College Conspiracy

Originally posted by inimalist

but the problem with most economic theories, is they assume some sort of rationality behind human behaviour.

"Some sort of rationality"? Do you know what you are taking about? What does any of this statement above have to do with "economic theories" or economics/free markets in general? You seem (in my mind) to be flirting with the concepts of marketing, not economics.

Let me break it down for you (in the form of a question): Do you have a cell phone? Most likely, you do. What kind of cell phone do you own? It is an:

1) iPhone,

2) Android,

3) or some other mobile phone (manufactured by a third company) that cashed in your hard earned money - whether it was based on price, functionality, customer support or whatever?

The point is, marketing convinced you to purchase one product over another - or perhaps, you sat back and chose not to buy any of the products at all. It's your choice; that is what free markets are all about: freedom of choice. And these freedoms dictate prices in the markets.

Simply said, if everyone and their mother were demanding a certain product, but output was low, prices would increase; otherwise, they would decrease if demand was low and output was high.

Economics has absolutely nothing to do with "assuming some sort of rationality" - other than competing for the distribution/sales of their goods and services. This is universal.

The problem is, governments around the world (more so than others) manipulate the free market in the form of taxes, regulation and money supply - even bailouts. And such things have a direct impact on consumer goods in the market, not "some sort of rationality" - as if it's a mysterious plague or something unknown to man (if I understood you correctly).

Otherwise, square me away.

Originally posted by inimalist

Every theory of social organization has fallen apart through history because it assumes these sort of core axioms that drive how we behave, and you can see the limitations of all of the "-isms" when we finally do get them as policy by governments.

Like what, inimalist? Are you talking about social/entitlement programs in this statement? If so, I'm with you on that, but what does that have to do with economics (directly)? Quite with the fancy talk and get to the point already. That's why I said in my last post, "Could someone please punch me in the face." Make your point known and understandable to those who may not be as informed as you. Pretend that your writing a thesis paper in college, and make sure it's MLA formatted, ha ha! Kidding.

Originally posted by ushomefree
"Some sort of rationality"? Do you know what you are taking about? What does any of this statement above have to do with "economic theories" or economics/free markets in general? You seem (in my mind) to be flirting with the concepts of marketing, not economics.

ok, so, I'm not sure how much free market literature you have read...

Are you familiar with Rand's non-fiction? With Friedman or Smith even?

if you were to read them, and the basic theories that are behind free market capitalism, you will see that it assumes people behave in a certain way, and in fact, many of the conclusions from these thinkers only work if people behave in the way they think they do.

So, for instance, for capitalism to work, you need people to be what I would call "rational actors". Much like you describe below, you need people to think about and weigh their options before they buy things, you need corporations willing to invest for long term gains, you need people to think rationally about what is or is not in their self interest, not just about their immediate needs.

And this is where is largely breaks down. Psychology has spent 30 years showing that the decisions people make in the economy are not based on rational interest at all.

Originally posted by ushomefree
Let me break it down for you (in the form of a question): Do you have a cell phone? Most likely, you do. What kind of cell phone do you own? It is an:

1) iPhone,

2) Android,

3) or some other mobile phone (manufactured by a third company) that cashed in your hard earned money - whether it was based on price, functionality, customer support or whatever?

The point is, marketing convinced you to purchase one product over another - or perhaps, you sat back and chose not to buy any of the products at all. It's your choice; that is what free markets are all about: freedom of choice. And these freedoms dictate prices in the markets.

Simply said, if everyone and their mother were demanding a certain product, but output was low, prices would increase; otherwise, they would decrease if demand was low and output was high.

Economics has absolutely nothing to do with "assuming some sort of rationality" - other than competing for the distribution/sales of their goods and services. This is universal.

this is just absurd... you are using an example of how a rational actor works to try and prove that there is no assumption of rational actor in capitalism...

you really don't understand what I'm saying, do you? Have you read any Rand/Friedman/Smith?

Originally posted by ushomefree
The problem is, governments around the world (more so than others) manipulate the free market in the form of taxes, regulation and money supply - even bailouts. And such things have a direct impact on consumer goods in the market, not "some sort of rationality" - as if it's a mysterious plague or something unknown to man (if I understood you correctly).

Otherwise, square me away.

well, yes... and those government policies themselves are based on theories of how people behave in a market, largely influenced from ideas about rational actors...

like, the bailouts, or the idea that by easing tax burdens on the wealthy, is based entirely on an idea of rational self-interest engaged in by wealthy people. The state assumes the wealthy will behave in a way psychologists can empirically prove is not the case, and thus, the "trickle down" or "rising tide" analogies don't pan out in the long run, because it assumes things about the behaviour of people that aren't actually true.

Similarily, look at the predatory lending. Not only does this show a lack of self-interest from those lending, it shows that people in the market are not willing or able to make informed and rational choices that would have kept them from taking a morgage they would have defaulted on. One of the leading causes of the financial meltdown was the fact that both lenders and lendees did not behave in the rationally self interested ways that capitalist theorists had predicted they would.

in both of these examples it highlights the problem humans have with prefering immediate gratification to long term gratification, something that is pretty easy to show experimentally.

Originally posted by ushomefree
Like what, inimalist? Are you talking about social/entitlement programs in this statement? If so, I'm with you on that, but what does that have to do with economics (directly)? Quite with the fancy talk and get to the point already. That's why I said in my last post, "Could someone please punch me in the face." Make your point known and understandable to those who may not be as informed as you. Pretend that your writing a thesis paper in college, and make sure it's MLA formatted, ha ha! Kidding.

I've been trying to keep this at a general level... I think most people actually have understood what I've said...

mocking me because I can say things in a way you don't understand is silly at best, and ya, I hardly need to bolster my posts with meaningless filler to appear intelligent

Why did you make your text so big ushomefree?

I got a Windows Phone 7

ahhh freedom of the press!

As somewhat of an advocate for the free market, I'm much more a fan of Friedman than Rand personally. Haven't heard of this Smith, mind posting a wiki link or something in?

Part of the idea of the free market, though, is that there will indeed be some "losers" in it. It becomes as much about personal and economic freedom and less about being an ideal economy. So I'm not sure the "people don't behave like they need to for it to work" argument entirely discredits it as an economic goal.

Still, it's not hard to poke holes in an entirely free market. 90% of the complaints I've heard can, imo, be solved by anti-trust laws and/or subsidizing the lower class to living wage so that they can compete in the market. It's just not feasible outside of an academic setting right now. When you have a system that relies on governmental intervention, simply creating enterprises to be "free" is in essence yanking the rug out from beneath them. They will falter miserably because they don't exist in a conducive context.

Originally posted by inimalist

Are you familiar with Rand's non-fiction? With Friedman or Smith even?

if you were to read them, and the basic theories that are behind free market capitalism, you will see that it assumes people behave in a certain way, and in fact, many of the conclusions from these thinkers only work if people behave in the way they think they do.

So, for instance, for capitalism to work, you need people to be what I would call "rational actors". Much like you describe below, you need people to think about and weigh their options before they buy things, you need corporations willing to invest for long term gains, you need people to think rationally about what is or is not in their self interest, not just about their immediate needs.

And this is where is largely breaks down. Psychology has spent 30 years showing that the decisions people make in the economy are not based on rational interest at all.

So what, inimalist? Is that my fault (or your fault) that idiot-consumers participate in any given economy? Is it the fault of small businesses and/or fortune 500 companies that become rich over selling Snuggies, for example? Should governments around the world regulate what people can and can not buy in an economy? No... just let markets rise and fall (as they naturally would) under supply and demand laws governed by consumers. Who cares that one person decides to buy a gas guzzler over a more economical-efficient automobile.

The US economy is failing as a result of high taxes, government regulation and manipulation of the free markets, not idiot-consumers purchasing goods and services based on irrational reasons.

Originally posted by inimalist

this is just absurd... you are using an example of how a rational actor works to try and prove that there is no assumption of rational actor in capitalism...

you really don't understand what I'm saying, do you? Have you read any Rand/Friedman/Smith?

When you say that I am trying to prove - through the actions of consumers - that "no assumption of 'rational actor' in Capitalism" exists, are you referring to research and development? Market analysis?

If so, I'm not trying to disprove that. Research and development, not to mention market analysis, is a very healthy thing for small businesses, fortune 500 companies - even entrepreneurs. Any CEO, small business owner or entrepreneur would do this. For example, would you spend millions of dollars to develop, manufacture and distribute a hexagon shaped fart box? You might, but you'd wanna check things out first. Even on your best day, open markets will determine your success. Research and development, not to mention market analysis, are merely tools necessary to make an educated guess.

I'm simply stating, that in open markets, consumers are the bottom line. Without the exchange of money for goods and services, companies like Apple, Inc., for example, are doomed. Apple knows this, along with others; and so they strive to improve on their product line (while attempting to keep prices at competitive rates) - to keep their products affordable to consumers.

Moreover, Apple competes with companies in their market, like Dell, Compact, IBM, Sony and numerous others. They are all competing for consumer purchases. Consumers regulate markets, not businesses. That only thing mega corporations can do, not to mention small business and entrepreneurs, is "market/advertise" their goods and services. Consumers have the power (in an open market).

I hope I understood you correctly.

Originally posted by inimalist

well, yes... and those government policies themselves are based on theories of how people behave in a market, largely influenced from ideas about rational actors...

Social/entitlement programs provided by the US tax payer - medicare, medicaid, social security, welfare, unemployment and others - have nothing to do with economics (directly), inimalist. They have an impact on domestic debt, but what are you talking about? Are you trying to tell me, that social/entitlement programs were mandated to increase the value of stock on Wall Street? Of course not.

Originally posted by inimalist

like, the bailouts, or the idea that by easing tax burdens on the wealthy, is based entirely on an idea of rational self-interest engaged in by wealthy people.

Sure... self interests are involved, but they are not "rational." More often than not, they are based on greed and the stink of Corporatism and Cronyism. And you and I are not part of the club. This, of course, has nothing to do with Capitalism. If Capitalism were to rein in the US (as it once was), we would have never seen the bailouts granted to multibillion dollar corporations - corporations that have gone bankrupt for a very simple reason: little to no one wants to buy their product. Or how about this: shady business deals (behind closed doors) that go belly up?

Originally posted by inimalist

The state assumes the wealthy will behave in a way psychologists can empirically prove is not the case, and thus, the "trickle down" or "rising tide" analogies don't pan out in the long run, because it assumes things about the behaviour of people that aren't actually true.

Like what...? Counting billions of dollars, while the middle class and poor pay through the nose. Brilliant.

Originally posted by inimalist

Similarily, look at the predatory lending. Not only does this show a lack of self-interest from those lending, it shows that people in the market are not willing or able to make informed and rational choices that would have kept them from taking a morgage they would have defaulted on.

That is their own stupidity. Not mine or yours; nor is it the lenders fault. It all boils down to this crazy idea called, accountability. Predatory lending is a direct consequence of greed and the hope to profit off of ignorant, desperate people. And guess what... they are making a fortune. Not by my dollar, though. What do you think all the nonsense over AIG and subprime mortgage loans dealt with? People looking out for the little guy? The housing market is now in shambles, thanks for white-collard criminals. Again, this is not Capitalism.

Originally posted by inimalist

One of the leading causes of the financial meltdown was the fact that both lenders and lendees did not behave in the rationally self interested ways that capitalist theorists had predicted they would.

Like what?

Originally posted by inimalist

in both of these examples it highlights the problem humans have with prefering immediate gratification to long term gratification, something that is pretty easy to show experimentally.

I understand this, and you don't need experiments to verify such. Just open your eyes and take in the world around you. I just fail to see the application of your views (or those of Rand, Friedman and Smith) into the real world. Things aren't as complicated as you seem to make them.

With all in mind, if I missed a point (or points) of yours, simply tell me. Otherwise, I think we should agree to disagree. I'm getting a head ache, ha ha! And this thread was supposed to be about college! 🤪

Originally posted by Digi

As somewhat of an advocate for the free market, I'm much more a fan of Friedman than Rand personally. Haven't heard of this Smith, mind posting a wiki link or something in?

Part of the idea of the free market, though, is that there will indeed be some "losers" in it.

Correct.

Originally posted by Digi

It becomes as much about personal and economic freedom and less about being an ideal economy.

Correct.

Originally posted by Digi

So I'm not sure the "people don't behave like they need to for it to work" argument entirely discredits it as an economic goal.

Correct.

Originally posted by Digi

Still, it's not hard to poke holes in an entirely free market. 90% of the complaints I've heard can, imo, be solved by anti-trust laws

Correct, amongst other things.

Originally posted by Digi

and/or subsidizing the lower class to living wage so that they can compete in the market.

Incorrect.

Take any business or economics class in college to confirm this. Objective independent learning will suffice as well.

I'll provide one basic example: minimum wage. When the Federal Government mandates an increase in minimum wages, this (particularly) puts pressure on small businesses within local communities.

In some cases, since the minimum wage has increased, small businesses are forced to layoff employees or... increase the price attached to their goods and/or services to make up the difference lost in increased wages for their employees. This obviously presents two problems:

1) with employees being laid off, they are no longer able to participate in the local economy, and other businesses are effected as a result. They too, might have to lay off employees or raise prices attached to their goods and services to make ends meet,

2) due to the increase in prices attached to the goods and services provided by small businesses, they will lose customers. This could possibly result in lay offs (within that particular small business), because profits have been hampered. This further has a negative impact on local businesses. Less employed folks + an increase in price of goods and services = bad times.

But... forget about all of that for a moment. Let us pretend, that increases in the minimum wage, have zero impact on small businesses. Are we pretending? Okay. When you are finished, understand this: minimum wage increases will be wiped out due to open market forces.

Let me explain: when minimal wages increase, this puts additional money in people's pockets. Yes? This equates to an increase in discretionary spending. Yes? In other words, people have additional money to spend, that they wouldn't have had otherwise, if not for the increase in minimum wages. Yes? Okay, ha ha!

We are tracking so far.

Now... thanks to the increase in minimum wages, people now have more money to spend. The problem is, in time, with more and more people (now) participating in the local economy - that wouldn't have been able to do so, if not for minimum wage increases - prices increase! Simply said, the economy now has more consumers competing for goods and services. As a result - yep, you guessed it! - prices increase to stabilize supply and demand.

So, in the long term, minimum wage increases are effectively wiped out; and this doesn't even factor in inflation. This is a best case scenario. Expect another Federal mandate to increase minimum wages again this decade.

Originally posted by Digi

It's just not feasible outside of an academic setting right now.

Correct.

Originally posted by Digi

When you have a system that relies on governmental intervention, simply creating enterprises to be "free" is in essence yanking the rug out from beneath them. They will falter miserably because they don't exist in a conducive context.

Correct.

Mo love, Digi. Mo love. God bless you.

Originally posted by Digi
As somewhat of an advocate for the free market, I'm much more a fan of Friedman than Rand personally. Haven't heard of this Smith, mind posting a wiki link or something in?

http://en.wikipedia.org/wiki/Adam_Smith

Dude...

Originally posted by Digi
As somewhat of an advocate for the free market, I'm much more a fan of Friedman than Rand personally. Haven't heard of this Smith, mind posting a wiki link or something in?

Part of the idea of the free market, though, is that there will indeed be some "losers" in it. It becomes as much about personal and economic freedom and less about being an ideal economy. So I'm not sure the "people don't behave like they need to for it to work" argument entirely discredits it as an economic goal.

Still, it's not hard to poke holes in an entirely free market. 90% of the complaints I've heard can, imo, be solved by anti-trust laws and/or subsidizing the lower class to living wage so that they can compete in the market. It's just not feasible outside of an academic setting right now. When you have a system that relies on governmental intervention, simply creating enterprises to be "free" is in essence yanking the rug out from beneath them. They will falter miserably because they don't exist in a conducive context.

Originally posted by Digi
As somewhat of an advocate for the free market, I'm much more a fan of Friedman than Rand personally.

fair enough. One point that I think gets missed in a lot of these debates about capitalism is that, all of its philosophical proponents have said, yes, government needs to keep its hand out of the economy, but outside of that, they have wanted an extremely powerful central state that does monitor for criminal activity in the marketplace.

imho, one of the biggest problems in Capitalism now is that it has come to mean toothless state, which is something Rand and Friedman would not have supported at all. The collusion of business and political interests, unavoidable in a free market system, pressures people into reducing the effort and effectiveness of what regulations do exist, and people jump from jobs in the government and business world all the time, so nobody burns those bridges.

I tend to see this type of thing as an inevietable concequence of a free market system, but I guess my point more is, this is something none of the philosophers of the free market would have ever wanted and without any power over the economy, the ideas of capitalism don't work, because you end up with worse abuses by those in the market than you would from state intervention.

Originally posted by Digi
Haven't heard of this Smith, mind posting a wiki link or something in?

http://www.econlib.org/library/Smith/smWN.html

I'm not sure if I actually recommend trying to read it, you know, 18th century english and economics, not an exciting time at all 🙂

Originally posted by Digi
Part of the idea of the free market, though, is that there will indeed be some "losers" in it. It becomes as much about personal and economic freedom and less about being an ideal economy. So I'm not sure the "people don't behave like they need to for it to work" argument entirely discredits it as an economic goal.

I don't actually believe that governments (since they exist) should be run based off of moral or ideological principles. I don't see why you saying "we should be capitalist because it is morally better" is different than saying "we should be Christian because it is morally better". When you put government policy in terms like that, it really leaves it open for anyone to make whatever policy choices they want, based on ideas that exist in the abstract, rather than based on how things can be seen to work empirically. Saying you would rather have a faulty economy, rather than an ideal one, simply because it appeals to this concept of "freedom" seems almost like a lunacy to me, especially when the changes that would be required to make the economy run much more efficiently are modest and generally can be solved by actively trying to reduce the impact of the corporate sector on politics.

I'd also question the definition of freedom that thinks an economic policy that leads to the vast majority of the wealth in a nation being controlled by a small group is "free". Whether you think such inequality in wealth distribution is moral or fair or whatever, I can't believe you think it is indicitive of a financial system in which the most individuals are the free-est.

additionally, its simpler than "people behave dumb". Capitalism assumes that wealth accrued by the wealthy will be redistributed through basic market forces. ie, the wealthy employ people, build infrastructure, spend their money, etc, and through this, all people get a share of their wealth. However, this isn't how people who are wealthy behave. This nearly altruistic role they are supposed to play is something they don't do, much like how in communism the party is supposed to play a similar role, only much more direct in resource distribution to people. The problem in both systems is that those who the system is relying on to provide the resources, do whatever they can to keep those resources for themselves. They fight wage increases, they send jobs overseas, they do everything in their power to reduce their financial burden, thus reduce the very single mechanism through which resources are supposed to enter the market. This is what I mean by human behaviour doesn't support Capitalism.

Originally posted by Digi
Still, it's not hard to poke holes in an entirely free market. 90% of the complaints I've heard can, imo, be solved by anti-trust laws and/or subsidizing the lower class to living wage so that they can compete in the market.

yes, for some reason you and ushomefree seemed to take my radical suggestion that the free market for the sake of the free market might not be a good way to do things as saying that there should be no free market at all...

obviously the best choice is a well regulated market in which people are able to compete under limited restrictions that ensure the market doesn't bankrupt everyone. Hell, Canada's banks did fairly well during the recession because we have very tight regulations and enforcement, that would be the type of model I'm presenting. Not sucking capitalism's dick is a little different than not wanting a free market

Originally posted by Digi
It's just not feasible outside of an academic setting right now. When you have a system that relies on governmental intervention, simply creating enterprises to be "free" is in essence yanking the rug out from beneath them. They will falter miserably because they don't exist in a conducive context.

yes, another reason I don't think ideological solutions are the best. They might be "right" or whatever, but they don't really acount for the situational context.

Goddamn, did ushome and I just agree on some things?

I may need some time to collect myself after such an ordeal, I'll reply later.

Originally posted by ushomefree
The US economy is failing as a result of high taxes, government regulation and manipulation of the free markets

then why are nations with greater government regulation and higher taxes fareing better than you right now?

Originally posted by ushomefree
Just open your eyes and take in the world around you. I just fail to see the application of your views (or those of Rand, Friedman and Smith) into the real world.

and I found this funny

Rand, Smith and Friedman are probably the three most important philosophers in the history of capitalism. In fact, so important was Rand, that the US Senator and Tea Party love child, Rand Paul is named after her.

So, while I think it is funny you say my views don't fit into the real world (by which I mean, you have totally just assumed things about my views because I disagree with you), it is even more humerous that you say Friedman, Rand and Smith's wouldn't either, as they are the people who invented the ideas you are defending...

makes me chuckle heartily, ifyouknowwhatimean

Originally posted by inimalist

then why are nations with greater government regulation and higher taxes fareing better than you right now?

Such countries have less foreign and domestic debt to GDP for one, and such countries have a healthy manufacturing base to support their debt/spending. The United States has none of these.

Originally posted by inimalist

and I found this funny

Rand, Smith and Friedman are probably the three most important philosophers in the history of capitalism. In fact, so important was Rand, that the US Senator and Tea Party love child, Rand Paul is named after her.

So, while I think it is funny you say my views don't fit into the real world (by which I mean, you have totally just assumed things about my views because I disagree with you), it is even more humerous that you say Friedman, Rand and Smith's wouldn't either, as they are the people who invented the ideas you are defending...

makes me chuckle heartily, ifyouknowwhatimean

Capitalism has been around for centuries, inimalist. Look... I've made genuine efforts to respond to your posts. I'm done.

Originally posted by inimalist

Goddamn, did ushome and I just agree on some things?

I may need some time to collect myself after such an ordeal, I'll reply later.

ha ha! 💃

Originally posted by ushomefree
Such countries have less foreign and domestic debt to GDP for one, and such countries have a healthy manufacturing base to support their debt/spending. The United States has none of these.

which are a product of long term economic planning and strict market regulation mixed with a reasonable tax policy...

Canada isn't a magically better or different country than is America, we just have some better fiscal policies that aide our population in times of economic downturn.

Originally posted by ushomefree
Capitalism has been around for centuries, inimalist. Look... I've made genuine efforts to respond to your posts. I'm done.

I'd really suggest you at least read, say, anything from these "centuries" of history of capitalism then. I linked Adam Smith's "Wealth of Nations" above, from the late 18th century, considered the book that presented the first argument in favor of the free market.

I don't believe you have made genuine effort. It seems you have put more effort into trying to make me look silly for knowing what I'm talking about than you have actually looking at the substance of my argument. The idea that there are assuptions of human behaviour at the core of capitalist principles is not hard to understand.

Originally posted by Tha C-Master
I just call them like I see them.

Like I said before, college does benefit *some* people, doctors, lawyers, etc. It however is *not* an instant success bubble, and because people in our country have such terrible financial education and spending habits, it won't really matter what they make, no different than the millionaire musician or athlete with no financial skills.

Yes, It is right. college does benefit some people, doctors, lawyers.There is a advantage that we have to go college and get the knowledge about the specific subject.

Anyone else really want to buy some silver from the NIA?