. Depressions are necessary (interest, tax, corporation, recessions)

[Mircea]

Originally Posted by GregW

A completely free market without any government interference or protections would not be allowed to exist because neither investors nor workers would want to live in such a situation. Most of us do not want to live in a casino. Let the gamblers take the risks.

Well, that's how [some] economies operated for centuries, and they did well.

There is risk in everything one does. You want to grow soy beans, fine, but what happens if there's a flood, an early freeze, a drought, a wild fire, a rust, an insect infestation?

So you're just not going to farm anything because there's risk?

There are inviolable laws in economics, three of them specifically:

1) You must provide a product or service that is in demand;

2) The product or service provided must be of the highest possible quality;

3) The product or service must be competitively priced

If you violate any one of those three laws, your business fails.

You can make 8-Track Tape Players if you want, and they can be precision crafted, with the finest polished wood or metal case and you can price them cheaply, but since there's no demand for 8-track tape players, your business will fail miserably.

And you want the government to step in and bail you out or create legislation and volumes of regulations and tax the manufacturers of iPods and CD players so you can compete?

That's nonsense, yet that is exactly what the US government has been doing for the last 90 years or so.

You act like investors simply throw their money at a corporation and have no further responsibility. Not true.

Investors need to investigate the companies they invest in and keep tabs on them. That's part and parcel of investing. If you ain't got the time, then get a safer investment like a savings account.

As an investor, you need to be paying attention to what the company does, and if it isn't being operated properly, or you suspect corruption or wrong-doing, or the product or service is substandard, then you need to get your ass to a share-holder's meeting and voice your concerns, and if necessary, oust the CEO and if necessary, withdraw your investment and move it elsewhere.

It's not my job to bail you out because you made a bad investment then washed your hands of the whole thing and sat by while the company drove itself into the ground.

You can't operate a free market while simultaneously shielding or protecting those in the market.

Can you buy Partridge Meats? No. Why not? Because they had 3 recalls for listeria in less than 2 years. Consumers did not feel comfortable buying their meat products for their families, especially when higher quality products were available for the same price or less.

Do you know what listeria is? It's a bacteria that grows around drains. That means meat fell on the floor and the employees picked it up off of the floor, put it back on the line to be packaged and sold to consumers.

That's a great example of the free market working. So the employees lost their jobs. Well, if they couldn't collect unemployment benefits and they knew they might lose their home, their car and other things, maybe they would have been a little more conscious about what they were doing.

That's just like the Haliburton contractors at the BP Horizon site. They knew what they were doing was wrong, and dangerous and against their own common sense and experience, yet they did it anyway because they didn't have the courage to walk away and because they knew they had a "safety net" and because of that people died and there's lots of destruction in the Gulf.

Originally Posted by GregW

I have wondered just what is so attractive about the need for continuous striving and growth. Why does everything have to get bigger?

It's a psychological thing. There is a need to measure performance and growth is equated with performance. As a baseball player, if you hit 10 home runs, certainly you would want to hit more home runs the following season, and even more in the season after that.

Originally Posted by GregW

What is wrong with a stagnant economy and a decreasing population?

I don't have a problem with that and obviously neither do you, but some people want to be "king of the hill" while the sole function of others on Earth is to collect more toys than anyone else.

As long as those kinds of people exist, there's going to be problems.

Originally Posted by GregW

What is the market going to do with labor made redundant by robots?

The same thing economies have always done.

It took a lot of people to farm. When they switched to the 3-field crop rotation method, yields increased and fewer people were needed.

The excess labor then moved into other areas, like making shoes and leather products and producing weapons and making clothes.

Inventions like the spinning wheel and the loom and other machines created a surplus of labor again and those people moved into other areas.

Better farming techniques led to a surplus of labor that met the demands of industrialization.

New innovations in industry, like the assembly line, created a surplus of labor and those people moved elsewhere.

However, eventually, they will run out of jobs. It's inevitable. If you follow linearly, the US should have entered the 5th Economy about 30 years ago but failed because our education system is so pathetic.

The 0 Economy is subsistence farming
1st Economy is raw materials and resources (1st Phase) and processing of raw materials and ores (2nd Phase)
2nd Economy is base materials -- instead of exporting iron or iron ore and then re-importing the finished steel you're now making your own steel (1st Phase) then you're making industrial goods -- tractors, mills, lathes and durable goods like washing machines (2nd Phase)
3rd Economy is commercial goods (1st Phase) and consumer goods (2nd Phase)
4th Economy is electronics (1st Phase) and services (2nd Phase)
5th Economy is R&D

It should be noted that since even before the time of the Neanderthals, when there were no food or jobs, people moved to other places where there were food and jobs.

Americans should at least be open to the possibility that they made need to emigrate from America to another country to obtain work, or to obtain work in a field in which they are trained or experienced.

Those people who are unwilling to do that are going to have a very difficult time.

Originally Posted by GregW

We need an economy designed to provide the basic necessities for everyone. We do not need an economy that provides excess for the few and deprivation for the many.

It is government interference that has created that situation, in addition to the general stupidity of Americans.

The Middle Class is disappearing and rightly so, since this is the stupidest Middle Class to ever exist in the history of the universe (including parallel and multiple universes which theoretically may or may not exist).

The Middle Class is so stupid they actually believe they're getting 0% financing on a car. Not true. The base price of the car has been increased to allow the dealer the dealer to offer 0% financing so not only are the Middle Class idiots paying more for the car than they should be paying, they're also paying an interest rate equivalent to about 9% to 16%.

The Middle Class is so stupid, they will actually buy a house and only put 0% to 10% as a down payment instead of 35% to 50% as common sense dictates.

Those idiots will buy a house for $250,00 and pay $250,000 plus $304,000 interest and then have the unmitigated gall to whine and cry like a small child and complain they have no money.

The American with half a brain will put 35% down and pay $250,000 for the house plus $75,000 interest.

That means the smart person ends up saving $229,000 plus the smart person can put the difference in monthly payments $529 into a savings account and at the end of 30 years, they'll $585,175 saved up.

The Middle Class is so stupid they'll pay $5000 for a $1500 plasma TV because they lack the discipline of a small worm and can't even save up $1500 to pay cash and they put it on their credit card instead and end up throwing lots of money away in interest.

Originally Posted by jimhcom

It is easy to blame government, but in the end the people get the government they deserve; and that they voted for.

Well the best one can hope for is that they'll suffer enough to realize they're part of the problem, but I don't see where that's ever happened historically.

I guess we'll continue in stupid mode until something better comes along are we all cease to exist.

[nicet4]

Originally Posted by HappyTexan

Only when extremes happen like in 1928.
Glass Steagall was enacted to prevent situations like that from happening again but Glass Steagall got repealed and we are now right back where we started..extremes.

Everything in moderation

[Guineas]

Originally Posted by Mircea

Americans should at least be open to the possibility that they made need to emigrate from America to another country to obtain work, or to obtain work in a field in which they are trained or experienced.

I've been thinking about this myself too. Americans have been doing this in past generations, it was called "Go West." Now that our population is finally catching up to the size of our country (similarly sized China is overpopulated), it may be that there is fewer and fewer places to go and stake out. This is particularly true in places like California which is building more and more into the desert and consuming huge water resources. Illegal immigration will insure our country reaches 400 million people by 2040, and then 600 million (higher fertility of Latinos), until we have just as many people as China. At some point emigration and not just interstate moving might be the more lucrative option (just like it is for many educated Chinese).

But where? I really don't see another country with better opportunity still. Going from the US to China would be like going from the lion's jaw to a hungry tiger's. Housing is just as expensive but poorer quality, people are everywhere and much more competitive. 1,000s of people apply for one job in China.

I have a feeling there will be massive political instability and racial conflict in the US when we reach 600 million people.

[shrewdnlewd]

Kondratiev conceived his model of long waves when the workforce was 90% agriculture based. I think his work is worth looking at and admittedly fascinating, but applying his observations directly to the political-economic environment we find ourselves in today is naive.

Where as Kondratiev's observations of:

Scarce supply w/ growing demand ---> prices rising ---> suppliers entering the markets ---> technology made possible by rising prices ---> oversupply and price collapse ---> revolution/war/unrest

Is based in historical truth; applying the same time scales and reasoning to today is sort of silly in my opinion. Today we call these actions "creative destruction" which in the long scale of things ends up increasing quality of life.

On the bright side of 10% unemployment, we have labor slack available to fuel the next wave of innovation without causing wage based inflation. On a micro scale we all knows this sucks and it hurts, but on a macro scale, meaning years from now, we'll come to appreciate what the recession made possible for this country. Proof - Record Productivity

[Guineas]

Originally Posted by shrewdnlewd

On the bright side of 10% unemployment, we have labor slack available to fuel the next wave of innovation without causing wage based inflation. On a micro scale we all knows this sucks and it hurts, but on a macro scale, meaning years from now, we'll come to appreciate what the recession made possible for this country. Proof - Record Productivity

Most of the labor slack is in the dregs. Those employed are busy not rocking the boat. The unemployment rate for those with college is under 5%, while those without high school is above 15%.

As long as our underclass embraces gangbanger culture, this country won't really be able to harness our labor slack, instead they'll remain a huge net drag. All indications show the underclass to be increasing.

[jimhcom]

Originally Posted by shrewdnlewd

Kondratiev conceived his model of long waves when the workforce was 90% agriculture based. I think his work is worth looking at and admittedly fascinating, but applying his observations directly to the political-economic environment we find ourselves in today is naive.

Where as Kondratiev's observations of:

Scarce supply w/ growing demand ---> prices rising ---> suppliers entering the markets ---> technology made possible by rising prices ---> oversupply and price collapse ---> revolution/war/unrest

Is based in historical truth; applying the same time scales and reasoning to today is sort of silly in my opinion. Today we call these actions "creative destruction" which in the long scale of things ends up increasing quality of life.

On the bright side of 10% unemployment, we have labor slack available to fuel the next wave of innovation without causing wage based inflation. On a micro scale we all knows this sucks and it hurts, but on a macro scale, meaning years from now, we'll come to appreciate what the recession made possible for this country. Proof - Record Productivity

Kondratiev's work has less to do with the basis of the economy than human nature. It is human nature that drives cycles. We go thru cycles of hard work and high moral standards that produce prosperity, followed by cycles of diminishing work and moral standards as a result of that prosperity. The declining work and moral standards eventually cause economic collapse in the form of recessions/depressions. The hard times of depressions cause increases in work and moral standards and the cycle repeats. It is the same reason most family businesses do not last more than 3 generations. What is interesting is that he was commissioned by the Soviets to prove capitalism was a failed system. What he found instead was that not only did capitalism work, but that it self regulated itself. This displeased the Soviet government so much they put him to death.

[Mircea]

Originally Posted by shrewdnlewd

Kondratiev conceived his model of long waves when the workforce was 90% agriculture based. I think his work is worth looking at and admittedly fascinating, but applying his observations directly to the political-economic environment we find ourselves in today is naive.

I never thought of that, but that's a great criticism of his cycles.

[shrewdnlewd]

Originally Posted by Guineas

As long as our underclass embraces gangbanger culture, this country won't really be able to harness our labor slack, instead they'll remain a huge net drag. All indications show the underclass to be increasing.

Ugh... I know

For further reading about long cycles and beyond, I would suggest reading some of Martin Armstrong's essays from Fort Dix Prison. I've read this entire essay some time ago and I found that he stretches truths to make his framework function, nevertheless you will get a good idea of things without having to do all that much footwork.

*It's Just Time - Martin Armstrong

Originally Posted by jimhcom

Kondratiev's work has less to do with the basis of the economy than human nature. It is human nature that drives cycles. We go thru cycles of hard work and high moral standards that produce prosperity, followed by cycles of diminishing work and moral standards as a result of that prosperity. The declining work and moral standards eventually cause economic collapse in the form of recessions/depressions. The hard times of depressions cause increases in work and moral standards and the cycle repeats. It is the same reason most family businesses do not last more than 3 generations. What is interesting is that he was commissioned by the Soviets to prove capitalism was a failed system. What he found instead was that not only did capitalism work, but that it self regulated itself. This displeased the Soviet government so much they put him to death.

I completely agree. If anything, I think the time scale of the cycles are shortening up as time progresses. You'll love the link I posed above.

-Shrewd

[Huckleberry3911948]

reasonable post. its not like laizze faire is the solution, but endless debt isnt working either.
the great evil right now is excessive credit. gota stop --else we are back to 1929 very soon.
americans must stop signing for things and start paying for things. it utterly changes your consumption behavior. of course that is what they are trying to avoid.

[CosmicWizard]

h....39....: wrote

americans must stop signing for things and start paying for things.

Agreed....BUT many Amreicans don't have the cash to pay for their needs let alone their desires. As long as the bulk of the wealth is controlled by the mega rich few, the situation is not likely to change, with the exception of more people starving and probably stealing from those who are even slighty better offf then themselves. With such a strong disdain for any spread-the-wealth ideas in this country, the continual flow of greater wealth to the already uber wealthy will simply increase. How long will we allow the uber wealthy to steal our meager wealth in broad daylight?