Why do most people have no clue about economics?

I argue with people constantly about economics. I used to be a steadfast socialist (I didn't know what that was at the time, but there you go), but after a very brief conversation with a near stranger, I was convinced capitalism was the best of a bad situation (that is to say, scarcity).

The issue is, no matter how you argue, people convinced socialism and communism are the best sides of the coin will always politicize the issue talking about how everyone should be equal and so on and so forth. They do this trying to make you look as though you don't believe in equality or basic human rights.

Even worse are the ones who believe they're aware of some sort of international conspiracy among bankers. I spent 5 days yelling at the brick wall on youtube who insisted capitalism was slavery because he took out a loan that he couldn't afford.

Who else has this problem? All economic theory essentially shows capitalism to be the best of a bad situation, but I have a harder and harder time finding anyone who believes it.

 

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It does maximize profits for a privileged elite, but socialism maximizes the public good. It all depends on which you value the most.

 

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Maybe that's because it's harder to convince people about the law of scarcity when they see other people spending, on a handbag or scarf or picture, the equivalent of a family home in America or life-saving medication for a sizable town in Africa.

Problem is, scarcity, like disparity, is largely man-made, and some of us would prefer The Man stopped making it.

 

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I'd think that any system that is controlled by greedy, corrupt and have no empathy for anyone but themselves are systems that are bound to fail. All economic systems have weaknesses and strengths but can only be worked properly with laws and people in charge that respect what that system is to do. In every case I've seen it is the people in charge of any economic system that make it fail because of their own wrong doings.

Capitalism is a very good system, best of all perhaps, but easiest to take advances of.

 

That's right. No system is beyond corruption. People are sneaky.

 

I agree that scarcity is often more about manipulating access to resources that are actually not scarce.

Where scarcity truly does exist, then the natural competition for resources will occur, no matter that we like to think of ourselves as somehow more intelligent and altruistic than other species.

When the Alaska Highway was out for several days a month ago, we had young mothers fighting in a store for the last jug of milk, Wal-Mart put their price up to $10.00/4L and some enterprising individual was listing milk and bananas on a Yukon You Buy & Sell for wildly inflated prices.

In my opinion, people do not understand economics because basic math and accounting are not adequately taught in the primary and junior high grades. Many people these days do not even read and write well despite our education system. :bugeye:

 

Probably because most people don’t have an education in economics, finance or business and believe the partisan crap they hear in the media, and you think you have a background in such?

Capitalism is certainly a great means to allocate scarce resource to a point. However, it is not perfect. If left to its own a strictly capitalist system tends to collapse in on itself in rather spectacular fashion. The best solution is a blended economy where the best aspects of socialism and capitalism are intermingled. That is why there is virtually no advanced economy in the world today that does not blend capitalism and socialism.

I suggest you take a look at Keynesian and post Keynesian economics, what has been learned in the last 100 years.

 

Pick one;
World 1:
I have a billion dollars. You have fifty thousand dollars.

World 2:
I have a ten dollars. You have five dollars.

Even if I do control more of the world 1's wealth, you still have 49995 more than you would in world 2.

This is the basis of economics. People are driven by the want for more. In world 1, everyone is better off even if there is a larger disparity of wealth.

Am I missing something?

 

How much does a loaf of bread cost in world 1? World 2?

 

You have more dollars. That's not the same as more wealth.

In world #1, the billion dollars buys about 99.995% of the resources, goods, and services of the economy. The 50k buys the remaining .005%. That probably won't include things like medical care or a single family house - not if the billion dollar guy wants them.

In world 2, doctors will have to sell their services to people with ten dollars, and house prices will be set accordingly.

 

Manipulating everything: resources, supplies, production, land-use, water, migration, birth rate, population density, health, opportunity and information.

How is it natural for Walmart to control the supply of milk? What you describe is capitalism in its purest, rawest (well, rawest short of private army) manifestation. A pharaoh would have had control of the warehouse for just such emergencies, and a standing protocol for distribution. So would a co-operative or Mennonite village.
Indeed, so should any reasonable community - especially in these times of unpredictable and increasingly destructive climate.

They do in Finland. Dumb socialists!

 

Yes, people who believe in unregulated capitalism are becoming fewer, because their access to the historical record is easier.

If you want to find out what pure capitalism looks like, just read:

http://en.wikipedia.org/wiki/The_Condition_of_the_Working_Class_in_England_in_1844

 

...and since World I has just been defeated, our entire government wiped out, in a war with World II, all of our dollars are worthless. Because you have more paper to burn, you will stay warm much longer than me, unless the WII occupation patrols, or the enemies you made along with that fortune find you first.

Well, yes. The 12, 000, 000 people who have no dollars, or too few to live on. Disparity between the haves and have-mores doesn't cause major ructions. It's the people they got more from who periodically grow restive.

 

It's a question of priorities, for instance let's say we have enough gas to power a resort hotel or a hospital (actual resource scarcity), the hospital could save 100s or 1000s of lives and the resort will make shitloads of money for a Ritchie executive. Which is more ethical to give the gas to? In a pure capitalist society the hospital can't compleat against the ditch profit making resort so would get the gas but is that the best system?

Or look at 2 hospitals 1 in capitilsium land and one in socialism land

The first triages people based on there ability to pay, the amount of profits they get from each patient so when a nose job paying 10000 comes in the heart attack which costs more resources to treat gets pushed back down and if that person can't pay they get kicked out just like what would happen to someone who couldn't pay in a car dealership

In socialist land patients would be triaged not on financial grounds but MEDICAL grounds. So the heart attack comes first and the nose job gets bumped until the hospital is free to do it. Both are allocating scarce resources but I belive (and most people including medical staff would belive) that triage should be about what will do the most good for the most people, not just those who can pay the most

Actually it's funny, we were learning about the new international triage system recently and there is a section on there which is only used in the US, "medical insurance". Ie in a major disaster people in the US are being classified not by there medical catigory but by there health insurance. Here that isnt used (though there is some talk that it maybe used in the future for Medicare number if known to help with tracking patients)

 

Besides the economic effects of extreme income inequality, the distinction between market exchange in principle and capitalism seems obscured.

There's nothing about real life capitalism that supports free markets - capitalists are very often, perhaps always, attempting monopoly control and benefiting by artificial market restrictions of all kinds - including brute force.

Although probably capitalism in some sense is necessary for market exchange to govern distribution of goods and services, the reverse is not true - and in particular, capitalism will not keep markets "free" and "competitive" and so forth by its natural workings, without regulation and political governance.

 

How is it not natural for a Wal-Mart to want to derive profit? The Wal-Mart owns the milk. If it was a mom-and-pop store you probably wouldn't say anything, it's just a huge politicized issue where somehow corporations who started off the same as small operations and who have learned to function more efficiently are berated for their success.

I don't particularly like the way Wal-Mart operates, but it's like the issue of free speech; it has to apply absolutely. If I want to complain about racism in the country, I can't censor the KKK (as much as I'd want to).

The benefit however, is that it's a level playing field. If you want to compete with Wal-Mart, learn how to operate more efficiently. If you say it can't be done, then you really don't have the entrepreneurial skills to compete, and your inefficiency is removed from the market as a result, which benefits everyone. Survival of the fittest and all that, right?

I see the point you're making, but it goes back to the competition thing; if you're put into a situation where you can't afford housing, you get smart and learn how to produce enough to afford it. I'm not saying from a humanitarian standpoint that that's a good thing, but if you manage to become twice as productive as you were before, then society as a whole DOES benefit.

Maybe I need to clarify my point here; Is it not better to live in a world where you get food, water, and shelter while another guy lives in a house of gold bricks than a world where the other guy has food, water, and shelter, but no one else does? It all comes down to standards of living.

Compare that to the living conditions anywhere else in 1844. They were all shit. We didn't have modern technology at our disposal.

And consider the alternatives (Namely, communism). I'm pretty sure the Eastern European's can tell you all about how great "economic equality" worked out for them under the USSR.

And I reiterate; natural selection. The businesses that are efficient survive, the one's which do not survive die out. If there is a business which has found an opportune method of operation, then it is in the best interests of society to allow that monopoly. The issue however is that these monopolies do not innovate because they do not have to. They're run by bad entrepreneurs who don't have a vision, just a desire for profit. Look at the music industry as a great example. It was a monopoly, but someone came along with a better way of doing things (well, several people did) and threw the RIAA off the metaphorical yoke. This competition ensures innovation that improves business for the good of all humankind, but if the innovation continues even after a business has achieved a monopoly, there's no reason that business shouldn't maintain the monopoly.

You seem to be confusing America with a capitalist country; it's not. It's precisely the issue of the government getting involved that prevents new business from being done (IE we'd all have a better music distribution system if the US wasn't enacting legislation against it). A large monopoly gaining a monopoly artificially is not capitalism, despite what the left-wingers would have you believe. It violates every definition of the word.

 

Interestingly, Engels makes the case in his intro that textile workers were better off before the introduction of mechanized spinning and weaving machines under pure capitalism.

http://www.gutenberg.org/files/17306/17306-h/17306-h.htm#page1

Are you saying that the ONLY alternative to one extreme...is its opposite extreme?

 

??!! On what planet?

Produce what? The same guy - who has mansions in Bern, Santiago, Nice, Tokyo, Milan, Edinburgh, Denver, Key West, Juno, Boston, Chicago and LA - who repossessed your 2-bedroom row-house also moved your job to China, bankrupted your town after dumping toxic waste in its water supply and closing down the school and hospital. Go, produce, and compete with him.

The way it benefits from Mitt Romney being one thousand times as productive as a Georgia miner. I wonder what he produces so much of?

It sure does. It's certainly better to live in a world where i'm the one who has shelter, not the one who lives in dumpsters, even if 1000 people have to live in dumpsters so that one can have a house of gold brick. And that's in the same city! You should see how people live in the country where the gold came from! [/QUOTE]

You don't know a lot of history, do you?

Actually i know a number of eastern Europeans of that age, and they do not speak with a single voice, nor see with a single eye. There was much else besides mismanagement and fraud (eg. they came out of school literate, numerate, skilled and non-racist) There was disparity, as no real communist states ever derived from the Russian military occupation, and the USSR itself was about as communist as Hitler's Germany was social democratic... Fcs, would you eat road-tar if it were labelled licorice?

Another subject you need to bone up on. Biology and business are nothing alike.

Cartels?