"Democratic control over economics" looks like people voting for more services and lower taxes.
Austerity occurs when the cost of government borrowing becomes so high governments are would be functionally unable to operate in the medium term without brining it down.
After the finance crash the UK was increasing it's debt load at something like 200bn GBP/yr, iirc. A rate that credit-nervous markets wouldnt sustain cheaply.
Austerity is the way the ideologues talk about the consequences of economic collapse without having to learn anything.
What you never hear from them is alternative policies that address the specific economic problems periods of austerity are solving. You hear instead about ever more elaborate abstractions that ever less map on to any observed reality.
Somehow we went from "the state should be financed from taxes" to "in hard times the state should spend more than it has to quickly get back to the good times where it can pay back its debts" to "the state should spend to stimulate the economy in both good times and bad times, and as long as the economy grows fast enough it doesn't matter that this spending isn't covered by taxes".
This is in effect an infinite-money glitch, until you overplay your hand and a market upset bankrupts the state (or the state triggers hyper-inflation in an attempt to prevent bankruptcy). Austerity is just a roundabout way of saying "let's get more breathing room by abusing this infinite-money glitch less".
In an ideal world any country would go through periods of austerity to get rid of wasteful spending, before increasing spending again. But of course this is not how politics works: it's hard to sell to voters, and the things that get cut in "austerity" are often not the most wasteful things.
>>the things that get cut in "austerity" are often not the most wasteful things.
That's how bureaucrats play the game. When an organisation gets their budget cut, they don't immediately look through the services they provide to see which ones can be cut or delivered at a lower cost. The first move is to float stories about cutting their most popular services to generate adverse press for the budget cuts. c.f. local councils in the UK threatening libraries whenever they get a budget reduction (or not as much of an increase as they would like).
By repatriating all the obligations imposed by central government, such as social care, back to the central goverment budget? I agree. It's nonsense to use local democracy as a thin interposer layer on service delivery which is centrally funded.
In Berlin, we have a district called Neukölln, a poor district accumulated a lot of social and economic problems, such as high levels of violent crimes, drug abuse, a lot of homeless, gang wars etc.
The solutions for Neukölln problems devised by left-leaning municipal and city govs were absolutely fabulous, such as public swimming pools. At some point when it became clear that the district (or rather Berlin in general) is an eternal money pit, it was decided to cut its funding.
What was the response of local gov? Cut unnecessary and redundant services (sarcasm) like school security, drug addiction helping centers among others. Basically what they do is an open blackmailing, "you cut the funds, we are fucking things up", but that's how political blanket-pulling game works. Nobody likes funding cuts, so it's not uncommon that executives, local governments and various institutions sabotaging such initiatives.
Bureaucrats, there are too much of them almost everywhere so they could probably cut their own numbers. Instead they choose to cut the workers, which is why it is so hard to do anything about them and why we have too many of them everywhere.
Pretty much. And since they are seen as "better" or more "educated" than the actual workers they are most of the time paid much more, so even though technically there might be less of them, they cost quite a lot more to society, for providing "services" that very often have negative value.
I think both are important figures. Cost-of-repayment tells you how much your debt currently drags your budget down. Total debt in relation to GDP tells you how quickly you could pay it off if the cost of new debt skyrockets in the future.
If for some internal or external reason people are suddenly only willing to lend to you at 4x the previous cost, your cost-of-repayment will quadruple over the next ~20 years. Having a lower debt-to-gdp ratio gives you more flexibility on how to react to this because lowering your debt by a significant margin becomes one of the viable strategies.
From my limited understanding of how nationap debt works, it also matters a lot whom the money is owned to. If it is mainly citizens of said country, the situation is very different from foreign investors holding the bonds. Just ask Greece (which, surprisingly, wasn't mentioned in the summary, and I assume the book, as a poster child of austerity going wrong).
greece defaulted on some of its debts -- it's more about whether that's happened. To my knowledge the UK has never in its history defaulted on its debts, and I'd imagine neither has the US since at least the civil war (but i assume never).
The debts of governments of this type is about the lowest risk investments its possible to make, and they're treated that way.
But that also means severe economic crises in those countries has an outsized impact. If the US debt were to increase 12.5% of GDP YoY for years, the entire global financial system would melt down -- as US debt is basically the baseline of the entire system
A country that issues its own currency never has to default. The only question is does the country produce enough goods/services that the rest of the world wants such that the currency (or its debt) stays in sufficient demand.
The above goods and services can simply be “stability” relative to the rest of the world, such that wealth seeking a safe haven continues to choose assets denominated in they nation’s currency.
A country that issues its own currency never has to default. But Russia chose to default on ruble denominated bonds in 1998. Sometimes default is preferable to high inflation.
> A country that issues its own currency never has to default
That is really a statement without a real point. Countries can of course print currency to keep covering their debt obligations but that just impoverishes their citizens and means they lose access to debt markets (effectively).
I know people make this statement a lot, but I never really understand what point they're trying to make.
It sounds like they're trying to claim "free lunch" but I don't really know.
And yet they often do default. Look up sovereign defaults. Possible reasons why include things like “inflation is out of control because we’re printing money to cover the debt, and we’ll get voted out if we don’t do something”.
Can you name an instance in which a developed country, borrowing in its own currency, has defaulted? I can't, at least not since the end of the gold standard.
Over 40% of government debt is held by other branches of government. If your right hand owes your left hand money, your net debt is $0. That 40% should not be counted.
Mostly true which is why worrying about US debt figures is hilariously stupid. It's like worrying about China holding an unloaded water gun to your head.
When do you think this switch has occurred, though? I mean, British debt-to-GDP ratio was 200% in 1815 [1], for example, and there are several other examples that suggest that most countries had their national debts peak before the past 10 years [2].
Ironically one major contributor to government debt today and 200 years ago were war expenses.
English kings had a tendency to spend all the money on foreign wars. Take Henry VIII for example:
> Henry inherited a vast fortune and a prosperous economy from his father, who had been frugal. This fortune is estimated at £1,250,000 (the equivalent of £375 million today). By comparison, Henry VIII's reign was a near disaster financially. He augmented the royal treasury by seizing church lands, but his heavy spending and long periods of mismanagement damaged the economy.
> Henry VII had not involved Parliament in his affairs very much, but Henry VIII had to turn to Parliament during his reign for money, in particular for grants of subsidies to fund his wars.
It isn't a glitch, it is simply how the modern monetary system works. States can spend as much as they would like to. The issue for a state is what is available to buy, not whether the money is there to buy it with.
Austerity is therefore a self-defeating strategy. It does not remove wasteful spending, rather it creates more of it. What states should focus on is what are the best resources to purchase and how that spending should be apportioned, not whether there is money to spend with.
An important factor is which country we are talking about. Only the US really has access to this "glitch" by being the world's reserve currency. UK austerity was so brutal because there's no real demand for GBP, outside of trading with the UK.
I met someone in Berlin who told me that he was a member of the UK Conservative party, and that he was on-course to become a Conservative party councillor before also leaving the country. He made at least four testable false statements in that discussion (I made notes, one was for how long Cameron had been prime minister), so take this with a pinch of salt:
He openly admitted that the Conservative party manifesto of 2010 was a lie. That it was totally impossible to do what they promised about the deficit. Now, I'm not sure I remembered the manifesto pledge correctly, but even with that caveat, he still insisted that lying was absolutely acceptable. He refused to accept that normalising lies in this fashion is a problem (I wish I'd asked him about the Boy Who Cried Wolf, but I didn't) and then promptly changed the topic.
This isn't true. The UK can spend as freely as the US. Being the reserve currency has nothing to do with it. Demand for the currency is unrelated to how much a sovereign state can spend.
I think a lot of the problem with the UK is that the housing market eats the wind out of everything else's sails too. This has both the economic effect of reducing the amount people have to spend on non-housing things and also it creates the psychological malaise of 'why should I work harder just so I can pay off some random baby boomer's mortgage instead of my own?'.
If we can fix housing we can fix a lot of what's wrong the UK I think.
Sometimes the austerity is ideologically motivated rather than pragmatic. The goal is to reduce public spending, and it's often combined with tax cuts for the well-off. Public finances don't get any better, but the income/wealth distribution will change.
And sometimes austerity means stupid spending reductions that would not even qualify as cost savings under any meaningful accounting scheme. You save money on infrastructure maintenance, education, preventative healthcare, mental health services, and youth work, and you don't see any changes in the short term. But in the long term, you get failing infrastructure, a less productive workforce, higher healthcare costs, mental health issues, and more crime.
Instead of cutting fixed spending, it would often be less harmful to cut discretionary spending – the programs the current government uses to achieve its policy goals. But of course no government wants to do that. People get into politics to change something, not to manage the existing system.
In economic terms, bond-buying and tax-paying are the exact same thing, real consumption forgone by current workers. IMO, the profligate deficit spending of the baby boomer generation's prime working years is a symptom of massive demand for government bonds rather than the cause of some moral failure by leadership.
Like, it is true that oversupplying government bonds creates some really nasty economic effects, but so does undersupply. The government budget is not a household budget, and it's simply not true that their debts can or should be paid back.
> bond-buying and tax-paying are the exact same thing, real consumption forgone by current workers
No. US Treasuries are one of the most liquid and easy to borrow against assets in the world. When institutions buy Treasuries, they use them as collateral to borrow against with new money created by the banking system. This money is then spent in the real economy. That’s very different from taxes.
> Most macroeconomists now agree that the austerity programme pursued by the Coalition Government in its first two years was both too severe and unnecessary and set back the economic recovery which was underway in the first half of 2010. The Office of Budget Responsibility confirmed that the austerity programme reduced GDP, while the Oxford economist Simon Wren-Lewis has calculated that the Coalition Government's austerity programme cost the average household £4000 over the lifetime of the Parliament and severely damaged those public services which were not ring-fenced.
> set back the economic recovery which was underway in the first half of 2010
This was really obvious at the time. The economy was recovering slowly, and then the Tories got elected and induced a recession. It kinda amazes me that this wasn't obvious in advance of their actions, but whatevs.
It was also what all three parties proposed. I remember an IFS report showing actual cuts were less than both Tory and labour plans and slightly more than Lib Dem plans, but if you go back to 2010 you had a labour chancellor promising to cut more than thatcher.
It’s common in hindsight to say “if only labour were elected”
Also worth remembering that in 2015 the country said “we want more Tory”. The coalition wasn’t Tory enough.
That wikipedia article is outrageous, just look at its sources list -- it's almost entirely a rewriting of guardian articles.
I have never seen something so revisionary on wikipedia. This is just left-wing propaganda.
There is zero analysis of the macroeconomic context, zero analysis of austery as an economic policy. Just an endless series of newspapers attacking the government in power for the economic consequences of a economic crisis.
One of the most egregious misrepresentations of an issue i've ever seen. Its just writing up what newspapers said; i can't believe it.
Reading that article can you answer: (1) what the economic policies called 'austerity' were? (2) what the economic aims of these polices were? (3) whether these aims were successful? (4) why were these the aims? (5) what were alternative policies?
I think the time has long past when you could rely on wikipedia for a disinterested viewpoint on anything political or subjects that are part of the "culture wars".
An encyclopedia is a place where secondary research on a topic by disinterested professionals is summarised.
You could not submit to an academic journal with most of your controversial claims referenced to newspapers. An enclopedia operates at a higher standard of research than academic journal articles -- it should summarise books/etc. about those articles.
This article is essentially poor-quality primary research which quotes MPs and newspapers to argue a case about austerity. That's fine for a BA sociology degree -- it's bad for a MSc, it's disqualifying at PhD level, and has zero plac e in an encylcopedia
Austerity is often times the least bad option when compared to hyperinflation and a complete withdrawal of creditors. Neither were realistic scenarios for the UK, so I agree that austerity as a ideological goal like it was in the UK doesn't make any sense. As far as successes go, Greece and Spain can be considered successes as they were legitimately at risk of losing their Eurozone status.
Reduce the deficit sufficiently to promote confidence in the market for UK debt in order to deliver growth in the economy.
You claim this was overwhelmingly successful?
How? Where would we see evidence of success? Would it show up in a change in bond yield trajectories post GFC? (It doesn’t). Would we see a change in the growth rate of the economy post GFC? (We didn’t).
So how is it possible it was not just successful but overwhelmingly so when we can’t detect the proposed benefits in the observed data?
It was to reduce the increasing deficit from +12.5% GDP YoY to flat, in the middle of essentially a "deficit crisis" caused by the need to bail out the financial industry to prevent a whole-economy crisis.
Arguments can be made about how far and how fast the deficit needed to decrease; but the policy was overwhelmingly successful.
The government was able to maintain non-trivial deficits for a decade after the policy -- precisely because of it. Only people with zero understanding of the issue maintain that there was any non-austerity alternative.
Labour's policy was "less" not different. There was no non-austerity option for the UK, with such dramatic deficit increases -- ie., 25% of GDP in <2yr.
Few other countries experienced this. The US did not.
The financial crisis should've caused a depression in the UK, and a total wipeout of our economy in a whole economy crisis. The bailouts prevented this, then austerity prevented the ensuing deficit crisis.
Both policies were not about "growth" they were about preventing total economic metldown in the UK. We were the worst country in the world affected, these conditions were unique and severe.
>> Mr Deputy Speaker, let me now turn to the measures in the Budget designed to deliver this accelerated reduction in the structural deficit.
The coalition Government believes that the bulk of the reduction must come from lower spending rather than higher taxes.
The country has overspent; it has not been under-taxed.
Our approach is supported by the international evidence, compiled by the Organisation for Economic Cooperation and Development, the International Monetary Fund and others, which found that consolidations delivered through lower spending are more effective at correcting deficits and boosting growth than consolidations delivered through tax increases.
>> “and boosting growth”
I’m having a hard time seeing this as anything other than intellectual dishonesty on your part.
Given this is HN, I’ll be curious instead of judgemental. Help me interpret what you said about austerity had nothing to do with growth?
Hindsight is wonderful, in 2010 the choice was austerity, austerity or austerity, there was no alternate voice, but that doesn’t mean it was the right move
You can see that it was indeed increasing through 2008/2009, although that was largely a one-off thing because of the financial crisis.
The problem is austerity didn't work, and the reason is that it also reduces economic growth (slowing growth of the demoninator - GDP). Without austerity, if we'd spent money on infrastructure, we'd likely have had higher growth, reducing debt to GDP that way.
Plus the fact is the markets were lending the UK money at 1% for very long terms all through the 2010s, so funding a large debt to spend on infrastructure would not have been difficult.
The markets were lending money at that rate because of austerity.
Austerity isnt about reducing debt, it's about reducing borrowing costs.
UK debt went from 50% GDP to 75% in two years by your own graph -- you'll notice that rate basically flatlined when austerity was introduced.
Increasing your debt load by 12.5% *GDP* YoY is an insane situation to be in; austerity was part of the policy response which enabled the UK to continue to borrow.
Ideologues on the left havent address this, as far as i'm aware. Preferring to blame austerity for one of the worst economic crises in modern history.
I think even people against Austerity agree that governments may have to temporarily rein in some spending following a crash or time of economic hardship.
In the UK, however, austerity has been a persistent policy for over 13 years. Low taxation, low spending, persistent erosion of workers rights. No spending even when times were better, leaving it all the more fragile the next time.
Compare to the US, Canada and elsewhere, which performed strong austerity measures immediately following the 2009 crash, then dialled them back - as per economists recommendations - and recovered much faster than the UK.
Taxation in the UK is currently at the highest levels in recorded history. It is not true to say that "taxation is low". It is also not really true to say that government spending is low recently either, so it is a bit of a myth that there's some ongoign "austerity" in all the 15 years since 2009. In addition, we just came through a pandemic where a large portion of the population were paid to do nothing. The "austerity" narrative just isn't reflected by facts.
What's going on is that the UK population is greying and far older than it once was, and huge portions of the UK budget are going towards paying pensioners, the NHS etc. Worse, the triple lock ensures that this part of the UK budget is essentially inflexible. The perceived "austerity" is jsut a reflection of demographic trends.
It's high in historical perspective because the austerity years of the 2010s and Brexit choked growth. But we could still choose to spend more on services without being unusual in European terms
This year, the tax burden is higher than the OECD average for the first time since 2011[1]. As the graphs on that page show, the UK's tax burden being below the OECD average - and certainly lower than France/Germany - is the general rule since the '80s.
In any case, the low rate of taxation is only one element of the persistent austerity policies that have been in place since the 2009 economic crash.
In terms of government spending, we have easily-obtainable data on the NHS[2] and those available by thinktanks like IFS[3]. The NHS spending is low (and again consistently lower than our peers in Europe). I find the charts from the IFS interesting because it doesn't show a lot of change in spending year-on-year (relative to GDP) since the '90s, except for the catastrophes.
But the table at the bottom is very interesting. Health £ spending up, but equivalent to 2-3% increase YoY, which barely keeps up with inflation. Education, public order & housing spending are all DOWN in absolute terms, forget about inflation. Defense, social security, transport all increased at a rate less than inflation. (Obviously a huge increase in debt spending recently due to Covid measures.)
That there is long-term austerity exemplified. No myth.
The top income tax rate was 90% for decades until it dropped to 75% in the 70s (although you could still end up paying 90% in some cases even then). Today it’s 45%
Since 1965 companies pay a much lower corporation tax.
Tax to GDP has been a little bit up and down but only recently did it breach the 1970s peaks.
I don’t think this matches with “ Taxation in the UK is currently at the highest levels in recorded history.”
> Until 1965, companies were subject to income tax on their profits[11] at the same rates as was levied on individual taxpayers
> In addition to income tax, companies were also subject to a profits tax, which was deducted from company profits when determining the income tax liability
> At the time of Hugh Gaitskell's 1951 budget, the profits tax was 50% for distributed profits and 10% for undistributed profits.
> The tax rates fell to 22.5% on distributed profits and 2.5% on undistributed profits by 1957
This means that in 1951, if a company had a profit of 100, the taxes were *at least* (I'm using undistributed profits, not taking into account higher rates, etc.etc.) 52.75
(10% of 100, plus 47.5% of the remaining 90% of 100)
Decreasing the purchasing power of the currency is also taxation. For example, a country might want to increase its money supply to nominally satisfy obligations to old people, while the supply of labor and goods does not keep up with the demand. Manifests as higher prices and longer wait times.
Or the country can experience a reduction in the quality of goods and services being delivered, for example instead of being able to see a doctor, some portion of the population is now expected to consult with someone less qualified.
It's usually the opposite. In a crash or time of hardship you want to spend more. Austerity in a downturn creates a virtuous cycle. That's the insight of Keynes and what got the world out of the Great Depression.
The austerity policy you're suggesting has been overwhelmingly found to have failed almost everywhere it's been tried. Cutting spending in a downturn creates slower growth, which makes it even harder to recover. The book in OP argues that austerity is not about recovery, it's about disciplining workers.
Yeah, I do agree. I meant that there may need to be a temporary refocus of spending (with the emphesis on temporary) during the difficult period, which may include some cutting-back on development, spending instead of expanding infrastructure, etc.
Totally agree that austerity as practiced in this country is dogmatic and about keeping people in place.
> governments may have to temporarily rein in some spending following a crash or time of economic hardship
The most popular theory (and one with some quite good empirical support) is that government should increase spending exactly following a crash or time of economic hardship. That has been the mainstream economical thinking for near a century.
What people mostly disagree with each other is what to do on times of strong growth.
This is true, but we still tax/spend less than many European competitors. The reason tax is historically high (for the UK) is that we've had no growth and our population is getting older.
> I think even people against Austerity agree that governments may have to temporarily rein in some spending following a crash or time of economic hardship.
It is only a "one off thing" in hindsight. I recall well the UK deficit was 14% of GDP each year. That is not sustainable. The point you are missing is that if the government had said "YOLO, lets just increase the deficit to 20% and invest in infrastructure!" then the markets would certainly not have continued to lend money at 1%. That's the path towards an Argentina style situation.
Once you've bailed out the banks, then what? You're going to bail them out again? (No, because they're now publicly owned). There was no reasonable scenario where that was not a one-off increase in the debt.
We were borrowing at 1% (basically free money because inflation was higher) and we might have spent that on growth policies, but George Osbourne thought this was a good way to reduce the size of the state, a political decision.
> What you never hear from them is alternative policies
You’re not familiar with Keynes I guess. There are many many well thought out alternatives to austerity that have been shown to work. The problem with them is it’s harder to cushion particular classes from having to bear some of the cost.
Neither are you, I guess. Keynes also suggested running surpluses in times of growth to counteract it, but it seems policy makers didn't really get that half of it. That the results of "Keynesian" economic policy as practiced by politicians and actual Keynesian policy differ in outcome is about as obvious as the fact that alternating the gas and brakes in your car will have a different result than smashing the accelerator and never letting go.
There’s plenty of criticism of Keynes and how his practices are implemented (or whether they should even) but that’s quite a different thing to saying that nobody has any alternatives.
> "Democratic control over economics" looks like people voting for more services and lower taxes.
The services part seems clear but "lower taxes" makes me ask what kind of taxes are we talking, income tax, sales tax, corporate tax, capital gains tax, corporate tax credits, import duties, national insurance (UK government health service levy), wealth tax, etc, etc, etc
There are so many taxes and 100 more exceptions and loopholes and so many vested influences pushing for changes that benefit themselves. The current political processes aren't capable of a systematic review and revamp of all of the taxes.
> Austerity occurs when the cost of government borrowing becomes so high governments are would be functionally unable to operate in the medium term without brining it down.
That is not why austerity happens, at least in recent history:
Austerity is a policy choice, it has nothing to do with the cost of borrowing. States that control their own currency, like the US, the UK, Japan etc. do not borrow money at all. The term is simply not applicable.
During the COVID crisis deficits grew rapidly and the cost of borrowing did not change. This only happened after the crisis was over, and as a policy choice, not necessity. Japan never increased interest rates and its deficit has continued to widen.
The credit markets do not sustain the UK. It is the other way around. Without the UK state there would be no credit markets, at least not in GBP.
I think the core problem is that it is your thinking that does not map to any observed reality.
"Austerity occurs when the cost of government borrowing becomes so high governments are would be functionally unable to operate in the medium term without brining it down."
Given that the 'cost of government borrowing' is a policy setting, there can therefore never be a case for 'austerity'.
See Japan for details.
There is no traditional market in government bonds. The only aggregate alternative to the fixed rate is the expected path of the floating rate and the floating rate is set by the central bank. Which we can easily set permanently to zero once we reject the failed 'twin star' economic hypothesis and accept the 'price anchor' hypothesis.
Eh, that didn't work out so well for Greece. Admittedly not borrowing in their own currency, but it's still possible for government bond auctions to fail to clear.
"Austerity is antidemocratic", indeed because a democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.
Insert any other group and you realize how stupid that statement is.
> Indeed, because an oligarchy cannot exist as a permanent form of government. It can only exist until the billionaires realize that they can bribe themselves largesse from the public treasury
There is always an equilibrium point. The oligarchs won’t suck the state’s teat to the point where the state collapses.
From a European perspective, I would not say it's antidemocratic if parties who are pro-austerity get elected while being transparent about their policies.
However in my opinion, there is a great lack of "class consciousness" from the people who vote for these parties, in a sort of Stockholm syndrome, or because people easily fall prey to the sensationalist idea that you can apply household economics to macro-economics.
Being transparent would be a start though. The tories in 2019 were still making Red Bus promises about how Brexit would save us all billions we could spend on the NHS.
Yeah most people will percieve austerity as saving. As something like when they stop paying netflix or buy less of the expensive cheese they like.
Inherently a good thing that will lead to having more money in future.
Then just say people are stupid and abolish voting. If the public doesn't have the mental tools to evaluate the simplest of electoral programs then what's democracy even good for?
It's probably good for a lot of things, but clearly has drawbacks everyone intuitively agrees on (no one would want medical doctors to democratically seek advice from their patients, at least not on complex decisions like which medication to take)
The "10% less democracy" concept (https://www.sup.org/books/title/?id=28088) is interesting here, and frames the question as "when and how much" as opposed to "democracy or no-democracy"
Without all the financial abstractions and acronyms, they ultimately work like that. A household is a micro-economy that's connected to the outside world. The productive working members contribute to the well-being of the household. The children, the elderly or the disabled require spending and support. The home needs spending in order to keep it a safe and comfortable environment.
That's like saying a human and an amoeba are basically the same because one is a micro-organism and the other is, well, also an organism. They've both got inputs and outputs within an ecology! Surely the rest is an implementation detail...
A psychologist doesn't learn anything useful from studying amoebas. A macroeconomist can't apply lessons from individual household economics either.
Let's say that a place like, say France, maps to a family of six (Mother and Father, 2 children, 2 elders) living in an apartment on the second floor of a 5-floors/ten apartments building.
- Can France "extract" the tiles from the bathroom and sell it to Switzerland on floor 4th?
- Can France tax movement across the section of hallway directly outside their door? Who takes care of enforcing this, and protect "our sacred hallway section" from expansionistic Germany on the other side of the stairs?
- How do the two working adults in the household make sure that a portion of their income will be invested in order to sustain them when they are too old to work?
- The daughter is 16 - will she be forced to emigrate to the 3rd floor when she reaches working age?
- How is she supposed to send some money back home? maybe Switzerland can help, but of course they will get a share of it for the service...
I think there are things in common and others not. For analogies, like models, I guess there is no right or wrong, only useful.
Some of your examples indeed do not work with the analogy. Others might. For instance, that daughter who is 16 might babysit somebody‘s children for a payment and buy some shein clothes with it, instead of getting money from her parents. Or France can definitely sell their used washing machine to Swiss students on floor 4th, who might pay a bit to not rent a van. In some countries living blocks split cleaning common areas between neighbours, and replacing lightbulbs or painting the common areas provokes heated arguments at neighbours meetings, not unlike some EU decisions.
These are just examples. I agree with your point. I just do not agree it is generally wrong unless we talk about a specific example. You provide a few where indeed it is wrong.
My point is this: if you make a 1-inch model of a cruise ship (real length, ~1000 feet) and put it in a water tank which is approx. 120 feet in length (1/12000 of the distance between Rome and the eastern coast of Sardinia) you can then make your ship model move at a decent speed just by dropping tiny quantities of liquid soap right behind the stern.
How much soap do you need to replicate the effect with a real boat?
The different scales (not only in terms of space/number of inhabitants, but also in terms of time) at which a household operates, compared with even the tiniest nation (Vatican City: 19 km2, 510 inhabitants, >1000 years of "life") invalidates any attempt to try to derive anything useful from the household model, precisely like the soap experiment I described above.
I agree with you and the examples you mention. At the same time I am not disappointed that the model/analogy does not work in all cases. That does not mean it is not illuminating in others.
Following your example (kind of, with planes). Dont people use wind tunnels to test aerodynamics of planes? Miniature planes/boats might be useful to detect design flaws early on. In that sense you can derive useful things from that model. The same model of a small boat will be useless to decide the route, the weather, or the electronics on board.
- a 1-inch cruise ship (model) can definitely be moved by 1 drop of dish soap.
- 12000 drops of liquid dish will have no effect whatsoever on a full-sized cruise ship.
Let's go back to our "State economy is just like a household economy".
If you google for "major expenses of local government" you will get something like:
"public school system, law enforcement, fire protection, public facilities , and public health."
do you really believe that the household budget for "fire protection" or "law enforcement" is comparable (as a percentage of total expenses) to what a state spends?
(According to the California State Controller's Office, in the 2021-22 fiscal year cities spent $14.82 billion on police expenditures, making up the highest category of spending at 14.8% of total expenditures in the state)
Does the average household spend 15% of its annual budget on enforcing corrective measures to be applied to the family itself?!
Same applies to income, actually. States have taxes, and may have some sort of natural resource that they can sell or "lease" to private companies for a fee.
Something that is really difficult to shoehorn in something remotely similar at the household level.
The only "insight" we can obtain from something like a "household economy model" is that if you spend more than what your assets are you will end in debt.
Not exactly unexpected.
But any kind of measure you might find useful at the household level (e.g.: everyone will fast by skipping 1 meal / week, reducing groceries bills by 7% - nothing to sneeze at, at the household level: https://www.statista.com/statistics/237211/average-food-expe...) will not really work at the city level, let alone at the state level.
And it is not that difficult to understand why, either: enforcing the new law "absolutely nobody will have lunch on wednesday" will be complicated and expensive to enforce at the state level, and require more resources to be devoted to this new task, possibly resulting in a negative gain.
I agree with you with it on the scale example. Thanks for the detailed explanation.
Where we disagree fundamentally is that you are finding that the analogy is wrong. But wrong for that? For the scale example it is wrong. For the aerodynamics testing on a little model it is not. From that, I conclude that it _can_ be useful, which is a different claim that it _always_ is.
I'd say, the smaller the country is, the more it does work like you househould budgets. Very small countries using somebody else's currency, works very much so.
Whatever you do, it won't affect the world very much.
For behemoths, very much not like a househould budget, because whatever you do influences the world a lot.
> I'd say, the smaller the country is, the more it does work like you househould budgets. Very small countries using somebody else's currency, works very much so.
The size isn’t that relevant. The degree of the autonomy over one’s monetary and fiscal policy is much more important. It certainly applies to big economies like the US. But it also applies for other economies that issue their own currency. At least it does for goods that are produced domestically
For example, if the US and Eurozone decide to increase their interest rates this causes capital to fly from smaller countries with an independent currency, which causes their currency to devalue, which (generally) causes inflation, which forces them to increase their interest rate.
Yeah it should not have an effect on locally produced goods, but unless you're both an industrial and an energy power house you are going to import a lot of stuff so you still get inflation.
I would not overstate their complexity. State economy is different from your household budget but its understanding is well within the abilities of an average college graduate. The problem is that most of economy experts are in fact snake oil salesmen so they work hard to undermine that understanding while pushing their own agenda.
The fact that there are still schools of though that call for abolition of all tariffs and subsidies as inherently bad for economy is telling. That's the economy variant of belief in perpetuum mobile.
Can you (or anyone else) recommend reading materials for me to understand 1) how state economy actually works 2) what austerity actually is and why it does/doesn't work? As someone who was a little kid in 2008 austerity is just a mean tory boogyman that made my life more miserable and required everyone to treat people who needed social welfare subhuman but I don't really understand what the actual thinking was behind it.
Yeah they work like a criminal's household budget. They steal every cent of income they have and when that isn't enough (because they are spendthrifts) they counterfeit more.
But do people generally vote for parties based on their attitude towards the budget/austerity plans?
Because my experience is that the big parties in most countries cover so many topics in their political agendas that people are voting for them for all manner of different reasons. Sometimes it's the social/moral aspect that they care about more than the economic one, and sometimes vice versa.
It's unlikely any conservative will vote for the more left leaning party based on a dislike for austerity, and vice versa.
Democratically elected parties can transparently enact anti-democratic policies. If my local democratically elected fascist transparently has "do not allow group x to vote" as an intended policy, then that policy is anti-democratic, even though it may be popular.
The argument the article makes is not that austerity measures are unpopular, it's that they're anti-democratic.
> However in my opinion, there is a great lack of "class consciousness" from the people who vote for these parties
After those voted come to power, nothing prevents them from flipping on their agenda. I've seen it happen countless times, and probably so did you.
If only there were mechanics (a la Liquid Democracy) to recast votes in collective actions without the initiative of the government, but by way of constitutional rights. Politicians would be more interested to keep themselves aligned to their electorate, or lose their comfy job before their term would normally end.
Politician as a career, and unconditional 4 year terms seem like a problem imo.
I would say there are two problems here that are different: intervention as it stands can regulate in favor of a few groups of people. More intervention can easily lead to more corruption.
As for austerity: reasonable people do not spend beyond what they have and if they do they do it in reasonable ways: things with an expected return on investment and with limited, calculated risk.
Yet what I see is increasing intervention and out of control debt.
Starting from these two premises...
I do not think austerity is antidemocratic in itself. What I see is that a high degree of intervention ends up doing a cost transfer to normal people.
But that would be a problem of hyperregulation, not from austerity itself IMHO. After all, I would say the correct philosophy is to spend what you have and measure the risk every time you go beyond that. Sometimes you have less, sometimes you have more, but I would not advice any person, business or state to go out of control about this. However, a state incentive is different from the former two, since they continuosly transfer costs by the force of law to unrelated people. Namely, I do and you pay, be it by friends regulation or by direct expenses and taxes increases.
> As for austerity: reasonable people do not spend beyond what they have and if they do they do it in reasonable ways: things with an expected return on investment and with limited, calculated risk.
It seems to me that this is becoming harder and harder, and consumer debt is pushed harder and harder, people are forced to take on more debt as costs of living increase. No matter how reasonable you are, you need a place to live and food to eat.
Not in the sense that the debt can be pushed further for something an individual could not do for a more long-term return.
But at the end, you have to measure gow much you are risking.
I would say it is the same, just the scale is different and allows states push for policies probably not at the reach of normal people.
But even those should be managed with care, because what someone should be looking for long-term is sustainable services. Meaning that debt cannot be infinite.
At the time your creditors do not believe you... you have a problem. Just look at Argentina in the last 20 or 30 years for an example.
What is particularly evil is the fact that people who take our money have basically no responsibility on the results and can take it from us through laws but they benefit from those in other ways.
I have doubts about the idea "spend what you have". It is framing wrongly the problem. Money are not something "you have". Money are "a promise" to get something "in the future". Evaluating how much that promise "will be worth it" is complex.
To give an example "at the limit" - sometimes easier to see the issues. Assume all people in the world die except 2 people, if they inherit all the wealth, each will be multi-billionaires (or something - no clue how much money is in the whole world). That would not mean they could do a lot with that "money".
Back to austerity. I agree with you that the key is "spending in reasonable ways". But to understand what is reasonable you must make a projection. And that is the hard part. A projection will probably affect the result. Of course you are correct you can't just say we will spend 10x more because we will have 10x more, so there are limits...
> Assume all people in the world die except 2 people...
That's a great argument I had never heard before, thanks!
The way I see it is that any given economy has an amount of real resources (labor, raw materials, know-how...) that are often under-utilized. In such cases targeted government spending can mobilize those resources in a way that increases output without creating the bottlenecks that cause inflation.
> I have doubts about the idea "spend what you have". It is framing wrongly the problem. Money are not something "you have". Money are "a promise" to get something "in the future".
Around the time they switched to that frame, wages decoupled from productivity and what I might call working-class power started to get crushed. It is, and I say this at my most sarcastic, a miracle of modern economics that once we stop trying to measure how much we have in consistent units suddenly resources stop being a problem and big borrowers can just take what they need.
Although what I actually think is someone is getting ripped off really badly; I'm just not sure who. Hopefully retirees since I'm not one of them yet.
You are mixing regulation, intervention and austerity, which is so broad, it cannot provide a distinct explanation for the declining public services, which enforcing regulations is a part of, btw.
Budget cuts set a hard upper bound on the reach of public institutions. Nothing else you mentioned achieves this.
Regulation and intervention is what defacto can loot us. It is harmful that someone comes and says: we are going to get 65% of what you earn and put more public workers and invest in two business from my friend. Regulation is what allows your friend have free competition if conveniently tweaked... austerity is not democratic? It is democratic looting or chosen by a few only? All these topics are closely related if you think of it a bit beyond the surface.
In my experience, talking about Spain, I am not sure where that upper bound of expenses you talk about is. In EU according to the rules debt should not be over 60% of GDP. Spain is over 110% and after covid they did not cut back to the normal expenses...Every spanish owes over 30.000 euros in debt... I mean each of them, all ages.
Any reasonable person could tell you that here health system and public education are degrading at the same time the taxes go up steadily.
Now, you are mixing in un-/fair taxation. This is the income side, austerity is primarily about spending.
> It is democratic looting or chosen by a few only?
If those few were the only ones elected, then by definition, yes it is democratic. Now you are mixing in democratic participation and political corruption.
> 110% spains debt, not sure where the fiscal upper bound is.
According to your name, you are a german guy: Haushaltsdebatte, Schuldenbremse. Large tasks cost money and without such you cant do anything. Germany is essentially using legal tricks to circumvent their austerity nonsense, like propably spain and many others did, decades before. Do i really have to be more specific about that hard upper bound?
> public services degrade while taxes go up.
You are supporting my point here. With the right spending this degradation wouldnt happen. And to let me mix in something: Taxes go up for who exactly? Workers or owners?
> All these topics are closely related if you think of it a bit beyond the surface.
But they are non the less different problems. I think you are not just wrong, you are confused.
Austerity imo is ultimately about sabotaging the ability of public institutions, thus shifting power from the public to the private sector and this is the part, that makes it undemocratic. "Let large private corporations fix climate change by building megalomanic nuclear power plants (which i suppose you are a fan of too) and then let the public handle the staggering cost of the nuclear waster by taxing more off the ones who resist less, the poor and somehow (???) uneducated."
I mean “responsible spending” is just a right wing talking point that is only deployed on things they don’t like. Governments, like companies and individuals, can and should take on debt in appropriate circumstances. The shocking thing with austerity, as the IMF has underlined, is that it shrinks the economy so much your tax revenues fall by more than you “save”.
For me it is not really that. The logic that starts from the small applies to the big. In other shapes and with different scale limitations, but at the end if you spend more than what you have increasingly accumulating debt things get bad. It can take 5 or 50 years.
At that time services stop working. I also refuse the idea that everyone can permanently get more than what they produce. If you give someone some push it should be for them to be able to become autonomous, not for living from other people permanently.
It’s not a matter of scale, it’s a matter of lifetime. You can’t roll over a loan indefinitely because you will at some point die and lenders will factor that in to their calculations. But even in the small, plenty of people take out mortgages and spend WAY more than they were earning and do very well out of it.
The breaking point is if you expand your debt repayments beyond your ability to service them. And, because growing economies and inflation are both real things, an ever growing debt is not only possible but desirable. As long as you can invest in things that grow the economy like libraries and benefits for those in need, you’ll be fine.
Btw, read a UBI study sometime. You’ll find the actual research into just plain giving people’s money does not match the naive econ101 theory.
Left wing parties have various labels for people/things they don't like too, it doesn't mean either side is wholly incorrect though, especially when whatever it is becomes a real problem, like borrowing flagrantly based on the assumption there'd be no wars, extremely low interest rates, and stable employment. Whoever in that case said something like "forgive me if I'm not concerned about finances" might look a bit silly later, while the right wingers banging on about the budget might look silly if they cut funding to scientific research in times of prosperity, but didn't cut oil subsidies, and then wind up with climate problems.
Governments have to take on debt for there to be a net money supply. There's no two ways about it. The right wing certainly wouldn't want all their savings to disappear to pay off the "national debt".
Moreover, government spending pays for itself - from each transaction a proportion comes back in tax. It can be considered as a geometric series that tends to zero.
Ok, austerity bad, but the alternative isn't better. Either way it's the 'little man' who ends up paying through the nose.
The article mentions how war time economy is evidence how the society can do whatever it wants, and implies this should be done during peace time too. And then later in the article mentions how war time leaves the economy heavily indebted. So you can do the same during peace time - take on as much debt as needed to do everything. The issue with this approach is that this increases the money supply, effectively debasing the currency. Due to the Cantillon effect, the first people to use the new money will be able to spend it at 'old value', while people further down the line will get less and less value out of it.
If you're wealthy enough, you can short the currency by taking out debt, and buying assets. If the assets are yield bearing (dividend, rent), your income automatically adjusts for increased money supply. If you depend on your wage, tough luck, wages are last to adjust, so you just keep silently getting poorer.
So there's no free lunch. Either explicitly or implicitly, the poorest pay the most.
I don't think that's a predicament though. It's just that the answer likely doesn't lie in the extremes. A prudent enough government should be able to navigate this by not devaluating the currency too much, yet also taking on reasonable amounts of debt to fund the functions with the highest ROI.
modern democracy is a sham anyway. lets examine a recent large crisis we had in Finland - the border crisis, in which Russia systematically weaponized migrant waves - where the democratically elected government was initially unable to act with any measures on, because it would've been in violation of a UN convention which was agreed on in the 60's.
This was one of the most prolific decisions to be done in the 2020's and yet we could just barely enforce the will of the people over the interests of extragovernmental groups. Now imagine the thousands of small decisions being done which the average voter has no transparency into.
A good start to real democracy would be completely outlawing lobbying, NGO's, think tanks and other garbage organizations who's only raison d'etre is subverting the peoples right to their own governance.
Russia was bussing migrants without Finnish or Russian visas, in winter temps approaching -40C, through the Russian border and dumping them on the Finnish side, basically giving Finland the option of letting them in or allowing them to freeze death (because Russia certainly wouldn't let them come back). When Finland stopped letting them walk across, they magically procured bicycles; when the crossings down south were closed, they magically appeared in the far north. What other option is there than to close the border entirely?
This line of thinking always confuses me, obviously there is at least one other option: Just let them in. Immigrants, even badly educated ones, are a resource a smart country knows to use and there are a ton of options how to do that. Look up "immigration keyhole solutions" for a selection. Next time some fearmonger tries to activate your flight or fight response you have a better answer than hiding behind a wall.
> Immigrants, even badly educated ones, are a resource a smart country knows to use
Using them that way is unethical though, to an ethical country that tries to do the right thing for its citizens they are a net drain. No country can handle the burden of doing that for the entire world, so it isn't unethical to tell countries to take care of their own instead of dumping them at your country.
What are you trying to say? I read
1) It is unethical to treat citizens and immigrants differently. Treating immigrants like citizens strains the resources of ethical country beyond breaking point. Therefore it is ethical to deny immigrants.
2) It is ethical to tell other countries to take care of their people, so they don't come here.
2) Migration is caused by countries "dumping" people on other countries.
On the surface 1) sounds like a principled stance, but it is anything but. First, it is shameful, the argument is selfishness disguised as ethics. We, the people of ethical country, enjoy prosperity. We could not provide this prosperity to all comers without diminishing our own prosperity. Obviously we don't want that. But we neither want to deny a part of the prosperity for some time to migrants because that would not be what ethical people do. So, the ethical answer is to send the migrant back into squalor? Off you go, back to whereever you do not want to be. I think it is obvious this argument is about US, not THEM, and it has a taste of we don't like them no strangers. Sorry, mister, you can't come in from the thunderstorm, there is no cake left for you. Have fun on the trip home over the Mediterranean. Second, it seems to say that any solution must be perfect -- but that's not what I am looking for. Improving the lot of people is a process, not a state. The lot of a migrant is improved if she may live in a country with working institutions and the rule of law, even if they are denied some things naturalized citizens enjoy (like voting. Oh wait, ethical country doesn't seem to mind that though). Now the migrant has a chance to build something for themselves without worrying about drought, war, corruption, oppression, lack of institutions, raider warlords, or religious nutcases, and start on the road of gaining citizenship. I think here at HN we are big on entrepreneurship and personal responsibility, ask the migrant what she would prefer.
Argument 2) is more of an extension of 1). It is ethical to tell others what to do if it improves my lot. You change, so I don't have to. Here we chide other countries that obviously have massive problems already -- otherwise people would not leave in droves -- to get their act together so that we do not have to bother. I mean, telling other countries what to do is par for the course, everybody does this all the time, just think of China. But it doesn't seem to work, I wonder why?
If a country would be organized enough to enact 3) they probably also could create an environment where their people could provide for themselves (granted, maybe they wouldn't, see Russia). The main reason for migration is because individuals cannot provide for themselves in many parts of this planet for various reasons (see above). The migrant takes the largest decision of her life: leaving behind everything she knows, embarking on a long, expensive, and dangerous journey for the fighting chance to make a living somewhere else. It's not the nations that are sending their citizens (and tax base) away, quite to the contrary. It's the citizens that say, I can't provide for myself here. I must seek my fortune elsewhere. Ferrying people back into countries they fled from is not helping the migrant or the originating country.
>> lets examine a recent large crisis we had in Finland - the border crisis, in which Russia systematically weaponized migrant waves - where the democratically elected government was initially unable to act with any measures on, because it would've been in violation of a UN convention which was agreed on in the 60's.
just like that, yes. Finland is in the EU and NATO now. Russia didn't invade and society didn't colapse because of refugees (for some reason Ukrainian refugees are different from those other refugees, but I digress). So it seems, so far, democracy won.
Yesterday I learned that Bosnian 1992 independence referendum where a second largest community has refused to participate and the remaining ones are told to have voted 99.7% "Yes" is considered democratic. Of course that plunged them right into the civil war, but it does not seem that anybody has reflected on that.
What's the problem with solid majority of citizens deciding they don't want any more refugees then? Poland actually ran referendums like that and got 95% of "no thanks".
Reducing the Balkan Wars to a single referendum in a single country is so simplistic, I'd even call it ignorant.
But since you are on the journey of learning about all of this, continue. Use Wikipedia for startes, and not some other sources a quick search turns up so.
But hey, The Guardian does not see any reason to not be ignorant:
> The declaration of Republika Srpska in January 1992 triggered a civil war and a campaign of ethnic cleansing of Muslims and Croats, in which 100,000 people died.
Вот плачут дед и баба, но напрасно -
Всё предначертано, яйцо должно разбиться.
Зло порождает зло в наш век ужасный.
Ты хочешь знать, чем эта сказка завершится?
Старуху ту Раскольников зарубит,
И не со зла, причём, так по сюжету надо.
Старик же, пьянством горе усугубив,
Эрцгерцога застрелит Фердинанда.
>> Grandfather and grandmother are crying, but in vain Everything is preordained, the egg must break. Evil begets evil in our terrible age. Do you want to know how this fairy tale will end? Raskolnikov will cut down that old woman, And not out of malice, and that's the way it should be according to the plot. And the old man, having aggravated his grief by drunkenness, The Archduke will shoot Ferdinand.
Because the Archduke Franz Ferdinand didn't shoot anyone, he was the one being shot...
Boycotting elections/etc is always stupid. This is how the Soviet Union allowed the Korean War to start with the UN officially involved on behalf of South Korea, despite the Soviet Union being a member of the UN Security Council who could have vetoed it. They were boycotting the UN and so neglected to veto it. They certainly learned their lesson though, and won't make that mistake again.
Considered 'democratic' only by countries that liked the outcome. Referendum for independence in the Catalonia? Not democratic, and illegal according to the West. Referendum for Kosovo independence? Absolutely democratic in the West, a sham according to Russia. Crimea referendum to join Russia? You start seeing the pattern?
I would point out that your adversary there was actually Russia, not the immigrants or the UN or NGOs etc. (by the way, does that convention have an exit clause?). The problem is that the actual adversary is largely untouchable for Finland.
You are - but not sure how that changes what I wrote. Among other things, countries can exit conventions, change laws, declare state of emergencies or even war to potentially set aside some rules.
But it did work, and in proportion to the threat the migrants posed, it didn't take that long. Following agreed upon international conventions is also important to a country in the long run.
Barely working in 1 case in a 1000 is hardly a good track record, plus the border is about to reopen again in 4 days because appeasing the UN is more important than national safety
So, you see migrants as a threat to national security. On par with a Russian invasion? Just asking, because shooting at unarmed people at the border is something people are discussing at the moment, something I cannot put my disgust for in words.
Being a member of NATO is Finland's most important safety measure against that. And what are you even talking about, he didn't suggest that closing the border was necessary to prevent a military invasion. The national security threat it addresses is an unregulated influx of migrants handpicked by Russia to cause trouble for Finnish society, to punish Finland for joining NATO.
But I guess now you're going to act shocked and offended that anybody could think these migrants could be a problem for Finland. No doubt they're truly a blessing, Finland should be happy to have them, and Russia is actually inadvertently doing Finland a favor, right?
Only Sith deal in extremes, there is quite a large field between seeing immigrants as a blessing and seeing them as a national security risk. People holding the latter opinion usually come from a certain political leaning so, one that sees democracy as a tool to gain power for themselves and nothing else.
How do you they didn't provide a mix of families and felons and are banking on your exact opinion (my political opponents will use this to gain power) as the actual end goal? To me it seems like a strategy of stoking internal conflicts with actions to small to qualify as a declaration of war.
The poster you're replying to is an idiot and you should disregard them; this is exactly the risk Finland is trying to mitigate. Wagner for instance has been very actively recruiting in Africa and this is a golden opportunity to sneak in military personnel of the correct ethnicity under the guise of refugees.
I'd assume more of a concern troll type but you never know, there's more gullible/naive people that need things laid out in plain terms. Not necessarily knocking the person I was originally replying to, but don't forget half the population is dumber than the average. If we have to tell people not to eat laundry detergent than I can understand some people being not grasping military strategy or geopolitics.
Didn't know about that happening in Africa but doesn't surprise me, do you know of anything else like that happening in Southeast Asia? Might find myself in that area and would like to know what to look out for besides vodka and people yelling "cyka blyat"
I don't think it's a hugely strategic location for them right now; closest is India, to a degree, as I understand they use a lot of Russian tech as part of their defense - but SEA seems to be a fading / non-acute geopolitical area for Russia
I must charitably assume that neither of us is a redditor, so kindly spare me the pop-culture meme cringe. The fact of the matter that Russia is delivering these migrants to the Finnish border to undermine the resolve of the Finnish people to resist Russian aggression. It is an overt act of fifth generation warfare and as such it is a plain threat to Finnish national security. Secondly, the majority of Finnish people support addressing this threat by closing their border to these migrants, so that is the democratic course of action.
To oppose this is antidemocratic, and frankly, in the service of Russia's belligerent interests.
One could also say, that Finlands refusal to take the refugees in, and the EUs failure to come up with a slotion for migration ans refugees that doesn't involve letting people drown for ten years, enable Russia to use refugees. Hence, it isn't Russia posing a national security threat, it is Finland's and the EU's policies towards refugees that pose one.
No, it's Russia overtly attacking Finnish society. Even if Finland welcomed as many migrants as their country could handle, Russia would ship in any more. The only winning move is for Finland to close their borders.
The other guys in this conversation are calling you an idiot or a concern troll. I don't know if that's what's going on here but your unwillingness to concede that Finland has a right to defend itself from Russian border bullshit really does make me wonder. Finland wasn't in NATO throughout the cold war, only recently did they join. Why do you think that is? The Russian threat is real and needs to be taken seriously. Russia is sending those migrants specifically to disrupt Finnish society. For you to pretend otherwise is absurd.
Never would I oppose someones right to defence, I give the right to Russia, Israel, NATO, Palestinians, you name it.
And I explicitly calles out the EUs failure to come up with a workable plan how to handle refugees across all 27, and formerly 28, member states since 2014 (!). Because that plays a big role by allowing other nations to weaponize refugees, either as some war tactic or to gain political and financial favors.
At the core of that failures of EU policies lies something deeply human so: Xenophobia and fear of the unknown and different. In ky opinion so, we owe it to ourselves to not allow those fears define our actions and policies, especially if we give our adversaries angles of attack by doing so.
Besides Russia, we had Turkey and Tunesia using refugees to extract concessions and money from the EU using the same mechanism. One would assume people have learned back then to allow others to extort them using their own fears, but I know that this is propably impossible.
Since nobody who knows me ever called me stupid (I have been called a lot of other things so), I am inclined taking it as a compliment considering whom this insult is coming from.
On account of Turkey, it hosts worlds largest number number of refugees.[1] But gets almost no recognition for it.
6 billions of euros EU thought of paying accounts only for a small amount of what it has costed to Turkish taxpayers which are a lot poorer than their, for example, German counterparts.
Yeah, I know. A lot of countries with much less resources and wealth than the EU host a lot more people. Which commendable. And shows that it is purely a lack of pilotical will on behalf of the EU to do more.
And still Erdogan used refugees to gain concessions and favors from the EU.
Explain what moral imperative we (Finland) have to keep goodwill mechanisms like open borders for refugees when there are hostile forces trying to abuse them.
I'll give you a bit of help, you can't use colonialism or similar usual guilt tripping against us because we have never engaged in that activity. (in fact, I believe Finland has had the most people forced into slavery per capita, by the hand of Russia of course - but that doesn't concern this discussion)
Moral imperative? Same as anyone else, human rights and human decency.
If you want to close your borders with an agressive neighbor, by all means do so. Just don't call refugees a threat to national security if the only reason refugees can been seen as a threat a totally home made and self-inflicted (again, by each and every single EU member state and the EU itself).
The reason for doing so is quite straight forward so: soft power. Western democracies relied a long time on the perception of championing human rights, on being the good guys. Just look at how bad the US looked during and after Vietnam. We in the West, especially the EU, lost a lot ofbthat clout and soft power since we are ok with thousands of people drowning unnecessarily in the Mediterranean. Now we do the same on our Eastern borders. Giving up moral high(er) ground, when said morals make up a huge part of your power, is stupid. Especially when you already have others using that weakness for almost a decade.
Just regarding enslaved Fins: bavk during Zarist tines, serfdome was a Russian thing. And Finland still part of Russia. No actions, or lack thereof, in the past justifies actions in the present. At the most, they explain them.
It is our fault to conduct illegal pushbacks, hinder search and rescue and generally not extend the basic rule of saving people in distress at sea to migrants. Yes, it absolutely is. And it is bad looks, when the human rights and democracy parading Europe stands by letting people drown. Which we totally do.
It should give you pause to think so: the risk of the journey is clear to everyone, the risknof loosing your life and your loved ones either somewhere in the desert or at sea. And regardless, people embark on that journey. Just image how desperate one has to be to do so, how utterly fucked up life at your home has to be. At the very least, we all couod afford and extend some compassion to people having much harder lives than we do. And by the way, compassion is not weakness or softness, quite the opposite actually, it is people eho refuse to show it that are too weak to accept and face their oen fears and insecurities. You know, the difference between the real tough ones and the wannabes.
The non-austere "Free stuff for you! Vote for me!" political strategy has worked pretty well while technology improvements has made stuff faster than politicians can give it away. But it's a precondition. If technology ever stops improving at this rate, we're going to have a hard time, and no amount of words will change that fact.
To be for free stuff and at the same time be for degrowth, decel, limit resource use, etc.... seems naive to say the least.
Also, politicians can get more and more creative at excessive spending, at some point even outspending any kind of economic growth. And even if they don't outspend, at some point inflation comes along and kicks things over the edge.
I appreciate the review, especially in making connections between fascism and economic policy. Historically, fascists had support from powerful economic groups because of their ability to deliver on highly unpopular economic measures. The current state of politics in the West is that while (some) governments are not outright fascist, any pretense of them representing the political will of the majority of its population is crumbling. They serve a minority of very wealthy individuals much more than they do their general populace, and we accept that as fact.
To play devil's advocate, however, I would argue that there is sound rationale for not allowing economic policy to be decided in an a purely democratic way. If everyone had equal vote in what the government should do monetarily, the result could quickly evolve to a disaster, which we have also seen in places where dictators try to appease to the population as a whole by subsidizing costs and wages.
The title is linkbait-ish and the author is ideological, but the book reviewed in the OP, "The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism," by Clara Mattei, is truly worth a read.
Recommended by economists as different as Tyler Cowen and Thomas Pikkety, the book won Best Book of the Year by the Financial Times.
Ignore the OP's review of the book. Instead, read the book itself:
The opposite of austerity, stimulative spending (by printing money), has also been argued, by similar groups, to increase inequality due to the inflation of asset prices. Which way, left-leaning man?
State profligacy in the era of Central banking is an anti Democratic strategy to boost capital too. You borrow money, which increases the money supply, stealing value from everyone through inflation. This hurts the poor the worst, and benefits the rich, who rely on debt for capital instruments (the value of the debt, which is nominal, is reduced over inflation). Then you spend that money on contractors (even when it's used for social services).
When run unchecked, capital will happily suck all the money from the economy and into its coffers, and the fun thing is, it has no idea what to do next. Next it would very likely invest these money in the worst possible way and cause a big crash. Think about is like of a centipede instead of sentient creatures at work. It does not know what to do once it eats its leaf. We know it's going to morph but the thing is oblivious to it itself.
I think the iffy reasoning your committing here is the anthropomorphization of complex systems. Similar to the error of describing darwinian evolution as having a "goal"
We should probably describe economic systems as massively complex distributed interactions rather than thinking of them as organisms with monolithic intentions and goals
We cannot describe the thing you are referring to. We are quite poor at contemplating "massively complex distributed interactions". It's all noise to us.
Voting to fire people working in government to lower costs is antidemocratic? In government, you aren't even fired but retired, allowing you to collect your pension and benefits. It's as humane a practice as it can be while addressing financial responsibility.
It's undemocratic to continue growing in perpetuity and not be held accountable to those who pay for it.
It scares me a lot that modern economies don't understand yet the worst tax on citizens is the Inflation tax. Still can't understand why we're still trying to make things work after centuries of failures.
Obviously monetary base expansion to support non austerity policies is the biggest inflationary factor.
Well, it worked better at preventing inflation. It led to some really nasty financial collapses, though, and what we have now works better at preventing those.
It never led to any financial collapse though. It just prevented ballooning the money supply that could be used as a temporary work around. "If only we could printed more money we would have been fine!". So the gold standard wasn't the cause of the issue at hand, it just prevented _some_ type of a fix. The deflationary nature of the gold standard is something working long-term only, it can't flair up all of sudden. Unlike inflation. Besides I have an issue with this mantra that "small inflation is good for the economy" but somehow _small_ deflation being the end of the world.
If the Panic of 1879, the Panic of 1897, and the Great Depression don't count as "financial collapse", sure. I don't think that I agree with your definitions, though.
None of these examples were solely caused by the gold standard though. Gold standard was only a factor and to this day it's not clear how much it mattered. If the gold standard was universally soo bad why would the US reinstate it after the Great Depression and kept it going all till the 70s? Why would a superpower knee cap itself on a purpose? And the other way around: how would the US become superpower while maintaining the gold standard? Clearly it gave the US _some_ advantage. Similarly withdrawal from the gold standard by the UK and France coincidence with the start of the decline of these countries.
> Gold standard wasn't great but in hindsight it actually worked better what we have now.
You didn't specify what it worked better at, just asserted that overall it worked better.
I replied that it was specifically worse at preventing crashes (implying that it therefore was reasonable to question whether it was overall better).
You reply that the crashes were not specifically caused by the gold standard. Perhaps not, but they were part of the way things worked under the gold standard. You can't argue that things as a whole worked better, and then argue that all the parts that didn't work better weren't part of what you were talking about.
Is there any particular reason to blame the crashes on the gold standard? Well, the gold standard prevented someone like the Fed from doing what the Fed does these days to keep them from being so severe. So, maybe the gold standard wasn't the cause, but it was part of the problem.
Well, now we have empirical experience that after abolishing gold standard we still have economic crashes so getting rid of it didn't help us. So you can't really claim that gold standard was actually worse at preventing crashes. But we also have undesired things that weren't possible before such as FED's ability to print unlimited amount of money. That was my initial point and I stand by it. The gold standard wasn't great but at least it kept the monetary policy anchored to the reality.
If you have empirical evidence that, after abolishing the gold standard, economic crashes were still as frequent and as severe as they were under the gold standard, I'd love to see it. Until I do, I'm skeptical that any such evidence exists, because I'm pretty sure that they have not been as frequent or as severe.
> The gold standard wasn't great but at least it kept the monetary policy anchored to the reality.
I will agree with you that the Fed policy is less constrained by reality than it would be under the gold standard. I think the new actually works better, but I admit that the lack of constraint is a serious concern.
We don't really have empirical evidence that abandoning the gold standard reduced frequency and severity of crashes, either. Gold standard (or silver) has been the norm for centuries and we are only 50 years in without it in the US. So it's all a matter of opinion.
The failing of the gold standard was that it never limited money in circulation. Gold standards in practically all economies allowed for unlimited amounts of money to be printed at the whim of the central banks. Just that the central banks had to guarantee to pay out the set value in gold (or sometimes silver). At some point ppl realized that there wasn't enough gold in the vaults, which is why trust in the value of money (which is the actual backing force) vanished and hyperinflation happened.
So the gold standard failed because it was bound to fail. It was bound on the false illusion that every penny in circulation was backed up by a gold brick, which it wasn't.
It seems like what you and sibling (hef19898) are calling "failing of the gold standard", others would already call "abolishment of the gold standard". So it's a question of what perspective you take on the question whether it's still a "gold standard" if it has already been departed from. At the very least, if a fixed ratio of coin:gold were actually maintained these failings wouldn't have happened (almost by definition). Whether that is actually achievable in practical politics is of course another question.
> At the very least, if a fixed ratio of coin:gold were actually maintained these failings wouldn't have happened
It could still have happened, the mechanism is basically the same as in a bank run. If there isn't enough gold and too much demand for gold payouts, the central bank will run out and the system will explode.
The "other" "abolishment of the gold standard" is actually something different: The transition from commodity money to fiat money. Commodity money is when your money is something of intrinsic value such as gold. Stamping coins in commodity money only serves to assure the holder of weight and purity, but the value of a coin is 1:1 the metal value. In commodity money, it is pointless to mint any coins out of metals other than the precious ones, so that transition is marked by the abolition of actual gold coins. There you transit from intrinsic value to putative ("fiat" means "believe" in latin) value, usually through instilling some kind of trust into that coin by payout guarantees (you may still get some gold if you really want), force of law and guarantees of purchase power (a loaf of bread will always cost some fixed amout, or else...) or just plain trust that it will continue to work as it always has (which is the current state of things). So the actual abolishment of the gold standard was quite some time after the commodity to fiat money transition and just exchanged the "fiat base" of a promised gold payout by plain trust.
However, that "plain trust" can only work if the amount of money in circulation doesn't increase too rapidly compared to the amount of goods and services available and provided. Which is why you really really need strict control of the amount of money in circulation, thus central bank interest rates, austerity and other limitations on "printing" of money.
The gold standard was, partially, abondonned due to the Vietnam War in 1971. German hyper ibflation, read up on it, it was hilariously bad, happened in the 1920s.
So, inflation under the gold standard was even worse than under fiat at times.
Inflation is never anywhere a monetary phenomenon. It's always a lack of competition that allows someone to put their prices up. We need to dump the Friedmanian nonsense before more people get hurt.
> Capitalism gave rise to a value system that teaches us to find meaning in our work; yet millions are employed in low-paying, soul-crushing jobs.
Many philosophies throughout history emphasize finding meaning in your work:
- Ikigai: discover your reason for being, which is at the intersection of passion, mission, vocation, and profession. It is not just about yourself, but contributing to the world and bringing joy to others
- Stoicism: while not solely focused on work, Stoicism emphasizes finding purpose and virtue in whatever situation you find yourself in, including approaching work with a sense of duty and striving to contribute to a greater good, even if the task itself is mundane
- Confucianism: stresses the importance of hard work, diligence, and skill in all aspects of life, incl. work. Emphasizes fulfilling your roles and responsibilities in society with excellence, finding meaning and respect through well-performed work
- Protestant work ethic: sees work as a moral obligation and way to glorify the Christian god. Encourages hard work, diligience, and productivity, finding meaning through creation & contribution to society through labor
- Existentialism: encourages individuals to create own meaning in life, incl. through their work. Involves taking responsibility for your choices, pursuing authentic goals, and engaging authentically with your work.
Yes, people often have a shocking misunderstanding of historical attitudes, and attribute modern sensibilities to people way too far back in time.
They obviously also haven't read Marx, who literally argued the exact opposite. He believed Capitalism caused "alienation" in the worker, preventing him from finding meaning in his work. Prior to capitalism people were highly skilled artisans, or subsistence farmers, who almost universally found meaning in their work.
So capitalism did not "give rise to a value system that teaches us to find meaning in our work", the value system was already there. Capitalism just prevented the values from being fulfilled in the workers' lives.
Maybe. The fact that these old philosophies place so much emphasis on finding meaning in work could also (and likely, in my opinion) suggest that finding value and meaning in work does not come automatically, especially since there are physical, economic, and cultural constraints on what any one of us is able to do, and so they needed call it out specifically to engender that ethos.
Putting it differently, scapegoating capitalism for preventing people from finding meaning in work seems like a shallow analysis to me. It is not like factory workers or blakcksmiths from the past who were more interested in other things (making music, say), would agree that they were fulfilled.
Few democratic countries can manage their finances well. Switzerland comes to mind. But the general experience is that if the population can vote itself more money and services at the cost of a) either someone else, or b) growing national debt, they usually will. We are well down the same road in Czechia.
Europe has a very long history of banking, but at the moment when the Euro was created, most of the obliterated national currencies were weak, reflecting distrust towards their overlords. Switzerland, the country with the strongest national currency in Europe, never felt compelled to join the bloc.
Historically, authoritarian countries tend to go bankrupt over war expenses, democratic countries over handouts. The British pound was strongest at the time when the country was somewhat semi-democratic, neither-nor. But that is a very unstable configuration.
What would be "well managed finances"? The objective is to improve the living, not how you manage the money.
At all points in history most of people were trying to do "things at the expense of someone else" (colonialism, feudalism, etc.). Borrowing and not repaying is one of the most reasonable ways to do that - I think it's a clear improvement from killing/enslaving people, so I think it's an improvement.
The objective is to improve the living without worsening it in the long run.
Andreas Papandreu, the king of Greek debt, is long dead, but debt that he ran up is still saddling the young Greek generation. The artificial living standard growth which resulted from his reckless borrowing helped him getting reelected several times, but the guy died in 1996 and now people who even weren't alive back then are carrying the burden of his electoral success that was bought by unsustainable spending. One of the insidious properties of national debt is that it comes at cost of people who aren't born yet. They are in no way represented in the democratic process, but they shouldn't be ignored either. We understood so much at least with regard to environment (albeit the implementation is far from perfect), we should do the same with regard to finances.
Compared to death and outright enslavement, bankruptcy is better, but it is a choice between Black Death and some treatable cancer. We should strive for better.
You mention bankruptcy, it should be noted that Greece was loaded up with debt it could never hope to pay back to private French and German banks, and it was not allowed to declare itself bankrupt and restructure. Instead, they kept "extending and pretending" rather than restructure the debt. Some economists have called it a modern form of debtors prison.
The Greeks also had no control over monetary policy as a result of being part of the EU currency union so they were essentially at the mercy of the banks and the EU leadership.
Basically every official function in the EU is either directly voted for (not the EUs fault if people don't vote) or nominated by someone democratically elected.
If you don't see the difference between a truely authoritarian regime and the EU, you never paid attention in history class or current world events.
There's a lot of negotiations behind closed doors where we don't know how decisions are made. E.g. how the EC is formed.
EU is run in authoritarian ways, but so far it's in, let's say, benevolent dictator mode. But same mechanism can be easily abused. And it's already abused. Just in ways that don't affect day-to-day life too much. But overall it's very bad for the society which does not feel attached to decisions of it's servants. Which is the bad thing. Democracies can easily cause a lot of harm (e.g. wars, repressions etc) too. But authocracies ruin societies for a loooong time. Wether they spilled blood or not.
EU lobbying isn't any worse than other political lobbying, both of which are bad.
What the EU does so, is managing to get 27 nations to work on compromises. And it does so quite well, sometimes better and sometimes not. That, obviously, involves a ton of politics (humanity hasn't figured out a different approach yet, heck, even the most authoritarian and absolutists governments had tons of politics). The core fact remains so: all participants in EU governance are either elected directly at EU or national level or nominated by those elected parties.
It’s not about lobbying. And it’s far past managing sovereign nations to compromise. Modern EU is a beast of its own and its own interests. Which so far is power grab from member states. And trying to push through infamous laws. Such as chat surveillance.
The core fact is that EU governance is far removed from the people. It’s too huge and too diverse. But it’s perfect ground for deep state (deep union?) to find ways to work around democratic instruments.
Yep, and that's even before mentioning the absurd cost it has for the little real benefits the citizen truly experience.
I don't know about the poorer countries in EU, maybe they get net positive benefits; but as far as I can tell, for a country like France, you only get less efficient use of the taxation money, and the outcome are generally disconnected so not necessarily well spent.
There is a lot of propaganda around what EU is paying for or allowing. But the truth is that each country would be able to do the exact same thing if they wanted to, just with better money efficiency because it wouldn't have to be cut so much for feeding the bureaucracy monster of the EU...
Same here re propaganda. The only difference is we get a lot of your tax money to listen to that propaganda :) But as we catch up economically, we'll get less and less euromonies.
And yes, it's terribly inefficient too. The only thing it's efficient at is building a class of people who rely on EU institutions for their wellbeing. Collaborator class if I may?
Yes, collaborator is a nice way to put it.
I have had the (dis)pleasure of spending a bit of time near Brussels with some people that do "work" tightly related/linked to EU stuff.
This is EXACTLY what it feels like; and in most cases it was pretty clear to me that those people cost more money to society than any kind of "value" they were bringing.
But the whole thing is politics anyway, so outcomes are kinda irrelevant in the grand scheme of things. To me it looks like a prototype of some sort of new communist system, where the "leaders" choices are completely disconnected from the rest of the population...
The EU isn't democratic in that basically every official function is only through multiple indirections dependent on the voters. So the will of the people and the sovereignty of the voters is diluted through a multitude of political backroom deals that are anything but democratic. Just look at how von der Leyen came to her job.
Back in the day, when there was still a communist bloc, this kind of system, a "soviet republic" consisting of a hierarchy of workers councils was the usual example for how you can have elections but not have democracy. Because the hierarchy of councils will dilute any kind of will and sovereignty of the people into the will of the political upper class.
I think this is a bit misleading. The EU is the way it is because of democratic decisions. The commission isn’t democratic because it’s a civil service. The Parliament is less powerful than you’d expect because it would challenge national governments. The true power of the EU is the Council of Ministers, which are the representatives of the national governments.
Most people looking for “more democracy” are actually advocating for a more politicised commission, which is a very bad idea.
And this civil service have a ton of power to bring forward policies. Which is undemocratic.
IMO more politics at EU level overall is a bad idea. The strength of europe is diversity and competition within the region. Not a bureaucracy superstate on shaky legs with a rather long runway to die.
European Parliament is not even a parliament because it can't propose any laws in the first place. It can only approve or decline laws proposed by the European Commission. It can't act on its own.
The only such a parliament in the world
I’m saying it’s what people want. Very few people complaining about it being undemocratic actually want it to be “more democratic” because that would involve a transfer of power from the member states to the EU.
In as much as it is what people actually want through revealed preference, it’s as democratic as they come.
My last point (there are more of them in the comment) is that historically, authoritarian countries have gone bankrupt from other reasons than democratic countries, but democracies are prone to bankruptcies too. There is nothing about democracy that results in good management of public finances.
The original article uses "Antidemocratic" as a subtly negative value judgment. One of my points was that "Democratic" management of finances has often turned sour, too.
With all the temporary embarrassed and actual millionaires here on HN I'm not so sure that this article will go over well.
Most people who are into this space are doing relatively well, but then remember that more than 60% of Americans can't spare 400 dollars for an emergency and this simple fact shows how absolutely bonkers the whole system is.
You may be free to say hateful things if that's your definition of freedom, if we define freedom as having the means to develop your true potential or just do things you like sometimes without a constant feel of existential threath, that's what I call freedom.
Marx hasn't been around for a while. With the corporate world sucking so hard on government teats, in the US and Europe in particular, austerity has a more distributed but still intensely negative impact. I strongly recommend Mark Blyth's book Austerity: The History of a Dangerous Idea as a more modern and nuanced take on what is going on.
I got most of the way through this and found many things to disagree with. I started to write a reply and then I read this part:
> Expertise is, in a certain sense, a bourgeois concept, a by-product of the ideological imperative to organize our lives and activities in a rational way.
God help anyone who takes this shit seriously.
I don't know when, if ever, austerity is called for (even Paul Krugman has called for deficit reduction in certain circumstances: https://www.nytimes.com/2023/10/10/opinion/us-budget-deficit...). But this review is dripping with ideology to the point that it's genuinely disconcerting.
In a college poetry class, I learned that literary analysis isn't about being "right" (what did the author actually intend to say?), but instead, being "interesting" (what's a cool way of framing this?). Any subjective interpretation is valid if it's thought-provoking.
I think that is the mental framework with ideology-saturated economic opinion pieces like this one. I don't think they care about being right. Instead, the goal is to make cool, edgy, story-book-good-vs-evil narratives independent of empirical validity ("any subjective interpretation is valid if it's thought-provoking")
I think there's a bit more to the background mental framework. Postmodernism (as best I understand it) says that all truth claims aren't actually about truth. Those who believe such things need not concern themselves with whether the facts support their position. So far I'm restating what you said.
But postmodernism says more. It says that truth claims aren't actually about truth, but are assertions of power. Those who believe such things are likely to have that intent when they write. Keep that in mind when you evaluate what they say.
Makes sense. And the extent to which human communication is embedded with latent assertions of power is an empirical question, which seems more a question for science than philosophy
An issue with your reasoning is it can be liberally applied, including to your very own message. You provide no basis for discounting the opinion piece you disagree with other than projecting stuff you don't like onto it.. But anyone can do that to anyone.
Id agree with you here. I didn't offer any substantial criticism or engage with the articles points. I'm just throwing shade at articles with intense ideology-jargon, which isn't the best thing to do.
However, do you think ideological language is a predictor of a valid, fact-based take on an issue, or the opposite? I'd be hard pressed to say "more ideology -> more empirical validity", but maybe they're orthogonal
Sure, but that would still make it bad, right? I may be a hypocrite (for argument's sake), but that doesn't change whether being steeped in ideology is a bad thing.
Would you agree? Or do you think being steeped in ideology leads to more rational decision making? (independent of whether ideology is needed for social mobilization)
The worldview for commies depends on that. Pay no mind to facts or experts, those are all stacked against you by way of conspiracy. All that matters is the utopian ideal, which incidentally, they argue isn't utopian. That is thoroughly betrayed by Hegel-lite rhetoric that what they want (the "ought") can be realized without any consideration for reality (what "is").
It is funny. For like 4 or 5 years ago I would have waived away the article as communist hallucinations. But somehow covid made me realize that we don't live in a market economy, but rather have a central power that benefits the rich via monetary policy and lower tax.
It is the same realization as when I stopped consider the GNU guys paranoid crackpots.
I come to HN for tech news and recently I get a heaping of 100% political, 100% partisan, non-tech-related drivel that is not even news - it's just opinion blog.
I'd apply it to both sides, but I only see one side on HN:
Dear leftists! Can you please take your propaganda and fuck off to reddit, twitter/X, or wherever?
This is nonsense, the opening paragraph isn't a contradiction, it's describing an equilibrium, and the difference between the actions of a single firm and aggregate demand/supply.
This has been studied for over a century, why this being repeated uncritically in media?
Yet another butthurt marxist misinterpretting (among other things) the fact that free markets evolve into oligopolies to mean twar the whole system apart. The correct interpretation is that we screwed up going full rehnquist and nerd our antitrust enforcement to move back nearer to what it was doing pre rehnquist supreme court.
I'm a bit surprised to see this at the top of HN. Maybe the US is still asleep, and the Friedman fanboys have not read that yet.
This look like a good book and I am likely to buy it. From a systems standpoint it is quite obvious that capitalism tends to concentrate wealth in the hands of those who already own capital.
Piketty showed the historical data agree with that: as long as growth is less than capital rewards, wealth concentrates.
We need a systemic solution to that, and that can't happen with représentative democracy. We need direct control of the means of production by those who make them work. This means stronger unions, but also platform régulations, as users are unpaid knowledge workers giving away their data in exchange for a service, an exchange so one-sided and highly beneficial to the platforms that states are losing their sovereignty to the platforms.
Wealth concentrates because of https://en.wikipedia.org/wiki/Preferential_attachment -- it has nothing to do with "capitalism" -- an era which contains historically unprecedented periods of comparative wealth equality.
The only processes known to make substantial impacts on this process involve mass death.
Write a simulation yourself, it's relatively trivial. You'll find PA a force of nature which little can overcome.
2x0 is still 0, 2xbillion = 2billion
And thus from equal starting points and equal chances inequality becomes ever more extreme.
Rutheless redistribution on the scale of a small tribe might, within that tribe, work for a time. But wars between tribes fix this 'temporary reprieve' -- since tribal power follows PA.
There is no known policy, at least none i'm aware of, which can preserve the tiny populations needed for equalising redistribution which at the same time prevents them from preferetnailly attaching to each other.,
"Preferential attachment", to the level of detail that you have specified, is an observation that a thing occurs, not a mechanism, a reason or a force, or even an estimate of the rate. Modelling a process by circularly assuming that is how the process will work provides exactly zero information, and is how one comes to conclude that heavier objects accelerate under gravity faster than those lighter, or more analogously, the impossibility of aerostats, satellites and hyperbolic trajectories.
Instead, I would like to encourage those interested to consider and discuss the similarities and differences between capital income taxes and wealth taxes, between taxation and non-voting ownership of an asset, and between voting and non-voting ownership. What is the average rate of return on capital and what is the volatility? What is the difference between the CPI basket and that of the implicit GDP deflator and why? Those are all interesting questions to ask and answer.
Sure, but the level of abstraction "anti-capialist" ideologues are operating at isnt one where a non-pareto distribution of wealth is a necessary consequence of any system in which wealth accumulates simpliciter.
All policies which affect the wealth distribution do so by moderating the gini coef, ie., the specific shape of the power-law -- they do not make it normal, uniform, etc. or however the ideologue would wish it to be.
The "natural mechanism" of "fair procedures" in the case of systems wherein parts attach to other parts based on their current size (, success, etc.) is spiriling inequality in the extreme.
All sane policy conversation is about how extreme. That bigger things get bigger isn't "capitalism's fault", as far as anything could be said here, all modern systems of economics and government seek to make the concequences of this process less extreme, rather than more.
Eg., in the case of capitalism, it is essentially a mechanism for managing the extreme impact of risk (via limited liability companies), and a mechanism for addressing intergenerational rent-seeking (the historical way pref. attachment was "fought").
> All policies which affect the wealth distribution do so by moderating the gini coef, ie., the specific shape of the power-law -- they do not make it normal, uniform, etc. or however the ideologue would wish it to be.
Again, you are assuming your conclusion, and you do not even do us the favour of stating premises, which is hardly conducive to a productive discussion (or, any, really). On the other hand, it is quite fundamental to welfare economics that under a few assumptions, some unrealistic and some less so (namely: perfect information, fully internalised externalities, absence of market power, local nonsatiation and convexity of preferences and production) it is possible to reach any point on the Pareto frontier. The policies required to reach a desired point in such a toy model is left as an exercise for the reader. Now, the actual juicy questions here are how things like market power, externalities and imperfect information affect this? Is the model still a good approximation? To what extent are we able to correct things, and do we even want to? If we do, how best to do it?
> The "natural mechanism" of "fair procedures" in the case of systems wherein parts attach to other parts based on their current size
Again, you assert that it's "natural" and "fair" as if the result is a foregone conclusion. If it is inevitable that dx be a f(x) ~ x then yes, that's an exponential. Why would it be unnatural or unfair for dx to be instead a function of y, some other factor that has no proportionality to x? You are stating as a conclusion and premise that financial wealth experiences preferential attachment unconditionally, that is in essence, circular reasoning. What is the actual mechanism, the force, and how irresistible is it really? Would resisting it simply divert its effects to something else, for example, concentration of political rather than economic power?
Quite frankly, the dismissal of everything outside of a frankly ridiculously narrow space, where your model with an unspecified mechanism (which does achieve the results that you say it does) clearly must be an accurate reflection of the real world in all circumstances... Well, it gets old quite fast. If you really must use that model, describe and justify the accuracy of your proposed mechanism at least, if you please.
In some sense i'm assuming wealth is a pref-A phenomenon, yes; not that "capitalism makes it so". There need be no formal argument here: all research into all wealth distributions in history are power-law; and a vast array of social phenomena are pref-A. And pref-A produces power-law.
As an empirical matter, the burden of proof lies with those who say "there is some other process" to show it. Since the PA process is demonstrated without exception.
Formally, why should we expect wealth to be a PA process?
Well, formal arguments will always be toy and disappointing, but get someway to explaining what's observed empirically. But:
Economic transactions are, roughly, exchanges of time. We have a fixed quantity of time each, and Alice offers some time to Bob, who offers some time to Eve... and so on.
Wealth is your net ability to draw down on the time of others, as a function of time. By spending X amount, I can obtain Y time from P people.
Assume, at t=0, everyone has an equal ability to draw down on the time of others, and an equal preference for exchanging their time (1hr for whatever it takes me to do, for 1 hr of whatever it takes you to do...).
Now, since we have different rates of production and produce different things it becomes wasteful for me to spend 1hr for your 1hr when you dont make what i want; or someone else makes more of it faster.
Our desire not to expend our own time needlessly, to waste our finite quantity of it, means we allocate it to where the ratio from ours/others is most efficient.
That is to those who can draw down on the time of others most, we give some of our own; and to those who can the least, we give none. (To, roughly, quote Matthew).
Simply in the pursuit of not having our 100 years wasted egregiously. And there are many compounding effects, not least this. For as soon as any inequality enters those who then have more can do more, and so become ever more effective at what they do.
We will not work a month to buy a t-shirt when a t-shirt can be made in a factory for a minute of our time. It makes no difference that the factory is owned big Capital (omg!">?!?). And if we were to that, there could be no "factories" of this kind -- since allocating resouces according to what minises wasting our time gives us more time, without which we cannot develop anything new.
All this is somewhat irrelevant however. As above, the burden is on those who say something else is conceivable to show (1) what their conception is; and (2) it is physically possible.
If all alternatives amount to global coordinaton across the species such that we are each programmed Marxists acting like drones -- or, likewise, non-agression libertarians -- you're then talking about a different species.
Wealth amongst the bees might be a little more normally distributed, for sure.
No, you've made the claim that that it's impossible to alter, I'm fairly sure it's up to you to show that one of imperfect information, externalities, market power, ~LNS or non-convexity of preferences or production result in the impossibility in the real world of producing a single even slightly different distribution when you're making a universal quantification on what is certainly a non-null hypothesis (never mind the abuse of mathematics that is drawing a straight line on a log-log plot and calling it a day, I know it's a good approximation for almost everything but so do you that it often fails to hold for the whole domain if you've ever took a single maths class) which otherwise clearly contradicts a well established fundamental result of economics. This is not a new theorem, if you're making the case that it cannot possibly hold in the real world in any way under any conceivable circumstances then you really ought to have a rock solid case already prepared, one that stands up to slightly more scrutiny than looking at any graph, literally any single one of them, and seeing that there is clearly a non-linear region there. You know, where all the people actually are. Maybe if you had the time to take a second math class you'd know that being able to fit a power law to the upper tail of a distribution is utterly meaningless considering you can fit it to the upper tail of basically any empirical distribution. You can go for sub- and superlinear PA schemes in your third one. The questions posed continue to be uninteresting, and they don't even have the honour of being accurate.
I've already conceded that a small tribe could do it. It's not entirely clear that they have 'wealth' at all, since i'd define it to be that thing which accumulates 'alike pref-A' (ie., I will concede that processes which disrupt/regulate social networks produce, at best, power-laws in a theoretical limit).
But the issue is that small tribes arent stable. The primary objective of tribes is foremost survival, and in the pursuit of every more gauretees of survival, they will pref attach to other stronger tribes (often by concequest, occasionally by consent, see eg., the formation of the UK vs. the formation of the british empire).
So there are different 'social logics' taking place at each level: the individual wants to minimize the amount of their life wasted; the group wants to maximise its chances of survival etc.
It's not that I do not see 'local violations' of pref-A-type expectations; they're quite common indeed.
It's more that I see the 'effect size' from pref-A processes to be, empirically, overwhelming. A force of nature at every scale.
People who are "anti-capitalist", ie., the person i was addressing, arent offering an analysis of the entire history of the human species in terms of these processes --- and how alternatives can be provided; rather they are profoundly ignorant of all this, have no interest in learning it, and are rather engaged in a religious crusade against their notion of sin.
The first step to help this ideologue out of their crusade, is if even possible, to show that it isnt Sin which makes the world Fallen -- it Falls even under extremely simple, extremely fair procedures. This is intolerable to the fantatic whose crusade is against a human psychic reality they thing they can attack -- tilting at windmills, of course.
If we're talking "two good-faith people who arent fantatics trying to model possible realitites" then the dialetic is different.
I'd say: i have sets of entirely plausible propositions each of which entail 'inevitable extreme inequality', each of which plausibly model reality, each of which have high credences from a range of experts (etc.).
I do not see the same on the other side; this may be my ignorance, but I have never encountered a systematic presentation of any explanatorily-plausible alternative.
How on earth do you propose to hault 2*2*2*2*2... vs. 0.001*1.001*1.0001* ... ?
By what means are most individuals on the planet coordinated so that the labours of one do not multiply benefit themselves, but "divisionally benefit" everyone? What process to the general benefit of society could be imagined where net wealth grows without inequality?
THe only "divisional processes" i can imagine not only reduce net wealth, they are horsemen of the apocalypse.
> concede that processes which disrupt/regulate social networks produce, at best, power-laws in a theoretical limit
I'm going to interpret that as acknowledging that the bulk of the distribution is not Pareto with Pareto fitting well only at the end of the right tail. This fits with a mostly multiplicative dNW/dt but in a random walk rather than monotonic increase, or a sublinear PA, but with increasing linearity at the very high end. Not that we actually need to model this blindly, dNW/dt is to a significant extent just Y, income, and we can and do measure income, at least. A lot more accurately than wealth, even. More importantly, there is enough data with both for the same individuals that we can examine the relationship between the two. Certainly, there is a positive correlation, but overall it seems R ~ 0.33 across many countries, which is fairly low, really, and if you want to eyeball the graph you can probably see the data points clustered tighter near the top.
Now, I can't tell you what distribution @linschn might target as desired or if there are things beyond mere distribution that they would wish to address. My reading of their comment would be that they wish to focus on ensuring non-NW effects >> NW effects, i.e. high mobility, not necessarily high equality (does raise an interesting question here, would a combination of mobility and inequality also tend to increase zero-sum vs positive-sum competition?) Still, given that the correlation, although low, does exist, any actions increase to mobility does seem likely to reduce final inequality as a side effect. This does not necessarily shift the shape of the distribution (rather than spread) significantly, but there is no reason why it should need to.
> How on earth do you propose to hault 22222... vs. 0.0011.0011.0001* ... ? By what means are most individuals on the planet coordinated so that the labours of one do not multiply benefit themselves, but "divisionally benefit" everyone? What process to the general benefit of society could be imagined where net wealth grows without inequality?
I don't see why anyone should care for growth of total NW over Y. Wealth isn't real, there is not literally a warehouse full of stuff and services that wealthy people can draw upon, so it can only be a claim on future Y plus or minus inflation. I entirely agree with @linschn in this respect, seeing growth in wealth being higher than growth in income as a good thing is complete and utter madness, and yet those are the scenarios where the PA or PA-like effects relatively dominate. If during relative stagnation it's a choice between infinite paper growth (plus increasing concentration) and the apocalypse, let's have the apocalypse. At least the apocalypse is honest about what it is. In a way, it's the Greek sense of the word.
Austerity occurs when the cost of government borrowing becomes so high governments are would be functionally unable to operate in the medium term without brining it down.
After the finance crash the UK was increasing it's debt load at something like 200bn GBP/yr, iirc. A rate that credit-nervous markets wouldnt sustain cheaply.
Austerity is the way the ideologues talk about the consequences of economic collapse without having to learn anything.
What you never hear from them is alternative policies that address the specific economic problems periods of austerity are solving. You hear instead about ever more elaborate abstractions that ever less map on to any observed reality.