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danielearwicker

Listed below are comments made by danielearwicker between Sunday, 30th August 2009 and Sunday, 15th November 2009.

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New name for a new economy? 12:25pm on 15 Nov 2009 @FrankSz

"It is a shame that I do not have the time to offer a more illuminating description of my position on this subject."

The real shame is that you don't have time apparently to even read my last answer, let alone write another response!

To recap: you asked "Does it then matter what percentage is taken by the government?"

My response explains why it would matter. It's there for you to read, if you want to know.

Like most people on this thread (as encouraged by Stephanie herself) you seem to get muddled. One moment you're talking about deregulation and profiteering purely within the credit system, which I agree (see various places above) is a bad idea. Money and credit has to provide a stable basis for all other economic activity. No disagreement there.

But then the next moment you're suggesting that unlimited taxation by the government wouldn't be a problem! You're talking as if the credit crunch - a breakdown of regulation in the finance sector - provides a reason to reconsider and perhaps roll back free unregulated economic activity across the whole of the economy. It's that manoeuvre that I am largely objecting to throughout this whole thread (and the original article).

To accept central management of credit is NOT the same thing as having a mixed economy. After all, central banks have manipulated the base interest rate forever. A mixed economy is a completely different thing - widespread government intervention in prices, wages and investment across the whole economy. That would be a disastrous development - we already have some of that and would do well to get rid of it.

In short - just because our governments now accept the need for competent regulation of finance, we don't need to think of a new name for capitalism!
New name for a new economy? 12:05pm on 15 Nov 2009 #142 armagediontimes

"Why do you have to assume that the super wealthy obtained their wealth through providing value to others."

I didn't. I laid out the possibilities and said which of those I condone. Either they took the wealth by force, or it was handed over willingly. What alternatives between those two exist?

In order to take people's money by force, there are only two approaches - to apply your own force (like organised crime, doorstep money lenders etc.) or to get government force to act on your behalf (like the BBC, The Royal Opera, Rover, etc.). And to repeat myself completely - I don't condone either of those.

So the only approach I condone is getting money from people through a trade, where they decide to give you the money in return for something they want. I would certainly encourage you to look at a list of billionaires and see if you can figure out whether they used forced or people willingly gave them the money. Worldwide, you'll find it's a mixture.

"In Kenya (not in the bottom 2% of nations, and never a communist state) somewhere between 17% and 32% of the population have access to a TV."

Comparisons between Africa and nations in other continents are difficult because Africa frequently suffers droughts. Also most of its nations were created only a few decades ago by the withdrawal of European colonial governments, and remain stuck in a cycle of dictatorship/corruption/coups.

Kenya is no exception, as one of the most corrupt countries in the world. Perhaps the best that can be said of Kenya is that it is "not communist", but nevertheless it has been effectively a one-party state for long periods of its history. It isn't necessary for a government to describe itself as communist in order for it to form a power-hierarchy that intervenes directly and destructively in people's lives all the time - the average Kenyan has to pay a bribe to a government official approximately once every two days! As in most African countries, the richest people are generally the ones in government.

There are exceptions, where people find a way to get around the government. For example, there are only 300,000 land-line telephones in Kenya, most in government offices. Like all services solely controlled by the Kenyan government (Kenya Telekom), it's a half-finished joke, used more to control the ordinary people rather than free them. But in the last few years mobile phone use has exploded, and already over a third of adults carries one, and practically all populated areas have network coverage. Vodafone got into this market by partnering with Kenya Telekom, but there is also Zain, a wholly commercial pan-African telecom provider. As well as accelerating economic activity through faster communication, cellphones are even revolutionizing the use of money, as there is now away to make secure payments via SMS. This kind of progress is happening mostly despite the government, which continues to be a corrupt mess that ordinary Kenyans have to negotiate around.

Africa does have some very wealthy people - aside from corrupt government officials - and many of them are founders of telecoms businesses. If the result of their efforts is that Africa is put on the road to long term double-digit growth, which is a real possibility, then Africa will be getting a very good bargain out of the situation.

Of course, some African countries have been proudly Marxist for long periods. Ethiopia, well known as one of the poorest nations on Earth, was for many years a fine example of a communist country, with collectivised farming and regular bouts of starvation, dependent on money from the Soviet Union.

Many African leaders had the misfortune to be educated in Britain in the early 20th century, so they were indoctrinated with Fabian socialism. For example, Nyerere studied economics in Edinburgh, and later became ruler of Tanzania for several decades. He instituted collectivised agriculture, based on his romantic notion that "Africans have always been socialists", effectively halting economic development in the pre-industrial age, leaving the country permanently on the very brink of starvation, mortally vulnerable to the slightest bad weather. It turned out that what Africans (like the rest of the pre-industrial human race) had always been was not socialist, but feudalist. But then it can be very hard to tell the two apart in practise.

Then there are the problems caused by the governments on other continents. Europe and the US pay subsidies to our own farmers (provided by our tax payers), which keeps more farmers in business than we naturally need. This creates a problem: too much food here, and that would drive prices down and impoverish our own farmers. The solution? Dump the goods on the world market at low prices (or even for free). Just in case there was any doubt that we don't want to trade with Africa, we also impose import tariffs on African produce. All this is caused by government intervention (taxing/spending and tariffs) on behalf of political interests in Western countries. Africa suffers from being locked out of free trade.

So of Kenya's (and other African nation's) problems, which do you think are caused by poor or overbearing government, and lack of access to free trade, and which are caused by self-made billionaires operating in free markets?

"In Cameroon only 2% of the population have access to the internet."

I wouldn't be surprised if that was an OVER-estimate. Again, you're talking about a country in which 70% of the population still has to grow their own food. It's not an example of a capitalist economy - it's more like a feudal economy, with the same ruler for the last 28 years. Same story of massive corruption. And yet it also has in recent years seen an explosion in mobile phone usage, right under the government's nose, before they had time to get involved and introduce any regulation. Like many rural Africans, they may not have a PC to by DVDs from Amazon, but they increasingly have a computer in their pocket that they can use to text payments.

Somalia is an interesting case. Prior to 1991 it was ruled by... guess what... The Somali Revolutionary Socialist Party! Since then it has been riven by civil war, stoked by the intervention of neighbouring Ethiopia (a conflict dating back to when both nations were client states of the Soviet Union), and also arguments about Islamic law. It has this year managed to form a government for the first time in 18 years, but in the intervening period it existed in a state of near anarchy.

And yet - and this is the strange bit - according to the UN's Political Office for Somalia, it still had a stronger economy than many other African countries. It's hard to think of a more damning statement about the quality of government in some Africa countries - that they might conceivably be better off if the government just shut itself down. Somalia has five small airline businesses competing to carry freight. It has the fastest growth rate in internet usage in Africa, served by 22 ISPs. If you want broadband, in Somalia it takes 3 days to get a landline installed, while in Kenya there is a multi-year waiting list. Obviously with a responsible government Somalia would certainly be much better off, but it's also a demonstration of how a corrupt government is potentially worse than no government at all.

"In Afghanistan the UN estimates that UK/US policies will result in the deaths of upward of 300,000 Afghan children..."

What you're quoting there is the result of government policies. I quite agree that they are obscene. The whole Afghan war (and Iraq war) is a terrible waste of time, resources and human lives, probably motivated in part by corruption in the US and UK governments.

"Footballers do not make a lot of money by comparison to the wealth of the super rich. You only think they make a lot of money by comparing their income to yours. We are all hurt by this. Why should Usmanov be allowed to own shares in Arsenal?"

Usmanov's history of corrupt links with government stretch back into the later years of the Soviet Union. He's the son of a Soviet government official. He acquired all his wealth by cherry picking the remnants of the steel industry of the collapsing Soviet Union. He is part of the fall-out from the sorry history of Russia, which simply went from being ruled by one kind of Mafia (the Bolsheviks) to another.

However, if he now wants to lend some of his billions to a football club, why turn it down? It's apparently one of the few legitimate things he's ever done.

But for this, and all other cases you mention, there is a very simple way to protest against perceived injustice in football or F1 racing - which is to divert your own time and attention elsewhere. That's what I do.

"Maybe I´m out of touch but I don´t see too many people requesting to be bombed. Do you?"

No, I don't. But I don't see Tesco, or Walmart, or Microsoft, or David Beckham, or Kenyan telecoms entrepreneurs, bombing anyone. I see the UK and US governments doing it.

Your problem is not being out of touch. Your problem is your inability to distinguish between people becoming rich by giving value to others (which is what economic freedom based on limited government makes possible) versus powerful people who oppress others (which is what arbitrary government intervention makes possible).
New name for a new economy? 10:14pm on 14 Nov 2009 @FrankSz

"Does it then matter what percentage is taken by the government?"

It does indeed. There are four ways money can be spent. Search on YouTube for: "The 4 Ways to Spend Money by Milton Friedman (HD)"

Further to that, consider the fact that every person's intelligence has something to contribute to economy. We all have a little bit of knowledge that is important - it mostly concerns our own needs, desires and abilities, but they are important things (to us, anyway). No government has the ability to gather all that information, much less act on it. They can only make averaged-out, aggregated decisions than treat people uniformly, ignoring the fine detailed information about the diversity of people's opinions and wants. And more importantly, that distributed knowledge is not just about what people want, but also about what they can do in order to get it - what they can generate, make, how they can improve things.

By allowing people to keep their own money, we are more able to take advantage of the intelligence and knowledge that is distributed throughout all the individuals in the economy. The more of their income people are allowed to keep, the smarter our economy will be. Those individuals will be able to make decisions using knowledge only they have, and will be able to direct whatever resources they have to get where they want to be.

A free economy has access to the combined intelligence of tens or hundreds millions of people. A centrally planned economy is as dumb as a few hundred bureaucrats, or perhaps even a single dictator.

This is why centrally planned economies grind to a halt, while free economies race ahead.
New name for a new economy? 9:59pm on 14 Nov 2009 @danielearwicker,

"communism doesn’t necessarily mean It's basically about punishing the productive and rewarding the unproductive. It would only do this if that was your intention"

Not so - the intentions (good or bad) of the people erecting a communist system cannot somehow magically flow out into the world and direct what will happen. The miserable outcome is a given, based on how the system works.

"In any event I do not propose communism"

Phew!

"I simply point out that intrinsically it is fairer that what we currently have."

How?

"My concern is not for myself but for those who come after me. Admittedly I have a vested interest being a father of three;"

Absolutely right - most individuals end up with families of their own, and so are concerned about the long term. Why should you apologise for that as a "vested interest"? Why should anyone have to apologise for defending their own interests, as long as they aren't harming anyone else?

"but more particularly I am concerned for all those who are about to inherit what we leave behind. And what have we left them? Well an awful lot of debt, which they have to repay."

Indeed - but you must be talking about government debt?

"If the young spoke with one voice, it would not be unreasonable for them to shout, ITS YOUR DEBT NOT OURS, WHY SHOULD WE SETTLE IT ON YOUR BEHALF. "

Ah, now you're talking. That certainly isn't communism - it's a tax payer's revolt!

Workers of the world unite - you have nothing to lose but your P60 (I know I put it somewhere...)
New name for a new economy? 9:47pm on 14 Nov 2009 @armagediontimes

You mention 500 individuals in the US with $5 trillion, and you wonder how they obtained it. There are basically two ways:

1. they took it by force, which is illegal (unless you're the government of course) or
2. they were given it willingly by other people who wanted some kind of goods or services in return.

The sneaky way to take advantage of the first method is to blur the line between government and private enterprise - find some way to get a politician to pull the strings for you, so you end up owning a captive market, or - as with the BBC - get a cunningly named "license fee" that guarantees you $4bn a year.

But leaving aside such malevolent trickery (which I certainly don't condone) we have to assume the second method was used. In that case, the question of how long or hard they worked isn't relevant - you might spend several hours trying to go to the toilet but that wouldn't increase the value of whatever you produced. What matters is what they can offer to others. A billionaire is someone who has given 1 dollar/pound of value to a billion people, or a thousand to a million people, etc. And their enormous wealth doesn't actually confer absolute power on them - if a billionaire wanted you to run naked down the street, they could offer you money, but it's up to you whether you accept the offer.

"Maybe you will find that poor people don´t have access to these things.. washing machines, TV´s, or the Internet"

In the dreadfully unfair US, at least 99% of households have at least one TV. The average number of TVs per household is 2.4. There are more TVs than people in the US. Across the EU in 2001, 95% of households have a washing machine. In the UK 90% of homes have internet access. If we interpret "access" more broadly, launderettes and internet cafes mean that almost no one is without access to any of these things.

As is so often the case, your critique of the free market system involves focusing on the top 2% and the bottom 2% of society, and completely ignoring the 96% in between who - despite the efforts of 20th/21st century governments to the contrary - are still far better off than they could ever be in an authoritarian, centrally planned socialist state.

"But then we need our own justifications don´t we - much better to sneer at poor people and imagine that they are poor because they are either evil or stupid - not like you or me at all."

"Sneering", like the evil character in a film, is obviously not on. So I'm quite happy to agree that we should not sneer at people. On the other hand, you have to concede that as well as luck, as free individuals we have the power to make our own decisions, so it's not *entirely* down to luck. If I claimed that everyone's lot in life was apportioned to them according to a perfect scheme that rewarded the good and punished the evil, that would clearly be nonsense. But nor would be be true to say that it's entirely down to luck.

If someone repeatedly is successful in so many of their dealings with other people, it cannot be down to chance alone - they must be doing something right. And some people's behaviour is wilfully self-destructive, while others are simply apathetic or can't see the point of studying, getting an education, or a job, or making a contribution to their community. People do vary in their attitudes, and their attitudes are to an extent born out of the signals they get from the world they live in.

Unless you are the poorest person in the entire world (at odds of six billion to one) then there is always someone else worse off than you - and the odds are the same in the other direction too. There's a great deal of luck involved, but so what? We are not actually hurt by the fact that - say - a footballer earns a lot of money. We can ignore it. We have it very easy compared to people in - say - North Korea. And so we each have the opportunity to make something of whatever we've got. I'm never going to be a prima ballerina, but I've learned to get over that and move on.

Ultimately we will never be able to extinguish differences between people, and so some will always be judged luckier than others. So all we can focus on is people's attitudes to how they can improve their own situation. If everyone who starts off with misfortune ends up bitter and apathetic, blaming their condition on their own bad luck, or that other people have better luck, then what effect do you think that has on equality?

If you require perfect equality, you will need to apply a horrific amount of force. So it has to be hoped that you will settle for less than perfect equality - that's just how it is. Fortunately, an unequal world is not actually a disaster even for its poorest citizens, if they are in fact rather wealthy in historical terms, which is exactly how it is in the UK, US and Europe today, and pretty soon in China and India.

"leverage these lies to justify bombing and killing them."

Okay, now you've totally lost me - it's governments that do that, not small businesses or corporations. What exactly *are* you complaining about?
New name for a new economy? 6:50pm on 14 Nov 2009 Dempster wrote:
"Communism may be derided by capitalists, but morally it has much going for it."

If you can say that, I wonder if you know what communism is. It's basically about punishing the productive and rewarding the unproductive. Also there's this saying "From each according to his ability, to each according to his need."

You don't really need the internet, do you? So that's going to be disconnected. And you only really need one suit of clothes. And you can wash them yourself each evening, so you don't need a washing machine - that can go. And you'll be busy washing your clothes, so no need for a TV, etc.

And about your ability - you work 8 hours a day? But really you have the ability to work about 16, don't you, if you're honest. So those are your new working hours. (And weekends aren't that necessary either.)

Perfect - now you give according to your maximum ability, and you only take according to your minimal need.

The choice is simple - either you let people keep what they produce, and trade with each other, with the result that humanity steadily makes itself better off as a whole, or you confiscate whatever anyone produces so "you" (some central authority) can apportion it "fairly", i.e. punishing the productive and rewarding the unproductive, with the result that everyone spends all their time fighting for a bigger share instead of producing anything themselves.

Leaving aside the markedly different practical outcomes, which of these approaches do you really think has the most going for it, "morally"?
New name for a new economy? 6:41pm on 14 Nov 2009 @JohnnyParanoia:
"Where to start with your litany of inaccuracies?"

Ready when you are - you don't seem to have spotted any yet.

As glanafon confirms above, "half" is a perfectly reasonable way to approximate the proportion of our incomes spent by the government. For businesses, the government taxes their earnings directly, then it taxes whatever they pay their employees as well.

You also apparently want to deny that private enterprises mostly create wealth. When did you last grow/catch your own food, build your own shelter or create from scratch any of the other helpful/enjoyable things that surround you? You live in a pile of wealth created for you by others. This is obviously true, because you are posting messages on the Internet. You are not sitting in a puddle, naked, which is what you'd be doing if you were left entirely to your own devices.

Governments have two roles, in practice: 1. enforce laws that underpin the free market, and 2. intervene and redistribute according to popular whims. The former creates the conditions in which wealth can be created by free individuals. The latter does not create any wealth at all - it just moves it around. All the actual wealth creation is done by individual people pursuing their own interests.

It is true that larger corporations are often able to out-compete small businesses; this is partly to be expected due to the economy of scale, but sometimes it happens for entirely the wrong reasons, because only larger corporations are able to deal with the overhead of regulation.

You try to equate the mountains of new and increasingly petty/pointless regulations created every year with the ancient laws against burglary and kidnapping. Oddly, I am not swayed by this line of reasoning! There are such things as good and bad laws, you see.

You trot out the standard line about immigrants pushing down the price of domestic labour. That is a nationalist argument, frequently voiced by the BNP. It makes no sense. National borders are drawn on maps by politicians who like to carve the world up according to who is in charge of which piece. But in reality, people are just people, they can move around, and economies need hard working people to keep them going.

Polish immigrants fill areas of the labour market that British "workers" refuse to take on. There is surely no noise more disgusting than a British person complaining about immigrants doing all the jobs that we can't be bothered to do ourselves. They also set up businesses (e.g. shops catering for other immigrants) and help to grow the economy. And British "natives" complain because they don't like seeing a Polish newspaper in a shop…

"People DON'T just sit and starve you know, they have these things called 'riots', and 'revolutions'."

The idiots do, anyway, especially when whipped up by political manipulators who just want to get their hands on some power.

"Governments pay employees, who spend their cash in the economy, thereby stimulating it - causing it to 'grow'".

Great idea! By the way, my ladder isn't long enough. I know - I'll saw the bottom off and attach it to the top. Hey presto!

"Rich bankers take their money in to offshore tax-avoidance schemes - they do NOT re-circulate the capital within the economy."

What do you imagine they're going to do with it, then? Eat it? Weave it into suits?

As for your understanding of Hayek - I urge you to actually read him, if you really care about any of this stuff. Start with 'The Road To Serfdom'. How on earth can you believe that the UK government has been following his advice any time in the last ten years? They've been doing the precise opposite - steadily eroding the freedom of individuals.
New name for a new economy? 8:51pm on 13 Nov 2009 I wonder why it was necessary for there to be a crisis in the banking system for Stephanie to realise that we don't really have a free market system!

Just take a look at your tax bill. Well before the credit crunch (you remember, back when Gordon Brown had abolished "Tory Boom and Bust"), the government was spending nearly half of what we all earned, nearly half of what all businesses make.

So in 2005, in a way, the government already owned half of every business in the UK, and in a way it owned half of every person. It's only nearly-half communism, and nearly-half slavery, but half is pretty bad. It's even worse when you consider that it has gradually got like that over decades, and it will probably continue to get worse as the decades pass. "Sleepwalking" would be a good way to describe it.

And yet in the other half of the economy, the private sector, there is half a free market, and it does indeed work very well, mostly left to itself. It struggles under the weight of a mountain of regulation, originally created with the good intention of stopping unscrupulous businesses from ripping people off. However, unscrupulous businesses tend to break the law anyway, so regulations don't really work on them. So the regulations just create a massive additional cost burden on the scrupulous.

Our private sector must be reasonably healthy because we continue to attract economic migrants. The Berlin Wall was built to stop people trying to leave communism - which no one in their right mind would volunteer to live under. So we have every reason to celebrate the fall of the wall, and it is crackers to suggest that we should pretend that we have no advantages over the Eastern block. The fall of the communist states was a miracle!

The reason for the credit crunch, as many people have said, is that the bankers did NOT take a risk, as they knew they were too big to fail (and had been told as much by the government). The banking sector is so intimately related with the money system itself, it has to be regulated. This is surely not a shock to anyone?

The above blog post is written rather misleadingly. The key phrase is "Especially in matters of finance". Before that, Stephanie talks about markets in general, and the widespread belief (well supported by experience) that they produce wealth if left to themselves. After that phrase, she switches to talking about financial markets, i.e. the extending of credit to other businesses. That is, and always has been, and probably always must be, a regulated special sector of the economy. Ultimately government controls the base rate, which controls everything else. And all other business activities depend on the credit supply.

So it is frankly odd to say that because the government screwed up the regulation of credit, we can cast doubt on the effectiveness of markets and personal economic freedom in all other areas of our lives. That is the implication of saying that it is "ironic to be marking the fall of communism, when less than a year ago capitalism itself had seemed to be on its knees." The only part that failed was the part that the government absolutely has to regulate. Instead, Gordon Brown said he'd ended Tory Boom and Bust, and kept interest rates low (and in 2005 Labour campaigned on the basis of how wonderfully low interests were - they made a whole poster about that, as if it was an achievement rather than an idiotic decision). That failure of government is what has endangered all other economic activities, so to praise the government for being the source of growth right now, is misplaced praise, to say the least.

In fact, another misleading claim here is that governments are responsible for economic growth at the moment. Governments aim to create a fixed structure, something static. This means they cannot cause economic growth. At best, they can stop economic collapse. They can cause inflation though, which can look like growth for a while. Economic growth has to be created by people looking for efficiencies, inventing smarter ways of doing things - Government incentivises the opposite! It rewards the wasteful. It punishes the efficient.

Also, although Stephanie claims that "economists agree" that the growth is being driven by stimulus packages, in fact there is much dissent over this. Search for 'Cafe Hayek' for some Austrian perspectives.
How Rover executives pocketed £42m 08:24am on 11 Sep 2009 If the company had debts of £1bn pounds and not enough income to keep going, clearly the whole thing had been a charade for years and the government were well aware of this.

How much public money did Labour give to Rover in the week prior to the 2005 election, to stop them going public about the imminent collapse of the firm at such an inconvenient time?

And shouldn't that money (given where it has obviously ended up) be viewed as essentially a bribe?
Time now for the space station to deliver 2:33pm on 30 Aug 2009 What would be the practical obstacles to using the ISS itself as a mobile spacecraft?

This is a bit of a "Stephen Baxter" solution, but how about using a series of unmanned missions to lift several non-reusable boosters up and attach them to the ISS. Then some supplies and finally a "flight crew". They would fire one booster to make the ISS leave Earth orbit, and another to get it into lunar orbit. Then come back to Earth again, in an "Apollo 8"-style dry run.

Once shown to be feasible, they could develop a lander. And the ISS can support maybe ten astronauts for several months. With the right extensions and some more supplies, it wouldn't be much of a stretch to take it to Mars and back.

Would make a lot more sense than ditching the thing after all the effort and cost of building it.

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