre

 https://www.quora.com/Is-there-a-fundamental-flaw-in-the-free-market-theory-that-leads-to-the-deprivation-of-property-and-concentration-of-economic-power-through-debt/answer/Charles-St-Pierre  And see my comment at the bottom.

https://www.quora.com/What-is-wrong-with-America-2/answer/Charles-St-Pierre


https://www.quora.com/Should-the-economy-of-a-country-always-be-growing-If-it-is-not-possible-could-it-mean-that-the-thesis-of-the-capitalism-is-wrong/answer/Charles-St-Pierre



https://www.quora.com/Why-should-I-hate-free-markets/answer/Charles-St-Pierre Why you should fear free markets


PBOC injects record $83 billion into the financial system - Asia Times  So this was reposted to Quora,  I posted a comment there suggesting that the financial system was the wrong place to put the money.  They should instead have a negative sales tax.  This would pretty immediately stimulate demand, and make everybody happier at the same time.




However, further thoughts occurred to me, which I (will) discuss above.

https://www.quora.com/Would-the-economy-run-better-if-we-got-rid-of-all-government-control-and-destroyed-monopolies-it-creates/answer/Charles-St-Pierre
Government and the role of violence.

Moving My Activity

Due to the underwhelming response to my posts on this web site, I have moved my activity here to Quora.

A few parting thoughts:

        It is important to determine what is important.

                                          

                                                                 *

        People who are paid to think, think what they are paid to think.

                                                      _______________


And:

           "It ain't what you don’t know that gets you into trouble. 

            It's what you know for sure that just ain’t so."

                                   Mark Twain  (1835 - 1910) American Author*

                                                         _____________

Finally, this little dose of concentrated wisdom from Terry Pratchett (1948-2015) British Author  

           From Carpe Jugulum, (with thanks to Elspeth Cowrie and her answer at Quora) 

"And that's what your holy men discuss, is it?" [asked Granny Weatherwax.]

"Not usually. There is a very interesting debate raging at the moment on the nature of sin. for example." [answered Mightily Oats.]

"And what do they think? Against it, are they?"

"It's not as simple as that. It's not a black and white issue. There are so many shades of grey."

"Nope."

"Pardon?"

"There's no greys, only white that's got grubby. I'm surprised you don't know that. And sin, young man, is when you treat people like things. Including yourself. That's what sin is."

"It's a lot more complicated than that--"

"No. It ain't. When people say things are a lot more complicated than that, they means they're getting worried that they won't like the truth. People as things, that's where it starts."

"Oh, I'm sure there are worse crimes--"

"But they starts with thinking about people as things."

                                                         ____________________

Thank you for your time and attention.
                           
                              Another Amateur Economist
                                                      _____________________
*I have since learned that this attribution is unlikely.

Link to: "Researchers chart rising inequality across millennia"

This link is too good to pass up, especially as our Republican Congress debates lowering taxes for the wealthy.

"Researchers chart rising inequality across millennia

Findings have profound implications for contemporary society"

https://www.eurekalert.org/pub_releases/2017-11/wsu-rcr110917.php


One paragraph: "Their findings, published this week in the journal Nature, have profound implications for contemporary society, as inequality repeatedly leads to social disruption, even collapse, said Tim Kohler, lead author and Regents professor of archaeology and evolutionary anthropology at Washington State University. The United States, he noted, currently has one of the highest levels of inequality in the history of the world."

The Purposes to Taxation

There are four purposes to taxation.

1: Destroy money. The government doesn’t need to tax to spend money. It just has to write the check. However, money it spends adds to the money supply, and this would cause inflation if an equal amount of money wasn’t taken out of circulation or destroyed. If money is taken out of circulation but not destroyed, as when the government borrows to spend, (which it rarely has any need to,) and this money is accumulated by the financial sector, the potential for inflation remains, and increases as the amount of money in the financial sector increases.

2: Discourage certain behaviors, or, through negative taxes, ie subsidy, (a word for particular forms of spending,) encourage certain (other) behaviors. All spending, of course, encourages the production of what it is being spent on. (Allowing for profits, of course.)

3: Redistribute demand, and therefore wealth. More or less egalitarian societies, such as democracies, cannot survive an excess of economic inequality. Money represents economic rights. That is, economic rights are proportional to wealth and income. Economic rights cannot be completely separated from political rights. An unequal distribution of economic rights results in an unequal distribution of political rights. This phraseology, however, is sort of a contradiction, since political rights may implicitly be regarded as those rights held, and that wealth shared, equally by all citizens in a society. Precisely: The only difference between economic rights and political rights is the method of allocation, and their resulting distribution. A more proper phrasing, then, would be that increasing economic inequality results in an increasing conversion of political rights to economic rights. A sufficiently progressive tax system can prevent this from arising, and so help to maintain a system of political rights. An egalitarian government, therefore, will tax economic rights, so limiting the scope and degree of inequality, and subsidize political rights, so enlarging the scope and degree of equality. The dynamics and stability of this process is itself interesting, but beyond the scope of this question. However, the first goal of every proto- oligarchy is the reduction of the progressivity of taxation to a level insufficient to prevent the increasing of economic inequality.

4: Validate its currency. By requiring that taxes be paid in its unit of money, the use of that money is (very strongly) encouraged in that economy. Since using a single unit of money increases economic efficiency, this increases the quantity of free resources in that economy. This increases both the rate of sustainable consumption, and the rate of wealth accumulation in that economy.

How Misleading are Solar Yeilds?-- A Link

Here is an excellent discussion by Gail Tverberg, over at oilprice.com:  How Misleading are Solar Yields?.

http://oilprice.com/Energy/Energy-General/How-Misleading-Are-Solar-Yields.html



While yes the main topic is indeed that named in the title, she also goes into an excellent discussion of Energy Return on Energy Investment (EROEI:  It is the ratio of energy spent to the energy produced. ) and its origins as a measure if energy return on human (and animal) labor.

She also deals with some important social issues when this ratio drops too low. Societal collapse seems alarmist, but others like inability of governments to collect sufficient taxes, seem to describe our current situation.  She refers to this book:

The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization
Jan 31, 2008

by Thomas Homer-Dixon

https://www.amazon.com/dp/1597260657/_encoding=UTF8?coliid=I1NCYEBK5PCSU7&colid=1U07S0MRX94Z1

Her basic point is that the EROEI on PV Panel is (Probably grossly) overestimated.  She's probably right about that to some degree, since mostly we settle for industry figures. The complementary problem for oil, however, is that domestic oil production is also heavily subsidized which means we don't really know the true cost of extraction, and neither do we know the EROEI on it. 

In any case, the EROEI is certain to be less than we have historically been used to.  This has two implications: The first is that we must devote a larger share of the economy to developing and maintaining our energy supply.  And the second is that we will not be able to live as comfortably as we are used to.  If our unequal society is unable to adapt to this new condition, it will not survive, and this would be catastrophic.

While some of the issues in measurement  of EROEI return on PVs she raises I believe can be addressed, it is an important discussion of these issues, and as I indicated above EROEI issues in general.

Generalizations in Interpreting Supply and Demand Diagrams

In a recent post Hidden Benefits of Taxes we argued that while a tax wedge reduced allocative efficiency, it increased productive efficiency.  With a tax wedge,  a portion of the remaining Social Surplus was allocated to the government, the Harberger Triangle in the diagram being discarded since it was no longer being (inefficiently) produced.  Inefficient production is a waste of resources, often irreplaceable ones.  For a very nice post on this issue, see this book review of:  "Capitalism 3.0 A Guide To Reclaiming The Commons" https://www.amazon.com/s/ref=nb_sb_noss_2?url=search-alias%3Dstripbooks&field-keywords=Capitalism+3.0 (2006) book by Peter Barnes,over at Portrait of the Dumbass

So.  Consider the situation where the source of a product, the factory or the mine, is far from the consumer, and the cost of transport is significant.
The shipper must cover the cost of transport, so the price the consumer is going to have to pay will be much higher than the shipper pays the producer.  We also observe that the quantity bought from the producer will ordinarily be the same as the quantity sold to the consumer.  And we see that if we draw a diagram of the entire process, including the cost of transport, we have an identical diagram as if we had a tax wedge:  The wedge now going to cover the costs of transport, instead of going to government coffers.

Now the wedge covers all transport costs T so we can consider it as the resources consumed to include those that are necessary to support the capital involved in the transport.  This would as well include any retained surplus. What was actually surplus and what was cost to the shipper is not yet defined by the diagram.  Where the infrastructure costs are zero,  the wedge is merely the costs incurred by the shipper.

We note that high transport costs imply that the productive costs must be low, since only the most eager and wealthy of consumers are willing to pay the high prices for the product. Productive efficiency, per se, must be high.  There is thus a large Allocative loss, but also correspondingly large deferred costs.

Now, where transport costs are low, we see that there is still a market for those goods which are produced at a higher cost, with less efficient processes, among those with a lower inclination to pay.  With a lowering of transport costs, there is an increase in allocative efficiency, a reduction in allocative loss, and a reduction of productive efficiency

However, there is another way of looking at low transport costs.  We can say that lower amount of resources given over to transportation support a smaller infrastructure.

So we can consider a rectangular wedge in any situation where there is a cost between supplier and consumer, and the quantity supplied does not change.

Now we will define a community to consist of consumers and the local businesses to support them. The supplier will input into this community.
The supplier will sell to the local businesses, who sell the input to the consumers.  The difference between the price the businesses pay and the price the consumers pay the businesses, times the quantity supplied by the businesses, is seen to support the businesses.

The interesting thing is that the size of this wedge, that is, the size of the business sector in the community, depends on the inefficiencies involved in the conveyance of the input from the suppliers to the consumers.   A totally efficient conveyance between supplier and consumer would eliminate any business sector in the community.

The point is, while from one point of view this wedge is wasted resources, from another point of view it supports the business sector of the community. And from that point of view it is not wasted at all.  Indeed, let us look at the worst possible alternative to the community:  Suppose a more efficient supplier is able to provide inputs directly to the consumer, at just below the price community business would have been able to supply them.  We see that the consumer is marginally better off, but the business sector of the community has essentially been destroyed.  Virtually the entire surplus has been absorbed by the supplier, and the surplus which would have gone into the community to support the business sector is denied the community..



Where the transport costs become low, it may become in the interests of the society to increase the tax wedge, in order to maintain productive efficiency.  And see the previous discussion at http://anamecon.blogspot.com/2017/05/hidden-benefits-of-taxes.html

Obligations of the Wealthy

What obligations do capitalists have to their society? Any? Or is it only the money?

Consider somebody who works for a living. Family. Wife and children. Hard worker. Maybe overtime. He has time and resources to look after his own affairs. But does he have time to look at the bigger picture? And even if he had the time, would he have the opportunity. Would he have the education?

Probably not. Indeed, in most cases, a person cannot look after larger interests than his own. Yet, each person is as dependent on this bigger picture as he is of his job. Indeed, one of the people he is most dependent on is his boss. His boss can make his job miserable or pleasant. He can fire him, in some places without any cause at all. Just so, his boss is dependent on his own boss, and his boss on his boss. And so on, up to the very wealthy and very powerful. And even the self employed, even the small business owner is dependent on those richer and more powerful than he is in society. After all, they are able to spend vast sums of money, and alter the government and the allocation of resources. Any one of these powerful could destroy him, the worker, the self employed, the small business man, purely incidentally, without thought, or regard. One has only to look at the hundreds, perhaps thousands, of down towns destroyed by Walmart, or the thousands of desolate factories, to know this is true.

We are all dependent on what goes on beyond our horizons. And we look to other people, those above us, those around us, to keep track of what those things are. We have to.

This dependency is a socially necessary thing. Society could not exist without it. A worker who was more concerned with the affairs across the planet simply could not give enough attention to be able to manage his own life. The same for the small business man. He must attend to his business, his community, the people he buys from and sells to. He doesn’t really have the time to spend a lot of it worrying about the larger issues.

And of course there are other dependencies. We are dependent on the behavior of our neighbors, on the politicians who are expected to serve us, on the people who provide the public services in our community. Society is a web of dependencies. So the question is: Do these dependencies carry any obligation beyond the purely economic? Do they carry a moral obligation?

And what do we mean by moral obligation? From “The Free Dictionary:”http://legal-dictionary.thefreedictionary.com/moral+obligation we have: MORAL OBLIGATION. A duty which one owes, and which he ought to perform, but which he is not legally bound to fulfill.

Now some of these dependencies are equal exchanges. I depend on my neighbors, and my neighbors depend on me. The sense of ‘duty which one owes,’ seems clear in these cases. It is not so clear in cases of hierarchy. Does a boss owe his employee anything besides his salary? Is not the entire value for both parties of the relationship summed up in the exchange of labor for money? Is not the employee compensated in his wages for all the factors of his employment including, say, the fact that he can be fired at will? If we believe this, then be believe that not only is the labor market efficient, but that it is just. But if we believe a particular market is just, how can we believe that the same market, tilted by external forces, is also just? Is the market produced by a monopoly just? And employment, we have a market defined not only by an asymmetry of needs, as are all markets, but by an asymmetry of information. Can the employee negotiate a premium on not only on what he doesn’t know, but what he doesn’t know he doesn’t know? Not only can he not negotiate such a premium, but it is unreasonable to expect him to. And even were he to, he would be in competition with those who would not demand such a premium.

The point here there is that there is a gap, which cannot be remedied by formal debt and application of law.

And what about the relationship between the wealthy and the rest of us. Let us first admit the obvious. They pretty much control the economy. That is, our welfare, the welfare of the society is dependent on their actions. Even if this were not completely the case, it is very much so. By their actions, should they choose, they can do enormous damage to society.

I am not claiming conspiracy. I merely claim a similar response to similar motivations. There was no conspiracy to outsourcing, nor is there to robotization, but damage was done, though some would say the benefits to society more than compensated for it.

But who got compensated? Did the workers who lost their jobs to outsourcing gain any share of the increased profits enjoyed by those companies who sent their jobs overseas? Were they owed any? Did the companies who fired these workers for greater profit elsewhere have any obligation to these workers, or society in general? Or just to enjoy their increased profits, to divide among the wealthy shareholders?

So do the wealthy owe the rest of us anything? It need not be a matter of owing. A parent has obligation to his offspring. But it is not a matter of debt. And in a very real sense we count on the wealthy to take care of us, to manage the economy for the benefit of us all. Why should society allow them to have and retain wealth, if it were not to the benefit of the rest of society? If the wealthy have no obligation, then they have no obligation to act to society’s benefit. They have no obligation not to inflict damage on the rest of society. So if inflicting damage on society profits them, then we should expect them to do so.

Unless they indeed have a moral obligation to the society which supports them.