almost ideal fiscal stimulus — contributing to the development of more advanced technology as well as the increased knowledge of mankind (thereby raising long-run productivity curves), yet doing almost nothing to (immediately) increase total productive capacity or to compete to consume large amounts of natural resources. the biggest problem with space exploration funding in a depression from an economic point of view is that it isn’t a large enough sector of the economy.
This guy says we need to privatize the world and do away with governments and uses spacex as an example. Imagine that evil star trek universe where we take dilithium crystals by force. Star fleet inc. lawyers decided the uss enterprise had more need than the locals and it would help profits.
I find it disgraceful we cant even transport the space shuttle enterprise over a river without damaging a wing as just happened. We once put a man on the moon and didn’t damage a wing. How far we have fallen.
We should be going back to the moon to retrieve Helium 3 which is extremely rare on earth but abundant on the surface of the moon. H3 would be the ideal fuel for thermonuclear fusion energy. I believe this is why the Chinese are going to the moon.
Helium-3 is not particularly useful (I actually used it a lot in my grad school days, but its uses are pretty esoteric), but in any case, it has to be cheaper to use nuclear reactors to produce tritium which decays into Helium-3 with a half-life of 12 years.
I imagine the Chinese are going to the moon for the same reason we did: national pride. Might be worth it, might not – it’s a political decision I guess.
Correct me if I am wrong but my understanding is that while H3 would require much higher temperatures for fusion reaction, the by-product is much less radioactive…. virtually clean.
Controlled fusion is about 30 years away from being practical, just as it was in 1960, 1970, 1980, 1990, and 2000. But in reading up, I see that you’re correct that He-3 is potentially useful in fusion as a fuel. It’s far from clear that the advantages would outweigh the disadvantages, however.
ESM – I take issue with your assessment that controlled fusion is 30 years away from producing energy. I first read about fusion in 1973 when I was in college in an article in the Boston Globe which projected that it was probably 30 years off into the future. Clearly, the task of containing in effect a hydrogen bomb in an electromagnetic bottle the size of a bus must be a daunting scientific, engineering and materials endeavor, but lets not forget that the development of fusion energy is the very last thing that the petrochemicals industry would like to see come to fruition because it would make crude oil, gasoline, heating oil, etc as obsolete as buggy whips.
Fusion energy research has been undergoing de-funding for many years. You might detect from some of my postings on this website that I am not a big government kind of guy. While I largely accept MMT, I also have a strong Libertarian streak in me which I’m sure probably seems like a contradiction in terms to many on this blog site.
Nevertheless, I can say wholeheartedly that government funding for the development of fusion energy is one of those big government type spending programs that I can endorse enthusiastically. It is very unfortunate that the bush administration pulled the plug on what would have been the largest super collider in the world in Texas. Too close to the oil patch maybe? My point is that I believe that fusion energy development is deliberately being held back and the practical consequence as you point out that is that it is still 30 years off in the future.
“I take issue with your assessment that controlled fusion is 30 years away from producing energy.”
Actually, that wasn’t my assessment. I was just recounting a long-running joke about the field. The current assessment from reviews I’ve googled up is that commercial fusion power is close to 40 years away.
“Fusion energy research has been undergoing de-funding for many years.”
I don’t know that this is true, since there are a number of large-scale research projects around the globe, including at the NIF at Livermore Laboratory. But even if it is, you’re getting causality mixed up. Less money for fusion power research is a reflection of the lack of meaningful progress, not the other way around. It has unfortunately turned out to be a very, very hard engineering problem.
“… I also have a strong Libertarian streak in me which I’m sure probably seems like a contradiction in terms to many on this blog site.”
Not at all. I consider myself a libertarian, and so does Warren I think. MMT has nothing to do per se with one’s political leanings.
“It is very unfortunate that the bush administration pulled the plug on what would have been the largest super collider in the world in Texas.”
The SSC had nothing to do with fusion research. No doubt SSC proponents like Steven Weinberg talked up the prospect of spinoff technologies that could be helpful, but it was smoke and mirrors.
“My point is that I believe that fusion energy development is deliberately being held back …”
I’m sorry, but this is tin-foil hattery. There’s no way that the oil and gas industry is far-sighted enough to worry about fusion power, and there is also no way that it is powerful enough to slow or kill development of a resource that would make the US energy-independent.
I’ve never heard anybody even posit that the oil and gas industry has impeded the development of nuclear (i.e. fission) power, and that’s got to be at least 100x more plausible as a conspiracy theory.
@Ed Rombach, I think we have learned one thing from space exploration to date.
It’s a lot easier to get there than to come back.
@Ed Rombach, Maybe,or maybe they’ve read Robert Heinlein’s book “Moon is a harsh mistress”……….lol
Sounds like the lunar colony in Heinlein’s novel was not unlike Australia and Virginia which got traction as prison colonies. Not sure what that signifies about harvesting He3 from the lunar surface but thanx…..I’ll put it on my reading list.
Isnt it better to let china do all the work and research and just sit back and import the knowledge and products? Imports are a benefit right? You confuse me warren. This article seems to be saying we should fund more NASA stuff so NASA boys can do all the work and research.
I used to work at space stuff (captain of a starship). But then I read this blog and decided to put my wife to work while I sat down and imported her salary into my pocket. Imports are a benefit.
@Captain Kirk, Very well put. The “imports are a benefit” line requires some serious blinders on to make sense.
Just how long will others be willing to accept a trade deficit without anything in return? Clearly not forever, and if this deficit had been allowed to continue long enough, the productive capacity of the deficit country could be seriously undercut.
“Clearly not forever, and if this deficit had been allowed to continue long enough, the productive capacity of the deficit country could be seriously undercut.”
Not if you’re maintaining that productive capacity at the same time. That’s the MMT difference. It doesn’t let the foreign central bank from the export nation drain the domestic economy of money and depress the local economy.
Instead it gives the foreign nations new tokens in return for their real stuff, with no guarantee that those tokens will be usable to buy as much real stuff back in the future (although the chances are it will be a win-win due to the reversal of the hysteresis effect).
The problem we have at the moment is there is no commonly acceptable policy to a foreign central bank swapping your currency for its own and then burying your currency in its vaults. The Swiss are doing it with Euros and the Chinese and Japanese with dollars.
The current offset is for the import country to swap the currency in foreign central bank vaults for bonds, which gives most standard economists the shivers.
@Neil Wilson, “The problem we have at the moment is there is no commonly acceptable policy to a foreign central bank swapping your currency for its own and then burying your currency in its vaults. The Swiss are doing it with Euros and the Chinese and Japanese with dollars.”
Does this imply that the Chinese and Japanese can eventually agree to spend until they seriously inflate the dollar?
when a cb buys your currency it means your taxes can be lower than otherwise
@Neil Wilson, I understand the “token” concept and the fact that growth can be increased to the level of full employment, but what I have in mind is the hollowing out of crucial industries and the skills that industries require.
For example do we really want the US to import all of its steel? Using the “imports are a benefit” as our only yardstick, the answer would be “why not?” But once the steel industry and related educated workforce leave the US, then they would be hard to get back, thereby leaving the US in an obvious disadvantage. Multiply this throughout the economy and you’d have a major problem.
Assuming that foreigners will continue to send real goods in exchange for tokens and that said foreigners will never exert the power they have over crucial technologies is a bit naive. In the long run only balanced, trade makes sense.
“For example do we really want the US to import all of its steel? Using the “imports are a benefit” as our only yardstick, the answer would be “why not?””
Imports are an *added* benefit.
With MMT you are maintaining your own economy at maximum output *and* taking anything the rest of the world will give you in exchange for tokens.
So what MMT is essentially saying is change your policy focus. Rather than worrying incessantly about balance of trade, export levels, interest rates and government deficits, instead concentrate on maintaining the maximum output of the domestic economy in the format you want it to be.
If you do that then the trade balance et al will likely look after itself.
So if your industrial policy mix requires local production of steel as a strategic position, and you have the raw materials at hand then make that happen.
So it’s not about switching off exports, or switching on imports. It’s about changing the policy focus away from obsessing about managing those things and concentrating instead on managing the domestic economy.
There are tolerance limits to everything. Inflation or deflation would kick (maybe both, successively) before we became 100% reliant on imports. The benefits of growing, low-margin imports goes away as a nation approaches the asymptote of having exported 100% of it’s adaptive capabilities – so that it ceases to grow new skills while exporting old skills.
Getting to the real point, that’s essentially what we’ve done with our public awareness & political skill – exported too much of it. Now we’re left with a nation predominantly filled with couch potatoes and politicians who think islands will tip over and dead people can come back to converse with the brain dead.
There aren’t enough math and science whizzes coming up through the ranks to do this work anyway – they’ve all left for wall street.
Seriously, an MIT B.S. education costs a quarter mil – meaning it takes $44 grand a year off the $60K a year salary one can make starting with a science/engineering degree. The numbers no longer work for a young person from the US to go into science and technology anymore.
“The World Wide Web was invented at the CERN lab to help particle physicists communicate across with each other across the world. If the laboratory wasn’t built or was closed, there would be no Fox News website.”
Does this person really believe that if the Europeans didn’t spend tens of billions of dollars building a supercollider that we wouldn’t have websites today?
Most educated elites complain that the unwashed masses (particularly conservatives) don’t trust science. But what they don’t trust are scientists, and I think people are right to be skeptical.
“What a stupid statement. Does this egghead really believe that if the Europeans didn’t spend tens of billions of dollars building a supercollider that we wouldn’t have websites today?”
The World Wide Web was absolutely development due to government research funding, as is most innovation.
The Internet on which the web is build was also DIRECTLY due to US government research funding, look up DARPA, and ABSOLUTELY would not exist without it.
Same with the entire aerospace industry, computer industry, energy industry, medical industry, etc.
Governments have always funded most of the core breakthroughs and then private capitalism takes them to markets as products and services.
Have you ever heard of research tax breaks, also a form of government funding, etc.
You would be best to stop watching TV news and education yourself about the basics of democratic capitalism, it has always been public + private by definition.
Pretty strong statement, and almost certainly incorrect. I am supportive of some government funding of basic research, just as I am supportive of some government funding of public infrastructure and other public purpose projects that wouldn’t happen otherwise. It’s a matter of degree – a continuum. I do not believe in zeroing out the NSF or NASA, but at the same time, I chafe at researchers trying to justify their personal pet projects by laying claim to any and all useful technologies that their pet projects might have tangentially touched.
By the way, I used to work at NIST, and I remember the Advanced Technology Program quite well (apparently it was terminated a few years ago for good). It was nothing more than welfare for technology companies. Just because it’s called “science” or “technology” doesn’t mean government funding is justified.
And a good way you can tell if something is not really justified is when the proponents start talking about spin-offs. If the spin-offs are so useful, why don’t they just work on the spin-offs directly?
There is often a huge investment barrier required to displace encumbent technology and entrenched distribution monopolies delaying the adoption of better products. Inefficient, wasteful and environmentally damaging cash cows will be milked dry before more socially beneficial products see the light of day.
Unpopular niche markets will not be served with vital products. For example catch a rare disease in a hypothetical libertarian wonderland….I can almost guarantee you will die.
I could go on. It is absurd to think the profit motive and market pricing is the one stop shop that provides the solution to all societies needs and wants. It’s patently obvious 99% of the population are on the wrong end of the pointed stick exactly because of such religious beliefs.
Fascinating! So, just to clarify my thinking……. if I’m an entrepreneur and I come up with a new product and obtain the financing to produce and market it, and it is a success……. I should not be allowed to make a profit on it?
Oh he’ll, let’s just let the Chinese government do it. We don’t need this stuff. Better to buy another fleet of drones to blow shit up. That’s our thing. We have really, really smart people managing our money. I think.
@Jonf, seriously, warren confuses me. He constantly says imports are a benefit and to let the Chinese do the work and for me and mr. Spock to sit down in the holo deck. So I gave the captains chair to counselor Deanna troi. Now I let the vulcans do all the hard research and work and my wife make all the money and I sit on mmt blogs all day telling people imports are a benefit like warren trained me. Warren resolve this for me. Why pay NASA scientists to do this when china scientists will do it at the china price? Carmack is a friend, but why subsidize armadillo aerospace or spacex when china can do it better for cheaper. Waste of human CPU cycles. Why isn’t Mosler cars made in china at the china price? It is inexcusable that an mt 900 costs so much that the median human being cant have one: fail!
LOL, Straw. I was wondering if that was you. Now I’m sure of it.
good points!
A minor list of technology that was primarily advanced due to DIRECT GOVERNENT FUNDING – for you neoconservative and neoliberal “free market” proponents.
The airplane, radar, jet engine, helicopter, electronic computer, atomic energy, Global Positioning System (GPS), and Internet technologies.
The lack of basic understanding of what “free market” capitalism actually is constantly amazing me.
I think these types of people actually believe “free markets” mean no regulations as in “free” the entire modern banking system by definition is a regulated system created by government – would not exist nor would have existed in some wild west, no government, anarchist world.
Capitalism by definition is a government regulated system, would not and can not exist without regulation.
You’re arguing against strawmen. Of course there is a necessary role played by government funding of basic research. But this idea that we should spend $100B to go to the moon because we might get spinoffs like Tang is idiotic. You can fund the basic research without funding the exorbitant boondoggles.
Government funded research into computers and networks was critical to the development of the internet, but not government funded research into particle accelerators.
From what I can tell of the oh so many spin offs generated from government research projects is that those spin offs were UN-intentional. In other words they were unexpected by-products (assets mind you) of the prime work being done (also an asset both in physical, material terms as well as in intellectual terms – ie smarter people working on complex systems today will be able to work on even more complex systems tomorrow, etc.).
You speak with the hubris of hindsight ESM in this regard. How can you “linearly” develop a product or system which you can’t envision, aren’t looking for, and don’t even know is possible? Well…ummm….you CAN’T!!!
It’s called creativity, innovation, ingenuity, intelligence, coincidence, spontaniety, surprise, highly stylized and complex resource management and GENIUS.
Sometimes these arguments you make are so infuriating for those of us in this world that crave a more rapid and fulfilling evolution of the human race and all earth’s inhabitants. And you understand MMT and economics better than I do no less!!! Just amazing…it’s not what you know that makes the difference; what matters is the kind of man/woman that you are.
Mario, it’s in my nature to play devil’s advocate. I’m just trying to get people to see the other side. How can anybody be against investing in science or technology or education or our children??? Well, there really are times when it is not a wise investment.
As for spinoffs, yes of course we never know where the next technological breakthrough will come from. That’s why I do support government funding of basic research to some extent (maybe even more than we currently do now). But it doesn’t mean you can’t be a little more selective in the projects you fund. You don’t have to actually send men to the moon in order to investigate all of the different issues involved and technologies needed to do it. I would imagine that 90% of the resources spent on gargantuan programs like that goes to reinventing the wheel or building mundane infrastructure.
By the way, I’m actually a big fan of government funded space exploration. I just don’t expect some overtaxed middle class schlub to share my enthusiasm.
Just to confuse Mario more… On the topic of gov funding basic research — I agree with you Mario. I have even mentioned before I think space exploration may be a good area for such funding.
On the SSC:
I’m pretty confident that if you gathered up a representative selection of top physicists (say 1000 or so – distributed across fields in an unbiased manner), and asked what projects they would have funded with $X (where X was sufficient to fund the SSC), they would not have chosen the SSC. The only ones in favor were a minority of high energy physicists.
The group would have still chosen basic research areas, but there’s a lot of theoretical and experimental research in physics that has very little or nothing to do with what the SSC was for — and the former is much, much cheaper (and probably cheaper per unit of useful knowledge gained, though that’s ridiculously subjective). The lament of the others in the physics community was that the high energy people had succeeded in a public relations campaign for funding, and were actually hurting the field as a whole — Philip Anderson wrote a good essay somewhere about many of the “discoveries” (theoretical) supposedly made in High Energy, that actually originated in Condensed Matter physics 10-20 years earlier (to the High Energy folks credit, their organization of the ideas was much better).
I would wager we’ll see more usefulness and benefits from Bose Einstein condensates than we will from any results that could have come from the SSC. And the creation of the former happened after the defunding of the latter.
On motivations and spin-offs:
I think your argument is that funding basic research that excites and inspires the general populace is worthwhile – and I generally agree. By picking a goal and striving towards it, you will hit unknown obstacles and be forced to innovate in previously unseen ways. But that’s true whether it’s building the SSC, or trying to figure out some basic property of materials with laser tweezers. In both cases there will be spinoffs, but the two may have vastly different costs.
and you’re also not considering the indirect impact such projects have had on our society and work force either. As in how advancements in one science or field fueled growth in other fields and influenced their paradigms, approaches, and workflows. Let alone any direct labor cross-pollination that occurred by a NASA scientist or researcher working for the auto industry, or engineering, or education, or architecture, or computers, or private consulting. I mean the impact is so gargantuan to our society by having more highly educated, skilled, and experienced individuals across the board it is almost heretical if not clinically insane to attempt to argue otherwise.
“The airplane, radar, jet engine, helicopter, electronic computer, atomic energy, Global Positioning System (GPS), and Internet technologies.”
Yes. Big government was the driving force behind all of these technological advances, and the underlying predicate was and is the state of war or the threat of it which only amounts to welfare for the military industrial complex. Eisenhower of all people warned of this as he left the White House. Nothing facilitates the arrival of big government, authoritarian, totalitarian social order like big war where citizens become all too willing to surrender their individual liberties to have security but end up they get neither.
A true, “bridge to nowhere.” Spend money to build something halfway, then stop it abruptly on the idiotic belief that you have no more digits to finish the work. Idiots. And Fox is idiotic, too, and should take a lot of the blame for our current mess, for pushing their disgustingly misguided propaganda. That’s why I quit.
@Mike Norman, No one wants another Solyndra I expect. So don’t take any chances things might go wrong and overrun too much. Then Faux News will have a field day. What a way to run a country, eh? But everyone, it often appears anyway, fear we will run out of money. So we need to be careful where we allocate those digits.
Obama (and every president) talks about the need for a commitment to math and science, yet they cut back on these programs. If government spending is the allocation of resources for the public benefit, I say spend those dollars to hire the bright math brains away from Wall St. You really can’t argue that 100 years from now the efforts of 1,000 mathematicians and scientists will have a more lasting effect than the efforts of 1,000 bankers and lawyers.
Look, this is a form of central planning. I suspect you have no idea (as I do not) if as a society we have too few mathematicians or scientists. Perhaps we have too many, and that’s why so many people leave the field in which they got graduate degrees.
Now I would agree with getting rid of any externalities or government distortions which make working in finance more attractive to people than it otherwise would be (quantitative people or any others for that matter), but I wouldn’t want to create a distortion the other way either.
People talk all the time about how we need to invest more in math and science education and research, but I don’t know that anybody has actually subjected such investments to a real cost-benefit analysis.
Of course you hear complaints all the time from industry executives that they need more trained engineers, but has it ever occurred to you that such complaints are self-serving? If there is more supply of skilled labor, then companies like Apple and Microsoft can pay less for that labor. It always comes down to supply and demand.
To some degree, it may be “central planning” although that is a loaded term. You toss that into a discussion and everything grinds to a halt… like labeling someone a socialist or an anarchist.
Ironically, the civilizations and cultures we have the most reverence for have all had a strong commitment to central planning. The Egyptians, the Romans… large, powerful and extremely advanced civilizations for their time… all due to central planning.
I’m not advocating for emperors or pharaohs, but rather just pointing out that it does work the other way, and therefor we should leave our options for a “mixed bag” of public and private projects open.
Its always been interesting to me that our modern conservative mouthpieces keep railing about our govt being more like a business. Do you know any business that doesnt have “central planning? Try going to get a business loan or convincing ten of your buddies to invest in your “project” and see what they do when you answer their question “Can I see your plans” with “I dont have one, I dont believe in central planning”
People talk all the time about how we need to invest more in math and science education and research, but I don’t know that anybody has actually subjected such investments to a real cost-benefit analysis.
seriously? Just what exactly IS a good idea for our economy and society in your world-according-to-ESM then?
Anyone with a dash of sophistry can EASILY tear down ANY argument put forth. That’s a cheap shot. The real work and challenge and courage comes from planning, mapping, implementing, and adjusting for modifications of real ideas, and decisions, and efforts, and engagements. Funny how I don’t hear too much from you on such fronts (granted I don’t read all of your posts either though); usually it’s a “well we need to qualify this or that” type of a comment that likes to truncate and castrate ideas and initiatives. As I say, that’s the cheap shot and too easy. You are far, far smarter and cultured for more enriching and productive pursuits ESM. Truly it would do you and all of us good to apply yourself in such contributory ways.
Well, as a quick answer Mario, allowing there to be a free market in skilled labor, just as there is in goods and unskilled labor is a good solution.
I don’t really care if our scientists and engineers are US-born or foreign born. And there seems to be more than enough foreign born science geeks who want to come here. So many in fact that we actually let only a small percentage of them in.
Even though he was probably trying to be sarcastic, Captain Kirk/Save America/Strawberry Picker actually had it right. We shouldn’t be protectionist with labor either. If China or India has a comparative advantage creating skilled scientists, I don’t have a problem with that.
Come to think of it, I don’t really care if technological advances are made here or in China or India. Invariably, such advances are disseminated throughout the world. There are some issues with technology that has military applications, but I’m not terribly worried about that. There’s plenty of time to fix the problem should hoarding of advanced military technology become an issue.
don’t forget your first year game theory- people have to work to eat and business only hires if it can get a desired return on equity, so it’s not a fair game.
Not in this country. In any case, a business can die if it doesn’t hire or retain the workers it needs, so one could argue the other way too. And large companies are run by managers who are often incentivized to grow their managerial resonsibilities which include increased headcount.
None of that matters, though, since the “game” changes dramatically in the presence of multiple players on each side. It really only takes two competitiors to have real competition in the absence of collusion, and most workers today have thousands of potential employers. And then there’s the government which employs millions.
if unemployment was a ‘living wage’ you’d be correct, but it isn’t.
nor did I say all people have to work to eat.
or that people only work if they need to eat.
but at the margin i suggest people work because they need the money
and, in general, business won’t hire unless it feels it’s getting value based on prices and volumes of sales.
@Mario, people have to work to eat in USA where 40 million get food stamps? i know farmers that are paid to not grow corn. Most of humanity reaches a plateau on maslows hierarchy. Food shelter and Oprah reruns seems to be enough for many. As the robots and AI take over humans can get dumber and continue to eat. Your blog here is proof of that as you point out many who just don’t get the big picture and you call them buffoons and we all are in astonishment at their stupidity or fraud. What kind of society are we trying to engineer? at my local college many students keep going to school so they can keep getting free money and keep the party going. Many of my world travelled male military friends say USA is the worst country in the world for family, that the government has taken over as provider and u can’t keep a marriage together. Have you been divorced warren? I can’t even find 1 sada to marry? What for. Parents or friends or the state can give them their hearts content. I predict the continued dumbing down of many American citizens, the incentives to work hard and get smarter (like starvation) no longer exist.
@ESM,
Perhaps you’ll change your mind if the next generation super drone is built in China.
But then, on second thoughts, no – it won’t happen. The US military are too experecienced and sophisticated to be swayed by free market ideological BS…
Well if we actually take esm at his words (god help us if we do) we won’t have a military or society for that matter that can even understand let alone compete b/c apparently the ” cost-benefits” of science and math education is somehow upside down!!! Can u guys believe someone is actually thinking like this? I literally could not believe I read that from esm no less from a man who is so mmt-smart and who I believe has a science background!! It’s as if this is more just a parlor game to esm rather than an actually constructive or helpful effort to find much needed social solutions today. With all the issues today I think the last thing we need is more intellectual noise and pointless argumentative gymnastics.
The size of our nation’s blind spot is more astounding to me as the days go by. Watch out!! Objects in mirror are closer than they appear!!
“If government spending is the allocation of resources for the public benefit, I say spend those dollars to hire the bright math brains away from Wall St. You really can’t argue that 100 years from now the efforts of 1,000 mathematicians and scientists will have a more lasting effect than the efforts of 1,000 bankers and lawyers.”
The migration of bright math brains to Wall Street is the practical consequence of a fiat currency system that rewards mathematically gifted individuals more for gaming volatility in interest rates, currencies, commodities and credit than it does for accomplishing new scientific and engineering feats, producing revolutionary energy and transportation systems not to mention educating the young.
Hey, how come nobody considers all the wonderful spinoffs from the world of finance? There are actually quite a few advances in numerical algorithms, statistics, cryptographics, and networking technologies that have come from the finance world.
Not to mention the no-money down, no documentation mortgage loan. Really, please, don’t mention it.
And of course without the Nasdaq bubble, which was fueled by snake oil salesmen on Wall Street like Henry Blodgett and Mary Meeker, would we have had the internet bandwidth necessary to handle all of the youtube and netflix videos people watch when these should be doing work?
@ESM, Good points, esm. I had never heard that pointed out before.
For some reason I can’t rely to mario in his post when he said: “Well if we actually take esm at his words (god help us if we do) we won’t have a military or society for that matter that can even understand let alone compete b/c apparently the ” cost-benefits” of science and math education is somehow upside down!!! ”
Would Mario say that there should be never be *any* cost-benefit analysis for math/science education? It’s expensive to train these kids, and it only gets harder and harder as you start trying to recruit the less scientifically-minded ones. Surely you’d admit there’s *some* trade-off on the margin, right?
[ESM is not pointing out that we should have zero science majors in the U.S.; he just saying that before you say that we have too few, you have to do some analysis. It’s not a slam-dunk.]
I think the point here is that religiously trusting in markets to plan and provide for everybody is a bit naive.
I bet those who have the means do not actually like to trust in markets. They make sure the “markets” and governments behave as they should. The “trust in markets” lullaby is for those who do not know and should not know any better.
So then who should be planning our lives: democratically elected governments or those who own the critical resources and capital?
Side point: who cares to mention a country which really allows “free markets” to rule it and plan its course?
You’ve completely gone off the rails. Free markets means allowing people to express their desires freely in the marketplace. If an item suddenly becomes popular, the price goes up, which then incentivizes other people to make more of that item (as well as reducing the demand for that item). That price increase ripples throughout the global market for goods and services which then rebalances to optimize production and consumption. In both theory and practice, allowing prices to move freely in response to voluntary transactions is the best way we’ve come up with for allocating resources (which by definition are limited).
Markets do not plan our lives. They merely provide the feedback necessary to make our own plans.
“So then who should be planning our lives: democratically elected governments or those who own the critical resources and capital?”
Neither. The answer is: each individual should plan his own life. Free markets provide not only the freedom, but also the information necessary to do that.
yes, I understand what market idea is. But is that how the world works or ever worked? Is it even possible to arrange the society is such way, that economy would respond to each consumer desire (which is by assumption always best possible and reached after long philosophical and ethical considerations) – and that society driven by consumer desires is headed for heaven on earth (of is following “God’s plan”)?
What is occurring in reality is that most of society is being brainwashed to desire toys and cheap decorations, and then works to create those and other things, while wasting enormous amounts of resources, driving whole ecosystems, and planet to destruction, while themselves living lives under tremendous pressure. While the benefit of all this arrangement goes to small part of the society.
The “market” ideology has all signs of fundamentalist religion with God (the market), the priests (economists), the prophets (Smith, friedman etc), the paradise(some future economy without government interaction), the devil (government), heretics (keynesians, mmt) and hell (communism, socialism).
What “freedom” the market provides? Freedom to chose the next toy from the array marketed?
In my view – market is nothing more than artificial environment to trade something for something.
It has its useful role in the social economic relations – but I just do not see why society would leave it up to markets to decide its fate: how to develop, what education to provide, what should people do (financial vs engineering etc), how to survive etc.
the trick is to introduce the incentives that result in market forces serving public purpose
“… I just do not see why society would leave it up to markets to decide its fate …”
Because markets aggregate and incorporate the information contained in billions of separate choices freely made by human beings. In most cases, the conclusions that the market signals are better than any that could be reached by even the smartest, most altruistic, hard-working central planners. The market is like a gigantic, organic supercomputer running an algorithm to maximize individual utility.
Where is Roger Erickson when I need him? He keeps going on and on about coordination and how the returns on coordination are exponential. Well, markets represent the ultimate form of coordination. Just as Milton Friedman describes in his pencil video, people from all over the world cooperate to make pencils. Most of them are total strangers; some even are enemies. But markets allow them to coordinate and cooperate in a way that even the most powerful, most well-managed government could not orchestrate from a bureaucrat’s desk.
Would Mario say that there should be never be *any* cost-benefit analysis for math/science education? It’s expensive to train these kids, and it only gets harder and harder as you start trying to recruit the less scientifically-minded ones. Surely you’d admit there’s *some* trade-off on the margin, right?
Personally, I think there is confusion here regarding building wealth (the wealth of nations that is) and building something “profitable” in a business. The two are NOT synonymous and function in different ways as MMT explains time and time again.
The “expense” of education at the Federal level is only in terms of resources utilized (again at MMT explains), and if we want to have a wealthy and competitive nation it will REQUIRE educated people. Period. End of statement. Fact. The Federal government can subsidize state education if you want to do it that way too. But however it works it NEEDS to be there, otherwise we lose out. Period.
As to people not being scientifically minded, first of all no one is saying everyone needs to be a scientist, but the better and more robust the education system is, the more scientists will emerge. Fact. And that means the greater possibility of new advancements coming out of our people. Fact. Personally, I believe that we are all totally skilled and able to learn anything (of course people with mental disease may be a bit different but these are exceptions to the rule). As Socrates taught, learning is simply remembering things we already know. Generally those people that “struggle” with math or science and excel in literature, writing, creative arts for example are simply the by-product of poor teaching and/or unwilling learning habits. It’s systemic, and speaks to the flaws in our educational system.
We can deploy resources for guns or for bunsen burners or for both. Your call. There is nothing wrong in my eyes with a society that is fueled by education, so long as it is not based on the financial markets owning all the student debt obligations!!! I envision more of a world where there are private businesses that specialize in educational tools, software, technologies, and systems that apply to the real world and bolster our efforts as humans on earth, and if the Federal government is willing (we know they are able) to fund schools to have computers, CNC machines, robotics departments, etc. then you betcha on my end! Those private businesses that manufacture and sell those systems will benefit too and we now have a positive feedback loop in play that is both non-violent and extremely cutting edge and productive. Plus it feeds the other way in that private companies are able to find more capital to further their research and progress their systems and innovations as well, while also investing in the training of their future employees. It’s a total win-win all around.
One of the biggest mistakes most people make is in thinking that building a society’s REAL wealth is a zero-sum game. It is not. In fact it is actually exponentially net positive for all involved by the very definition of the term “wealth.” Again MMT proves this time and time again.
As I say, it’s not about our society’s inability to achieve; it’s about our willingness to pursue those means necessary to accomplish what we want. MMT proves this is so, and for me these amazing blogs and discussion threads help to reveal who are the willing ones and who are not. It’s more about the willingness to view things in new, creative ways more than anything else. All the possibilities are there waiting to utilized. Do you want to be first in line or do you want someone else to be? I know where I stand.
“A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established.”
I think you and Neil are being a little too pedantic. I don’t dispute that a market requires rules enforced by some sort of authority, and I don’t dispute that there are always distortions and externalities. Everything is relative. When I speak of free markets, I mean free relative to what exists in underdeveloped countries, or what used to exist in communist countries, or even relative to what exists in most countries today. I believe the market should have fewer constraints than it does today in the US. I do not believe in no constraints at all.
@ESM,
> Where is Roger Erickson when I need him? He keeps going
> on and on about coordination and how the returns on
> coordination are exponential.
> Well, markets represent
> the ultimate form of coordination.
Hardly. Read my comment above. Complex markets can express any degree of utility, from horrendous to adaptive. It all depends on info flow, analysis, situational awareness, and quality of distributed decision-making.
Warren says that “markets express current values” …
but keep in mind that static valuations on average wield ~zero predictive power about dynamic valuations. That’s why speed in adjusting opinions matters so much.
We’re stuck adapting in dynamic, unpredictable contexts, and survive by how well we surf, NOT just how “good” our surfboards presumably are.
Best investment? Figure out ways to invest in a better democracy, just like people did ~1776. That’s dynamic value, while everything else we account for delivers only transient, static value.
It’s all about optimizing our emerging, aggregate options, not hoarding any static value separable from our option-pathway.
That all sums to a simple, compounding rule that agrees with both thermodynamics & evolution:
1) Optimize survival chances by optimizing adaptive rate,
2) which follows optimal aggregate resiliency,
3) which follows distributed/decentralized static resources;
4) which continually optimizes aggregate options.
In summary, teamwork always wins. That’s the story of both social species, and democracies. We need ways to invest in the USA.
ESM: I believe the market should have fewer constraints than it does today in the US.
But you need to admit that there are also non-market based systems which can also be efficient and probably more efficient than market-based. Also in terms of sustainability it far from obvious that free market system delivers more stable outcomes. Yes, we need to define what we mean by efficiency but there is nothing intrinsic about free markets which puts them above everything else.
The definition from wiki is a good example that a thing called market does not exist but is rather an abstract congregation of everything else we think is important for a functioning society.
Market is not even needed for the society to function. The only reason we need market and even money is because our society is too big to operate on trust. If you scale the world down to one village it can still live and develop. This is the way this world lived and developed for thousands of years.
Even several decades ago there was much more trust and people did not lock doors and did not need locks and security systems. Was it market who created such needs? Don’t you think that market can be even destroying us?
By the way, I didn’t understand even 1/4 of what you wrote, but if you are implying that markets are not dynamic, not adaptive, and/or not distributed, then you’re completely wrong. Those characteristics are in fact what make markets superior to central planning in most cases.
So the power and wisdom of the markets is represented by the pencil? Ok, I see the point.
But is that the best way to make pencil for any particular country?
Did he (Friedman) also consider the waste and pollution and violence that involved to make those pencils and take those resources all over the world, and then create conditions for the poor to work cheaply? (I did not watch the whole video, but I bet that he did not – that would be like a priest saying “but God is not really that wise, we can do better”).
I do not dispute that private initiative and freedom is needed for society and economy to function well, but my point is that there is no need for “free market” religion in order to accomplish that. There is no need to arrange most of social life to follow this idea of “free market”.
It is far from optimal. To state otherwise would require you to ignore billions of starving and sick people, enormous pollution, enormous ecological problems, enormous waste of resources (mountains of toxic, high tech garbage every day), etc.
“But is that the best way to make pencil for any particular country?”
Yes, unless there are externalities.
“Did he (Friedman) also consider the waste and pollution and violence that involved to make those pencils and take those resources all over the world, and then create conditions for the poor to work cheaply?”
Yes, markets produce sub-optimal results when there are uncompensated externalities. These occur when a non-party to a market transaction either bears costs of or reaps benefits from that transaction. You have listed negative externalities like pollution. There are also positive externalities like providing jobs and training to uneducated people in poor countries.
But unless those externalities are significant, the market price of a product gives you a good idea of the resources (both natural and human) that went into its production. For example, I take some pleasure in pointing out to my rich, lefty, environmentally-conscious Prius-driving friends (well, ex-friends) that buying a Prius is actually bad for the world. You can tell from the price. Even accounting for the gasoline savings, it costs more to purchase, drive, and eventually dispose of a Prius than it does for a conventional car of comparable size and quality. Therefore, it is a waste of resources. QED.
If you have a problem in a particular case with the way the market works, then I submit that you have an obligation to identify an externality and propose a regulation or a tax to correct it. That is what the government is for, and I fully support correcting externalities.
“To state otherwise would require you to ignore billions of starving and sick people, enormous pollution, enormous ecological problems, enormous waste of resources (mountains of toxic, high tech garbage every day), etc.”
I forgot to address your last statement. First, just because the world is a mess doesn’t mean capitalism is to blame. Far from it. I think capitalism has lifted close to 1B people out of poverty in China, India, and the rest of the developing countries in the last 30 years. As Uncle Milty says in another video, the kind of grinding poverty you’re referring to occurs only in those societies that depart from capitalism. It is the lack of capitalism that is the root of most of the evil in the world. Second, as long as pollution and waste disposal are properly priced, free markets will generate the optimal response. You worry about high tech garbage piling up, but have you actually checked the price of dumping a ton of garbage into a landfill? Frankly, I don’t know what it is, but I assume that it’s fairly priced. If it is low, then that means there really isn’t much of a problem. There’s lots of room for landfills. If it is high, then that means people will be incentivized to generate less garbage. The price of disposing of garbage will ripple back to raise the price of any product or service that even remotely contributes to generating garbage (and to lower the price of any product that does the opposite).
There are always “externalities”.
Capitalism can survive in specially arranged environment only. The state, the government, laws, money, enforcement, inequality, inability for people to be self sustaining, etc.
It is not a natural state of society, so it cannot encompass all social life.
However, let’s say we attempt to do that.
In order to compensate all externalities some very smart people separated from the profit seeking world should be in government.
Is that realistic?
Otherwise, we can safely assume that profit seeking interests will subvert the goverment to protect and enhance profitable externalities.
“Externalities” – what a beatiful world to hide millions and millions of starving people and warming planet on the brink of ecological disaster.
So who bear the costs of the externalities? The powerless. In a “free market” worshiping societies those are the ones who cannot buy the influence.
Prius is bad for the world, but burning oil and coal is good for the world (cheaper), until the climate becomes so unstable that it become expensive to burn oil? What if it becomes too expensive to eat first?
Will market priests connect the dots and adjust for externalities, or will it be cheaper to silence the scientists (cheaper = good for the world)?
It is good that you are supporting correcting externalities. But who will buy the government back, when externalities are so profitable that it pays to buy the government for those who makes money on those externalities?
So in order to even start of thinking of pricing in externalities the market approach to government needs to be removed. Do you agree?
And for that market approach to education needs to be removed, for you cannot expect people to understand this if all they think is how to make money because they are masively in debt when they finish school.
So poverty only occurs in countries that depart from capitalism?
I suppose there should be very few “grindingly” poor people in the world now? Since it is pretty much all capitalist?
Would you say being homeless and depending on handouts is being “grindingly” poor?
Your logic about dumping garbadge is laughable. It might be still cheap to dump the garbadge when garbadge is all around you. Would that be still ok with you?
The price of disposing garbadge only rises when people stand up and protest against having garbadge dumped in their back yards. And that only works if those people have power.
“In order to compensate all externalities some very smart people separated from the profit seeking world should be in government.”
That’s not necessary. One can lobby the government to address externalities. Those who benefit from the externalities may oppose you, and sometimes they win out in those cases where there are concentrated benefits and diffuse costs. Of course, there are problems the other way too. Sometimes people claim an externality is greater than it really is. You actually allude to two examples which I’ll address:
1) College education is generally considered to have an enormous positive externality. Therefore, as a society we subsidize college education to an enormous extent. I think there is almost no positive externality of a college education and therefore the subsidies do more harm than good.
2) Carbon dioxide emissions are generally considered to have huge negative externalities because they exacerbate global warming. I think the science is unpersuasive, and the economics even less so. It is far more economical to expend resources to adapt to climate change when and if (big if, by the way) it comes. Climate change may not happen at all. It may happen no matter what we do to curtail carbon dioxide emissions. Or, by the time it happens, we may be so technologically advanced that it is a trivial problem to solve. Nevertheless, there is an enormous push not just to tax carbon emissions at a level way in excess of any potential economic harm (which is far less than $1 per gallon of gasoline), but actually to limit carbon emissions arbitrarily, based on nothing but computer models which can’t even predict the climate in the past, let alone the future.
“Would you say being homeless and depending on handouts is being “grindingly” poor?”
The bottom tail of the distribution will always be considered poor. We can’t all be like Lake Woebegone where everybody is above average. Still, the poorest of the poor in the US are far better off than even the median household in a poor country.
“It might be still cheap to dump the garbadge when garbadge is all around you. Would that be still ok with you?”
Yup. If I’m already living in garbage, my price for taking on more will be low.
“The price of disposing garbadge only rises when people stand up and protest against having garbadge dumped in their back yards.”
Well, I think it would rise way before that. But if it gets to that point, the price will rise again when people complain that the garbage is too close to their backyards.
“And that only works if those people have power.”
Nope, all they need are property rights, which is one of the basic requirements for having a well-functioning market.
“One can lobby the government to address externalities”
Yes, one can lobby, especially if one has deep pockets. Who can devote more money to lobbying: those who make money of externalities, or those who are deemed unimportant enough to suffer because of externalities?
I am sure that there are exceptions, but as a point of logic – if your profit depends on externalities, you will not think twice to devoting part of it on making sure externalities persist.
I am not going to argue about college education and climate change, for that is another discussion. Potentially long and fruitless one, and I don’t care to convince you, nor will you be able to convince me.
“Still, the poorest of the poor in the US are far better off than even the median household in a poor country”
Very wide statement and very likely false.
In any case – even if US poor are better off – is that because of the capitalism or because of socialist government policies?
Also – those median poor in poor countries? Why are they poorer? Is it because their countries have not enough capitalism? What about those who are higher on the market freedom list than the US?
“The bottom tail of the distribution will always be considered poor”
OK, so your point is that those who have less always complain, even if they should just be happy that they are not like those poor in the “really” poor countries?
But did you consider that those poor countries are poor because of global arrangements that advantage the more powerful countries?
It is not that they have less free markets, or less ideological capitalism.
So – just as there is rich-poor gradation among citizens in any country – there is rich-poor gradation among countries. That does not negate that there are rich and poor, it just makes the scale bigger.
Regarding the garbage. By “in the backyard” – I meant next to it. Of course I assumed property rights already in place. We are discussing capitalism, after all.
In any case – the point was that market and commerce is only part of social relations, and not the most important. It is rather naive to try to convert most of social relations into “market based” ones.
It might be too expensive to buy land for the land fill next to rich neighborhood, but should that be the only consideration why landfill next to the poor neighborhood should be allowed? I think not.
Similar with other things.
I understand the wish of the rich that money would decide everything – but that is hardly a wise or just wish from the perspective of non-rich.
“I understand the wish of the rich that money would decide everything – but that is hardly a wise or just wish from the perspective of non-rich.”
Yes, that is the key point. Of course the rich would like money to buy more things than it does, and the not-rich would like it to buy less. The not-rich would like to make it so money can’t buy power or legal immunity or health or less congested highways or love, and to some degree we have laws trying to enforce that.
I can certainly understand why the not-rich would want to level out the playing field as much as possible, but there are often adverse consequences to that – which include sub-optimal allocation of resources and skewed incentives. Usually, these adverse consequences are not easy to see until it is too late.
And the fact is, even in those areas where we would agree money should have no purchasing power (e.g. buying immunity from the law, or buying votes from a Congressman), it is virtually impossible to police, and attempts to insulate those areas from the power of money often lead to bigger problems (e.g. laws against drugs, or prostitution, or financing campaigns).
Doesn’t mean we shouldn’t try to insulate some areas from market forces, but it does mean we should be rather selective about the areas that we choose.
In the end – money is a tool and nothing more. It presupposes society, government, laws, culture – and most of all – it presupposes force and violence. The force and violence has to stand behind the money to ensure their value.
The inequality supposedly appeared when population became denser and was able to produce surpluss.
Since then part of society dominated over most of it by apprioprating the surplus by various means and keeping the rest of society in subservience also by various means.
The original society was based on cooperation (can be seen in primitive tribes, or even village life in less “advanced” countries). The more “advanced” – or rather appropriated state of society is based on coercion.
The underlying power stuggle in appropriated society is always between the “haves” and “have-nots”.
The discussion about money is just a veil for that. Insistence that money is special and should be given more rights and control over more spheres of social life is just a code-words for giving more control over social life to the “haves”.
Note, that even if we take for granted the supposition that money is a perfect tool for allocating resources – the insistence by the “haves” then becomes that money should not be just given to “have nots”. Money has to be earned by serving the “haves”. Otherwise the money will lose value: it will lose is its utility in making “have nots” serve the “haves”.
I am not saying that money cannot be a useful tool, but that in order to make it so – society has to change first.
It might make sense to all here how to solve the economic troubles MMT way – but in order to do that – the “have nots” have to force the “haves” to distribute some of the money to them. Otherwise the “haves” will happily accept the unemployment as a “sacrifice they are willing to make” (by “have nots”, of course), before doing anything else.
Similar story is unfolding in Europe just on the scale of countries. The “haves” (Germany, etc) insist on sanctity of money, while the “have nots” have to force them to do something, otherwise the sacrifice will be on them.
Gary, completely agree with the above. However libertarians are unable to make a step outside of their box and admit that there are also other interests in the society but individual freedoms etc. A society which organizes itself purely along the individual lines is just one special way of organization which a-priori can not be better or worse than any other way. The concepts of money and market are used today only in the sense to re-enforce this given way of organisation. It is also clear that these concepts can be used in other ways and it is also very-very possible that we, people, could get rid of money and market all together and still be a happy society with lots of individual rights and freedoms. and development.
I still think you guys are arguing against a world which doesn’t exist and which few libertarians are even proposing.
I look all around and see underdeveloped and developing societies which would benefit from embracing more capitalism. I also look around developed societies and see plenty of areas of the economy which would benefit from more market-based activity rather than less.
Health care, of course, is the largest area which could benefit from a more market-based system (which, despite the claims of single payer proponents, is far from market-based in the US since consumers rarely pay for anything directly).
There are other examples: education, garbage disposal, water, utilities (especially electricity which should be billed to the consumer hourly). And as I’ve proposed before, assistance to the poor should be given as money rather than entitlements to specific goods and services.
Perhaps one of you can propose an example of a relatively free market which exists now, but shouldn’t?
you are arguing for more “market based” approach. But what is it? Market based approach is nothing more than arranging some area of social relations to be based on money.
So what does that mean? That means giving that area to be controlled by the “haves”, and taking it away from “have nots”.
Is your point now is that market based approach does not really exist in its pure form, and what we see as negative sides of market based approach is really a distortion of it?
So what would be a market based approach to health care? Would you get rid of health insurance companies? Are they not part of the market? Would you get rid of government insurance for the elderly? Would that “fix” the healthcare?
I would prefer a single payer solution to healthcare: government establishes reasonable prices for everything and sticks to them. Or something similar. Sure, some small consumer payment could be left there just to discourage system abuse. Although even that might be better left up to research.
Education should be free public education. Standards developed by government and uniform to everybody.
Higher education as well.
In order to save resources – best ways for teaching and learning could be found. Perhaps there is no need to teach people until they are 22 – 23. Perhaps the same teaching could be accomplished faster? If there are jobs for everybody – there is no need to make workforce smaller by educating for 11 – 15 years, and treating school as day care?
Social security, retirement savings. No need for market there. Government could just have a fixed social security guaranteed for all elderly. If that is reasonable – the saving will be discouraged.
Water is critical resource. Should not be left for profit.
Energy production and use is critical to re-think – since now it is leading whole civilization off the cliff.
…
etc.
I am ok with money based approaches and private initiative. That is necessary. But that should be balanced with a more long term view of things that are critically important to the whole society.
For instance – who can address unemployment now? We know it can be easily addressed, but with most interests privatized – there is nobody to stand and speak for the interests of whole society. Government is trying, but cannot sidestep the interests which defend the “sound money” first.
I was thinking why is it so difficult to accept that the struggle between the “haves” and “have nots” is real (and I am aware that there are many gradations in between, and that those are social groups with some mobility between them)?
My guess is that the societal values are still based on cooperation, and so society tries to maintain the illusion and self-deception that cooperation is still present.
I also think that is why the ideas of impersonal “market based” arrangements are so easily accepted. It is easier to accept that something impersonal is oppressing you, than to recognize that it would be your rich neighbor or your boss who does it – of course not personally (“it is not personal – it is business”).
According to this article about origins of money in ancient Egypt – when inequality appeared and the social relations changed – the forms and the illusions were still maintained. http://www.csus.edu/indiv/h/henryjf/PDFS/Egypt.PDF
People gladly accept inequality and oppression while life is still bearable, and even when it is unbearable – they accept it for a time being and try to cooperate. All for the sake of social values which are in their genes. The cooperation is essential and everybody knows it.
ESM: Perhaps one of you can propose an example of a relatively free market which exists now, but shouldn’t?
Sure. And easily. But I am also sure that you will freak out 🙂
One market would be residential real estate. Any “free” market “force” in that market shall be seriously restricted. Residential property market is like national food security potentially leading to political and social instability. Examples? 🙂
Next one – stock market. It is obvious and history is clear on that that stock market is not for investments as advocated by free market proponents and the like but for dis-investments, i.e. fooling the retail idiots. As such stock market serves very little economic purposes, satisfies the needs of a very little strata of society at the expense of everybody else and costs lots of resources. And I am not even mentioning here national economic strategic policies which are currently tied to the stock market performance. Examples? There was some recent case. I forgot the company name though 🙂
I could probably go on. Just never thought about that.
My problem is not that free market is not free enough or that not enough areas of economy are subject to free market forces. My problem is the idea of free market itself advertised as the ultimate and the only possible way to run ourselves.
If we get back to the drawing board and ask – is it possible to devise another system which can make everybody happier and without a free marker money driven ideology. What would be your answer? And before you rush with the answer let me re-phrase the question – does money define happiness. Is Bill Gates happier than you are or I am? So if money is not THE intrinsic motivator (and there is a plenty of research proving this) then where is the fallacy of composition which allows you to claim that on macro level money is the best motivator?
But then again I have no hopes that you will even try to consider such options. So no worries 🙂
“Residential property market is like national food security potentially leading to political and social instability. Examples? :)”
Well, if you’re referring to the potential for bubbles and the harm they cause, most free marketers believe that the bubble was caused by government interference, and most MMT people believe that the collateral damage to the real economy would not have happened but for government incompetence.
The Nasdaq bubble of the late 1990s did little damage except to the perceived financial wealth of speculators.
“Next one – stock market.”
I don’t follow you here. If it wasn’t for the fact that entrepreneurs, angel investors, venture capitalists, and key employees know that they can rely on the stock market as an exit strategy via a public offering, then most new businesses would either grow much more slowly or not even get off the ground.
“So if money is not THE intrinsic motivator (and there is a plenty of research proving this) then where is the fallacy of composition which allows you to claim that on macro level money is the best motivator?”
Human beings are highly adaptive. They tend to renormalize quickly to their current situation. It is not the absolute level of money that correlates to happiness, but rather the rate of change. The act of making money is what gives people a rush. Actually having it? Eh, not nearly as much. Stated mathematically, I think the money part of happiness (which is a significant part) equals K * (d/dt) log(wealth), where K is some positive constant, which no doubt varies from individual to individual.
So, yes, there is still a big incentive to produce provided by money, but of course providing incentives is only one positive aspect of markets. Efficient allocation of resources is another.
“most free marketers believe that the bubble was caused by government interference”
This is what free marketers believe regardless of the underlying problem. That is why they are called free markets and why it does not prove anything. No surprise here.
“The Nasdaq bubble of the late 1990s did little damage except to the perceived financial wealth of speculators.”
Really?! Unless you mean that it is a zero sum game, i.e. the amount of money did not change. However I did not mean bubbles. I meant a regular stock market operation. Please do not bring angels, VC and so on as a justification for stock market. There zillions of cases where one VC sells to another VC and similar. There is even a whole industry and related machinery called M&A. I am sure you know about it 🙂 So I do not see why a stock market is such a pre-condition for VC etc overall. But that is beside the point. You do not seem to dispute that stock market exists for dis-investments. But then you seem to argue that these dis-investments create wealth. Don’t you think there is a contradiction here?
“The act of making money is what gives people a rush”
This is what primary research clearly denies. Money reduces dis-satisfaction from work, However dis-satisfaction here is not the opposite of satisfaction. It is an independent dimension. And so while reducing dis-satisfaction money does nothing to improve satisfaction. And obviosuly it is satisfaction which provides motivation unless by dissatisfaction and motivation you mean kicking everybody’s butt. But then it is hardly a free market.
I believe some of the commentators have missed the point completely. The original American space program had nothing to do with researching the geology of the Moon, it was a response to the short-lived supremacy of the USSR in rocket technology in the late 1950s – early 1960s.
If you believe that in the globalised world China will pour state funds into research and American corporations will benefit from buying new products at a Chinese price – think about rare earth metals or solar panels. China is not ruled by corporations or “free markets”. Power gives money in China, not money gives power (like in the West). They plan decades not months or years ahead.
Is the space program all about “national pride”?…
Once the Chinese advance their dual-purpose technology enough – it’s better to convert American aircraft carriers into cruise ships before it’s to late. You can always invite some rich Communist Party members to have a party on a former American aircraft carrier obviously painted in red.
The Obama’s policy of reducing spending on advanced research is suicidal in the long run. It is not about glorification of state institutions such as NASA or DARPA because a lot of work was done by subcontracting private sector corporations. It is about the absolute failure of the educational system in America which has produced people so ignorant as the current political elite in Washington including the majority of the luminaries from the Democratic party. Not to mention the abysmal quality of mathematical and scientific education in the mainstream schools. People who are in power now not only don’t understand European history of the 1930s they are also ignorant in regards to the American history of the 1960s. It was not all about racial equality, experiments with LSD and anti-war movement. These events were totally irrelevant. It was all about winning the Cold War. If you lost the Cold War you could eat all the LSD you had.
It is not enough to advance pure military technology. It is the research onto broader science what gives the country the edge. Military technology secrets can easily be stolen – what happened with all the American inventions from fission bombs to stealth planes. It is the pace of scientific and technological progress what allows for military and political supremacy – since the late 18th century.
I dare to say that militarised Keynesianism of Mitt Romney (if true) may be better for America than enlightened ignorance of the current elite.
Thanks Adam I completely agree and you are correct on all of this.
My biggest fear is that your military keynes conclusionis at least economically accurate and therefore people will drink the kool-aid and justify their destructive ways.
@Adam (ak), Romney is a Keynesian member of a party that has become, from the bottom up, explicitly anti-Keynesian. The core constituency that will make up the bulk of Romney votes in November will be from people who agree with Ron Paul on economic matters (aside from the military). They didn’t vote for him in the GOP primary because they stridently disagree with him on social and foreign policy issues, but his Austrian economic worldview has become the zeitgeist for this modern GOP.
Thought that was a given? Supposed investors & economists don’t seem to get any intro to any other field of study. Framers of the Constitution knew this pre 1776. Look up James Madison & the Virginia Constitution.
Whatever’s at work now, it’s the outcome of specific lobby efforts, no matter how innocent the ignorant fraud.
I don’t believe anything however the main stream views of space in this reality are skewed just like everything controlled by greedy men…….or whatever or whoever is changing the numbers in the spread sheets…..lol
Eppur Si Muove, Higgs Particle YOK
Regardless Of Whatever Whoever
Regardless Of Whatever Is Said By Whoever Says It –
Higgs Particle YOK.
S Hawking is simply wrong in accepting it. Obviously wrong.
Everyone who accepts the story of the Higgs particle is simply wrong.
Plain commonsense.
Singularity and the Big Bang MUST have happened with the smallest base universe particles, the gravitons, that MUST be both energy and mass, even if they are inert mass just one smallest fraction of a second at singularity. All mass formats evolve from gravitons that convert into energy i.e. extricate from their gravitons clusters into mass formats in motion, energy. And they all end up again as mass in a repeat singularity.
Universe expansion and re-contraction proceed simultaneously..
B. Refresh Present SCIENCE Comprehensions And Restructure Science Plans, Policies And Budgets
Who Suppresses Science Creativity? Does Academia Suppress Creativity?
Again and again, ad absurdum:
Since the 1920s SCIENCE is suppressed by a Technology Culture, tightly supervised by a religious old style trade union , the AAAS…
Liberate Your Mind From Concepts Dictated By The Religious Trade-Union AAAS:
USA Science? Re-Comprehend Origins And Essence
* Higgs Particle? Dark Energy/Matter? Epigenetics? All YOK!
* Earth-life is just another, self-replicating, mass format.
* All mass formats evolve from gravitons, the primal universe mass-energy particles.
* Since singularity gravitons are extricated from their big-bang clusters , i.e. become mobile, energy, at a constant rate.
* All mass formats follow natural selection, i.e. intake of energy or their energy taken in by other mass formats.
* Evolution Is The Quantum Mechanics Of Natural Selection.
* Quantum mechanics are mechanisms, possible or probable or actual mechanisms of natural selection.
* Life’s Evolution is the quantum mechanics of biology.
* Every evolution, of all disciplines, is the quantum mechanics of the discipline’s natural selection.
Since the Big Bang galactic clusters loose mass at constant rate. Mass, gravitons, continue escaping at constant rate from their Big Bang fragments-clusters thus becoming energy, mass in motion, thus thrusting the clusters. Constant thrust and decreasing galactic clusters weight accelerate the separation of clusters from each other.
Common sense.
Dov Henis (comments from 22nd century) http://universe-life.com/
==============================
Natural Selection Is Built-In Hypocrisy In US Science Structure
In addition to the omnipotency of the AAAS trade-union-church with its science testament and gospels…:
A. http://www.nas.edu/
Where the Nation Turns for Independent, Expert Advice
THE NATIONAL ACADEMIES
Advisers to the Nation on Science, Engineering, and Medicine
B. http://en.wikipedia.org/wiki/Science_policy_of_the_United_States
In the Executive Office of the President, the main body advising the president on science policy is the Office of Science and Technology Policy. Other advisory bodies exist within the Executive Office of the President, including the President’s Council of Advisors on Science and Technology and the National Science and Technology Council.
Further advice (on legislating science policy) is provided by extra-governmental organizations such as The National Academies, which was created and mostly funded by the federal government,[2] and the RAND Corporation, as well as other non-profit organizations such as the American Association for the Advancement of Science and the American Chemical Society among others.
C.
Conflict of interest arises whenever the personal or professional interests of a board or committee member or of an expert adviser are potentially at odds with the best interests of the nonprofit…by the people for the people…
almost ideal fiscal stimulus — contributing to the development of more advanced technology as well as the increased knowledge of mankind (thereby raising long-run productivity curves), yet doing almost nothing to (immediately) increase total productive capacity or to compete to consume large amounts of natural resources. the biggest problem with space exploration funding in a depression from an economic point of view is that it isn’t a large enough sector of the economy.
of course we’d cut it.
@gaius marius, http://www.businessinsider.com/why-you-should-be-excited-about-national-bankruptcy-2012-6
This guy says we need to privatize the world and do away with governments and uses spacex as an example. Imagine that evil star trek universe where we take dilithium crystals by force. Star fleet inc. lawyers decided the uss enterprise had more need than the locals and it would help profits.
I find it disgraceful we cant even transport the space shuttle enterprise over a river without damaging a wing as just happened. We once put a man on the moon and didn’t damage a wing. How far we have fallen.
@gaius marius,
We should be going back to the moon to retrieve Helium 3 which is extremely rare on earth but abundant on the surface of the moon. H3 would be the ideal fuel for thermonuclear fusion energy. I believe this is why the Chinese are going to the moon.
@Ed Rombach,
Helium-3 is not particularly useful (I actually used it a lot in my grad school days, but its uses are pretty esoteric), but in any case, it has to be cheaper to use nuclear reactors to produce tritium which decays into Helium-3 with a half-life of 12 years.
I imagine the Chinese are going to the moon for the same reason we did: national pride. Might be worth it, might not – it’s a political decision I guess.
@ESM,
Correct me if I am wrong but my understanding is that while H3 would require much higher temperatures for fusion reaction, the by-product is much less radioactive…. virtually clean.
@ESM,
Ed,
Controlled fusion is about 30 years away from being practical, just as it was in 1960, 1970, 1980, 1990, and 2000. But in reading up, I see that you’re correct that He-3 is potentially useful in fusion as a fuel. It’s far from clear that the advantages would outweigh the disadvantages, however.
@ESM,
ESM – I take issue with your assessment that controlled fusion is 30 years away from producing energy. I first read about fusion in 1973 when I was in college in an article in the Boston Globe which projected that it was probably 30 years off into the future. Clearly, the task of containing in effect a hydrogen bomb in an electromagnetic bottle the size of a bus must be a daunting scientific, engineering and materials endeavor, but lets not forget that the development of fusion energy is the very last thing that the petrochemicals industry would like to see come to fruition because it would make crude oil, gasoline, heating oil, etc as obsolete as buggy whips.
Fusion energy research has been undergoing de-funding for many years. You might detect from some of my postings on this website that I am not a big government kind of guy. While I largely accept MMT, I also have a strong Libertarian streak in me which I’m sure probably seems like a contradiction in terms to many on this blog site.
Nevertheless, I can say wholeheartedly that government funding for the development of fusion energy is one of those big government type spending programs that I can endorse enthusiastically. It is very unfortunate that the bush administration pulled the plug on what would have been the largest super collider in the world in Texas. Too close to the oil patch maybe? My point is that I believe that fusion energy development is deliberately being held back and the practical consequence as you point out that is that it is still 30 years off in the future.
@ESM,
“I take issue with your assessment that controlled fusion is 30 years away from producing energy.”
Actually, that wasn’t my assessment. I was just recounting a long-running joke about the field. The current assessment from reviews I’ve googled up is that commercial fusion power is close to 40 years away.
“Fusion energy research has been undergoing de-funding for many years.”
I don’t know that this is true, since there are a number of large-scale research projects around the globe, including at the NIF at Livermore Laboratory. But even if it is, you’re getting causality mixed up. Less money for fusion power research is a reflection of the lack of meaningful progress, not the other way around. It has unfortunately turned out to be a very, very hard engineering problem.
“… I also have a strong Libertarian streak in me which I’m sure probably seems like a contradiction in terms to many on this blog site.”
Not at all. I consider myself a libertarian, and so does Warren I think. MMT has nothing to do per se with one’s political leanings.
“It is very unfortunate that the bush administration pulled the plug on what would have been the largest super collider in the world in Texas.”
The SSC had nothing to do with fusion research. No doubt SSC proponents like Steven Weinberg talked up the prospect of spinoff technologies that could be helpful, but it was smoke and mirrors.
“My point is that I believe that fusion energy development is deliberately being held back …”
I’m sorry, but this is tin-foil hattery. There’s no way that the oil and gas industry is far-sighted enough to worry about fusion power, and there is also no way that it is powerful enough to slow or kill development of a resource that would make the US energy-independent.
I’ve never heard anybody even posit that the oil and gas industry has impeded the development of nuclear (i.e. fission) power, and that’s got to be at least 100x more plausible as a conspiracy theory.
@Ed Rombach, I think we have learned one thing from space exploration to date.
It’s a lot easier to get there than to come back.
@Ed Rombach, Maybe,or maybe they’ve read Robert Heinlein’s book “Moon is a harsh mistress”……….lol
@kkken530,
Sounds like the lunar colony in Heinlein’s novel was not unlike Australia and Virginia which got traction as prison colonies. Not sure what that signifies about harvesting He3 from the lunar surface but thanx…..I’ll put it on my reading list.
Isnt it better to let china do all the work and research and just sit back and import the knowledge and products? Imports are a benefit right? You confuse me warren. This article seems to be saying we should fund more NASA stuff so NASA boys can do all the work and research.
http://www.businessinsider.com/how-to-date-women-who-earn-more-2012-6
I used to work at space stuff (captain of a starship). But then I read this blog and decided to put my wife to work while I sat down and imported her salary into my pocket. Imports are a benefit.
@Captain Kirk, Very well put. The “imports are a benefit” line requires some serious blinders on to make sense.
Just how long will others be willing to accept a trade deficit without anything in return? Clearly not forever, and if this deficit had been allowed to continue long enough, the productive capacity of the deficit country could be seriously undercut.
@seth2077,
“Clearly not forever, and if this deficit had been allowed to continue long enough, the productive capacity of the deficit country could be seriously undercut.”
Not if you’re maintaining that productive capacity at the same time. That’s the MMT difference. It doesn’t let the foreign central bank from the export nation drain the domestic economy of money and depress the local economy.
Instead it gives the foreign nations new tokens in return for their real stuff, with no guarantee that those tokens will be usable to buy as much real stuff back in the future (although the chances are it will be a win-win due to the reversal of the hysteresis effect).
The problem we have at the moment is there is no commonly acceptable policy to a foreign central bank swapping your currency for its own and then burying your currency in its vaults. The Swiss are doing it with Euros and the Chinese and Japanese with dollars.
The current offset is for the import country to swap the currency in foreign central bank vaults for bonds, which gives most standard economists the shivers.
@Neil Wilson, “The problem we have at the moment is there is no commonly acceptable policy to a foreign central bank swapping your currency for its own and then burying your currency in its vaults. The Swiss are doing it with Euros and the Chinese and Japanese with dollars.”
Does this imply that the Chinese and Japanese can eventually agree to spend until they seriously inflate the dollar?
when a cb buys your currency it means your taxes can be lower than otherwise
@Neil Wilson, I understand the “token” concept and the fact that growth can be increased to the level of full employment, but what I have in mind is the hollowing out of crucial industries and the skills that industries require.
For example do we really want the US to import all of its steel? Using the “imports are a benefit” as our only yardstick, the answer would be “why not?” But once the steel industry and related educated workforce leave the US, then they would be hard to get back, thereby leaving the US in an obvious disadvantage. Multiply this throughout the economy and you’d have a major problem.
Assuming that foreigners will continue to send real goods in exchange for tokens and that said foreigners will never exert the power they have over crucial technologies is a bit naive. In the long run only balanced, trade makes sense.
“For example do we really want the US to import all of its steel? Using the “imports are a benefit” as our only yardstick, the answer would be “why not?””
Imports are an *added* benefit.
With MMT you are maintaining your own economy at maximum output *and* taking anything the rest of the world will give you in exchange for tokens.
So what MMT is essentially saying is change your policy focus. Rather than worrying incessantly about balance of trade, export levels, interest rates and government deficits, instead concentrate on maintaining the maximum output of the domestic economy in the format you want it to be.
If you do that then the trade balance et al will likely look after itself.
So if your industrial policy mix requires local production of steel as a strategic position, and you have the raw materials at hand then make that happen.
So it’s not about switching off exports, or switching on imports. It’s about changing the policy focus away from obsessing about managing those things and concentrating instead on managing the domestic economy.
productivity is mostly a commodity nowadays
@WARREN MOSLER,
Warren: productivity is mostly a commodity nowadays
Nowadays?! Was it ever different? Seriously!
@Captain Kirk,
There are tolerance limits to everything. Inflation or deflation would kick (maybe both, successively) before we became 100% reliant on imports. The benefits of growing, low-margin imports goes away as a nation approaches the asymptote of having exported 100% of it’s adaptive capabilities – so that it ceases to grow new skills while exporting old skills.
Getting to the real point, that’s essentially what we’ve done with our public awareness & political skill – exported too much of it. Now we’re left with a nation predominantly filled with couch potatoes and politicians who think islands will tip over and dead people can come back to converse with the brain dead.
http://www.nationalmemo.com/congressman-joe-pitts-calls-on-arafat-sharon-to-restart-peace-talks/
Oh but the private sector could do all this without government help… just look at SpaceX. It only took them 55 years to do what NASA initially did.
There aren’t enough math and science whizzes coming up through the ranks to do this work anyway – they’ve all left for wall street.
Seriously, an MIT B.S. education costs a quarter mil – meaning it takes $44 grand a year off the $60K a year salary one can make starting with a science/engineering degree. The numbers no longer work for a young person from the US to go into science and technology anymore.
@Paul Palmer,
Yes. The student loan bubble is bursting and I think college tuitions are a good short.
“The World Wide Web was invented at the CERN lab to help particle physicists communicate across with each other across the world. If the laboratory wasn’t built or was closed, there would be no Fox News website.”
Does this person really believe that if the Europeans didn’t spend tens of billions of dollars building a supercollider that we wouldn’t have websites today?
Most educated elites complain that the unwashed masses (particularly conservatives) don’t trust science. But what they don’t trust are scientists, and I think people are right to be skeptical.
Yes, we need the money for bankers balance sheets because they contribute so much productive value to society.
“What a stupid statement. Does this egghead really believe that if the Europeans didn’t spend tens of billions of dollars building a supercollider that we wouldn’t have websites today?”
The World Wide Web was absolutely development due to government research funding, as is most innovation.
The Internet on which the web is build was also DIRECTLY due to US government research funding, look up DARPA, and ABSOLUTELY would not exist without it.
Same with the entire aerospace industry, computer industry, energy industry, medical industry, etc.
Governments have always funded most of the core breakthroughs and then private capitalism takes them to markets as products and services.
Have you ever heard of research tax breaks, also a form of government funding, etc.
You would be best to stop watching TV news and education yourself about the basics of democratic capitalism, it has always been public + private by definition.
@Alexander,
“… as is most innovation.”
Pretty strong statement, and almost certainly incorrect. I am supportive of some government funding of basic research, just as I am supportive of some government funding of public infrastructure and other public purpose projects that wouldn’t happen otherwise. It’s a matter of degree – a continuum. I do not believe in zeroing out the NSF or NASA, but at the same time, I chafe at researchers trying to justify their personal pet projects by laying claim to any and all useful technologies that their pet projects might have tangentially touched.
By the way, I used to work at NIST, and I remember the Advanced Technology Program quite well (apparently it was terminated a few years ago for good). It was nothing more than welfare for technology companies. Just because it’s called “science” or “technology” doesn’t mean government funding is justified.
And a good way you can tell if something is not really justified is when the proponents start talking about spin-offs. If the spin-offs are so useful, why don’t they just work on the spin-offs directly?
@Alexander, Remember any research not funded by the government that the private sector needs will be financed.
@pebird, only if it expects to make a profit
@MamMoTh,
And what’s wrong with that?
@MamMoTh,
Whats wrong with that?
There is often a huge investment barrier required to displace encumbent technology and entrenched distribution monopolies delaying the adoption of better products. Inefficient, wasteful and environmentally damaging cash cows will be milked dry before more socially beneficial products see the light of day.
Unpopular niche markets will not be served with vital products. For example catch a rare disease in a hypothetical libertarian wonderland….I can almost guarantee you will die.
I could go on. It is absurd to think the profit motive and market pricing is the one stop shop that provides the solution to all societies needs and wants. It’s patently obvious 99% of the population are on the wrong end of the pointed stick exactly because of such religious beliefs.
@MamMoTh,
Fascinating! So, just to clarify my thinking……. if I’m an entrepreneur and I come up with a new product and obtain the financing to produce and market it, and it is a success……. I should not be allowed to make a profit on it?
Oh he’ll, let’s just let the Chinese government do it. We don’t need this stuff. Better to buy another fleet of drones to blow shit up. That’s our thing. We have really, really smart people managing our money. I think.
@Jonf, seriously, warren confuses me. He constantly says imports are a benefit and to let the Chinese do the work and for me and mr. Spock to sit down in the holo deck. So I gave the captains chair to counselor Deanna troi. Now I let the vulcans do all the hard research and work and my wife make all the money and I sit on mmt blogs all day telling people imports are a benefit like warren trained me. Warren resolve this for me. Why pay NASA scientists to do this when china scientists will do it at the china price? Carmack is a friend, but why subsidize armadillo aerospace or spacex when china can do it better for cheaper. Waste of human CPU cycles. Why isn’t Mosler cars made in china at the china price? It is inexcusable that an mt 900 costs so much that the median human being cant have one: fail!
@Captain Kirk,
LOL, Straw. I was wondering if that was you. Now I’m sure of it.
good points!
A minor list of technology that was primarily advanced due to DIRECT GOVERNENT FUNDING – for you neoconservative and neoliberal “free market” proponents.
The airplane, radar, jet engine, helicopter, electronic computer, atomic energy, Global Positioning System (GPS), and Internet technologies.
The lack of basic understanding of what “free market” capitalism actually is constantly amazing me.
I think these types of people actually believe “free markets” mean no regulations as in “free” the entire modern banking system by definition is a regulated system created by government – would not exist nor would have existed in some wild west, no government, anarchist world.
Capitalism by definition is a government regulated system, would not and can not exist without regulation.
@Alexander,
You’re arguing against strawmen. Of course there is a necessary role played by government funding of basic research. But this idea that we should spend $100B to go to the moon because we might get spinoffs like Tang is idiotic. You can fund the basic research without funding the exorbitant boondoggles.
Government funded research into computers and networks was critical to the development of the internet, but not government funded research into particle accelerators.
@ESM,
From what I can tell of the oh so many spin offs generated from government research projects is that those spin offs were UN-intentional. In other words they were unexpected by-products (assets mind you) of the prime work being done (also an asset both in physical, material terms as well as in intellectual terms – ie smarter people working on complex systems today will be able to work on even more complex systems tomorrow, etc.).
You speak with the hubris of hindsight ESM in this regard. How can you “linearly” develop a product or system which you can’t envision, aren’t looking for, and don’t even know is possible? Well…ummm….you CAN’T!!!
It’s called creativity, innovation, ingenuity, intelligence, coincidence, spontaniety, surprise, highly stylized and complex resource management and GENIUS.
Sometimes these arguments you make are so infuriating for those of us in this world that crave a more rapid and fulfilling evolution of the human race and all earth’s inhabitants. And you understand MMT and economics better than I do no less!!! Just amazing…it’s not what you know that makes the difference; what matters is the kind of man/woman that you are.
@Mario,
Mario, it’s in my nature to play devil’s advocate. I’m just trying to get people to see the other side. How can anybody be against investing in science or technology or education or our children??? Well, there really are times when it is not a wise investment.
As for spinoffs, yes of course we never know where the next technological breakthrough will come from. That’s why I do support government funding of basic research to some extent (maybe even more than we currently do now). But it doesn’t mean you can’t be a little more selective in the projects you fund. You don’t have to actually send men to the moon in order to investigate all of the different issues involved and technologies needed to do it. I would imagine that 90% of the resources spent on gargantuan programs like that goes to reinventing the wheel or building mundane infrastructure.
By the way, I’m actually a big fan of government funded space exploration. I just don’t expect some overtaxed middle class schlub to share my enthusiasm.
@Mario,
Just to confuse Mario more… On the topic of gov funding basic research — I agree with you Mario. I have even mentioned before I think space exploration may be a good area for such funding.
On the SSC:
I’m pretty confident that if you gathered up a representative selection of top physicists (say 1000 or so – distributed across fields in an unbiased manner), and asked what projects they would have funded with $X (where X was sufficient to fund the SSC), they would not have chosen the SSC. The only ones in favor were a minority of high energy physicists.
The group would have still chosen basic research areas, but there’s a lot of theoretical and experimental research in physics that has very little or nothing to do with what the SSC was for — and the former is much, much cheaper (and probably cheaper per unit of useful knowledge gained, though that’s ridiculously subjective). The lament of the others in the physics community was that the high energy people had succeeded in a public relations campaign for funding, and were actually hurting the field as a whole — Philip Anderson wrote a good essay somewhere about many of the “discoveries” (theoretical) supposedly made in High Energy, that actually originated in Condensed Matter physics 10-20 years earlier (to the High Energy folks credit, their organization of the ideas was much better).
I would wager we’ll see more usefulness and benefits from Bose Einstein condensates than we will from any results that could have come from the SSC. And the creation of the former happened after the defunding of the latter.
On motivations and spin-offs:
I think your argument is that funding basic research that excites and inspires the general populace is worthwhile – and I generally agree. By picking a goal and striving towards it, you will hit unknown obstacles and be forced to innovate in previously unseen ways. But that’s true whether it’s building the SSC, or trying to figure out some basic property of materials with laser tweezers. In both cases there will be spinoffs, but the two may have vastly different costs.
@ESM,
and you’re also not considering the indirect impact such projects have had on our society and work force either. As in how advancements in one science or field fueled growth in other fields and influenced their paradigms, approaches, and workflows. Let alone any direct labor cross-pollination that occurred by a NASA scientist or researcher working for the auto industry, or engineering, or education, or architecture, or computers, or private consulting. I mean the impact is so gargantuan to our society by having more highly educated, skilled, and experienced individuals across the board it is almost heretical if not clinically insane to attempt to argue otherwise.
@Alexander,
“The airplane, radar, jet engine, helicopter, electronic computer, atomic energy, Global Positioning System (GPS), and Internet technologies.”
Yes. Big government was the driving force behind all of these technological advances, and the underlying predicate was and is the state of war or the threat of it which only amounts to welfare for the military industrial complex. Eisenhower of all people warned of this as he left the White House. Nothing facilitates the arrival of big government, authoritarian, totalitarian social order like big war where citizens become all too willing to surrender their individual liberties to have security but end up they get neither.
Example of how far macroeconomics as a science has reached.
Answer: Where astronomy was in middle ages.
A true, “bridge to nowhere.” Spend money to build something halfway, then stop it abruptly on the idiotic belief that you have no more digits to finish the work. Idiots. And Fox is idiotic, too, and should take a lot of the blame for our current mess, for pushing their disgustingly misguided propaganda. That’s why I quit.
@Mike Norman, No one wants another Solyndra I expect. So don’t take any chances things might go wrong and overrun too much. Then Faux News will have a field day. What a way to run a country, eh? But everyone, it often appears anyway, fear we will run out of money. So we need to be careful where we allocate those digits.
Obama (and every president) talks about the need for a commitment to math and science, yet they cut back on these programs. If government spending is the allocation of resources for the public benefit, I say spend those dollars to hire the bright math brains away from Wall St. You really can’t argue that 100 years from now the efforts of 1,000 mathematicians and scientists will have a more lasting effect than the efforts of 1,000 bankers and lawyers.
@Broll The American,
Look, this is a form of central planning. I suspect you have no idea (as I do not) if as a society we have too few mathematicians or scientists. Perhaps we have too many, and that’s why so many people leave the field in which they got graduate degrees.
Now I would agree with getting rid of any externalities or government distortions which make working in finance more attractive to people than it otherwise would be (quantitative people or any others for that matter), but I wouldn’t want to create a distortion the other way either.
People talk all the time about how we need to invest more in math and science education and research, but I don’t know that anybody has actually subjected such investments to a real cost-benefit analysis.
Of course you hear complaints all the time from industry executives that they need more trained engineers, but has it ever occurred to you that such complaints are self-serving? If there is more supply of skilled labor, then companies like Apple and Microsoft can pay less for that labor. It always comes down to supply and demand.
@ESM,
To some degree, it may be “central planning” although that is a loaded term. You toss that into a discussion and everything grinds to a halt… like labeling someone a socialist or an anarchist.
Ironically, the civilizations and cultures we have the most reverence for have all had a strong commitment to central planning. The Egyptians, the Romans… large, powerful and extremely advanced civilizations for their time… all due to central planning.
I’m not advocating for emperors or pharaohs, but rather just pointing out that it does work the other way, and therefor we should leave our options for a “mixed bag” of public and private projects open.
@Broll The American,
Agree about central planning being a laded term
Its always been interesting to me that our modern conservative mouthpieces keep railing about our govt being more like a business. Do you know any business that doesnt have “central planning? Try going to get a business loan or convincing ten of your buddies to invest in your “project” and see what they do when you answer their question “Can I see your plans” with “I dont have one, I dont believe in central planning”
@ESM,
People talk all the time about how we need to invest more in math and science education and research, but I don’t know that anybody has actually subjected such investments to a real cost-benefit analysis.
seriously? Just what exactly IS a good idea for our economy and society in your world-according-to-ESM then?
Anyone with a dash of sophistry can EASILY tear down ANY argument put forth. That’s a cheap shot. The real work and challenge and courage comes from planning, mapping, implementing, and adjusting for modifications of real ideas, and decisions, and efforts, and engagements. Funny how I don’t hear too much from you on such fronts (granted I don’t read all of your posts either though); usually it’s a “well we need to qualify this or that” type of a comment that likes to truncate and castrate ideas and initiatives. As I say, that’s the cheap shot and too easy. You are far, far smarter and cultured for more enriching and productive pursuits ESM. Truly it would do you and all of us good to apply yourself in such contributory ways.
@Mario,
Well, as a quick answer Mario, allowing there to be a free market in skilled labor, just as there is in goods and unskilled labor is a good solution.
I don’t really care if our scientists and engineers are US-born or foreign born. And there seems to be more than enough foreign born science geeks who want to come here. So many in fact that we actually let only a small percentage of them in.
Even though he was probably trying to be sarcastic, Captain Kirk/Save America/Strawberry Picker actually had it right. We shouldn’t be protectionist with labor either. If China or India has a comparative advantage creating skilled scientists, I don’t have a problem with that.
Come to think of it, I don’t really care if technological advances are made here or in China or India. Invariably, such advances are disseminated throughout the world. There are some issues with technology that has military applications, but I’m not terribly worried about that. There’s plenty of time to fix the problem should hoarding of advanced military technology become an issue.
don’t forget your first year game theory- people have to work to eat and business only hires if it can get a desired return on equity, so it’s not a fair game.
@Mario,
@Warren:
“…people have to work to eat…”
Not in this country. In any case, a business can die if it doesn’t hire or retain the workers it needs, so one could argue the other way too. And large companies are run by managers who are often incentivized to grow their managerial resonsibilities which include increased headcount.
None of that matters, though, since the “game” changes dramatically in the presence of multiple players on each side. It really only takes two competitiors to have real competition in the absence of collusion, and most workers today have thousands of potential employers. And then there’s the government which employs millions.
if unemployment was a ‘living wage’ you’d be correct, but it isn’t.
nor did I say all people have to work to eat.
or that people only work if they need to eat.
but at the margin i suggest people work because they need the money
and, in general, business won’t hire unless it feels it’s getting value based on prices and volumes of sales.
@Mario, people have to work to eat in USA where 40 million get food stamps? i know farmers that are paid to not grow corn. Most of humanity reaches a plateau on maslows hierarchy. Food shelter and Oprah reruns seems to be enough for many. As the robots and AI take over humans can get dumber and continue to eat. Your blog here is proof of that as you point out many who just don’t get the big picture and you call them buffoons and we all are in astonishment at their stupidity or fraud. What kind of society are we trying to engineer? at my local college many students keep going to school so they can keep getting free money and keep the party going. Many of my world travelled male military friends say USA is the worst country in the world for family, that the government has taken over as provider and u can’t keep a marriage together. Have you been divorced warren? I can’t even find 1 sada to marry? What for. Parents or friends or the state can give them their hearts content. I predict the continued dumbing down of many American citizens, the incentives to work hard and get smarter (like starvation) no longer exist.
@ESM,
Perhaps you’ll change your mind if the next generation super drone is built in China.
But then, on second thoughts, no – it won’t happen. The US military are too experecienced and sophisticated to be swayed by free market ideological BS…
@Jose,
“The US military are too experecienced and sophisticated to be swayed by free market ideological BS…”
Right. That’s why you find examples of the military paying $600 for a left-handed hammer.
@Jose,
Well if we actually take esm at his words (god help us if we do) we won’t have a military or society for that matter that can even understand let alone compete b/c apparently the ” cost-benefits” of science and math education is somehow upside down!!! Can u guys believe someone is actually thinking like this? I literally could not believe I read that from esm no less from a man who is so mmt-smart and who I believe has a science background!! It’s as if this is more just a parlor game to esm rather than an actually constructive or helpful effort to find much needed social solutions today. With all the issues today I think the last thing we need is more intellectual noise and pointless argumentative gymnastics.
The size of our nation’s blind spot is more astounding to me as the days go by. Watch out!! Objects in mirror are closer than they appear!!
@Broll The American,
“If government spending is the allocation of resources for the public benefit, I say spend those dollars to hire the bright math brains away from Wall St. You really can’t argue that 100 years from now the efforts of 1,000 mathematicians and scientists will have a more lasting effect than the efforts of 1,000 bankers and lawyers.”
The migration of bright math brains to Wall Street is the practical consequence of a fiat currency system that rewards mathematically gifted individuals more for gaming volatility in interest rates, currencies, commodities and credit than it does for accomplishing new scientific and engineering feats, producing revolutionary energy and transportation systems not to mention educating the young.
@Ed Rombach,
Hey, how come nobody considers all the wonderful spinoffs from the world of finance? There are actually quite a few advances in numerical algorithms, statistics, cryptographics, and networking technologies that have come from the finance world.
Not to mention the no-money down, no documentation mortgage loan. Really, please, don’t mention it.
And of course without the Nasdaq bubble, which was fueled by snake oil salesmen on Wall Street like Henry Blodgett and Mary Meeker, would we have had the internet bandwidth necessary to handle all of the youtube and netflix videos people watch when these should be doing work?
@ESM, Good points, esm. I had never heard that pointed out before.
For some reason I can’t rely to mario in his post when he said: “Well if we actually take esm at his words (god help us if we do) we won’t have a military or society for that matter that can even understand let alone compete b/c apparently the ” cost-benefits” of science and math education is somehow upside down!!! ”
Would Mario say that there should be never be *any* cost-benefit analysis for math/science education? It’s expensive to train these kids, and it only gets harder and harder as you start trying to recruit the less scientifically-minded ones. Surely you’d admit there’s *some* trade-off on the margin, right?
[ESM is not pointing out that we should have zero science majors in the U.S.; he just saying that before you say that we have too few, you have to do some analysis. It’s not a slam-dunk.]
@Coupon Clipper,
I think the point here is that religiously trusting in markets to plan and provide for everybody is a bit naive.
I bet those who have the means do not actually like to trust in markets. They make sure the “markets” and governments behave as they should. The “trust in markets” lullaby is for those who do not know and should not know any better.
So then who should be planning our lives: democratically elected governments or those who own the critical resources and capital?
Side point: who cares to mention a country which really allows “free markets” to rule it and plan its course?
@ESM,
@Gary:
You’ve completely gone off the rails. Free markets means allowing people to express their desires freely in the marketplace. If an item suddenly becomes popular, the price goes up, which then incentivizes other people to make more of that item (as well as reducing the demand for that item). That price increase ripples throughout the global market for goods and services which then rebalances to optimize production and consumption. In both theory and practice, allowing prices to move freely in response to voluntary transactions is the best way we’ve come up with for allocating resources (which by definition are limited).
Markets do not plan our lives. They merely provide the feedback necessary to make our own plans.
“So then who should be planning our lives: democratically elected governments or those who own the critical resources and capital?”
Neither. The answer is: each individual should plan his own life. Free markets provide not only the freedom, but also the information necessary to do that.
I highly recommend you watch this Milton Friedman video.
you mean ‘competitive markets’
@ESM,
“You’ve completely gone off the rails.”
Anybody who believes there is or can be ‘free markets’ in human society is the one that is off the rails.
That’s up there with the end-timers.
@ESM,
yes, I understand what market idea is. But is that how the world works or ever worked? Is it even possible to arrange the society is such way, that economy would respond to each consumer desire (which is by assumption always best possible and reached after long philosophical and ethical considerations) – and that society driven by consumer desires is headed for heaven on earth (of is following “God’s plan”)?
What is occurring in reality is that most of society is being brainwashed to desire toys and cheap decorations, and then works to create those and other things, while wasting enormous amounts of resources, driving whole ecosystems, and planet to destruction, while themselves living lives under tremendous pressure. While the benefit of all this arrangement goes to small part of the society.
The “market” ideology has all signs of fundamentalist religion with God (the market), the priests (economists), the prophets (Smith, friedman etc), the paradise(some future economy without government interaction), the devil (government), heretics (keynesians, mmt) and hell (communism, socialism).
What “freedom” the market provides? Freedom to chose the next toy from the array marketed?
markets express current values
@WARREN MOSLER,
In my view – market is nothing more than artificial environment to trade something for something.
It has its useful role in the social economic relations – but I just do not see why society would leave it up to markets to decide its fate: how to develop, what education to provide, what should people do (financial vs engineering etc), how to survive etc.
the trick is to introduce the incentives that result in market forces serving public purpose
@ESM,
@Gary:
“… I just do not see why society would leave it up to markets to decide its fate …”
Because markets aggregate and incorporate the information contained in billions of separate choices freely made by human beings. In most cases, the conclusions that the market signals are better than any that could be reached by even the smartest, most altruistic, hard-working central planners. The market is like a gigantic, organic supercomputer running an algorithm to maximize individual utility.
Where is Roger Erickson when I need him? He keeps going on and on about coordination and how the returns on coordination are exponential. Well, markets represent the ultimate form of coordination. Just as Milton Friedman describes in his pencil video, people from all over the world cooperate to make pencils. Most of them are total strangers; some even are enemies. But markets allow them to coordinate and cooperate in a way that even the most powerful, most well-managed government could not orchestrate from a bureaucrat’s desk.
@ESM,
ESM, please define market.
Does it have anything to do with a super-MARKET?
I am afraid you will not be able to define “market” as you want it to be. There is simply no such thing.
@ESM,
@Coupon Clipper
Would Mario say that there should be never be *any* cost-benefit analysis for math/science education? It’s expensive to train these kids, and it only gets harder and harder as you start trying to recruit the less scientifically-minded ones. Surely you’d admit there’s *some* trade-off on the margin, right?
Personally, I think there is confusion here regarding building wealth (the wealth of nations that is) and building something “profitable” in a business. The two are NOT synonymous and function in different ways as MMT explains time and time again.
The “expense” of education at the Federal level is only in terms of resources utilized (again at MMT explains), and if we want to have a wealthy and competitive nation it will REQUIRE educated people. Period. End of statement. Fact. The Federal government can subsidize state education if you want to do it that way too. But however it works it NEEDS to be there, otherwise we lose out. Period.
As to people not being scientifically minded, first of all no one is saying everyone needs to be a scientist, but the better and more robust the education system is, the more scientists will emerge. Fact. And that means the greater possibility of new advancements coming out of our people. Fact. Personally, I believe that we are all totally skilled and able to learn anything (of course people with mental disease may be a bit different but these are exceptions to the rule). As Socrates taught, learning is simply remembering things we already know. Generally those people that “struggle” with math or science and excel in literature, writing, creative arts for example are simply the by-product of poor teaching and/or unwilling learning habits. It’s systemic, and speaks to the flaws in our educational system.
We can deploy resources for guns or for bunsen burners or for both. Your call. There is nothing wrong in my eyes with a society that is fueled by education, so long as it is not based on the financial markets owning all the student debt obligations!!! I envision more of a world where there are private businesses that specialize in educational tools, software, technologies, and systems that apply to the real world and bolster our efforts as humans on earth, and if the Federal government is willing (we know they are able) to fund schools to have computers, CNC machines, robotics departments, etc. then you betcha on my end! Those private businesses that manufacture and sell those systems will benefit too and we now have a positive feedback loop in play that is both non-violent and extremely cutting edge and productive. Plus it feeds the other way in that private companies are able to find more capital to further their research and progress their systems and innovations as well, while also investing in the training of their future employees. It’s a total win-win all around.
One of the biggest mistakes most people make is in thinking that building a society’s REAL wealth is a zero-sum game. It is not. In fact it is actually exponentially net positive for all involved by the very definition of the term “wealth.” Again MMT proves this time and time again.
As I say, it’s not about our society’s inability to achieve; it’s about our willingness to pursue those means necessary to accomplish what we want. MMT proves this is so, and for me these amazing blogs and discussion threads help to reveal who are the willing ones and who are not. It’s more about the willingness to view things in new, creative ways more than anything else. All the possibilities are there waiting to utilized. Do you want to be first in line or do you want someone else to be? I know where I stand.
@ESM,
@Sergei:
“A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established.”
I think you and Neil are being a little too pedantic. I don’t dispute that a market requires rules enforced by some sort of authority, and I don’t dispute that there are always distortions and externalities. Everything is relative. When I speak of free markets, I mean free relative to what exists in underdeveloped countries, or what used to exist in communist countries, or even relative to what exists in most countries today. I believe the market should have fewer constraints than it does today in the US. I do not believe in no constraints at all.
@ESM,
> Where is Roger Erickson when I need him? He keeps going
> on and on about coordination and how the returns on
> coordination are exponential.
> Well, markets represent
> the ultimate form of coordination.
Hardly. Read my comment above. Complex markets can express any degree of utility, from horrendous to adaptive. It all depends on info flow, analysis, situational awareness, and quality of distributed decision-making.
Warren says that “markets express current values” …
but keep in mind that static valuations on average wield ~zero predictive power about dynamic valuations. That’s why speed in adjusting opinions matters so much.
We’re stuck adapting in dynamic, unpredictable contexts, and survive by how well we surf, NOT just how “good” our surfboards presumably are.
Best investment? Figure out ways to invest in a better democracy, just like people did ~1776. That’s dynamic value, while everything else we account for delivers only transient, static value.
It’s all about optimizing our emerging, aggregate options, not hoarding any static value separable from our option-pathway.
“Success follows quality [& tempo] of distributed decision-making.” http://www.dtic.mil/doctrine/jel/service_pubs/mcdp1.pdf
“we generate tempo by decentralizing decisionmaking”
http://www.marines.mil/news/publications/Documents/MCDP%201-2%20Campaigning.pdf
That all sums to a simple, compounding rule that agrees with both thermodynamics & evolution:
1) Optimize survival chances by optimizing adaptive rate,
2) which follows optimal aggregate resiliency,
3) which follows distributed/decentralized static resources;
4) which continually optimizes aggregate options.
In summary, teamwork always wins. That’s the story of both social species, and democracies. We need ways to invest in the USA.
@ESM,
ESM: I believe the market should have fewer constraints than it does today in the US.
But you need to admit that there are also non-market based systems which can also be efficient and probably more efficient than market-based. Also in terms of sustainability it far from obvious that free market system delivers more stable outcomes. Yes, we need to define what we mean by efficiency but there is nothing intrinsic about free markets which puts them above everything else.
The definition from wiki is a good example that a thing called market does not exist but is rather an abstract congregation of everything else we think is important for a functioning society.
Market is not even needed for the society to function. The only reason we need market and even money is because our society is too big to operate on trust. If you scale the world down to one village it can still live and develop. This is the way this world lived and developed for thousands of years.
Even several decades ago there was much more trust and people did not lock doors and did not need locks and security systems. Was it market who created such needs? Don’t you think that market can be even destroying us?
@ESM,
@Roger:
LOL. As Emily Litella would say – never mind.
By the way, I didn’t understand even 1/4 of what you wrote, but if you are implying that markets are not dynamic, not adaptive, and/or not distributed, then you’re completely wrong. Those characteristics are in fact what make markets superior to central planning in most cases.
@ESM,
So the power and wisdom of the markets is represented by the pencil? Ok, I see the point.
But is that the best way to make pencil for any particular country?
Did he (Friedman) also consider the waste and pollution and violence that involved to make those pencils and take those resources all over the world, and then create conditions for the poor to work cheaply? (I did not watch the whole video, but I bet that he did not – that would be like a priest saying “but God is not really that wise, we can do better”).
I do not dispute that private initiative and freedom is needed for society and economy to function well, but my point is that there is no need for “free market” religion in order to accomplish that. There is no need to arrange most of social life to follow this idea of “free market”.
It is far from optimal. To state otherwise would require you to ignore billions of starving and sick people, enormous pollution, enormous ecological problems, enormous waste of resources (mountains of toxic, high tech garbage every day), etc.
@ESM,
“But is that the best way to make pencil for any particular country?”
Yes, unless there are externalities.
“Did he (Friedman) also consider the waste and pollution and violence that involved to make those pencils and take those resources all over the world, and then create conditions for the poor to work cheaply?”
Yes, markets produce sub-optimal results when there are uncompensated externalities. These occur when a non-party to a market transaction either bears costs of or reaps benefits from that transaction. You have listed negative externalities like pollution. There are also positive externalities like providing jobs and training to uneducated people in poor countries.
But unless those externalities are significant, the market price of a product gives you a good idea of the resources (both natural and human) that went into its production. For example, I take some pleasure in pointing out to my rich, lefty, environmentally-conscious Prius-driving friends (well, ex-friends) that buying a Prius is actually bad for the world. You can tell from the price. Even accounting for the gasoline savings, it costs more to purchase, drive, and eventually dispose of a Prius than it does for a conventional car of comparable size and quality. Therefore, it is a waste of resources. QED.
If you have a problem in a particular case with the way the market works, then I submit that you have an obligation to identify an externality and propose a regulation or a tax to correct it. That is what the government is for, and I fully support correcting externalities.
@ESM,
@Greg:
“To state otherwise would require you to ignore billions of starving and sick people, enormous pollution, enormous ecological problems, enormous waste of resources (mountains of toxic, high tech garbage every day), etc.”
I forgot to address your last statement. First, just because the world is a mess doesn’t mean capitalism is to blame. Far from it. I think capitalism has lifted close to 1B people out of poverty in China, India, and the rest of the developing countries in the last 30 years. As Uncle Milty says in another video, the kind of grinding poverty you’re referring to occurs only in those societies that depart from capitalism. It is the lack of capitalism that is the root of most of the evil in the world. Second, as long as pollution and waste disposal are properly priced, free markets will generate the optimal response. You worry about high tech garbage piling up, but have you actually checked the price of dumping a ton of garbage into a landfill? Frankly, I don’t know what it is, but I assume that it’s fairly priced. If it is low, then that means there really isn’t much of a problem. There’s lots of room for landfills. If it is high, then that means people will be incentivized to generate less garbage. The price of disposing of garbage will ripple back to raise the price of any product or service that even remotely contributes to generating garbage (and to lower the price of any product that does the opposite).
@ESM,
I am not Greg. Greg is another person.
There are always “externalities”.
Capitalism can survive in specially arranged environment only. The state, the government, laws, money, enforcement, inequality, inability for people to be self sustaining, etc.
It is not a natural state of society, so it cannot encompass all social life.
However, let’s say we attempt to do that.
In order to compensate all externalities some very smart people separated from the profit seeking world should be in government.
Is that realistic?
Otherwise, we can safely assume that profit seeking interests will subvert the goverment to protect and enhance profitable externalities.
“Externalities” – what a beatiful world to hide millions and millions of starving people and warming planet on the brink of ecological disaster.
So who bear the costs of the externalities? The powerless. In a “free market” worshiping societies those are the ones who cannot buy the influence.
Prius is bad for the world, but burning oil and coal is good for the world (cheaper), until the climate becomes so unstable that it become expensive to burn oil? What if it becomes too expensive to eat first?
Will market priests connect the dots and adjust for externalities, or will it be cheaper to silence the scientists (cheaper = good for the world)?
It is good that you are supporting correcting externalities. But who will buy the government back, when externalities are so profitable that it pays to buy the government for those who makes money on those externalities?
So in order to even start of thinking of pricing in externalities the market approach to government needs to be removed. Do you agree?
And for that market approach to education needs to be removed, for you cannot expect people to understand this if all they think is how to make money because they are masively in debt when they finish school.
So poverty only occurs in countries that depart from capitalism?
I suppose there should be very few “grindingly” poor people in the world now? Since it is pretty much all capitalist?
Would you say being homeless and depending on handouts is being “grindingly” poor?
Your logic about dumping garbadge is laughable. It might be still cheap to dump the garbadge when garbadge is all around you. Would that be still ok with you?
The price of disposing garbadge only rises when people stand up and protest against having garbadge dumped in their back yards. And that only works if those people have power.
@ESM,
@Gary:
“I am not Greg. Greg is another person.”
Oops. Sorry about that.
“In order to compensate all externalities some very smart people separated from the profit seeking world should be in government.”
That’s not necessary. One can lobby the government to address externalities. Those who benefit from the externalities may oppose you, and sometimes they win out in those cases where there are concentrated benefits and diffuse costs. Of course, there are problems the other way too. Sometimes people claim an externality is greater than it really is. You actually allude to two examples which I’ll address:
1) College education is generally considered to have an enormous positive externality. Therefore, as a society we subsidize college education to an enormous extent. I think there is almost no positive externality of a college education and therefore the subsidies do more harm than good.
2) Carbon dioxide emissions are generally considered to have huge negative externalities because they exacerbate global warming. I think the science is unpersuasive, and the economics even less so. It is far more economical to expend resources to adapt to climate change when and if (big if, by the way) it comes. Climate change may not happen at all. It may happen no matter what we do to curtail carbon dioxide emissions. Or, by the time it happens, we may be so technologically advanced that it is a trivial problem to solve. Nevertheless, there is an enormous push not just to tax carbon emissions at a level way in excess of any potential economic harm (which is far less than $1 per gallon of gasoline), but actually to limit carbon emissions arbitrarily, based on nothing but computer models which can’t even predict the climate in the past, let alone the future.
“Would you say being homeless and depending on handouts is being “grindingly” poor?”
The bottom tail of the distribution will always be considered poor. We can’t all be like Lake Woebegone where everybody is above average. Still, the poorest of the poor in the US are far better off than even the median household in a poor country.
“It might be still cheap to dump the garbadge when garbadge is all around you. Would that be still ok with you?”
Yup. If I’m already living in garbage, my price for taking on more will be low.
“The price of disposing garbadge only rises when people stand up and protest against having garbadge dumped in their back yards.”
Well, I think it would rise way before that. But if it gets to that point, the price will rise again when people complain that the garbage is too close to their backyards.
“And that only works if those people have power.”
Nope, all they need are property rights, which is one of the basic requirements for having a well-functioning market.
@ESM,
There’s a nice translation there between biology & markets: Adaptive Rate tracks Dynamic Value.
Darwin might have agreed with Pirsig – yet wondered why the same concept was still being rediscovered 150 years later.
@ESM,
“One can lobby the government to address externalities”
Yes, one can lobby, especially if one has deep pockets. Who can devote more money to lobbying: those who make money of externalities, or those who are deemed unimportant enough to suffer because of externalities?
I am sure that there are exceptions, but as a point of logic – if your profit depends on externalities, you will not think twice to devoting part of it on making sure externalities persist.
I am not going to argue about college education and climate change, for that is another discussion. Potentially long and fruitless one, and I don’t care to convince you, nor will you be able to convince me.
“Still, the poorest of the poor in the US are far better off than even the median household in a poor country”
Very wide statement and very likely false.
In any case – even if US poor are better off – is that because of the capitalism or because of socialist government policies?
Also – those median poor in poor countries? Why are they poorer? Is it because their countries have not enough capitalism? What about those who are higher on the market freedom list than the US?
“The bottom tail of the distribution will always be considered poor”
OK, so your point is that those who have less always complain, even if they should just be happy that they are not like those poor in the “really” poor countries?
But did you consider that those poor countries are poor because of global arrangements that advantage the more powerful countries?
It is not that they have less free markets, or less ideological capitalism.
So – just as there is rich-poor gradation among citizens in any country – there is rich-poor gradation among countries. That does not negate that there are rich and poor, it just makes the scale bigger.
Regarding the garbage. By “in the backyard” – I meant next to it. Of course I assumed property rights already in place. We are discussing capitalism, after all.
In any case – the point was that market and commerce is only part of social relations, and not the most important. It is rather naive to try to convert most of social relations into “market based” ones.
It might be too expensive to buy land for the land fill next to rich neighborhood, but should that be the only consideration why landfill next to the poor neighborhood should be allowed? I think not.
Similar with other things.
I understand the wish of the rich that money would decide everything – but that is hardly a wise or just wish from the perspective of non-rich.
@ESM,
@Gary:
“I understand the wish of the rich that money would decide everything – but that is hardly a wise or just wish from the perspective of non-rich.”
Yes, that is the key point. Of course the rich would like money to buy more things than it does, and the not-rich would like it to buy less. The not-rich would like to make it so money can’t buy power or legal immunity or health or less congested highways or love, and to some degree we have laws trying to enforce that.
I can certainly understand why the not-rich would want to level out the playing field as much as possible, but there are often adverse consequences to that – which include sub-optimal allocation of resources and skewed incentives. Usually, these adverse consequences are not easy to see until it is too late.
And the fact is, even in those areas where we would agree money should have no purchasing power (e.g. buying immunity from the law, or buying votes from a Congressman), it is virtually impossible to police, and attempts to insulate those areas from the power of money often lead to bigger problems (e.g. laws against drugs, or prostitution, or financing campaigns).
Doesn’t mean we shouldn’t try to insulate some areas from market forces, but it does mean we should be rather selective about the areas that we choose.
@ESM,
That is the key point.
It is a struggle for resources.
In the end – money is a tool and nothing more. It presupposes society, government, laws, culture – and most of all – it presupposes force and violence. The force and violence has to stand behind the money to ensure their value.
The inequality supposedly appeared when population became denser and was able to produce surpluss.
Since then part of society dominated over most of it by apprioprating the surplus by various means and keeping the rest of society in subservience also by various means.
The original society was based on cooperation (can be seen in primitive tribes, or even village life in less “advanced” countries). The more “advanced” – or rather appropriated state of society is based on coercion.
The underlying power stuggle in appropriated society is always between the “haves” and “have-nots”.
The discussion about money is just a veil for that. Insistence that money is special and should be given more rights and control over more spheres of social life is just a code-words for giving more control over social life to the “haves”.
Note, that even if we take for granted the supposition that money is a perfect tool for allocating resources – the insistence by the “haves” then becomes that money should not be just given to “have nots”. Money has to be earned by serving the “haves”. Otherwise the money will lose value: it will lose is its utility in making “have nots” serve the “haves”.
I am not saying that money cannot be a useful tool, but that in order to make it so – society has to change first.
It might make sense to all here how to solve the economic troubles MMT way – but in order to do that – the “have nots” have to force the “haves” to distribute some of the money to them. Otherwise the “haves” will happily accept the unemployment as a “sacrifice they are willing to make” (by “have nots”, of course), before doing anything else.
Similar story is unfolding in Europe just on the scale of countries. The “haves” (Germany, etc) insist on sanctity of money, while the “have nots” have to force them to do something, otherwise the sacrifice will be on them.
@ESM,
Gary, completely agree with the above. However libertarians are unable to make a step outside of their box and admit that there are also other interests in the society but individual freedoms etc. A society which organizes itself purely along the individual lines is just one special way of organization which a-priori can not be better or worse than any other way. The concepts of money and market are used today only in the sense to re-enforce this given way of organisation. It is also clear that these concepts can be used in other ways and it is also very-very possible that we, people, could get rid of money and market all together and still be a happy society with lots of individual rights and freedoms. and development.
@ESM,
@Gary/Sergei:
I still think you guys are arguing against a world which doesn’t exist and which few libertarians are even proposing.
I look all around and see underdeveloped and developing societies which would benefit from embracing more capitalism. I also look around developed societies and see plenty of areas of the economy which would benefit from more market-based activity rather than less.
Health care, of course, is the largest area which could benefit from a more market-based system (which, despite the claims of single payer proponents, is far from market-based in the US since consumers rarely pay for anything directly).
There are other examples: education, garbage disposal, water, utilities (especially electricity which should be billed to the consumer hourly). And as I’ve proposed before, assistance to the poor should be given as money rather than entitlements to specific goods and services.
Perhaps one of you can propose an example of a relatively free market which exists now, but shouldn’t?
@ESM,
you are arguing for more “market based” approach. But what is it? Market based approach is nothing more than arranging some area of social relations to be based on money.
So what does that mean? That means giving that area to be controlled by the “haves”, and taking it away from “have nots”.
Is your point now is that market based approach does not really exist in its pure form, and what we see as negative sides of market based approach is really a distortion of it?
So what would be a market based approach to health care? Would you get rid of health insurance companies? Are they not part of the market? Would you get rid of government insurance for the elderly? Would that “fix” the healthcare?
I would prefer a single payer solution to healthcare: government establishes reasonable prices for everything and sticks to them. Or something similar. Sure, some small consumer payment could be left there just to discourage system abuse. Although even that might be better left up to research.
Education should be free public education. Standards developed by government and uniform to everybody.
Higher education as well.
In order to save resources – best ways for teaching and learning could be found. Perhaps there is no need to teach people until they are 22 – 23. Perhaps the same teaching could be accomplished faster? If there are jobs for everybody – there is no need to make workforce smaller by educating for 11 – 15 years, and treating school as day care?
Social security, retirement savings. No need for market there. Government could just have a fixed social security guaranteed for all elderly. If that is reasonable – the saving will be discouraged.
Water is critical resource. Should not be left for profit.
Energy production and use is critical to re-think – since now it is leading whole civilization off the cliff.
…
etc.
I am ok with money based approaches and private initiative. That is necessary. But that should be balanced with a more long term view of things that are critically important to the whole society.
For instance – who can address unemployment now? We know it can be easily addressed, but with most interests privatized – there is nobody to stand and speak for the interests of whole society. Government is trying, but cannot sidestep the interests which defend the “sound money” first.
I was thinking why is it so difficult to accept that the struggle between the “haves” and “have nots” is real (and I am aware that there are many gradations in between, and that those are social groups with some mobility between them)?
My guess is that the societal values are still based on cooperation, and so society tries to maintain the illusion and self-deception that cooperation is still present.
I also think that is why the ideas of impersonal “market based” arrangements are so easily accepted. It is easier to accept that something impersonal is oppressing you, than to recognize that it would be your rich neighbor or your boss who does it – of course not personally (“it is not personal – it is business”).
According to this article about origins of money in ancient Egypt – when inequality appeared and the social relations changed – the forms and the illusions were still maintained.
http://www.csus.edu/indiv/h/henryjf/PDFS/Egypt.PDF
People gladly accept inequality and oppression while life is still bearable, and even when it is unbearable – they accept it for a time being and try to cooperate. All for the sake of social values which are in their genes. The cooperation is essential and everybody knows it.
@ESM,
ESM: Perhaps one of you can propose an example of a relatively free market which exists now, but shouldn’t?
Sure. And easily. But I am also sure that you will freak out 🙂
One market would be residential real estate. Any “free” market “force” in that market shall be seriously restricted. Residential property market is like national food security potentially leading to political and social instability. Examples? 🙂
Next one – stock market. It is obvious and history is clear on that that stock market is not for investments as advocated by free market proponents and the like but for dis-investments, i.e. fooling the retail idiots. As such stock market serves very little economic purposes, satisfies the needs of a very little strata of society at the expense of everybody else and costs lots of resources. And I am not even mentioning here national economic strategic policies which are currently tied to the stock market performance. Examples? There was some recent case. I forgot the company name though 🙂
I could probably go on. Just never thought about that.
My problem is not that free market is not free enough or that not enough areas of economy are subject to free market forces. My problem is the idea of free market itself advertised as the ultimate and the only possible way to run ourselves.
If we get back to the drawing board and ask – is it possible to devise another system which can make everybody happier and without a free marker money driven ideology. What would be your answer? And before you rush with the answer let me re-phrase the question – does money define happiness. Is Bill Gates happier than you are or I am? So if money is not THE intrinsic motivator (and there is a plenty of research proving this) then where is the fallacy of composition which allows you to claim that on macro level money is the best motivator?
But then again I have no hopes that you will even try to consider such options. So no worries 🙂
@ESM,
@Sergei:
“Residential property market is like national food security potentially leading to political and social instability. Examples? :)”
Well, if you’re referring to the potential for bubbles and the harm they cause, most free marketers believe that the bubble was caused by government interference, and most MMT people believe that the collateral damage to the real economy would not have happened but for government incompetence.
The Nasdaq bubble of the late 1990s did little damage except to the perceived financial wealth of speculators.
“Next one – stock market.”
I don’t follow you here. If it wasn’t for the fact that entrepreneurs, angel investors, venture capitalists, and key employees know that they can rely on the stock market as an exit strategy via a public offering, then most new businesses would either grow much more slowly or not even get off the ground.
“So if money is not THE intrinsic motivator (and there is a plenty of research proving this) then where is the fallacy of composition which allows you to claim that on macro level money is the best motivator?”
Human beings are highly adaptive. They tend to renormalize quickly to their current situation. It is not the absolute level of money that correlates to happiness, but rather the rate of change. The act of making money is what gives people a rush. Actually having it? Eh, not nearly as much. Stated mathematically, I think the money part of happiness (which is a significant part) equals K * (d/dt) log(wealth), where K is some positive constant, which no doubt varies from individual to individual.
So, yes, there is still a big incentive to produce provided by money, but of course providing incentives is only one positive aspect of markets. Efficient allocation of resources is another.
@ESM,
ESM, as I said I do not hold my breath 🙂
“most free marketers believe that the bubble was caused by government interference”
This is what free marketers believe regardless of the underlying problem. That is why they are called free markets and why it does not prove anything. No surprise here.
“The Nasdaq bubble of the late 1990s did little damage except to the perceived financial wealth of speculators.”
Really?! Unless you mean that it is a zero sum game, i.e. the amount of money did not change. However I did not mean bubbles. I meant a regular stock market operation. Please do not bring angels, VC and so on as a justification for stock market. There zillions of cases where one VC sells to another VC and similar. There is even a whole industry and related machinery called M&A. I am sure you know about it 🙂 So I do not see why a stock market is such a pre-condition for VC etc overall. But that is beside the point. You do not seem to dispute that stock market exists for dis-investments. But then you seem to argue that these dis-investments create wealth. Don’t you think there is a contradiction here?
“The act of making money is what gives people a rush”
This is what primary research clearly denies. Money reduces dis-satisfaction from work, However dis-satisfaction here is not the opposite of satisfaction. It is an independent dimension. And so while reducing dis-satisfaction money does nothing to improve satisfaction. And obviosuly it is satisfaction which provides motivation unless by dissatisfaction and motivation you mean kicking everybody’s butt. But then it is hardly a free market.
I believe some of the commentators have missed the point completely. The original American space program had nothing to do with researching the geology of the Moon, it was a response to the short-lived supremacy of the USSR in rocket technology in the late 1950s – early 1960s.
If you believe that in the globalised world China will pour state funds into research and American corporations will benefit from buying new products at a Chinese price – think about rare earth metals or solar panels. China is not ruled by corporations or “free markets”. Power gives money in China, not money gives power (like in the West). They plan decades not months or years ahead.
Is the space program all about “national pride”?…
Once the Chinese advance their dual-purpose technology enough – it’s better to convert American aircraft carriers into cruise ships before it’s to late. You can always invite some rich Communist Party members to have a party on a former American aircraft carrier obviously painted in red.
The Obama’s policy of reducing spending on advanced research is suicidal in the long run. It is not about glorification of state institutions such as NASA or DARPA because a lot of work was done by subcontracting private sector corporations. It is about the absolute failure of the educational system in America which has produced people so ignorant as the current political elite in Washington including the majority of the luminaries from the Democratic party. Not to mention the abysmal quality of mathematical and scientific education in the mainstream schools. People who are in power now not only don’t understand European history of the 1930s they are also ignorant in regards to the American history of the 1960s. It was not all about racial equality, experiments with LSD and anti-war movement. These events were totally irrelevant. It was all about winning the Cold War. If you lost the Cold War you could eat all the LSD you had.
It is not enough to advance pure military technology. It is the research onto broader science what gives the country the edge. Military technology secrets can easily be stolen – what happened with all the American inventions from fission bombs to stealth planes. It is the pace of scientific and technological progress what allows for military and political supremacy – since the late 18th century.
I dare to say that militarised Keynesianism of Mitt Romney (if true) may be better for America than enlightened ignorance of the current elite.
@Adam (ak),
Thanks Adam I completely agree and you are correct on all of this.
My biggest fear is that your military keynes conclusionis at least economically accurate and therefore people will drink the kool-aid and justify their destructive ways.
@Adam (ak), Romney is a Keynesian member of a party that has become, from the bottom up, explicitly anti-Keynesian. The core constituency that will make up the bulk of Romney votes in November will be from people who agree with Ron Paul on economic matters (aside from the military). They didn’t vote for him in the GOP primary because they stridently disagree with him on social and foreign policy issues, but his Austrian economic worldview has become the zeitgeist for this modern GOP.
@Danny, So you’re saying that Romney changed his position on some issue? Say it ain’t so! 🙂
@Adam (ak),
Thought that was a given? Supposed investors & economists don’t seem to get any intro to any other field of study. Framers of the Constitution knew this pre 1776. Look up James Madison & the Virginia Constitution.
Whatever’s at work now, it’s the outcome of specific lobby efforts, no matter how innocent the ignorant fraud.
I don’t believe anything however the main stream views of space in this reality are skewed just like everything controlled by greedy men…….or whatever or whoever is changing the numbers in the spread sheets…..lol
Some things to think about:
2012: Restructure Science Plans, Policies, Budgets
A. Higgs Particle YOK
Eppur Si Muove, Higgs Particle YOK
Regardless Of Whatever Whoever
Regardless Of Whatever Is Said By Whoever Says It –
Higgs Particle YOK.
S Hawking is simply wrong in accepting it. Obviously wrong.
Everyone who accepts the story of the Higgs particle is simply wrong.
Plain commonsense.
Singularity and the Big Bang MUST have happened with the smallest base universe particles, the gravitons, that MUST be both energy and mass, even if they are inert mass just one smallest fraction of a second at singularity. All mass formats evolve from gravitons that convert into energy i.e. extricate from their gravitons clusters into mass formats in motion, energy. And they all end up again as mass in a repeat singularity.
Universe expansion and re-contraction proceed simultaneously..
Dov Henis (comments from 22nd century)
http://universe-life.com/
http://universe-life.com/2012/02/03/universe-energy-mass-life-compilation/
B. Refresh Present SCIENCE Comprehensions And Restructure Science Plans, Policies And Budgets
Who Suppresses Science Creativity? Does Academia Suppress Creativity?
Again and again, ad absurdum:
Since the 1920s SCIENCE is suppressed by a Technology Culture, tightly supervised by a religious old style trade union , the AAAS…
Liberate Your Mind From Concepts Dictated By The Religious Trade-Union AAAS:
USA Science? Re-Comprehend Origins And Essence
* Higgs Particle? Dark Energy/Matter? Epigenetics? All YOK!
* Earth-life is just another, self-replicating, mass format.
* All mass formats evolve from gravitons, the primal universe mass-energy particles.
* Since singularity gravitons are extricated from their big-bang clusters , i.e. become mobile, energy, at a constant rate.
* All mass formats follow natural selection, i.e. intake of energy or their energy taken in by other mass formats.
* Evolution Is The Quantum Mechanics Of Natural Selection.
* Quantum mechanics are mechanisms, possible or probable or actual mechanisms of natural selection.
* Life’s Evolution is the quantum mechanics of biology.
* Every evolution, of all disciplines, is the quantum mechanics of the discipline’s natural selection.
See:
Update Concepts-Comprehension…
http://universe-life.com/2011/12/13/21st-century-science-whence-and-whither/
Earth life genesis from aromaticity-H bonding
http://universe-life.com/2011/09/30/earthlife-genesis-from-aromaticityh-bonding/
Universe-Energy-Mass-Life Compilation
http://universe-life.com/2012/02/03/universe-energy-mass-life-compilation/
Seed of human-chimp genome diversity
http://universe-life.com/2011/07/10/seed-of-human-chimp-genomes-diversity/
New Era For Science Including Genomics
http://universe-life.com/2012/04/14/new-era-for-science-including-genomics/
Dov Henis (comments from 22nd century)
C. Universe Inflation And Expansion
Inflation on Trial
Astrophysicists interrogate one of their most successful theories
http://www.sciencenews.org/view/feature/id/342219/title/Inflation_on_Trial
Commonsense:
Inflation and expansion are per Newton.
Since the Big Bang galactic clusters loose mass at constant rate. Mass, gravitons, continue escaping at constant rate from their Big Bang fragments-clusters thus becoming energy, mass in motion, thus thrusting the clusters. Constant thrust and decreasing galactic clusters weight accelerate the separation of clusters from each other.
Common sense.
Dov Henis (comments from 22nd century)
http://universe-life.com/
==============================
Natural Selection Is Built-In Hypocrisy In US Science Structure
In addition to the omnipotency of the AAAS trade-union-church with its science testament and gospels…:
A.
http://www.nas.edu/
Where the Nation Turns for Independent, Expert Advice
THE NATIONAL ACADEMIES
Advisers to the Nation on Science, Engineering, and Medicine
B.
http://en.wikipedia.org/wiki/Science_policy_of_the_United_States
In the Executive Office of the President, the main body advising the president on science policy is the Office of Science and Technology Policy. Other advisory bodies exist within the Executive Office of the President, including the President’s Council of Advisors on Science and Technology and the National Science and Technology Council.
Further advice (on legislating science policy) is provided by extra-governmental organizations such as The National Academies, which was created and mostly funded by the federal government,[2] and the RAND Corporation, as well as other non-profit organizations such as the American Association for the Advancement of Science and the American Chemical Society among others.
C.
Conflict of interest arises whenever the personal or professional interests of a board or committee member or of an expert adviser are potentially at odds with the best interests of the nonprofit…by the people for the people…
D.
I rest the people’s case…
Dov Henis
(comments from 22nd century)
http://universe-life.com/