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  1. #91
    Vaguely Precise Seymour's Avatar
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    Quote Originally Posted by highlander View Post
    How are people making those incomes well off?
    You'll have to ask Forbes about their exact math, but to me it looks like they are reporting on individual income in 1999. Household incomes at the low end of the top quintile in 2011 were around $110K.

    Of course, the mileage one gets from income is affected by local cost of living, etc, etc.

  2. #92
    Senior Member Habba's Avatar
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    A system that rewards money generation is bound to produce individuals who are great at generating money. Few years ago Warren Buffett was just a name to me, but since I learned he's an ISTJ, I took a moment to learn about him. Turns out he seems actually rather benevolent guy. He has promised to give away almost all of his fortunes, has no appetite for ridiculous luxurities, is very down-to-earth kind of guy and openly criticizes the system that made him super-rich.

    I dislike very much the idea that selected few people have such a massive amount of global wealth at their disposal and are not obligated to contribute to well-being of the rest of the planet. I do agree that there needs to be incentives to guide people's time and energy, but not in such an outragedly manner as it exists now.
    "The present is theirs; the future, for which I have really worked, is mine."
    -Nikola Tesla

  3. #93
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    Isn't Warren a notable tax evader? Not holding that against him mind you.

  4. #94
    ^He pronks, too! Magic Poriferan's Avatar
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    Quote Originally Posted by uumlau View Post
    My point is that it matters which Gini is being measured. Given that the US consumption Gini is on a par with the European ones, while the income Gini is much higher indicates that the mechanism of redistribution differs between the two. If the consumption is similar, why would we be worried about the income Gini at all? It just means that in the US, the redistribution is not counted as income (or at least doesn't happen before the income is measured). What does it matter that the income Gini is higher, if in the end everyone gets more or less the same amount of real stuff?
    Given issues of poverty, health, and education, it would be fair to ask if we do have the same amount of real stuff.


    Quote Originally Posted by uumlau View Post
    This is a predictor?! ...


    There's barely even a correlation, there. If you go by countries with large territories and populations , there isn't much Gini variation and the GDP PC is all over the place. (OR, if you want to draw a line with a slope for correlation through those bold points, it points dramatically up and too the right - though the chi^2 on the data would be rather high.) There is a much better correlation between GDP PC and economic freedom: http://www.themoneyillusion.com/?p=5575


    But let's say there is something of a correlation, in that there's nothing in the upper right corner of the graph. The low GDP PC countries span a large range of the income Gini index. The high GDP PC countries span a smaller, somewhat lower range, but the range is still fairly wide.

    None of this would indicate to me that the Gini causes the high GDP PC. It looks more like the high GDP PC allows a higher likelihood of a low Gini. The economic freedom index, on the other hand, clearly indicates a strong correlation, and there is economic theory to back up the cause effect relationship.
    Economic freedom? Is that there Heritage Foundation's economic freedom index? Because that thing is elaborate, vague, interpretive, and the Heritage Foundation never does anything that isn't meant to prove its own ideals rights.

    While I said it was a predictor, I meant it was a predictor of one number from the other (either way) as a correlation, and of course I understand that correlation is not causation. It is perhaps weak, but it is there. However, there is no room at all to discuss a correlation going the other way, which I assume is what we'd see if the worked as you imagined. If you want to say there isn't a strong enough positive correlation between high gini and low GDP PC, fine, I'm content to let that go, because at the very least it doesn't have any chance of meaning what it ought to me for you.


    Quote Originally Posted by uumlau View Post
    Fair enough to question the premises, but all that means is that you aren't bothering to learn about investment. Instead, you are assuming that I should prove to you how investment works. Sorry. I can explain how investment works, but you can only prove things to yourself via your own research. I'm just showing you the paths to expand your investigation of the topic, where to find the perspectives that are an alternative to the a priori assumptions you've adopted. In the end, it isn't enough for you to just say that my explanations aren't sufficient: if you cannot talk about investment in the terms I'm discussing them, you don't understand enough for me to communicate more to you.
    I don't have to talk about anything in your terms, and I was not looking to find out how, nor was I looking for you to educate me on anything. I was trying to figure out how your reasoning all of this, but was finding your answers often vague.

    So let's just look at two ideas. One; I'll just take a page right from Joseph Stiglitz here and ask, what if externalities are essentially all-pervasive, and their impact is severe enough that you cannot count on the rationality of investors alone (making the big assumption that they have much that) because they are chronically ill-informed, that the economy is pushed around by forces which, by definition, the signals they look to don't account for? Would there not be a great deal of malinvestment as a result?

    Two; The role of monopolies and collusion comes in again. Once that establishes itself, investment becomes an entirely different ballgame. When a company becomes a monopoly, it's not like investments just vacate it. If anything, they probably increase, because if you want to profit it off of an investment, a monopoly is pretty safe. A monopoly (and everything I'm saying here largely applies to collusive oligopolies, too) can get away with things, lucrative but exploitative things, other companies cannot, and the relationship between the investors and the managers becomes a rather corrupt, reciprocal profit making scheme.

    So, there are reasons for malinvestment. I think it ought to happen quite often. So that's not just an open-ended question, when I ask you why there wouldn't be a beyond-negligible amount of malinvestment.

    Quote Originally Posted by uumlau View Post
    This isn't really a flaw in our conversation, but its like my discussing quantum mechanics with someone who is interested in physics, but never had calculus or college-level physics classes. Without the time and effort spent to learn the topic, all I can do is give "cartoon explanations", which will always fail tests requiring strong rigor. Of course my cartoon explanations aren't proof. But you're arguing against them from your ignorance, not your knowledge.
    Think of it as the Socratic method.

    I don't think I'm asking you to teach me investment 101, I'm asking questions that I'm pretty sure are the center of economic controversies, and what's more, I doubt any answer you could give me would actually satisfy the greater question that has been asked here. I've been getting an uncomfortable feeling that your near monologue about investment is kind John Cochran's bloody glove. Is the whole case really going to be decided on whatever you've ultimately meant to say with this? And nothing about investment can stand on its own here, it has to be compared to something else. That's why I moved toward the topic of wealth creation outside of investment, things like the capacity to work and the purchasing power of everyday people, etc.. That's why I brought up government programs either like public utilities or welfare. It doesn't matter that investment does something, it matters if investment as it is being done is a better use of money than those alternatives for creating wealth.

    And I also brought up what you called malinvestment, like I further discussed above. I brought up the effects of manipulating demand with things like marketing. I brought up evasive international behavior. And most importantly I brought up collusion and monopoly. These points weren't talk about what there is opposed to investment, but how much investment actually works. These aren't little points, particularly not the last one. It seems that anything you're trying to say about investment is changed by the issue of collusion and monopoly. Those aren't open ended questions either, but your response to each could practically be boiled down into "I don't think so" which I suppose is sort of what you accuse me of, except it doesn't even have an element of inquiry to it.

    I can't see why you think marketing is so weak. I didn't bring out an actual study, but I told you can tell you that if you will look, you will find some compelling example of what imprudent choices people make driven by marketing. And even if marketing couldn't keep products that were "good enough" from always winning, "good enough" is not the basis of improvement. That phrase really just fits in with my assertion that these companies prefer a status quo to investing in real innovation.

    Your response to the whole evasion thing was practically to agree with me, but not acknowledge any problem in this. You just sort of said "yeah, that happens", you even said every company wants to be anticompetitive, but somehow this doesn't undermine the faith in letting a company take some investment and work wonders with it.

    Now you did sort of make a point that monopolies and oligopolies apparently need the government, and I said that I thought that was ridiculous and made two points about that with no response, I see. It does happen to exemplify the problem with this conversation. Every time I peel back an assumption, I find it girded on another assumption I don't believe in. In other words, we apparently have such different ideas of how the world works that it is difficult to even come to a bridge if communication. For all I know, you think actions and reactions are independent, discrete things, and objects in motion sometimes stop dead of their own volition.

    And my last post did link to my thoughts about the negative effects of inequality, because have to ask about how the pros of this wealth distribution stack against the cons. That is really the fundamental question which has hardly been discussed here. I wanted to reel it in to that. I wonder if you think the power of letting super rich people invest is such as to counteract everything I've listed.

    Quote Originally Posted by uumlau View Post
    None of this is intended as an insult: I always admire those who stand up for their beliefs, and willing to argue them with others. I respect it enough to say, "You're beliefs aren't true: here is what you need to learn in order to reevaluate them." I also understand if you simply don't believe me. That's OK too, as long as you don't pretend that you "won" an argument by saying that I didn't present my case well enough to you.
    I'm not going to claim I've won, I don't know any measure by which either of us have. I suspect this conversation will just repeat what it has already done, that neither of use have had any change of opinion, and that no one who bothered to follow the conversation (if anyone did) had a change of opinion.

    But I don't like you condescending to me whether you intended it as an insult or not. And when you put the situation the way you did, you make it sound like there isn't a separation between your idea of understanding this topic and agreeing with you, as though it's merely me not understanding the minutia of investment that keeps me from being on your side here, and as far as I can tell, being on your side is supposed to be a part of understanding the minutia of investment. I don't think so, nor do I think it deserves the singular attention you've been giving it as opposed to everything else.

    It seems to me that you are just a full blown trickle down economist. That is the impression I get. And from other comments I've seen from you, you appear to be radically laissez-faire. Except where stated, I attempted to argue from my own knowledge and understanding, but I know individuals like Paul Krugman, Joseph Stiglitz, Robert Reich, etc... would definitely not agree with you. They obviously could make the argument better than me, and it'd be interesting to see you do a critique of their work. I don't suppose you figure you could just teach them some basics about investment, do you?


    Quote Originally Posted by uumlau View Post
    Given the data I supplied above, I would say economic freedom is a much better indicator of high GDP PC than Gini. I haven't the time to run the numbers (all available for download at the heritage.org site I linked above), but it would be interesting to see how the Gini correlates with the various pieces of the economic freedom index. I would hypothesize that the overall index correlates somewhat positively with Gini (higher economic freedom => greater inequality), but that particular pieces of the index correlate very negatively (e.g., freedom from corruption).
    See above for my thoughts on that.
    Go to sleep, iguana.


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  5. #95
    78% me Eruca's Avatar
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    http://www.ted.com/talks/paul_piff_d..._you_mean.html

    So relevant. All should watch this.
    I hope I'm wrong, but I believe that he is a fraud, and I think despite all of his rhetoric about being a champion of the working class, it will turn out to be hollow -- Bernie Sanders on Trump

  6. #96
    my floof is luxury Wind Up Rex's Avatar
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    The wealthy give tons of money away.

    ....they just typically give it to other wealthy people.
    And so long as you haven’t experienced this: to die and so to grow,
    you are only a troubled guest on the dark earth

  7. #97
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    Thread Subtitle: Why trying to teach Japanese to a monkey is a waste of breath and one perfectly good monkey

  8. #98
    ^He pronks, too! Magic Poriferan's Avatar
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    Quote Originally Posted by DiscoBiscuit View Post
    Thread Subtitle: Why trying to teach Japanese to a monkey is a waste of breath and one perfectly good monkey
    The way you've been cheering on Uumlau while adding nothing sort of makes me think of that twerp that follows Gaston around in Beauty and the Beast. But, I know, it's because you are much "lazier" than him that you don't write these arguments on your own. Here I thought it was because you are not as intelligent.
    Go to sleep, iguana.


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  9. #99
    pathwise dependent FDG's Avatar
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    Quote Originally Posted by DiscoBiscuit View Post
    Thread Subtitle: Why trying to teach Japanese to a monkey is a waste of breath and one perfectly good monkey
    So you're the monkey?
    ENTj 7-3-8 sx/sp

  10. #100
    Happy Dancer uumlau's Avatar
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    Quote Originally Posted by Magic Poriferan View Post
    Given issues of poverty, health, and education, it would be fair to ask if we do have the same amount of real stuff.
    Why does it seem to me that you reply with bald assertions, but never any concrete data? You've not even provided Gini data to back up your ideas.

    Economic freedom? Is that there Heritage Foundation's economic freedom index? Because that thing is elaborate, vague, interpretive, and the Heritage Foundation never does anything that isn't meant to prove its own ideals rights.
    And why does it appear that whenever I provide data, you dismiss it with a wave of your hand?

    While I said it was a predictor, I meant it was a predictor of one number from the other (either way) as a correlation, and of course I understand that correlation is not causation. It is perhaps weak, but it is there. However, there is no room at all to discuss a correlation going the other way, which I assume is what we'd see if the worked as you imagined. If you want to say there isn't a strong enough positive correlation between high gini and low GDP PC, fine, I'm content to let that go, because at the very least it doesn't have any chance of meaning what it ought to me for you.
    And this data (which I had to go look up for myself), which is supposed to prove your assertions to me, doesn't have a strong correlation. It's kind of unfair to say it even has a weak correlation. It is beyond weak.

    Combine this with dismissing out of hand data I provided with a strong correlation, and we thus have no conversation.


    I don't have to talk about anything in your terms, and I was not looking to find out how, nor was I looking for you to educate me on anything. I was trying to figure out how your reasoning all of this, but was finding your answers often vague.
    It's called communication. We must share terms. A first step of sharing terms is to learn each others' terms. I talk about Gini and GDP PC with you, and share data with you in those terms. You dismiss everything I say about investing, about other ideas that cause economies to improve. You don't want to learn my terms. Not necessarily believe the ideas behind them, but learn them enough to compare and contrast our ideas with each other.

    So let's just look at two ideas. One; I'll just take a page right from Joseph Stiglitz here and ask, what if externalities are essentially all-pervasive, and their impact is severe enough that you cannot count on the rationality of investors alone (making the big assumption that they have much that) because they are chronically ill-informed, that the economy is pushed around by forces which, by definition, the signals they look to don't account for? Would there not be a great deal of malinvestment as a result?
    I totally agree that "homo economicus" is a ridiculous assumption. It does not underlie my ideas. These ideas make sense of economic behavior in aggregate, not based on some individual superknowledge. If you have ever been exposed to the ideas of Hayek and Von Mises, the argument they make is that individuals, or small groups of individuals, cannot even BEGIN to have the "homo economicus" superknowledge required control/guide the economy (never mind make perfect individual investment decisions), and that attempting to do so (by providing too much credit, for example) is precisely what causes large scale malinvestment. As long as we allow the decision making to remain dispersed, in aggregate, the individual malinvestments wash out.

    Two; The role of monopolies and collusion comes in again. Once that establishes itself, investment becomes an entirely different ballgame. When a company becomes a monopoly, it's not like investments just vacate it. If anything, they probably increase, because if you want to profit it off of an investment, a monopoly is pretty safe. A monopoly (and everything I'm saying here largely applies to collusive oligopolies, too) can get away with things, lucrative but exploitative things, other companies cannot, and the relationship between the investors and the managers becomes a rather corrupt, reciprocal profit making scheme.
    If the monopoly doesn't increase its value, it's not going to be an attractive investment. Investors who know what they're doing look for small companies, which chances for huge increases in growth. They don't look to Apple or Microsoft except perhaps as "low risk, low return" investments.

    As for real monopolies, there isn't a huge rate of return on utilities companies.

    So, there are reasons for malinvestment. I think it ought to happen quite often. So that's not just an open-ended question, when I ask you why there wouldn't be a beyond-negligible amount of malinvestment.
    There will always be malinvestment. If a central authority tries to direct the market, however, instead of those malinvestments mostly cancelling out and remaining small scale, lots of entities (people, companies) all end up making the same malinvestment, and it ends up being on a huge scale, whether as stock market bubbles or housing bubbles or what have you bubbles.

    ...

    And my last post did link to my thoughts about the negative effects of inequality, because have to ask about how the pros of this wealth distribution stack against the cons. That is really the fundamental question which has hardly been discussed here. I wanted to reel it in to that. I wonder if you think the power of letting super rich people invest is such as to counteract everything I've listed.
    Sorry, but your linked thoughts contained nothing but assertions. That explains to me what your reasoning is, more or less, but it provides no concrete foundation to compare ideas.

    I'm not going to claim I've won, I don't know any measure by which either of us have. I suspect this conversation will just repeat what it has already done, that neither of use have had any change of opinion, and that no one who bothered to follow the conversation (if anyone did) had a change of opinion.
    Yep. Funny how that works.

    The thing is, I actually like to understand the arguments of those who disagree with me. And often they do change my opinion - or rather become part of my overall synthesis of ideas. In this instance, you got me to look up the correlation between Gini and GDP PC, and that's become part of my knowledge base. Yes, we disagree on the meaning of the data, but it's something concrete upon which my ideas can build, and I did not dismiss it out of hand.

    But I don't like you condescending to me whether you intended it as an insult or not. And when you put the situation the way you did, you make it sound like there isn't a separation between your idea of understanding this topic and agreeing with you, as though it's merely me not understanding the minutia of investment that keeps me from being on your side here, and as far as I can tell, being on your side is supposed to be a part of understanding the minutia of investment. I don't think so, nor do I think it deserves the singular attention you've been giving it as opposed to everything else.
    It isn't minutia, it's a full blown misunderstanding of what comprises investment. That's why I sound condescending to you: you don't understand what I'm talking about, and you clearly aren't trying to do so.

    It seems to me that you are just a full blown trickle down economist.
    There is no such thing as trickle-down economics theory. It's a political pejorative that obfuscates debate. http://en.wikipedia.org/wiki/Trickle-down_economics There are likely several ideas that you would regard as "trickle-down" to which I would never subscribe. There are several economic ideas to which I would subscribe that you wouldn't regard as "trickle-down".

    That is the impression I get. And from other comments I've seen from you, you appear to be radically laissez-faire.
    Radically? Not really. I'd be happy with clear and consistent regulations that didn't endlessly grow because the LAST set of regulations didn't fix the problems that the politicians wanted to fix. The real problem being that the regulations usually address symptoms, not causes, just as I suspect that low/high Gini is a symptom of other conditions, not a cause of high/low wealth creation.

    Except where stated, I attempted to argue from my own knowledge and understanding, but I know individuals like Paul Krugman, Joseph Stiglitz, Robert Reich, etc... would definitely not agree with you. They obviously could make the argument better than me, and it'd be interesting to see you do a critique of their work. I don't suppose you figure you could just teach them some basics about investment, do you?
    I'd be satisfied if you argued with me about investment on their level. Heck, I'd be satisfied with concrete data from you, or if you're going to dismiss the data I provide, actually do the leg work to find its flaws.

    As for critiquing their work, it isn't that hard to critique statements like:
    Quote Originally Posted by Krugman on 9/11
    First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I've already indicated, the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending.
    SOURCE

    This is an example of the broken window fallacy. The "investment" spurred by losing the buildings doesn't even begin to make up for the huge capital loss; the "investment" is the loss.

    Anyway, if you want to end this at "agree to disagree", I'm fine with that. If you'd care to explore ideas further, then perhaps take a stab at finding flaws in the economic freedom index, as opposed to dismissing it ad hominem as being from an unreliable source. Or go find Gini data that better supports your assertions. I'm up for it, if you are.
    An argument is two people sharing their ignorance.

    A discussion is two people sharing their understanding, even when they disagree.

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