what a dumbell.... let's let the 'experts' run the show, what a fucking pawn you are, I guess Clinton was really feeling 'neo-con' when he signed the repeal of glass-steagal
Oh and the "robber barons" were in bed with government constantly. Their monopolies were created with the help of the politicians. This is the OPPOSITE of free market capitalism.
Yeah, It abhors me that people think that government policies are the ONLY things that cause monopolies. Monopolies can be bought or agreed upon in private w/ government or not.
You should pick up two books, the History of Money and Banking by Rothbard and Economics In one Lesson by Hazlitt. Also this recession is the result of Keynes driven Fed policy combined with ignorant government intervention. It had nothing to do with being a free market because it was not a free market. Interest rates and lending are not being determined by the bank reserve status and fiscal prudence like they would be in a free market. Please for your own sake read a book and stop watching CNN
@xTAxGUNZ There are no free markets. They're physically impossible.
The thing in the USA is that because you're all so damn poliarised you fail to see the nuances of complex events such as this. The housing crisis and subsequent financial freeze were not caused only by government intervention, they were not only caused by greedy banks, the were not only caused by a debt-ridden society. THEY WERE CAUSED BY ALL THREE + MORE.
Christ, and you free-marketeers keep saying you have a grip on reality.
Well regulation from the govt. allways gives someone a benefit. So no, these regulations you are refering to are not of good for the economy. Yes, for the richest in the society they are good, but not for the poor and middleclass. As this financial krise is a result of keynes. Govt. have been the biggest employer for many decades, to keep unemployment lower, and look at where we are right now. And again the solution should be for govt. to emply more ppl. Kommunism doesnt work!
@kuzzlenuzzle Look at when organized crime took place in US, when they tried to go away from Free market, by prohibit alcohol. And the mafia polycracy came long before they started the transition to a more free market. Russia is not even today a free market oriented country, but its better than before.
Could you please give me some name of the countries that have seen more poverty by adopting free market.
And how did china follow keynes after 1998? If any country followed keynes it was the USA!
@Warzoooooo Russia was an obvious dictatorship before the transition. The foisting of free-market principles onto a legally and physically unprepared country led to a hoarding of state assets (including Russia's vast natural resources) by rich ex-leaders and foreign firms. This led to a flight of capital, a total collapse in investment, and a recession. Free marketeers simplistically cried that Russia wasn't trying hard enough.
Parts of Africa, much of The Far Fast, much of South America.
@Warzoooooo The followed keynes in as much as they ignored the free-market fundamentalist IMF and instead pursued their own policies of high government investment and protectionism.
Y'know, those things that made Europe and the USA slowly rich over hundreds of years, too.
@kuzzlenuzzle And why is that? All regulation is morally-driven, especially in communism and socialism. Keynes theroy is based on morally-spending by politicians.
@Warzoooooo I suppose you think that laissez-faire economists and Keynesians have different moral goals, because you're stupid. That's wrong. At the core, both schools of thought think free markets are fan-dabby-doozy. The only real difference is that moderates and Keynesians don't have such blind faith (and the associated detachment from reality) in free markets because, yes, MARKETS CAN AND DO FAIL.
Both schools of thought want the same thing, they just disagree one how to achieve it.
@kuzzlenuzzle Markets can and do fail, and goverment fail and will do it again, in trying to micro manage all ppl in the market. Keynesians doesn't have blind faith? Blind faith that you can create wealth from wasting resources? If I'm stupid, you ought to be the next step in the wrong direction, what ever the word for that might be.
"I suppose you think that laissez-faire economists "
@kuzzlenuzzle Well as most of your guessing you are as good as Ben Bernanke, you do not seem to get alot right. Yes, I have studied economics both in school and in spare time just for pure interest. So there are alot of hours behind each of my statements.
Your analogy to baseball rules is not the same as the rules govt is creating in the market. As we have got rules that are good in the market. Thats the idea with govt from the begining. Rules like you have the right to your life, your liberty and your property, but noeone have the rights of anotherones life, liberty nor property. But these other rules are like in baseball giving one team an dissadvantage like making them carry extra wight. That is what govt regulation does.
Can I ask a quick question as to how many individuals watching this video are Economics Majors? Any body going to get a Graduate Degree in Economics? Anybody take Calculus II or Linear/Matrix Algebra? Anybody study history? I see everyone here against this video but all of you forget that economic thoughts are tools and ideology should never be followed. Keynes doesn't work 100% of the time and sometimes you use something else but it's stupid to say all of it is trash.
@getnbusy2nite I am an econ major, I have taken Calc II, and I am a student of history. I agree that economic thoughts are tools. Having said that, Keynesian economics is to actual economics as astrology is to astronomy.
If you accept even a very basic economic axiom such as "in the long run, you cannot consume more than you produce", then the Keynesian approach to economics should be very easy to deconstruct.
Individuals and governments can consume more than they produce through debt and deficit spending. Debt is increasing present consumption at the expense of future consumption. Technically one can grow using debt, then use resources from the growth to pay off the debt...risky but it can work. In the case of Keynes you're right in what you say, but it's not a long run solution, only a short run fix to be considered (not always used) in a recession. Long run will depend on good exit policy.
@getnbusy2nite: I never said governments can't consume more than they produce *temporarily*—I specifically said "in the long run".
Having said that, I don't disagree with anything you stated in this post. Unless, of coure, you mean to imply that the stimulus and/or bailouts represented sound fiscal policy.
Government should never enter deficit unless it needs to. My main point is I see many people bash Keyen, or Austrian, or Monetarist, etc... because they think their way is the best and refuse to accept any good from other theories. A good economists will use these schools of thought as tools and use them when applicable. I don't subscribe to any one school of thought, but think all have valid points to be considered. I hope to carry this thought once I get my Masters and Ph.D.
Keynesian policies of bush and greenspan got us into this mess and you believe the same approach of lower interest rates, war spending, stimulus and bailouts will save the economy now that someone who isn't a neocon is in office nonsense. when will you Keynesians admit it you've been wrong since the 30's you keep getting it wrong time after time the great depression, praising the soviet union the housing bubble now bailouts. reality is money must be saved to be able to spend it not just printed
You're mistaken...Keynesianism says spend in recession and save in expansion and Bush did the former and not the latter. The ultimate issue is the notion that "everyones self interest" left unchecked will lead to economic prosperity. It doesn't. I'm not saying government is without it's faults and spending is not a cure-all for recessions, but to say Keynesianism led to this is wrong because it was never implemented. Keynesianism did get us out of the Great Depression though.
@getnbusy2nite you're greatly mistaken bush spent to avoid a recession stimulus package,t.a.r.p, war dropped rates from 6.5 to 1% .this along with sup prime lending entities of the gov. created an expansion which was solely based on borrowing and spending which IS Keynesian all this borrowed money was spent to avoid the recession. saving is exactly what is needed to ever have prosperity unfortunately Keynesian beliefs that deficit spending creates wealth is dead wrong
Yeah you're right in saying that Bush followed the Keyensian approach to spending in a recession, but the other side of Keynesianism is to save and invest in growth. He only considered savings a problem if it was savings "beyond planned investment." I agree that Bush was fiscally irresponsible for some time, but you can't call him guilty of Keynesianism, only Keynesian spending (which he rightfully should have done given similarities to Great Depression).
right well i think the theory that savings beyond planned investment is what waste or destruction of wealth? yeah i think its nonsense you can never know how much is needed to invest in the future many factors like technology the economy interest rates these change i dont think a businessman could anticipate the exact amount to save but the more savings in banks the more money for those businesses to borrow for investment in capital goods more credit is good when the money actually exist.
People save to eventually maximize consumption through investments. There's something in Macroeconomics called "The Golden Rule Savings level" which, through mathematical computation, can show that it is possible to save in excess of what will maximize consumption, meaning that it is possible to save more than what is necessary to get the most bang for your buck. Consumption falls so does demand. It's a two way street. I agree with what you say, but you have to consider both demand & supply
@getnbusy2nite yea i see the demand side but i think this is where a natural business cycle might take a dip when people just max out their saving but the people are in good shape with money saved up and still the growing amount of savings will lead to even greater investment now, as more credit is available and even more consumption is possible in the future. it just seems like the market will be the best vehicle to determine real demand for a sustainably economy not the government
Everything has an equilibrium to look at. Money in a bank increases monetary flows through investment. Mattress money (saving beyond investment) decreases money flows and stifles growth. HOWEVER, you're right. Spending profusely is not the answer to stable growth as we learned in Depression and this Recession. Government should only get involved when markets fail. They increase demand that will reduce inventory surpluses, firms hire again, produce more, give wages, people spend, cycles ok.
@getnbusy2nite i'm very curious to know how Keynesian got us out of the great depression im sorry but its a laughable he wrote his general theory after the great depression and seemed right cuz all he did was excuse the action taken in the depression and the depression was over oh yeah what a genius everything the government did prolonged the great depression starting with hoover
Published in 1936 during the GD. He advocated increased government measures to increase aggregate demand. Increased government spending and demand for war materials in WWII put many to work and pumped the economy. Hoover did the same thing, so did Roosevelt before the war, but neither measures matched the massive demand that war created. Now military Keynesianism doesn't always work, but politicians are guilty of following ideology and not thought most of the time.
yea all those measures had been taken before then and during until the 40's so what around half way through he makes the claim that what the government had been doing was right i dont see it. of course the economy was going to get back on its feet sooner or later but i think it happened over such a long time, because of these Keynesian measures, that we got out of the depression in spite of these policies.
I see what you're saying, but if you look at the timeline the depression ended right as we entered WWII and government demanded all that material. We probably would have gotten back on our feet eventually but we got back out of the bad business cycle quicker through increased government spending. Obviously there's always the issue of causality vs correlation, but it seems "too coincidental" to be merely a coincidence that things got fixed as we entered WWII.
i don't see entering the war as getting us out of the depression if you look at unemployment numbers then yeah but millions left the labor force to go destroy things and of course alot of people had to take those jobs.Also if you consider what the economy was, its strengths were producing things for the war effort. so people making things to destroy stuff so yeah people had to work but standard of living i mean rationing goods all these oppressive policies.people were better off after the war
Yeah I agree it sucks that our workforce specialized in destruction and death at the time, but the overall effect was that greater government spending did employ more people, increased GDP, people earned money again, and it served to temper our way out of the Great Depression. I'm not advocating going to war every time our economy is down, but this shows that government spending can help if implemented properly. It's just another tool to use when and if it's applicable.
@getnbusy2nite the government can always affect gdp and employment but this isnt the best indicator of economic strength they have to disrupt the natural forces of the market to achieve these numbers. the soviet union had great employment gdp numbers but the market forces to set aggregate demand and anything were absent it was arbitrary production. but have you ever heard of the broken window fallacy?
I see what you're saying about the unintended consequences of helping one sector could spill over as hurt for others. In the present case we have an issue of market failure. It would take many years of drastic decline and stagnant growth for the market to recover. Government spending can ease the process if implemented properly. We already see improvement in the global economic recovery. I agree GDP and employment aren't perfect indicators, but those plus inflation are what impact people.
this was no failure of the market it was intervention into the market that brought about the housing bubble it was government boosting demand for houses through manipulated low interest rates bailouts and insuring mortgages and sub prime lenders this free money didnt come from the market it came from alan greenspan the
@getnbusy2nite i'm very curious to know how Keynesian got us out of the great depression im sorry but its a laughable he wrote his general theory after the great depression and seemed right cuz all he did was excuse the action taken in the depression and the depression was over oh yeah what a genius everything the government did prolonged the great depression starting with hoover
aaaaaaaaaaaaaaaaand a year and a half later, we're still in the hole. Unemployment is much worse. The deficit is larger than ever. And our total national debt has skyrocketed to monumental proportions.
Have you seen the recent job report numbers? The increases in major world stock indexes since their March Lows? Rising consumer spending? Increased orders for United States Durable Goods exports? Government spending and intervention can work if used properly and it takes time. It's by no means a cure-all for recessions, but it can work if used when appropriate.
@getnbusy2nite Jobs are increasing due to seasonal variation. Unemployment always reduces this time of year. Google "unemployment rate" and look at the chart. Moreover, roughly 1/3 of the "jobs" that were "created" were census jobs. Those are neither sustainable nor productive jobs. Durable goods orders is a good indicator, but consumer spending isn't. We're spending borrowed money on consumption. That's not good for the economy.
Nice points thanks for those, and I appreciate the data as well that did give your argument credence about unemployment so it's definitely something to consider...very cool.
What's your take on the recent stock index numbers though? Investors are back to work as major stock indexes around the world are up from their March lows. I think increased consumer confidence/spending is an important component of recovery, and though fragile the global economy is improving. What do you think?
robber barons? im assuming youre referring, generally, to the 1800s? yea...
its not like we created the cotton gin, electric lighting, steam engines, steam ships, the telegraph, the phonograph, hundreds of thousands of miles of railroads, the sewing machine, the refrigerator, pasteurization, toilet paper, the telephone, etc. or anything like that... should i go on?
yes.... what a ghastly and stagnant time in history that was.
Robber Barons refer to the late 19th/early 20th century...in that time there were economic booms in terms of GDP growth but the average working american worked and lived in dismal conditions, many occupations were life threatening, children worked in the same dangerous conditions, and there was little or no consideration for the working man (perhaps except Ford though he only paid high to make sure skilled workers didn't leave). Economic prosperity is not measured in GDP only.
@getnbusy2nite: Did you stop to consider the direct implications in my post? All of the technological innovations that I listed, in one century, have done more to contribute to the standard of living of the AVG human being than all previous centuries combined.
Did some people live poorly? Of course, that was the case then and had been the case throughout human history UNTIL the productive forces of voluntary trade were unleashed that made this modern standard of living possible.
I can't consider implications to a post that was more abrasive than informative. It took a lot of government intervention to ignite that voluntary trade, it didn't happen because of the increased production. Industrialists, for the most part, seemed content in extracting value with little reward to the worker, which is an unfortunate byproduct of firms in competitive markets looking to gain profits. Workers began to enjoy a descent standard of living once regulations/wages increased.
@getnbusy2nite: What was this hefty government intervention—the one that ignited all of voluntary trade in the 19th century—of which you speak?
I don't believe I ever said that increased production led to voluntary trade. Quite the opposite: Voluntary trade led to increased production and, more importantly, *increased productivity*—which is, as a matter of fact, the ONLY way that long-term real wages (i.e. avg standard of living) can increase. Government fiat does not do this.
You didn't say "voluntary trade of the 19th century"...I assumed you meant the economic freedoms that were enjoyed by the working class after WWII when you said modern standard of living, and all of that didn't happen without government regulation. Can you elaborate on what you mean by voluntary trade in 19th century? Government fiat is not designed for increased productivity or big returns but to fill gaps where markets fail/no private investment (Public Economics).
@getnbusy2nite: In my original comment—the one to which you responded—I listed a number of 19th century innovations. Then, referring to these innovations, I stated that we did more to raise the standard of living of the average human in 1 century than in all other previous centuries combined. I said absolutely nothing about WWII.
Ok, voluntary trade as in, for example, no income tax, no Fed, no huge bureaucracies, low regulation, etc. (i.e. general lack of coercion in the economy).
Too little regulation on the economy can create noxious and deleterious effects if left with little oversight...we've seen that happen. You can't just look at the positives and ignore the negatives because it conforms to your way of thinking, there is an equilibrium that must be maintained. In your era of "unleashed voluntary trade" workers worked and lived in deplorable conditions. There was slavery, high income inequality, trusts. There is a danger when markets interfere in government also.
@getnbusy2nite: Let's not get into slavery. Slavery was often enforced by the Federal Government (fugitive slave laws). I digress..
To your main point: Deplorable by what standard? Modern standard? Of course. The gains in productivity have afforded us the luxury of modern standards. But more importantly, under free competition, the market decides—not arbitrary governments—the optimal conditions of a work place given the productive capacity of the time... For example... >>>
Southern agricultural MARKETS wanted the cheap (free) labor and individuals wished to have them as a social status...again government had to steer them to a better decision. Then when that was over business entities did not hire or give economic equality because they chose not to for personal reasons. Again government (through democratic process) intervened at some point, though I agree they did much to discriminate as well.
@getnbusy2nite: I refuse to repeat myself on this point. It is a wash at BEST. If you are genuinely curious i will send you some academic material on the subject.
@getnbusy2nite: (continued).... if an employer can compete for employees by offering improved working conditions and do it in such a way that is economical given the resources of his time, then he does so and he is rewarded. You are creating a false choice between voluntary markets and humanity. It is simply unnecessary.
Be clear on real-wages. If you mean inflation adjusted, that can remain the same during productivity booms if firms keep wage levels the same. If you mean mass production made goods more affordable, like the roaring 20's, then you're correct. With clarification I see you're meaning, though more productivity/less regulation can also lead to asset bubbles if not checked by government oversight as we saw in the Great Depression and see now in the current recession...not good for longterm.
@getnbusy2nite: The overwhelming majority of inflation is attributable to the actions of the Federal Reserve.. but I digress.
I mean both. You seem like a reasonable guy so it surprises me when you state something like, "if firms keep wage levels the same". The avg. wage in an industry under free competition is not subject to the whims of the firms. A wage is simply a price that an employer pays for labor; it is subject to the same equilibrium forces as any other price in a free market.
What about supply shocks and demand pulls? Dismantling the Fed is not the answer. The fed is driven by the ideologies of those in power (or economists with myopic views). That is what needs to be addressed.
In *competitive* markets sure BUT firms can have *monopoly* power over the supply of labor/wage level if there are too many in the civilian labor force, that depresses the level of wages. That's market failure, and that's a time for government to intervene (Public Economics).
@getnbusy2nite: The Fed's most effective role is that of providing the means by which the Federal Government can have its cake and it too (spending and tax cutting). The Fed can simply print the difference. How convenient.
If there are "too many in the civilian labor force" and they feel like they're not getting a good deal, then they can move elsewhere. Free markets rely on fluidity. Still, let us say that wages are too low for your liking because of an excessive labor force... >>>
Capital may be easily mobile to some degree, but labor is far less mobile. 1) You can't just discount common sense to support your view 2) You can't expect people to just move to find work (that may not be there) with little capital and just find a job to improves, not just sustains, their lives. In the Great Depression many moved all over with what little they had. They found jobs that paid horribly and barely provided enough for subsistence...again we didn't leave GD until government spent.
@getnbusy2nite: (continued) .... how then does imposing an artificially high wage help long-term standard of living? Employers will not simply pay a worker more than his marginal product of labor. Employers will simply fire all workers whose value is under that arbitrary number and keep the more skillful workers. This creates unemployment and mass suffering for the least skilled members of society. In addition, total output is reduced and costs increase. Society is poorer because of this.
A minimum wage can be beneficial, economists have to look at more than just balance sheets. If employers have monopoly over labor supply and people are looking for work, then they would work for the lowest wage, TOO low to afford a descent level of comfort. This does not fit with the free market promise that fluid markets creates prosperity for all if all a worker earns is a subsistence (or even below that) wage. Besides even with a min-wage, if a worker performs poorly they are fired anyway.
@getnbusy2nite: You're repeating yourself on the minimum wage point. You decry the horrors of subsistence wages but you say nothing of the individuals who will be earning precisely ZERO in wages when an arbitrary and artificially high minimum-wage happens to be 1 penny above what their labor is worth. Talk about subsistence.
And you evade the greater point: Wages are not arbitrary. Wages are prices. A price is a signal. It performs a very specific and very important role in any market.
Hey settle down, you can only say so much in 500 characters. The min-wage is only harmful if set as a price floor above the market rate. Real min-wage has increased slower than CPI on most products so it's possible that a price floor below market rate exists which is acceptable, though there are studies that say classic textbook theory doesn't apply to min-wage (Labor Economics).
Also Marginal labor values will adjust to minimum wage as employers charge new prices for goods...BUT competition between firms, especially those with profits, could keep prices low but wages a little higher.
Price is a signal but in terms of labor it has a human component that needs to be considered. If unemployment was caused by low demand and high savings (not investment), even at low wages employers would not hire many anyway. A min-wage lets those that are hired live above subsistence.
Mass production coupled through capital intensity with specialization of labor enables an individual to product much more in MPL than before. In theory without min-wage, firms can pay individuals subsistence wages while extracting more from the worker. Under min-wage, it guarantees access to a descent wage for workers. There is nothing to suggest (in most markets) that the wage is set too high. It need not be arbitrary neither considering their are cost of living measures to base a min-wage.
@getnbusy2nite: This is, by far, your worst argument. "Mass production coupled through capital intensity with specialization of labor enables an individual to product much more in MPL than before." If only you had just stopped there!
In theory, firms can gang rape their employees regularly. Fortunately, there happens to be a reason why they don't—this happens to be the same reason why they don't pay all of their employees subsistence wages. It is called competition for labor.
@getnbusy2nite: If you think that some people simply dont make enough money, then just offer them a direct subsidy equal to the amount of this gap and call it a day. Don't institute arbitrary wage floors under which the least-skilled workers in our society (eg many minorities, immigrants, and young people) will be unemployed and royally screwed.
As said before, firms would seek those who are the most productive anyway even without the minimum wage. Why would they seek lower productive employees? Sure they could be cheaper, but if they performed poorly at their work they would get fired anyway so the end result is still jobs for more productive people.
@getnbusy2nite: If a worker works so poorly that they represent a negative return on the firm's investment (wage), then they will be fired. This is not rocket science. Firms are not necessarily going to seek the MOST productive. For example, McDonalds is not going to hire any 5 star speed chefs. Different business models call for different skill requirements. And even in the same occupation at the same job, more productive employees are paid more while less productive are payed less.
@getnbusy2nite: It is a matter of cost-benefit calculation. It has nothing to do with productivity (in the context of our discussion). For example, there could exist the most productive chef in the world, but if he demanded a wage that was above what even his productivity stood to benefit any given company, then he would be unemployed.
So what , you're saying that without min-wage firms wouldn't seek to hire more productive workers and just hire everybody? That logic doesn't hold water. Firms will always hire more productive individuals regardless, why would they do otherwise? Perhaps before mass production where production was more labor intensive but capital intensity has increased dramatically allowing MPL's to rise exponentially, so min-wage may not be a floor above equilibrium.
@getnbusy2nite: No, this is not a very complicated argument. Firms will not hire someone who, given their wage, operates at a loss to the company. Therefore, if the minimum wage is at x amount, firms will only hire workers whose mpl is grtr than x. All workers whose mpl is less than x are now unemployed. If the minimum wage is removed, the firm can hire all workers whose mpl was less than x up to & including the wage just above that for which they are no longer willing to work.
The critical arguments against minimum wage would hold more credence if the demand for low-skilled labor was not inelastic. Research shows that for a 10% increase in min-wage employment drops by at most 3% meaning that the min-wage is not drastically (if at all) set above market price. It does however reduce incentives for employers to adequately train employees and increases drop out rates...again some positives to consider and negatives to be addressed (not all trash).
Got you beat on min-wage being beneficial in some cases right here in my Labor Economics textbook. In cases of monopsonistic labor markets, a firm can price discriminate since they face the supply curve of labor. They will hire until MC reaches MRP. by instituting a min-wage below that point, they create a flat MC curve that touches the MRP at a point where the wage is higher and more labor is hired. See, government and min-wage being beneficial in a certain implementation...not impossible.
@getnbusy2nite: Dang, you got me beat brother. Yes, government-enforced minimum wages can be marginally beneficial when it comes to government-enforced monopolies. Check and mate.
Monopolies are not always created through government assistance. A firm can horizontally integrate with other firms or out-compete. I don't need to prove this cause it's common sense, if all monopolies are the result of government assistance then their wouldn't be a separate definition for coercive monopolies or government monopolies.
I think you're desire to one-up me is causing you not to pay attention. I said "it can also result from a failure of outside firms to compete based on PRICE"
In your other post you said this is the definition OF A NATURAL MONOPOLY.
THEN you said: Coercive Monopoly: "able to make pricing and production decisions independent of competitive forces" as such they have a PRICE ADVANTAGE because other firms face a barrier to entry based on inability to match or beat their Price
@getnbusy2nite: You are conflating *opportunity to compete* with *ability to compete*. With a natural monopoly, firms have the opportunity to compete yet are simply unable. With a coercive monopoly, firms simply do not have the opportunity to compete in the first place. There is a big difference.
A natural monopoly cannot making pricing and production decisions independent of competetive forces.
@getnbusy2nite: The barrier to entry erected by economies of scale is only a barrier to the extent that the prices offered by the firm in question remain BELOW what potential competitors would otherwise be able to provide. That is not an absolute barrier of entry and it is certainly not a example of a firm being removed from the forces of competition.
You should really get this distinction down as it seems to be at the root of a lot of the fallacies that you're assuming.
Now to a NATURAL MONOPOLY: this occurs when a firm made large capital investments and faces high fixed costs but low marginal costs. They have a COST advantage due to economies of scale, like you said, BUT earlier you said they had a PRICE advantage (coercive monopoly).
Again with your arrogance
You are right in saying a coercive monopoly can result from government assistance (natural ones even more). Though the main point is that monopolies are not all created through government help.
@getnbusy2nite: Haha wow.. Again with your erroneousness!
Coercive monopolies do not have a price advantage (necessarily). Read very carefully: ***They have the ability to set prices independent of competetive forces***. Refer to below \/\/\/.
"Necessarily" is a cheap trick to overturn your error, sure coercive monopolies don't "always" have a price advantage BUT their ability to "set prices independent of competitive forces" USUALLY gives them Price Advantage and deters other firms from competing, why do you think they are called coercive?
The main point is you said I was wrong on the definition of Coercive's, when I'm not "necessarily" (what a joke), then you said they're called Natural's (WRONG), then you insulted me (Arrogant).
@getnbusy2nite: I corrected this miscommunication 2 posts ago. Coercive monopolies do not necessarily have a ***cost*** advantage. They may or may not. That has nothing to do with the nature of a coercive monopoly.
I assumed that by "price advantage" you were referring to cost. If by "price advantage" you meant "price maker", then yes, sorry, you are right—irrelevant nonetheless.
First it was not a miscommunication. You were in a rush to prove yourself right and you were mistaken...take it like Greenspan and admit you were wrong.
Second, the point is that some Monopolies can exist WITHOUT GOVERNMENT HELP, and in turn can be REGULATED BY GOVERNMENT for positive outcomes. You should have covered this in Principles and Intermediate Micro Theory.
So you see, government is not always detrimental to markets.
You did "challenge" me to name coercive monopolies (which are monopolies in broad terms) that existed without government assistance. If you never said monopolies couldn't exist without government hlep, you certainly implied it in your challenge
Now you have implied monopolies CAN exist without government help. If an undesirable condition in the market has occurred without government, then regulation of which can bring positive effects (as taught in micro theory)
1) I don't care about winning I just wish you would open your mind and explore other ideas 2) Although disappointed at some aspects of this convo I'm happy to have brushed up on my Micro and I thank you for your time (you did not waste it) 3) You asked me this on another post and I made a comment, please see it 4) I'm taking a break to play Dragon's Age.
Best wishes on your endeavors in the field of Economics. What school do you go to by the way and do you have Grad School Plans?
If you would be so kind to copy and paste your answer to the question (What is the difference between a natural monopoly and a coercive monopoly?) it would be much appreciated.
@getnbusy2nite: You can't use "price" and "cost" interchangeably in the context that you are right now. Theoretically, a coercive monopoly could have astronomical costs but give everything that it produces away (eg medicaid, food stamps, public schools, etc).
Yes that "is" possible, a firm "could" give away everything for free with high costs and be considered a "coercive," but we learn that firms behave rationally and seek to maximize profit, or share-holder wealth if you're finance oriented. but they wouldn't last long if they did that and it wouldn't make sense to that for a long time. Maybe in the short term to establish relations with consumers or adopt "Gillette" business models but not continuously
How do they profit if they operate at a loss? I mean if you're implying they are subsidized or given additional monetary assistance outside of earned revenue then that's another matter.
It would be easier for you to just tell me what you have in mind because: 1) I *correctly* listed some already 2) There are quite a few, and 3) You're probably looking for a specific answer and I believe you are attempting to bait me into looking uninformed about the subject if I answer something different.
It was slightly abrasive and I thought you were still in "get him" mode but my response was:
It would be easier for you to just tell me what you have in mind because: 1) I *correctly* listed some already 2) There are quite a few, and 3) You're probably looking for a specific answer and I believe you are attempting to bait me into looking uninformed about the subject if I answer something different.
I'm sorry about that. Whatever knowledge you have I would be genuinely happy to know it.
@getnbusy2nite: The only thing I have in mind is learning what it is you believe to be the difference between a natural monopoly and a coercive monopoly.
Now with Coercive Monopolies they are defined to make PRICING decisions outside of competitive forces...THAT IS WHY THEY HAVE THE ADVANTAGE IN PRICE WHICH I SAID BEFORE, they are PRICE MAKERS not price takers as with competitive firms.
Again, a natural monopoly, WHICH YOU SAID I CONFUSED FOR A COERCIVE (which I didn't you just were in a rush to point me wrong), has A COST ADVANTAGE based on established economies of scale since they made the HEAVY CAPITAL INVESTMENT before other firms.
@getnbusy2nite: That is correct, coercive monopolies are price makers. I assumed where I should not have. Let's clear things up: Let us use the word "cost" instead of "price", in the interest of precision.
Coercive monopolies do not have a COST advantage (necessarily). Natural monoplies do, by definition. A coercive monopoly's prices are not subject to competetive forces. A natural monopoly's prices ARE subject to competetive forces.
You know that monopolies tend to make prices and cut quantities making profit at the expense of consumer surplus. Government can regulate monopolies for favorable outcomes, and there are SOME monopolies that DON'T exist because of government help, so this is an example of positive government regulation.
However, SOME monopolies do exist through government intervention (Dutch East India Co), and can be an example of negative government intervention.
1) a monopoly can occur through horizontal integration or out-competing it's rivals. If all monopolies were government assisted we wouldn't have a separate definition for coercive monopoly, they would all be called the same.
2) I said MONOPSONY which is a single buyer faced with multiple sellers. In this case you can have a firm, perhaps competitive in other regional labor markets, but in a particular region could be the only region, or the biggest, who hires.
@getnbusy2nite: In other words, wages are not arbitrary. But the most important thing to understand is that productivity increases long-term real wages by increasing the value of the marginal product of labor. This extra labor value allows employers to lower prices, increase compensation, and invest, all while turning a profit. This is how wages increase in the long-run. Again, I repeat, government fiat is incapable of performing this process.
That's an understandable logic but you're message is lacking. If I postulate correctly you don't like government intervention in the economy. With that in mind, you are correct that government spending usually fails at producing higher returns and is less productive. But the role of government spending is not to operate as a private entity. It's there to ensure market stability in times where markets fail, provide for investments where private sector lags, and ensure security.
@getnbusy2nite: That's the false choice to which I am referring. There is no dichotomy between humanity and voluntary trade. On the contrary, they are inextricably linked. Government interventions *create* instability by creating moral hazards and encouraging malinvestments. Governments use institutions like the Fed to take the entire concept of interest rates—a function of the value of money and time—and tinker with them... arbitrarily... whimsically.
@getnbusy2nite: Then, when the inevitable and predictable concequences of these policies materialize, governments rush in upon the rubble and ask for your money to pay for the clean-up. Well, how about we try keeping our money and spending it according to our individual desires in the first place? That's a novel concept. The further you divorce the consequences of decisions from the individual, the more inanity you bring to society. Big-government is an institution devoted to that end.
I'm not trying to get into a battle of wits with you...it would be wrong of me to attack an unarmed opponent anyway. Just kidding you're cool and I'm glad you're taking the time to speak with me, I've been starved for intellectual conversation.
I know there's research that discounts the benefits of a minimum wage but it might be too late to fix it. People are used to a standard wage now, and it would take a long time for a decrease in prices to occur if the min-wage is removed anyway.
@getnbusy2nite: Oh, and increased productivity does not lead to asset bubbles. That is ridiculous. Less regulation CAN lead to an asset bubble but only if that deregulation was preceded—or accompanied—by other regulations that skew economy-wide capital allocation. For example, the Fed was created; then we had the Great Dep.; then Glass Steagall was created; then we repealed Steagall (1999); then, came all of the crazy leveraging, derivates, MBSs, etc...
Increased productivity can create bubbles...we had increased productivity in housing and tech, both were bubbles. The Fed didn't just lower interest rates (which they kept low too long, I agree), they refused to examine the MBS and derivatives markets which in your world would be great cause there would be no regulation. This left the final decision on the loans to banks and institutions, they also made a wrong call. You can't just blame it all on the Fed cause you disagree with it the most.
@getnbusy2nite: Come on man, I very specifically stated that the crazy leveraging, MBSs, derivatives, etc., were a direct result of the moral hazards created by the bailout guarantees provided by the Federal Government and financed by the Fed. Not to mention the gross malinvestment caused by the artificially low interest rates, the effects of which were steered towards the housing industry through Fannie and Freddie. Why on earth would I be happy about that?
By lowering lending standards, the Fed essentially gave more freedom to financial firms. They should have been more prudent on their lending but they weren't, they were driven by their own self interest with little regard for others. Now you can argue that the Fed induced that, but it was deregulation all the same, and you're proposing that we completely deregulate markets when even a little was shown to be harmful...you need to have a balance between the two.
The bailouts were implemented AFTER the crisis unfolded from all the derivatives and MBS's. Again, I agree that rates were too low for too long but the Fed/government, by reducing standards, left to private firms to make their own standards and they chose not to lend prudently. Sometimes oversight is needed.
Government insuring banks can be a good thing, take the FDIC. People need trust to deposit currency in banks so they can lend and grow the economy, FDIC provides security.
@getnbusy2nite: Sorry, but no shit they were implemented AFTER the crisis unfolded. There was no need for them before the crisis. It was the *implicit* bailout guarantee offered—in true corporatist fashion—that provided the moral hazards.
Again (and I promise this is the last time), private firms didnt "make their own standards" according to a free market. They made their own standards according to a rather unfree market riddled with moral hazards and easy money.
@getnbusy2nite: (continued) now... we have this global financial crisis and most people lazily blame it on the deregulation. However, it was the INITIAL regulation (ie the Fed) that incentivized all of these outrageous financial practices to occur in the first place through policies like artificially low interest rates and implicit bailout guarantees.
Once again, I do agree that they kept interest rates low for too long, but it's a two way street. Ok Deregulation is bad, so is over-regulation, there is a common ground between the two. You're, I'm guessing, a lot like an Austrian, and I get the same thing from you guys, you blame the Fed for everything but don't offer any solutions except remove and let markets work. We've seen markets fail so there has to be regulation, now too much is bad as well so we work to an acceptable equilibrium.
@getnbusy2nite: Alright, my friend, I'll concede all if you can give me a single example in all of human history of any coercive monopoly ever coming into existence without some form of government assistance.
I don't want you to concede all. You can believe in your Austrian "tools," they make good points, but fervent blind ideology is corrosive. Greenspan was inspired by Ann Rand, a source of inspiration for many Austrians, and he too believed in little regulation and government oversight. He deregulated the fed from the inside and looked what happened.
Easy...Standard Oil, actually broken up by Supreme Court in 1911. Acting in *self interest* it gouged consumers and destroyed small business
@getnbusy2nite: Forgive me if I don't respond to your other posts. I have an aversion to repeating myself more than once.
I don't care if you don't want me to concede, I will. Real economics is incompatible with the voodoo economics to which you refer.
Now, on to the challenge. Standard Oil? Public education.. Oy vey! Please look up the term "coercive monopoly". Standard Oil gained 90% market share by lowering kerosene prices from 58 cents to 8 cents/gallon in less than a decade.
You've passed the point of arrogance on this one. I'm offering real tangible examples how government intervention can be beneficial but you're bent on supporting you're myopic views...it's individuals like you who scare me because if you hold a position of power you'll be just as bad as others who make decisions based on fervent ideology. However you're still young and I'm heading to Grad School and have research experience so hopefully with time you'll mature...anyway back to your challenge..
A coercive monopoly need not be a monopoly that profits from barriers to entry through government assistance, it can also result from a failure of outside firms to compete based on PRICE...As you, and I thank you, provided the data above it shows that no firm could compete at that price (they raised those prices back up later). Monopolies, as you know, are inefficient in providing goods. Government intervention spurred competition in oil market by breaking up standard oil.
@getnbusy2nite: No, you are wrong. It is not a coercive monopoly if it maintains its monopoly based on price. That is called a natural monopoly. I find it very hard to believe that you are actually an economics major—much less in grad school for it. If so, that is extremely disconcerting that you do not know the difference.
Oh, and I challenge you to present to me any data showing Standard Oil raising the per/gallon price anywhere CLOSE to as high as it was originally.
Intermediate Microeconomics, A Modern Approach - Hal R. Varian, 7th edition
Page 435: "When there are large fixed costs and small marginal costs...such a situation is referred to as a NATURAL MONOPOLY." i.e. a firm maintains monopoly because they made initial capital investment, set up their firm, and incur low marginal costs. Other firms have a barrier to entry because they can't raise capital and compete. A single supplier therefore has major COST advantage due to economies of scale...
NATURAL MONOPOLIES occur in industries such as utilities, public works, waste removal, and telecommunications. It occurs because single firm is able to procure enough capital (YES sometimes with government assistance) to fund the massive fixed costs, then they incur minimal marginal costs when established. THEY HAVE A COST ADVANTAGE over other firms wishing to enter due to economies of scale.
Government assisted or PRICE ADVANTAGED monopolies ARE indeed called *****COERCIVE MONOPOLIES*****
I must say at this point you're arrogance is an opprobrium. If you just made a simple fallacy I wouldn't have been so abrasive, but questioning my intelligence, experience, and ambitions on top of your mistake is immature.
I hope you learned that fervent ideology is indeed harmful.
@getnbusy2nite: I'm not going to comment on the personal stuff because its a waste of time. Sorry that I hurt your feelings.
Moving on, let's make this very clear:
A "cost advantage" monopoly is not a coercive monopoly. Economies of scale do not render a firm immune to the forces of competition. Coercive monopolies, on the other hand, are immune to the forces of competition. Period. Do you understand this?
Now you could argue that since the government did grant Standard Oil exclusive petroleum exploration rights, they assisted in monopoly creation. HOWEVER, they were already the only oil company who had the resources to explore, drill, and refine oil better than any other company. Only problem is once they got the oil, they used their volume to drop prices considerably, beat other firms, then gouge consumers after. Monopolies are a perfect example how government intervention can improve markets
A free-market's sole purpose—its reason for living—is to develop and distribute goods at the lowest optimal price. The government did nothing to "improve markets" by tearing down a company that did more to develop and distribute a universally desirable good at an extraordinarily low price—the fruits of which were enjoyed by all of society—than just about any company in human history. Sorry, I don't consider that a win for the markets.
Let me pose a challenge to you...Austrians are criticized for pointing out problems but don't expand on solutions so here are some questions:
Without a central bank, who will control the supply and printing of money? If you gave that power to multiple entities, what assurance can you offer that they won't over print?
How can we go to a gold standard, or non-fiat, if even when you take the total amount of gold ever mined at $1000 an ounce it only accounts for half our GDP?
@getnbusy2nite: Ok, as an economist, you must always ask the question, "what is the alternative?". I don't claim to suggest that the currency process has a magic pill that will solve all problems. It's sort of a messy process any way you look at it. Specifically, it is the act of transmuting hard value (ie gold, rice, sugar, etc) into more portable value—but that of equal universal fungibility... >>>
@getnbusy2nite: (continued) Now, if you have a central bank that can print money AT WILL, with no absolute standard against which the paper can be measured, then you have completely torn the foundations out from under what the point of money is. I say, at this point, keep the central bank as the sole printing authority, but allow it to print only as much as the hard assets (whatever they may be—it can be a collection of commodoties, not just gold) dictate.
"The evidence is, in fact, absolutely conclusive that the Standard Oil Company charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher."
I found that statement about from a book in the library called "The Trust Problem in the United States" by a Professor of Economics from Stanford University. The Bureau of Corporations made that statement regarding Standard Oil Co. If you google that title with the word "book" before it there's an online viewer for the entire book and the info is on page 80. On page 79 it shows that it charge 15+ cents in areas with no competition and charged less in competitive areas.
The point is they had the power to raise prices in areas where they had a monopoly and out-price in competitive areas. What would keep them from raising prices higher and higher if they wished, then if someone wanted to compete they just removed them. It's subjective I'll agree, but their capacity for damage on consumer surplus was too high.
You said coercives make pricing decisions outside of competitive forces, naturals make decisions within competitive forces. Is that true?
I said it in a previous post...man I wish youtube let you see every comment from someone and not just your most recent one.
You got something up your sleeve I think, ready to just wail on me but whatever...
There are some differences including the obvious definitions of each, but I remember you saying that a coercive monopoly is able to price outside of competitive forces, and a natural monopoly prices inside competitive forces. Is that what you were looking for?
If you're right then you have nothing to worry about. Your reluctance to define the distinction between a natural monopoly and a coercive monopoly confounds me. This seems like cognitive dissonance struggling to resolve itself.
Is that your answer? That a natural monopoly's prices are subject to competition while a coercive monopoly's prices are not? Is that what you believe to be the distinction between the two?
It's not cognitive dissonance I just feel some hostility, like you're trying to bait me into something. Why are you so eager for my answer?
I'll just stick to the classic definition between the two as my answer, I mean there's no way I'm wrong there. However if you have some knowledge you'd like to share about the two please go ahead. I would sincerely genuinely like to know.
I noticed you like the longest day, that's one of my favorites too. Ever seen Zulu?
I'm eager for your answer because I don't like discussing something for which there is no mutually established definition. It makes for inane arguments in which each person argues beyond one another. It's a waste of time.
Yea I've seen Zulu. Good stuff. Definitely another long day for those british soldiers.
Listen I know I may be getting sappy here but I'm kind of regretting getting into this. I think you and I have a lot to learn from each other though we haven't been the most cordial. This battle of wits is becoming counterproductive as it seems both of us are constantly trying to one up each other when we should be sharing ideas about Economics.
You have you're ideas and I have mine, we don't need to fight about it.
Not trying to fight, just want to avoid the wheel-spinning.
Am I baiting you? I guess. I'm trying to get you to state that the difference between a natural monopoly and a coercive monopoly is efficiency vs coercion.
A natural monopoly gains and maintains it's monopoly status through relative efficiency. A coercive monopoly gains and maintains it's monopoly status through the outright prohibition of competition.
Now ask yourself what kind of monopoly Standard Oil was.
Now, when you attempted to argue that Standard Oil was a coercive monopoly because it was able to raise prices marginally after gaining overwhelming industry control, I had to ask you to define a coercive monopoly because that has nothing to do with a coercive monopoly. If Standard Oil were have to raised prices beyond what any potential competitor had the ability to provide, then that competitor had nothing to prevent him from undercutting Standard Oil.
Thus, Standard Oil's pricing decisions were not independent of competetive forces—the definition of a coercive monopoly.
Now, you may say that Standard Oil's pricing decisions were indeed independent of competetive forces up to and including the price level at which other firms could compete, but then all you have done is describe what a natural monopoly is.
That's why I was trying to get you to define the difference for me so you could think for yourself and identify the difference between something like Standard Oil and, say, the business of delivering 1st class mail in America.
Yeah I can definitely see where you're coming from, even when they dropped prices, they were still competing technically. Though I wouldn't call it "competition" in the free-market sense because there really is no competition, it's one person always winning all the time because he has an unassailable advantage.
It's a good point though, I'll try and think of something else but I did come close.
Oh cool, I think that's a really underrated movie. How about Paths of Glory with Kirk Douglass?
I mean I don't regret all of it, it was good to brush up on micro theory and actually talk one on one with an Austrian, never did that before and I think I've grown richer from the experience. I'll admit my micro is rusty since it's not my main passion, I said before I'm more of an Econometrics and International Trade/Monetary guy. If you ever need help with STATA you can always hit me up.
Does that pass your challenge by the way? You asked me to name one coercive monopoly that existed without government assistance. I thought I read something somewhere (can't validate 100%) that said they did received exclusive exploration rights, but they were the only company that had the capacity to explore in those areas anyway. Does Standard Oil fit your challenge?
I also blame Fed policies for a lot that has happened, and just like you play a single deck the Fed doesn't use all the tools in its disposal. Example: the Fed could have increased money/lowered rates but increased reserve requirements for banks. While stifling lending, this would have depreciated the dollar (by Asset Curve) and induced domestic demand and growth for goods since imports would be expensive and foreign markets would find our exports cheaper and more attractive.
@getnbusy2nite: It's like removing the brakes from a car and then installing a parachute to prevent it from crashing; if one were to remove the parachute, resulting in the inevitable—a horrific crash—we would call it deregulation.
I had some cool conversations but I really have to stop, these talks are eating into my Linear Algebra and Calc studies. You seem pretty bent on showing how regulation is bad but try to understand that it can be beneficial. If you were a complete Keynesian I'd say "well free markets can be beneficial." A good economist should consider all points of view, to discount an idea just removes tools that could be used if implemented properly. I'll respond to any others once finals are over. Thanks.
@getnbusy2nite: I do not compromise between astrology and astronomy. I do not utilize a little chemistry here and a little alchemy here. There is no reconciling the hard fundamentals of economic reality with any fantastical Keynesian wizardry.
But I guess it was good talking to you.. probably the most sober Keynesian-ish person I've debated. Consider attempting to answer my challenge below though. \/\/\/
what a dumbell.... let's let the 'experts' run the show, what a fucking pawn you are, I guess Clinton was really feeling 'neo-con' when he signed the repeal of glass-steagal
DREwestcoast 2 months ago
Neo-Cons are HUGE Keynesians you moron.
Oh and the "robber barons" were in bed with government constantly. Their monopolies were created with the help of the politicians. This is the OPPOSITE of free market capitalism.
FartyFace 8 months ago 2
@ronpdavison: I don't know why the USA seems to be so much more Austrian in economic outlook than Austria.
You make good points, but it's worth remembering that the neo-cons and libertarians posting here *do* have good points to.
kuzzlenuzzle 9 months ago
ronpdavison,
learn history.
learn economics.
stfu until you do.
ure embarrassing yourself.
ZamolxisReborn 1 year ago
Yeah, It abhors me that people think that government policies are the ONLY things that cause monopolies. Monopolies can be bought or agreed upon in private w/ government or not.
thefredsays 1 year ago
You should pick up two books, the History of Money and Banking by Rothbard and Economics In one Lesson by Hazlitt. Also this recession is the result of Keynes driven Fed policy combined with ignorant government intervention. It had nothing to do with being a free market because it was not a free market. Interest rates and lending are not being determined by the bank reserve status and fiscal prudence like they would be in a free market. Please for your own sake read a book and stop watching CNN
xTAxGUNZ 1 year ago
@xTAxGUNZ There are no free markets. They're physically impossible.
The thing in the USA is that because you're all so damn poliarised you fail to see the nuances of complex events such as this. The housing crisis and subsequent financial freeze were not caused only by government intervention, they were not only caused by greedy banks, the were not only caused by a debt-ridden society. THEY WERE CAUSED BY ALL THREE + MORE.
Christ, and you free-marketeers keep saying you have a grip on reality.
kuzzlenuzzle 9 months ago
Comment removed
xTAxGUNZ 1 year ago
The creator of this video is an economically illiterate moron. Neocons support big government.
Robber baron capitalism never existed. It is a fallacious myth. Deregulation and free markets are very good things that we need A LOT more of.
TimeWarp66 1 year ago
Well regulation from the govt. allways gives someone a benefit. So no, these regulations you are refering to are not of good for the economy. Yes, for the richest in the society they are good, but not for the poor and middleclass. As this financial krise is a result of keynes. Govt. have been the biggest employer for many decades, to keep unemployment lower, and look at where we are right now. And again the solution should be for govt. to emply more ppl. Kommunism doesnt work!
Warzoooooo 1 year ago
@Warzoooooo
Communism doesn't work?
Then why did Russia devolve into a twisted mafia polycracy during the transition to free markets?
Why have so many countries actually seen DROPS in GDP and employment and INCREASES in poverty and inflation, since the transition to free markets?
Atop that, why did those countries which followed Keynes after the 1998 crisis do so well. Why is China doing so well?
BECAUSE THINGS ARE NOT AS SIMPLE AS YOU GOD-DAMN THINK THEY ARE!
Christ-all fucking mighty.
kuzzlenuzzle 9 months ago
@kuzzlenuzzle Look at when organized crime took place in US, when they tried to go away from Free market, by prohibit alcohol. And the mafia polycracy came long before they started the transition to a more free market. Russia is not even today a free market oriented country, but its better than before.
Could you please give me some name of the countries that have seen more poverty by adopting free market.
And how did china follow keynes after 1998? If any country followed keynes it was the USA!
Warzoooooo 9 months ago
@Warzoooooo Russia was an obvious dictatorship before the transition. The foisting of free-market principles onto a legally and physically unprepared country led to a hoarding of state assets (including Russia's vast natural resources) by rich ex-leaders and foreign firms. This led to a flight of capital, a total collapse in investment, and a recession. Free marketeers simplistically cried that Russia wasn't trying hard enough.
Parts of Africa, much of The Far Fast, much of South America.
kuzzlenuzzle 9 months ago
@Warzoooooo The followed keynes in as much as they ignored the free-market fundamentalist IMF and instead pursued their own policies of high government investment and protectionism.
Y'know, those things that made Europe and the USA slowly rich over hundreds of years, too.
kuzzlenuzzle 9 months ago
@Warzoooooo Comparing morally-driven prohibition in the USA to anything like this is a shockingly poor analogy.
kuzzlenuzzle 9 months ago
@kuzzlenuzzle And why is that? All regulation is morally-driven, especially in communism and socialism. Keynes theroy is based on morally-spending by politicians.
Warzoooooo 9 months ago
@Warzoooooo I suppose you think that laissez-faire economists and Keynesians have different moral goals, because you're stupid. That's wrong. At the core, both schools of thought think free markets are fan-dabby-doozy. The only real difference is that moderates and Keynesians don't have such blind faith (and the associated detachment from reality) in free markets because, yes, MARKETS CAN AND DO FAIL.
Both schools of thought want the same thing, they just disagree one how to achieve it.
kuzzlenuzzle 9 months ago
@kuzzlenuzzle Markets can and do fail, and goverment fail and will do it again, in trying to micro manage all ppl in the market. Keynesians doesn't have blind faith? Blind faith that you can create wealth from wasting resources? If I'm stupid, you ought to be the next step in the wrong direction, what ever the word for that might be.
"I suppose you think that laissez-faire economists "
And i suppouse you didnt understand what I wrote!
Warzoooooo 9 months ago
@Warzoooooo You've not been educated in economics, have you?
kuzzlenuzzle 8 months ago
@kuzzlenuzzle Well as most of your guessing you are as good as Ben Bernanke, you do not seem to get alot right. Yes, I have studied economics both in school and in spare time just for pure interest. So there are alot of hours behind each of my statements.
Warzoooooo 8 months ago
Your analogy to baseball rules is not the same as the rules govt is creating in the market. As we have got rules that are good in the market. Thats the idea with govt from the begining. Rules like you have the right to your life, your liberty and your property, but noeone have the rights of anotherones life, liberty nor property. But these other rules are like in baseball giving one team an dissadvantage like making them carry extra wight. That is what govt regulation does.
Warzoooooo 1 year ago
Can I ask a quick question as to how many individuals watching this video are Economics Majors? Any body going to get a Graduate Degree in Economics? Anybody take Calculus II or Linear/Matrix Algebra? Anybody study history? I see everyone here against this video but all of you forget that economic thoughts are tools and ideology should never be followed. Keynes doesn't work 100% of the time and sometimes you use something else but it's stupid to say all of it is trash.
getnbusy2nite 1 year ago
@getnbusy2nite I am an econ major, I have taken Calc II, and I am a student of history. I agree that economic thoughts are tools. Having said that, Keynesian economics is to actual economics as astrology is to astronomy.
If you accept even a very basic economic axiom such as "in the long run, you cannot consume more than you produce", then the Keynesian approach to economics should be very easy to deconstruct.
Weeth 1 year ago
Individuals and governments can consume more than they produce through debt and deficit spending. Debt is increasing present consumption at the expense of future consumption. Technically one can grow using debt, then use resources from the growth to pay off the debt...risky but it can work. In the case of Keynes you're right in what you say, but it's not a long run solution, only a short run fix to be considered (not always used) in a recession. Long run will depend on good exit policy.
getnbusy2nite 1 year ago
@getnbusy2nite: I never said governments can't consume more than they produce *temporarily*—I specifically said "in the long run".
Having said that, I don't disagree with anything you stated in this post. Unless, of coure, you mean to imply that the stimulus and/or bailouts represented sound fiscal policy.
Weeth 1 year ago
Government should never enter deficit unless it needs to. My main point is I see many people bash Keyen, or Austrian, or Monetarist, etc... because they think their way is the best and refuse to accept any good from other theories. A good economists will use these schools of thought as tools and use them when applicable. I don't subscribe to any one school of thought, but think all have valid points to be considered. I hope to carry this thought once I get my Masters and Ph.D.
getnbusy2nite 1 year ago
Keynesian policies of bush and greenspan got us into this mess and you believe the same approach of lower interest rates, war spending, stimulus and bailouts will save the economy now that someone who isn't a neocon is in office nonsense. when will you Keynesians admit it you've been wrong since the 30's you keep getting it wrong time after time the great depression, praising the soviet union the housing bubble now bailouts. reality is money must be saved to be able to spend it not just printed
Depletethestate 1 year ago
You're mistaken...Keynesianism says spend in recession and save in expansion and Bush did the former and not the latter. The ultimate issue is the notion that "everyones self interest" left unchecked will lead to economic prosperity. It doesn't. I'm not saying government is without it's faults and spending is not a cure-all for recessions, but to say Keynesianism led to this is wrong because it was never implemented. Keynesianism did get us out of the Great Depression though.
getnbusy2nite 1 year ago
@getnbusy2nite you're greatly mistaken bush spent to avoid a recession stimulus package,t.a.r.p, war dropped rates from 6.5 to 1% .this along with sup prime lending entities of the gov. created an expansion which was solely based on borrowing and spending which IS Keynesian all this borrowed money was spent to avoid the recession. saving is exactly what is needed to ever have prosperity unfortunately Keynesian beliefs that deficit spending creates wealth is dead wrong
Depletethestate 1 year ago
Yeah you're right in saying that Bush followed the Keyensian approach to spending in a recession, but the other side of Keynesianism is to save and invest in growth. He only considered savings a problem if it was savings "beyond planned investment." I agree that Bush was fiscally irresponsible for some time, but you can't call him guilty of Keynesianism, only Keynesian spending (which he rightfully should have done given similarities to Great Depression).
getnbusy2nite 1 year ago
right well i think the theory that savings beyond planned investment is what waste or destruction of wealth? yeah i think its nonsense you can never know how much is needed to invest in the future many factors like technology the economy interest rates these change i dont think a businessman could anticipate the exact amount to save but the more savings in banks the more money for those businesses to borrow for investment in capital goods more credit is good when the money actually exist.
Depletethestate 1 year ago
People save to eventually maximize consumption through investments. There's something in Macroeconomics called "The Golden Rule Savings level" which, through mathematical computation, can show that it is possible to save in excess of what will maximize consumption, meaning that it is possible to save more than what is necessary to get the most bang for your buck. Consumption falls so does demand. It's a two way street. I agree with what you say, but you have to consider both demand & supply
getnbusy2nite 1 year ago
@getnbusy2nite yea i see the demand side but i think this is where a natural business cycle might take a dip when people just max out their saving but the people are in good shape with money saved up and still the growing amount of savings will lead to even greater investment now, as more credit is available and even more consumption is possible in the future. it just seems like the market will be the best vehicle to determine real demand for a sustainably economy not the government
Depletethestate 1 year ago
Everything has an equilibrium to look at. Money in a bank increases monetary flows through investment. Mattress money (saving beyond investment) decreases money flows and stifles growth. HOWEVER, you're right. Spending profusely is not the answer to stable growth as we learned in Depression and this Recession. Government should only get involved when markets fail. They increase demand that will reduce inventory surpluses, firms hire again, produce more, give wages, people spend, cycles ok.
getnbusy2nite 1 year ago
@getnbusy2nite i'm very curious to know how Keynesian got us out of the great depression im sorry but its a laughable he wrote his general theory after the great depression and seemed right cuz all he did was excuse the action taken in the depression and the depression was over oh yeah what a genius everything the government did prolonged the great depression starting with hoover
Depletethestate 1 year ago
Published in 1936 during the GD. He advocated increased government measures to increase aggregate demand. Increased government spending and demand for war materials in WWII put many to work and pumped the economy. Hoover did the same thing, so did Roosevelt before the war, but neither measures matched the massive demand that war created. Now military Keynesianism doesn't always work, but politicians are guilty of following ideology and not thought most of the time.
getnbusy2nite 1 year ago
yea all those measures had been taken before then and during until the 40's so what around half way through he makes the claim that what the government had been doing was right i dont see it. of course the economy was going to get back on its feet sooner or later but i think it happened over such a long time, because of these Keynesian measures, that we got out of the depression in spite of these policies.
Depletethestate 1 year ago
I see what you're saying, but if you look at the timeline the depression ended right as we entered WWII and government demanded all that material. We probably would have gotten back on our feet eventually but we got back out of the bad business cycle quicker through increased government spending. Obviously there's always the issue of causality vs correlation, but it seems "too coincidental" to be merely a coincidence that things got fixed as we entered WWII.
getnbusy2nite 1 year ago
i don't see entering the war as getting us out of the depression if you look at unemployment numbers then yeah but millions left the labor force to go destroy things and of course alot of people had to take those jobs.Also if you consider what the economy was, its strengths were producing things for the war effort. so people making things to destroy stuff so yeah people had to work but standard of living i mean rationing goods all these oppressive policies.people were better off after the war
Depletethestate 1 year ago
Yeah I agree it sucks that our workforce specialized in destruction and death at the time, but the overall effect was that greater government spending did employ more people, increased GDP, people earned money again, and it served to temper our way out of the Great Depression. I'm not advocating going to war every time our economy is down, but this shows that government spending can help if implemented properly. It's just another tool to use when and if it's applicable.
getnbusy2nite 1 year ago
@getnbusy2nite the government can always affect gdp and employment but this isnt the best indicator of economic strength they have to disrupt the natural forces of the market to achieve these numbers. the soviet union had great employment gdp numbers but the market forces to set aggregate demand and anything were absent it was arbitrary production. but have you ever heard of the broken window fallacy?
Depletethestate 1 year ago
I see what you're saying about the unintended consequences of helping one sector could spill over as hurt for others. In the present case we have an issue of market failure. It would take many years of drastic decline and stagnant growth for the market to recover. Government spending can ease the process if implemented properly. We already see improvement in the global economic recovery. I agree GDP and employment aren't perfect indicators, but those plus inflation are what impact people.
getnbusy2nite 1 year ago
this was no failure of the market it was intervention into the market that brought about the housing bubble it was government boosting demand for houses through manipulated low interest rates bailouts and insuring mortgages and sub prime lenders this free money didnt come from the market it came from alan greenspan the
Depletethestate 1 year ago
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@getnbusy2nite i'm very curious to know how Keynesian got us out of the great depression im sorry but its a laughable he wrote his general theory after the great depression and seemed right cuz all he did was excuse the action taken in the depression and the depression was over oh yeah what a genius everything the government did prolonged the great depression starting with hoover
Depletethestate 1 year ago
I'm disappointed to see that you aren't responding to your critics. I think they've got some valid points.
gunsandbullhorns 1 year ago
aaaaaaaaaaaaaaaaand a year and a half later, we're still in the hole. Unemployment is much worse. The deficit is larger than ever. And our total national debt has skyrocketed to monumental proportions.
Government intervention DOES NOT WORK.
ijust1 1 year ago 3
Have you seen the recent job report numbers? The increases in major world stock indexes since their March Lows? Rising consumer spending? Increased orders for United States Durable Goods exports? Government spending and intervention can work if used properly and it takes time. It's by no means a cure-all for recessions, but it can work if used when appropriate.
getnbusy2nite 1 year ago
@getnbusy2nite Jobs are increasing due to seasonal variation. Unemployment always reduces this time of year. Google "unemployment rate" and look at the chart. Moreover, roughly 1/3 of the "jobs" that were "created" were census jobs. Those are neither sustainable nor productive jobs. Durable goods orders is a good indicator, but consumer spending isn't. We're spending borrowed money on consumption. That's not good for the economy.
ijust1 1 year ago
Nice points thanks for those, and I appreciate the data as well that did give your argument credence about unemployment so it's definitely something to consider...very cool.
What's your take on the recent stock index numbers though? Investors are back to work as major stock indexes around the world are up from their March lows. I think increased consumer confidence/spending is an important component of recovery, and though fragile the global economy is improving. What do you think?
getnbusy2nite 1 year ago
Keynes was wrong then & is wrong now. Friedman is king.
goeatadick11 2 years ago
robber barons? im assuming youre referring, generally, to the 1800s? yea...
its not like we created the cotton gin, electric lighting, steam engines, steam ships, the telegraph, the phonograph, hundreds of thousands of miles of railroads, the sewing machine, the refrigerator, pasteurization, toilet paper, the telephone, etc. or anything like that... should i go on?
yes.... what a ghastly and stagnant time in history that was.
Weeth 2 years ago 2
Robber Barons refer to the late 19th/early 20th century...in that time there were economic booms in terms of GDP growth but the average working american worked and lived in dismal conditions, many occupations were life threatening, children worked in the same dangerous conditions, and there was little or no consideration for the working man (perhaps except Ford though he only paid high to make sure skilled workers didn't leave). Economic prosperity is not measured in GDP only.
getnbusy2nite 1 year ago
@getnbusy2nite: Did you stop to consider the direct implications in my post? All of the technological innovations that I listed, in one century, have done more to contribute to the standard of living of the AVG human being than all previous centuries combined.
Did some people live poorly? Of course, that was the case then and had been the case throughout human history UNTIL the productive forces of voluntary trade were unleashed that made this modern standard of living possible.
Weeth 1 year ago
I can't consider implications to a post that was more abrasive than informative. It took a lot of government intervention to ignite that voluntary trade, it didn't happen because of the increased production. Industrialists, for the most part, seemed content in extracting value with little reward to the worker, which is an unfortunate byproduct of firms in competitive markets looking to gain profits. Workers began to enjoy a descent standard of living once regulations/wages increased.
getnbusy2nite 1 year ago
@getnbusy2nite: What was this hefty government intervention—the one that ignited all of voluntary trade in the 19th century—of which you speak?
I don't believe I ever said that increased production led to voluntary trade. Quite the opposite: Voluntary trade led to increased production and, more importantly, *increased productivity*—which is, as a matter of fact, the ONLY way that long-term real wages (i.e. avg standard of living) can increase. Government fiat does not do this.
Weeth 1 year ago
You didn't say "voluntary trade of the 19th century"...I assumed you meant the economic freedoms that were enjoyed by the working class after WWII when you said modern standard of living, and all of that didn't happen without government regulation. Can you elaborate on what you mean by voluntary trade in 19th century? Government fiat is not designed for increased productivity or big returns but to fill gaps where markets fail/no private investment (Public Economics).
Read Second Post.
getnbusy2nite 1 year ago
@getnbusy2nite: In my original comment—the one to which you responded—I listed a number of 19th century innovations. Then, referring to these innovations, I stated that we did more to raise the standard of living of the average human in 1 century than in all other previous centuries combined. I said absolutely nothing about WWII.
Ok, voluntary trade as in, for example, no income tax, no Fed, no huge bureaucracies, low regulation, etc. (i.e. general lack of coercion in the economy).
Weeth 1 year ago
Too little regulation on the economy can create noxious and deleterious effects if left with little oversight...we've seen that happen. You can't just look at the positives and ignore the negatives because it conforms to your way of thinking, there is an equilibrium that must be maintained. In your era of "unleashed voluntary trade" workers worked and lived in deplorable conditions. There was slavery, high income inequality, trusts. There is a danger when markets interfere in government also.
getnbusy2nite 1 year ago
@getnbusy2nite: Let's not get into slavery. Slavery was often enforced by the Federal Government (fugitive slave laws). I digress..
To your main point: Deplorable by what standard? Modern standard? Of course. The gains in productivity have afforded us the luxury of modern standards. But more importantly, under free competition, the market decides—not arbitrary governments—the optimal conditions of a work place given the productive capacity of the time... For example... >>>
Weeth 1 year ago
Southern agricultural MARKETS wanted the cheap (free) labor and individuals wished to have them as a social status...again government had to steer them to a better decision. Then when that was over business entities did not hire or give economic equality because they chose not to for personal reasons. Again government (through democratic process) intervened at some point, though I agree they did much to discriminate as well.
getnbusy2nite 1 year ago
@getnbusy2nite: I refuse to repeat myself on this point. It is a wash at BEST. If you are genuinely curious i will send you some academic material on the subject.
Weeth 1 year ago
@getnbusy2nite: (continued).... if an employer can compete for employees by offering improved working conditions and do it in such a way that is economical given the resources of his time, then he does so and he is rewarded. You are creating a false choice between voluntary markets and humanity. It is simply unnecessary.
Weeth 1 year ago
Be clear on real-wages. If you mean inflation adjusted, that can remain the same during productivity booms if firms keep wage levels the same. If you mean mass production made goods more affordable, like the roaring 20's, then you're correct. With clarification I see you're meaning, though more productivity/less regulation can also lead to asset bubbles if not checked by government oversight as we saw in the Great Depression and see now in the current recession...not good for longterm.
getnbusy2nite 1 year ago
@getnbusy2nite: The overwhelming majority of inflation is attributable to the actions of the Federal Reserve.. but I digress.
I mean both. You seem like a reasonable guy so it surprises me when you state something like, "if firms keep wage levels the same". The avg. wage in an industry under free competition is not subject to the whims of the firms. A wage is simply a price that an employer pays for labor; it is subject to the same equilibrium forces as any other price in a free market.
Weeth 1 year ago
What about supply shocks and demand pulls? Dismantling the Fed is not the answer. The fed is driven by the ideologies of those in power (or economists with myopic views). That is what needs to be addressed.
In *competitive* markets sure BUT firms can have *monopoly* power over the supply of labor/wage level if there are too many in the civilian labor force, that depresses the level of wages. That's market failure, and that's a time for government to intervene (Public Economics).
getnbusy2nite 1 year ago
@getnbusy2nite: The Fed's most effective role is that of providing the means by which the Federal Government can have its cake and it too (spending and tax cutting). The Fed can simply print the difference. How convenient.
If there are "too many in the civilian labor force" and they feel like they're not getting a good deal, then they can move elsewhere. Free markets rely on fluidity. Still, let us say that wages are too low for your liking because of an excessive labor force... >>>
Weeth 1 year ago
Capital may be easily mobile to some degree, but labor is far less mobile. 1) You can't just discount common sense to support your view 2) You can't expect people to just move to find work (that may not be there) with little capital and just find a job to improves, not just sustains, their lives. In the Great Depression many moved all over with what little they had. They found jobs that paid horribly and barely provided enough for subsistence...again we didn't leave GD until government spent.
getnbusy2nite 1 year ago
@getnbusy2nite: (continued) .... how then does imposing an artificially high wage help long-term standard of living? Employers will not simply pay a worker more than his marginal product of labor. Employers will simply fire all workers whose value is under that arbitrary number and keep the more skillful workers. This creates unemployment and mass suffering for the least skilled members of society. In addition, total output is reduced and costs increase. Society is poorer because of this.
Weeth 1 year ago
A minimum wage can be beneficial, economists have to look at more than just balance sheets. If employers have monopoly over labor supply and people are looking for work, then they would work for the lowest wage, TOO low to afford a descent level of comfort. This does not fit with the free market promise that fluid markets creates prosperity for all if all a worker earns is a subsistence (or even below that) wage. Besides even with a min-wage, if a worker performs poorly they are fired anyway.
getnbusy2nite 1 year ago
@getnbusy2nite: You're repeating yourself on the minimum wage point. You decry the horrors of subsistence wages but you say nothing of the individuals who will be earning precisely ZERO in wages when an arbitrary and artificially high minimum-wage happens to be 1 penny above what their labor is worth. Talk about subsistence.
And you evade the greater point: Wages are not arbitrary. Wages are prices. A price is a signal. It performs a very specific and very important role in any market.
Weeth 1 year ago
Hey settle down, you can only say so much in 500 characters. The min-wage is only harmful if set as a price floor above the market rate. Real min-wage has increased slower than CPI on most products so it's possible that a price floor below market rate exists which is acceptable, though there are studies that say classic textbook theory doesn't apply to min-wage (Labor Economics).
getnbusy2nite 1 year ago
Also Marginal labor values will adjust to minimum wage as employers charge new prices for goods...BUT competition between firms, especially those with profits, could keep prices low but wages a little higher.
Price is a signal but in terms of labor it has a human component that needs to be considered. If unemployment was caused by low demand and high savings (not investment), even at low wages employers would not hire many anyway. A min-wage lets those that are hired live above subsistence.
getnbusy2nite 1 year ago
Mass production coupled through capital intensity with specialization of labor enables an individual to product much more in MPL than before. In theory without min-wage, firms can pay individuals subsistence wages while extracting more from the worker. Under min-wage, it guarantees access to a descent wage for workers. There is nothing to suggest (in most markets) that the wage is set too high. It need not be arbitrary neither considering their are cost of living measures to base a min-wage.
getnbusy2nite 1 year ago
@getnbusy2nite: This is, by far, your worst argument. "Mass production coupled through capital intensity with specialization of labor enables an individual to product much more in MPL than before." If only you had just stopped there!
In theory, firms can gang rape their employees regularly. Fortunately, there happens to be a reason why they don't—this happens to be the same reason why they don't pay all of their employees subsistence wages. It is called competition for labor.
Weeth 1 year ago
@getnbusy2nite: If you think that some people simply dont make enough money, then just offer them a direct subsidy equal to the amount of this gap and call it a day. Don't institute arbitrary wage floors under which the least-skilled workers in our society (eg many minorities, immigrants, and young people) will be unemployed and royally screwed.
Weeth 1 year ago
As said before, firms would seek those who are the most productive anyway even without the minimum wage. Why would they seek lower productive employees? Sure they could be cheaper, but if they performed poorly at their work they would get fired anyway so the end result is still jobs for more productive people.
getnbusy2nite 1 year ago
@getnbusy2nite: If a worker works so poorly that they represent a negative return on the firm's investment (wage), then they will be fired. This is not rocket science. Firms are not necessarily going to seek the MOST productive. For example, McDonalds is not going to hire any 5 star speed chefs. Different business models call for different skill requirements. And even in the same occupation at the same job, more productive employees are paid more while less productive are payed less.
Weeth 1 year ago
@getnbusy2nite: It is a matter of cost-benefit calculation. It has nothing to do with productivity (in the context of our discussion). For example, there could exist the most productive chef in the world, but if he demanded a wage that was above what even his productivity stood to benefit any given company, then he would be unemployed.
I hope I don't need to explain the converse.
Weeth 1 year ago
So what , you're saying that without min-wage firms wouldn't seek to hire more productive workers and just hire everybody? That logic doesn't hold water. Firms will always hire more productive individuals regardless, why would they do otherwise? Perhaps before mass production where production was more labor intensive but capital intensity has increased dramatically allowing MPL's to rise exponentially, so min-wage may not be a floor above equilibrium.
getnbusy2nite 1 year ago
@getnbusy2nite: No, this is not a very complicated argument. Firms will not hire someone who, given their wage, operates at a loss to the company. Therefore, if the minimum wage is at x amount, firms will only hire workers whose mpl is grtr than x. All workers whose mpl is less than x are now unemployed. If the minimum wage is removed, the firm can hire all workers whose mpl was less than x up to & including the wage just above that for which they are no longer willing to work.
Weeth 1 year ago
From Textbook:
The critical arguments against minimum wage would hold more credence if the demand for low-skilled labor was not inelastic. Research shows that for a 10% increase in min-wage employment drops by at most 3% meaning that the min-wage is not drastically (if at all) set above market price. It does however reduce incentives for employers to adequately train employees and increases drop out rates...again some positives to consider and negatives to be addressed (not all trash).
getnbusy2nite 1 year ago
Got you beat on min-wage being beneficial in some cases right here in my Labor Economics textbook. In cases of monopsonistic labor markets, a firm can price discriminate since they face the supply curve of labor. They will hire until MC reaches MRP. by instituting a min-wage below that point, they create a flat MC curve that touches the MRP at a point where the wage is higher and more labor is hired. See, government and min-wage being beneficial in a certain implementation...not impossible.
getnbusy2nite 1 year ago
@getnbusy2nite: Dang, you got me beat brother. Yes, government-enforced minimum wages can be marginally beneficial when it comes to government-enforced monopolies. Check and mate.
Weeth 1 year ago
Monopolies are not always created through government assistance. A firm can horizontally integrate with other firms or out-compete. I don't need to prove this cause it's common sense, if all monopolies are the result of government assistance then their wouldn't be a separate definition for coercive monopolies or government monopolies.
getnbusy2nite 1 year ago
@getnbusy2nite: This is getting tedious.
Coercive monopoly: Monopoly that is ***able to make pricing and production decisions independent of competitive forces***.
Government monopoly: A TYPE of coercive monopoly in which ***a government agency is the sole provider of a particular good or service***.
Natural monopoly: Monopoly due to ***economies of scale***. (IMPORTANT: Not able to make pricing decisions independent of competetive forces)
A government monopoly is a coercive monopoly.
Weeth 1 year ago
I think you're desire to one-up me is causing you not to pay attention. I said "it can also result from a failure of outside firms to compete based on PRICE"
In your other post you said this is the definition OF A NATURAL MONOPOLY.
THEN you said: Coercive Monopoly: "able to make pricing and production decisions independent of competitive forces" as such they have a PRICE ADVANTAGE because other firms face a barrier to entry based on inability to match or beat their Price
getnbusy2nite 1 year ago
@getnbusy2nite: You are conflating *opportunity to compete* with *ability to compete*. With a natural monopoly, firms have the opportunity to compete yet are simply unable. With a coercive monopoly, firms simply do not have the opportunity to compete in the first place. There is a big difference.
A natural monopoly cannot making pricing and production decisions independent of competetive forces.
Weeth 1 year ago
@getnbusy2nite: The barrier to entry erected by economies of scale is only a barrier to the extent that the prices offered by the firm in question remain BELOW what potential competitors would otherwise be able to provide. That is not an absolute barrier of entry and it is certainly not a example of a firm being removed from the forces of competition.
You should really get this distinction down as it seems to be at the root of a lot of the fallacies that you're assuming.
Weeth 1 year ago
Now to a NATURAL MONOPOLY: this occurs when a firm made large capital investments and faces high fixed costs but low marginal costs. They have a COST advantage due to economies of scale, like you said, BUT earlier you said they had a PRICE advantage (coercive monopoly).
Again with your arrogance
You are right in saying a coercive monopoly can result from government assistance (natural ones even more). Though the main point is that monopolies are not all created through government help.
getnbusy2nite 1 year ago
@getnbusy2nite: Haha wow.. Again with your erroneousness!
Coercive monopolies do not have a price advantage (necessarily). Read very carefully: ***They have the ability to set prices independent of competetive forces***. Refer to below \/\/\/.
Weeth 1 year ago
"Necessarily" is a cheap trick to overturn your error, sure coercive monopolies don't "always" have a price advantage BUT their ability to "set prices independent of competitive forces" USUALLY gives them Price Advantage and deters other firms from competing, why do you think they are called coercive?
The main point is you said I was wrong on the definition of Coercive's, when I'm not "necessarily" (what a joke), then you said they're called Natural's (WRONG), then you insulted me (Arrogant).
getnbusy2nite 1 year ago
@getnbusy2nite: I corrected this miscommunication 2 posts ago. Coercive monopolies do not necessarily have a ***cost*** advantage. They may or may not. That has nothing to do with the nature of a coercive monopoly.
I assumed that by "price advantage" you were referring to cost. If by "price advantage" you meant "price maker", then yes, sorry, you are right—irrelevant nonetheless.
Weeth 1 year ago
Not irrelevant young padawan!
First it was not a miscommunication. You were in a rush to prove yourself right and you were mistaken...take it like Greenspan and admit you were wrong.
Second, the point is that some Monopolies can exist WITHOUT GOVERNMENT HELP, and in turn can be REGULATED BY GOVERNMENT for positive outcomes. You should have covered this in Principles and Intermediate Micro Theory.
So you see, government is not always detrimental to markets.
getnbusy2nite 1 year ago
@getnbusy2nite:
What is the difference between a natural monopoly and a coercive monopoly?
Weeth 1 year ago
@getnbusy2nite:
P.S. i never said that monopolies cannot exist without government help. Thank you.
Weeth 1 year ago
True but,
You did "challenge" me to name coercive monopolies (which are monopolies in broad terms) that existed without government assistance. If you never said monopolies couldn't exist without government hlep, you certainly implied it in your challenge
Now you have implied monopolies CAN exist without government help. If an undesirable condition in the market has occurred without government, then regulation of which can bring positive effects (as taught in micro theory)
Thank you
getnbusy2nite 1 year ago
@getnbusy2nite:
You win. Sorry for wasting your time man..
Ohhh hey bro, totally off topic, but what is the difference between a natural monopoly and a coercive monopoly?
Weeth 1 year ago
1) I don't care about winning I just wish you would open your mind and explore other ideas 2) Although disappointed at some aspects of this convo I'm happy to have brushed up on my Micro and I thank you for your time (you did not waste it) 3) You asked me this on another post and I made a comment, please see it 4) I'm taking a break to play Dragon's Age.
Best wishes on your endeavors in the field of Economics. What school do you go to by the way and do you have Grad School Plans?
getnbusy2nite 1 year ago
@getnbusy2nite:
If you would be so kind to copy and paste your answer to the question (What is the difference between a natural monopoly and a coercive monopoly?) it would be much appreciated.
Weeth 1 year ago
@getnbusy2nite: You can't use "price" and "cost" interchangeably in the context that you are right now. Theoretically, a coercive monopoly could have astronomical costs but give everything that it produces away (eg medicaid, food stamps, public schools, etc).
Weeth 1 year ago
I think you're reaching for a twig here...
Yes that "is" possible, a firm "could" give away everything for free with high costs and be considered a "coercive," but we learn that firms behave rationally and seek to maximize profit, or share-holder wealth if you're finance oriented. but they wouldn't last long if they did that and it wouldn't make sense to that for a long time. Maybe in the short term to establish relations with consumers or adopt "Gillette" business models but not continuously
getnbusy2nite 1 year ago
@getnbusy2nite: Just because they operate at a loss does not mean they don't profit.
Humor me. What is the difference between a natural monopoly and a coercive monopoly?
Weeth 1 year ago
How do they profit if they operate at a loss? I mean if you're implying they are subsidized or given additional monetary assistance outside of earned revenue then that's another matter.
It would be easier for you to just tell me what you have in mind because: 1) I *correctly* listed some already 2) There are quite a few, and 3) You're probably looking for a specific answer and I believe you are attempting to bait me into looking uninformed about the subject if I answer something different.
getnbusy2nite 1 year ago
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@getnbusy2nite: I'm not asking for examples.
You're an economics major. I have a genuine question: What is the difference between a natural monopoly and a coercive monopoly?
Weeth 1 year ago
@getnbusy2nite: I must have missed it.
Weeth 1 year ago
Well let's first remember that Monopoly is created by Milton Bradley....LOL
just kidding
Seriously though look for it. Hit Ctrl+F and search for "1)" its about 6 posts up from this one
getnbusy2nite 1 year ago
@getnbusy2nite:
Looked—can't find it. In the time it took you to write this post, you could have copied and pasted it for me. Would you be so kind?
Weeth 1 year ago
This has been flagged as spam show
It was slightly abrasive and I thought you were still in "get him" mode but my response was:
It would be easier for you to just tell me what you have in mind because: 1) I *correctly* listed some already 2) There are quite a few, and 3) You're probably looking for a specific answer and I believe you are attempting to bait me into looking uninformed about the subject if I answer something different.
I'm sorry about that. Whatever knowledge you have I would be genuinely happy to know it.
getnbusy2nite 1 year ago
@getnbusy2nite: The only thing I have in mind is learning what it is you believe to be the difference between a natural monopoly and a coercive monopoly.
Weeth 1 year ago
Now with Coercive Monopolies they are defined to make PRICING decisions outside of competitive forces...THAT IS WHY THEY HAVE THE ADVANTAGE IN PRICE WHICH I SAID BEFORE, they are PRICE MAKERS not price takers as with competitive firms.
Again, a natural monopoly, WHICH YOU SAID I CONFUSED FOR A COERCIVE (which I didn't you just were in a rush to point me wrong), has A COST ADVANTAGE based on established economies of scale since they made the HEAVY CAPITAL INVESTMENT before other firms.
getnbusy2nite 1 year ago
@getnbusy2nite: That is correct, coercive monopolies are price makers. I assumed where I should not have. Let's clear things up: Let us use the word "cost" instead of "price", in the interest of precision.
Coercive monopolies do not have a COST advantage (necessarily). Natural monoplies do, by definition. A coercive monopoly's prices are not subject to competetive forces. A natural monopoly's prices ARE subject to competetive forces.
Weeth 1 year ago
You know that monopolies tend to make prices and cut quantities making profit at the expense of consumer surplus. Government can regulate monopolies for favorable outcomes, and there are SOME monopolies that DON'T exist because of government help, so this is an example of positive government regulation.
However, SOME monopolies do exist through government intervention (Dutch East India Co), and can be an example of negative government intervention.
A TWO-WAY STREET to be considered
getnbusy2nite 1 year ago
@getnbusy2nite: You're wandering. Can you please acknowledge the distinction between a natural monopoly and a coercive monopoly?
Weeth 1 year ago
Well:
1) a monopoly can occur through horizontal integration or out-competing it's rivals. If all monopolies were government assisted we wouldn't have a separate definition for coercive monopoly, they would all be called the same.
2) I said MONOPSONY which is a single buyer faced with multiple sellers. In this case you can have a firm, perhaps competitive in other regional labor markets, but in a particular region could be the only region, or the biggest, who hires.
getnbusy2nite 1 year ago
@getnbusy2nite: In other words, wages are not arbitrary. But the most important thing to understand is that productivity increases long-term real wages by increasing the value of the marginal product of labor. This extra labor value allows employers to lower prices, increase compensation, and invest, all while turning a profit. This is how wages increase in the long-run. Again, I repeat, government fiat is incapable of performing this process.
Weeth 1 year ago
That's an understandable logic but you're message is lacking. If I postulate correctly you don't like government intervention in the economy. With that in mind, you are correct that government spending usually fails at producing higher returns and is less productive. But the role of government spending is not to operate as a private entity. It's there to ensure market stability in times where markets fail, provide for investments where private sector lags, and ensure security.
getnbusy2nite 1 year ago
@getnbusy2nite: That's the false choice to which I am referring. There is no dichotomy between humanity and voluntary trade. On the contrary, they are inextricably linked. Government interventions *create* instability by creating moral hazards and encouraging malinvestments. Governments use institutions like the Fed to take the entire concept of interest rates—a function of the value of money and time—and tinker with them... arbitrarily... whimsically.
Weeth 1 year ago
@getnbusy2nite: Then, when the inevitable and predictable concequences of these policies materialize, governments rush in upon the rubble and ask for your money to pay for the clean-up. Well, how about we try keeping our money and spending it according to our individual desires in the first place? That's a novel concept. The further you divorce the consequences of decisions from the individual, the more inanity you bring to society. Big-government is an institution devoted to that end.
Weeth 1 year ago
I'm not trying to get into a battle of wits with you...it would be wrong of me to attack an unarmed opponent anyway. Just kidding you're cool and I'm glad you're taking the time to speak with me, I've been starved for intellectual conversation.
I know there's research that discounts the benefits of a minimum wage but it might be too late to fix it. People are used to a standard wage now, and it would take a long time for a decrease in prices to occur if the min-wage is removed anyway.
getnbusy2nite 1 year ago
@getnbusy2nite: Oh, and increased productivity does not lead to asset bubbles. That is ridiculous. Less regulation CAN lead to an asset bubble but only if that deregulation was preceded—or accompanied—by other regulations that skew economy-wide capital allocation. For example, the Fed was created; then we had the Great Dep.; then Glass Steagall was created; then we repealed Steagall (1999); then, came all of the crazy leveraging, derivates, MBSs, etc...
Weeth 1 year ago
Increased productivity can create bubbles...we had increased productivity in housing and tech, both were bubbles. The Fed didn't just lower interest rates (which they kept low too long, I agree), they refused to examine the MBS and derivatives markets which in your world would be great cause there would be no regulation. This left the final decision on the loans to banks and institutions, they also made a wrong call. You can't just blame it all on the Fed cause you disagree with it the most.
getnbusy2nite 1 year ago
@getnbusy2nite: Come on man, I very specifically stated that the crazy leveraging, MBSs, derivatives, etc., were a direct result of the moral hazards created by the bailout guarantees provided by the Federal Government and financed by the Fed. Not to mention the gross malinvestment caused by the artificially low interest rates, the effects of which were steered towards the housing industry through Fannie and Freddie. Why on earth would I be happy about that?
You cannot argue that
Weeth 1 year ago
By lowering lending standards, the Fed essentially gave more freedom to financial firms. They should have been more prudent on their lending but they weren't, they were driven by their own self interest with little regard for others. Now you can argue that the Fed induced that, but it was deregulation all the same, and you're proposing that we completely deregulate markets when even a little was shown to be harmful...you need to have a balance between the two.
getnbusy2nite 1 year ago
Yes I can:
The bailouts were implemented AFTER the crisis unfolded from all the derivatives and MBS's. Again, I agree that rates were too low for too long but the Fed/government, by reducing standards, left to private firms to make their own standards and they chose not to lend prudently. Sometimes oversight is needed.
Government insuring banks can be a good thing, take the FDIC. People need trust to deposit currency in banks so they can lend and grow the economy, FDIC provides security.
getnbusy2nite 1 year ago
@getnbusy2nite: Sorry, but no shit they were implemented AFTER the crisis unfolded. There was no need for them before the crisis. It was the *implicit* bailout guarantee offered—in true corporatist fashion—that provided the moral hazards.
Again (and I promise this is the last time), private firms didnt "make their own standards" according to a free market. They made their own standards according to a rather unfree market riddled with moral hazards and easy money.
Weeth 1 year ago
@getnbusy2nite: (continued) now... we have this global financial crisis and most people lazily blame it on the deregulation. However, it was the INITIAL regulation (ie the Fed) that incentivized all of these outrageous financial practices to occur in the first place through policies like artificially low interest rates and implicit bailout guarantees.
Weeth 1 year ago
Once again, I do agree that they kept interest rates low for too long, but it's a two way street. Ok Deregulation is bad, so is over-regulation, there is a common ground between the two. You're, I'm guessing, a lot like an Austrian, and I get the same thing from you guys, you blame the Fed for everything but don't offer any solutions except remove and let markets work. We've seen markets fail so there has to be regulation, now too much is bad as well so we work to an acceptable equilibrium.
getnbusy2nite 1 year ago
@getnbusy2nite: Alright, my friend, I'll concede all if you can give me a single example in all of human history of any coercive monopoly ever coming into existence without some form of government assistance.
Weeth 1 year ago
I don't want you to concede all. You can believe in your Austrian "tools," they make good points, but fervent blind ideology is corrosive. Greenspan was inspired by Ann Rand, a source of inspiration for many Austrians, and he too believed in little regulation and government oversight. He deregulated the fed from the inside and looked what happened.
Easy...Standard Oil, actually broken up by Supreme Court in 1911. Acting in *self interest* it gouged consumers and destroyed small business
getnbusy2nite 1 year ago
@getnbusy2nite: Forgive me if I don't respond to your other posts. I have an aversion to repeating myself more than once.
I don't care if you don't want me to concede, I will. Real economics is incompatible with the voodoo economics to which you refer.
Now, on to the challenge. Standard Oil? Public education.. Oy vey! Please look up the term "coercive monopoly". Standard Oil gained 90% market share by lowering kerosene prices from 58 cents to 8 cents/gallon in less than a decade.
Weeth 1 year ago
You've passed the point of arrogance on this one. I'm offering real tangible examples how government intervention can be beneficial but you're bent on supporting you're myopic views...it's individuals like you who scare me because if you hold a position of power you'll be just as bad as others who make decisions based on fervent ideology. However you're still young and I'm heading to Grad School and have research experience so hopefully with time you'll mature...anyway back to your challenge..
getnbusy2nite 1 year ago
A coercive monopoly need not be a monopoly that profits from barriers to entry through government assistance, it can also result from a failure of outside firms to compete based on PRICE...As you, and I thank you, provided the data above it shows that no firm could compete at that price (they raised those prices back up later). Monopolies, as you know, are inefficient in providing goods. Government intervention spurred competition in oil market by breaking up standard oil.
getnbusy2nite 1 year ago
@getnbusy2nite: No, you are wrong. It is not a coercive monopoly if it maintains its monopoly based on price. That is called a natural monopoly. I find it very hard to believe that you are actually an economics major—much less in grad school for it. If so, that is extremely disconcerting that you do not know the difference.
Oh, and I challenge you to present to me any data showing Standard Oil raising the per/gallon price anywhere CLOSE to as high as it was originally.
Weeth 1 year ago
Intermediate Microeconomics, A Modern Approach - Hal R. Varian, 7th edition
Page 435: "When there are large fixed costs and small marginal costs...such a situation is referred to as a NATURAL MONOPOLY." i.e. a firm maintains monopoly because they made initial capital investment, set up their firm, and incur low marginal costs. Other firms have a barrier to entry because they can't raise capital and compete. A single supplier therefore has major COST advantage due to economies of scale...
getnbusy2nite 1 year ago
@getnbusy2nite: 100% correct, so far as it goes. No disagreements.
Weeth 1 year ago
NATURAL MONOPOLIES occur in industries such as utilities, public works, waste removal, and telecommunications. It occurs because single firm is able to procure enough capital (YES sometimes with government assistance) to fund the massive fixed costs, then they incur minimal marginal costs when established. THEY HAVE A COST ADVANTAGE over other firms wishing to enter due to economies of scale.
Government assisted or PRICE ADVANTAGED monopolies ARE indeed called *****COERCIVE MONOPOLIES*****
getnbusy2nite 1 year ago
Oh and to help you confirm: ISBN-10: 0393927024
I must say at this point you're arrogance is an opprobrium. If you just made a simple fallacy I wouldn't have been so abrasive, but questioning my intelligence, experience, and ambitions on top of your mistake is immature.
I hope you learned that fervent ideology is indeed harmful.
getnbusy2nite 1 year ago
@getnbusy2nite: I'm not going to comment on the personal stuff because its a waste of time. Sorry that I hurt your feelings.
Moving on, let's make this very clear:
A "cost advantage" monopoly is not a coercive monopoly. Economies of scale do not render a firm immune to the forces of competition. Coercive monopolies, on the other hand, are immune to the forces of competition. Period. Do you understand this?
Weeth 1 year ago
Now you could argue that since the government did grant Standard Oil exclusive petroleum exploration rights, they assisted in monopoly creation. HOWEVER, they were already the only oil company who had the resources to explore, drill, and refine oil better than any other company. Only problem is once they got the oil, they used their volume to drop prices considerably, beat other firms, then gouge consumers after. Monopolies are a perfect example how government intervention can improve markets
getnbusy2nite 1 year ago
@getnbusy2nite:
A free-market's sole purpose—its reason for living—is to develop and distribute goods at the lowest optimal price. The government did nothing to "improve markets" by tearing down a company that did more to develop and distribute a universally desirable good at an extraordinarily low price—the fruits of which were enjoyed by all of society—than just about any company in human history. Sorry, I don't consider that a win for the markets.
Weeth 1 year ago
Let me pose a challenge to you...Austrians are criticized for pointing out problems but don't expand on solutions so here are some questions:
Without a central bank, who will control the supply and printing of money? If you gave that power to multiple entities, what assurance can you offer that they won't over print?
How can we go to a gold standard, or non-fiat, if even when you take the total amount of gold ever mined at $1000 an ounce it only accounts for half our GDP?
getnbusy2nite 1 year ago
@getnbusy2nite: Ok, as an economist, you must always ask the question, "what is the alternative?". I don't claim to suggest that the currency process has a magic pill that will solve all problems. It's sort of a messy process any way you look at it. Specifically, it is the act of transmuting hard value (ie gold, rice, sugar, etc) into more portable value—but that of equal universal fungibility... >>>
Weeth 1 year ago
@getnbusy2nite: (continued) Now, if you have a central bank that can print money AT WILL, with no absolute standard against which the paper can be measured, then you have completely torn the foundations out from under what the point of money is. I say, at this point, keep the central bank as the sole printing authority, but allow it to print only as much as the hard assets (whatever they may be—it can be a collection of commodoties, not just gold) dictate.
Weeth 1 year ago
"The evidence is, in fact, absolutely conclusive that the Standard Oil Company charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher."
getnbusy2nite 1 year ago
I found that statement about from a book in the library called "The Trust Problem in the United States" by a Professor of Economics from Stanford University. The Bureau of Corporations made that statement regarding Standard Oil Co. If you google that title with the word "book" before it there's an online viewer for the entire book and the info is on page 80. On page 79 it shows that it charge 15+ cents in areas with no competition and charged less in competitive areas.
getnbusy2nite 1 year ago
@getnbusy2nite:
Right, so in some areas it reduced the price 87% and in some (less competetive) areas the reduction was only 75%. What a bunch of scoundrels.
What's the difference between a natural monopoly and a coercive monopoly?
Weeth 1 year ago
The point is they had the power to raise prices in areas where they had a monopoly and out-price in competitive areas. What would keep them from raising prices higher and higher if they wished, then if someone wanted to compete they just removed them. It's subjective I'll agree, but their capacity for damage on consumer surplus was too high.
You said coercives make pricing decisions outside of competitive forces, naturals make decisions within competitive forces. Is that true?
getnbusy2nite 1 year ago
@getnbusy2nite:
I don't think we can continue any further until you tell me what you believe to be the difference between a natural monopoly and a coercive monopoly.
Weeth 1 year ago
I said it in a previous post...man I wish youtube let you see every comment from someone and not just your most recent one.
You got something up your sleeve I think, ready to just wail on me but whatever...
There are some differences including the obvious definitions of each, but I remember you saying that a coercive monopoly is able to price outside of competitive forces, and a natural monopoly prices inside competitive forces. Is that what you were looking for?
getnbusy2nite 1 year ago
@getnbusy2nite:
If you're right then you have nothing to worry about. Your reluctance to define the distinction between a natural monopoly and a coercive monopoly confounds me. This seems like cognitive dissonance struggling to resolve itself.
Is that your answer? That a natural monopoly's prices are subject to competition while a coercive monopoly's prices are not? Is that what you believe to be the distinction between the two?
Weeth 1 year ago
It's not cognitive dissonance I just feel some hostility, like you're trying to bait me into something. Why are you so eager for my answer?
I'll just stick to the classic definition between the two as my answer, I mean there's no way I'm wrong there. However if you have some knowledge you'd like to share about the two please go ahead. I would sincerely genuinely like to know.
I noticed you like the longest day, that's one of my favorites too. Ever seen Zulu?
getnbusy2nite 1 year ago
@getnbusy2nite:
I'm eager for your answer because I don't like discussing something for which there is no mutually established definition. It makes for inane arguments in which each person argues beyond one another. It's a waste of time.
Yea I've seen Zulu. Good stuff. Definitely another long day for those british soldiers.
Weeth 1 year ago
I answered you one post below
Listen I know I may be getting sappy here but I'm kind of regretting getting into this. I think you and I have a lot to learn from each other though we haven't been the most cordial. This battle of wits is becoming counterproductive as it seems both of us are constantly trying to one up each other when we should be sharing ideas about Economics.
You have you're ideas and I have mine, we don't need to fight about it.
getnbusy2nite 1 year ago
@getnbusy2nite:
Not trying to fight, just want to avoid the wheel-spinning.
Am I baiting you? I guess. I'm trying to get you to state that the difference between a natural monopoly and a coercive monopoly is efficiency vs coercion.
A natural monopoly gains and maintains it's monopoly status through relative efficiency. A coercive monopoly gains and maintains it's monopoly status through the outright prohibition of competition.
Now ask yourself what kind of monopoly Standard Oil was.
Weeth 1 year ago
@getnbusy2nite:
Now, when you attempted to argue that Standard Oil was a coercive monopoly because it was able to raise prices marginally after gaining overwhelming industry control, I had to ask you to define a coercive monopoly because that has nothing to do with a coercive monopoly. If Standard Oil were have to raised prices beyond what any potential competitor had the ability to provide, then that competitor had nothing to prevent him from undercutting Standard Oil.
Weeth 1 year ago
@getnbusy2nite:
Thus, Standard Oil's pricing decisions were not independent of competetive forces—the definition of a coercive monopoly.
Now, you may say that Standard Oil's pricing decisions were indeed independent of competetive forces up to and including the price level at which other firms could compete, but then all you have done is describe what a natural monopoly is.
Weeth 1 year ago
@getnbusy2nite:
That's why I was trying to get you to define the difference for me so you could think for yourself and identify the difference between something like Standard Oil and, say, the business of delivering 1st class mail in America.
Weeth 1 year ago
Yeah I can definitely see where you're coming from, even when they dropped prices, they were still competing technically. Though I wouldn't call it "competition" in the free-market sense because there really is no competition, it's one person always winning all the time because he has an unassailable advantage.
It's a good point though, I'll try and think of something else but I did come close.
Oh cool, I think that's a really underrated movie. How about Paths of Glory with Kirk Douglass?
getnbusy2nite 1 year ago
I mean I don't regret all of it, it was good to brush up on micro theory and actually talk one on one with an Austrian, never did that before and I think I've grown richer from the experience. I'll admit my micro is rusty since it's not my main passion, I said before I'm more of an Econometrics and International Trade/Monetary guy. If you ever need help with STATA you can always hit me up.
getnbusy2nite 1 year ago
Does that pass your challenge by the way? You asked me to name one coercive monopoly that existed without government assistance. I thought I read something somewhere (can't validate 100%) that said they did received exclusive exploration rights, but they were the only company that had the capacity to explore in those areas anyway. Does Standard Oil fit your challenge?
getnbusy2nite 1 year ago
I also blame Fed policies for a lot that has happened, and just like you play a single deck the Fed doesn't use all the tools in its disposal. Example: the Fed could have increased money/lowered rates but increased reserve requirements for banks. While stifling lending, this would have depreciated the dollar (by Asset Curve) and induced domestic demand and growth for goods since imports would be expensive and foreign markets would find our exports cheaper and more attractive.
getnbusy2nite 1 year ago
@getnbusy2nite: It's like removing the brakes from a car and then installing a parachute to prevent it from crashing; if one were to remove the parachute, resulting in the inevitable—a horrific crash—we would call it deregulation.
Weeth 1 year ago
I had some cool conversations but I really have to stop, these talks are eating into my Linear Algebra and Calc studies. You seem pretty bent on showing how regulation is bad but try to understand that it can be beneficial. If you were a complete Keynesian I'd say "well free markets can be beneficial." A good economist should consider all points of view, to discount an idea just removes tools that could be used if implemented properly. I'll respond to any others once finals are over. Thanks.
getnbusy2nite 1 year ago
@getnbusy2nite: I do not compromise between astrology and astronomy. I do not utilize a little chemistry here and a little alchemy here. There is no reconciling the hard fundamentals of economic reality with any fantastical Keynesian wizardry.
But I guess it was good talking to you.. probably the most sober Keynesian-ish person I've debated. Consider attempting to answer my challenge below though. \/\/\/
Weeth 1 year ago