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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Lane3 who wrote (94173)	11/5/2008 6:32:15 PM
From: TimF	Respond to of 541416

"The other flaw in trickle-down is that globalisation of the supply chain has meant that productive investment by the rich in the west is rarely directed into the home market That's simply false. The rich invest an enormous amount in the US. If had said "is not always" rather than "is rarely" than he would have a valid point, but the point wouldn't be as big of deal. And investment in other countries has a return of Americans as well. Meanwhile other countries are investing in us. This cross investment across the world, rather than just being able to invest in your own country is a plus not a minus. instead those new jobs that are created, are generally overseas where the associated costs and regulations are far lower The US has had low unemployment for awhile. Now we might have moved back up to average unemployment, but its hardly like there has generally been a lack of jobs in the US. To the extent the cost of regulation and taxes are a problem we should look to lower them. To the extent that other costs are higher, well so is productivity in most cases. If it was just about labor costs sub-saharan Africa would be the world's economic powerhouse. It still seems like too much of the money of the rich is non-productive, Sure the rich have Ferraris and villas on the riviera, etc. The consume, they don't just invest or produce. Both the rich and poor spend on consumption, not just investment. The rich spend more in absolute terms on consumption but less compared to their level of investment (mainly because the poor don't have investment capital in most cases, but its also true when you compare the rich to the middle class)

To: Lane3 who wrote (94173)	11/5/2008 9:05:17 PM
From: spiral3	Read Replies (1) \| Respond to of 541416

It still seems like too much of the money of the rich is non-productive, bubbles notwithstanding. The pursuit of financial gain based on non-productive assets is what brought us this collapse. I think this trait is going to be around for a long long time despite the biblical injunctions against it. The solution is to increase transparency. It's precisely the most non-transparent aspects of this bubble that drove this destruction. More visibility into these derivative markets would have gone a long way in helping to avoid a lot of what we're experiencing know. Transparency allows markets a chance to succeed whether the players know what they are doing or not, and if it's not going to be voluntarily implemented then it's going to have to be made compulsory by the govt. The idea oft stated, that this collapse was on account of not of being able to quant the risks, a smokescreen if ever I saw one, wouldn't exist if all the facts were on the table and open for all to see. Without the regulation in place to ensure transparency, the invisible hand took an arm and a leg, incapacitating it's host entity. I find the notion that “no-one saw this coming” a little ironic, it must be tongue in cheek. With increased transparency puppet masters would have to find a new way to hold on to their loot and their power, objects which are easily secured behind the opaque walls of a non-transparent system. Opening a closed loop is a recipe for creative destruction. No doubt folks are not about to give up so easily and would exploit global asymmetries in this regard. Ultimately everything needs to be open, because when a butterfly 10000 miles away flaps it’s wings, well, look out. So be it. What always gets me is that transparency is one of the most fundamental requirements of the free market, yet regulating it into the economy is considered a sin by those who advocate free markets most dogmatically. It's an odd juxtaposition, on the one hand free market fundamentalists are driven by too much hope and belief in enlightened self interest, while on the other the invisible hand has just bitten them in their unenlightened self interested ass. The point is that at this point, increased transparency is an important and urgent imperative. More is better because under such conditions the market stands a better chance of taking care of itself. The longer we delay regulating this in, the steeper will be the cliff off which we've just jumped.