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David G
02-05-2016, 10:37 AM
http://dollarsandsense.org/archives/2015/1115kotz.html


David Kotz argues that the ongoing economic crisis is not simply the aftermath of financial panic and an unusually severe recession but instead is a structural crisis of neoliberal, or free-market, capitalism. Consequently, continuing stagnation cannot be resolved by policy measures alone. It requires major institutional restructuring. Kotz analyzes the reasons for the rise of free-market ideas, policies, and institutions beginning around 1980. He shows how the neoliberal capitalism that resulted was able to produce a series of long although tepid economic expansions, punctuated by relatively brief recessions, as well as a low rate of inflation. This created the impression of a “Great Moderation.” However, the very same factors that promoted long expansions and low inflation—growing inequality, an increasingly risk-seeking financial sector, and a series of large asset bubbles—were not only objectionable in themselves but also put the economy on an unsustainable trajectory. Kotz interprets the current push for austerity as an attempt to deepen and preserve neoliberal capitalism. However, both economic theory and history suggest that neither austerity measures nor other policy adjustments can bring another period of stable economic expansion. Kotz considers several possible directions of economic restructuring, concluding that significant economic change is likely in the years ahead.

Too Little Time
02-05-2016, 12:59 PM
Capitalist economic systems—in which a small percentage of the population owns the enterprises, hires wage workers, and sells the products aiming for a profit—have brought economic growth but also periodic severe economic crises.
I think the key phrase is "economic growth." That is, not "capitalist economic systems." Economic growth and time explains all the issues we now have.

David G
02-05-2016, 09:53 PM
I think the key phrase is "economic growth." That is, not "capitalist economic systems." Economic growth and time explains all the issues we now have.

Nope. Wrong as stated. Maybe you'd like to elaborate? Or go hole up in your library and read up for a bit. I'd suggest 3-4 years.

Peerie Maa
02-06-2016, 06:00 AM
Nope. Wrong as stated. Maybe you'd like to elaborate? Or go hole up in your library and read up for a bit. I'd suggest 3-4 years.

I agree, I attended a lecture by a University academic who stated that unregulated capitalism will go into a cycle of growth and bust. He pointed out that although there was not enough time for a statistically significant data set to build up it is beginning to indicate that it happens about twice a century. He even was able to explain why there was this periodicity.

Paul Pless
02-06-2016, 07:54 AM
I agree, I attended a lecture by a University academic who stated that unregulated capitalism will go into a cycle of growth and bust. He pointed out that although there was not enough time for a statistically significant data set to build up it is beginning to indicate that it happens about twice a century. He even was able to explain why there was this periodicity.I might venture that the gentleman that gave the presentation was blowing smoke up y'alls asses. . .

Peerie Maa
02-06-2016, 08:07 AM
I might venture that the gentleman that gave the presentation was blowing smoke up y'alls asses. . .

Nope. University academics don't tend to do that, even if some pseudo capitalist republican would want to think so.

The reasoning based on the available historical data allied to a pragmatic view of human nature made it all hang together extremely well.

Paul Pless
02-06-2016, 08:13 AM
Nope. University academics don't tend to do that. . .let me state it differently, it sounds to me like the gentleman was offering up a confident hypothesis on the inner workings of the business cycle - this is is one of the most hotly debated area of macroeconomics and no one, not even the giants in the field, have worked out an accurate theory yet which explains the 'periodicity' of the cycle. So he was either way out there on limb or he was peddling something. . .

Peerie Maa
02-06-2016, 08:46 AM
let me state it differently, it sounds to me like the gentleman was offering up a confident hypothesis on the inner workings of the business cycle - this is is one of the most hotly debated area of macroeconomics and no one, not even the giants in the field, have worked out an accurate theory yet which explains the 'periodicity' of the cycle. So he was either way out there on limb or he was peddling something. . .

His thesis was quite simple.

A crash happens
The managers and government figure out what happened.
Regulations are put in place to remove the causes and enablers of the crash.
Economies recover and grow.
The people who lived through the crash and understand what happened retire from work.
A new generation who did not live through the crash are promoted to positions of authority.
The new generation of managers think that they can do better without the regulations.
A new government of the right deregulates, because that is what right wing governments do.
The money market crashes the economy. Again.

The periodicity relates well to the duration of a working persons career.

Tom Hunter
02-06-2016, 09:01 AM
Going back to the article, he is right that things need to change, and will change, but you hardly need a PhD to come up with that. His comparisons of pre 1980 capitalism and current capitalism are wrong, or so fascile as to be useless.

He has a before: Govt regulated the economy after: companies could do what they want, electricity prices in California shot up. He is right about that, but if I wanted to argue the other way I would say:


Before: Govt regulated the economy, a phone call to California cost $4 a minute, and airline tickets were too expensive for most people to fly after: phone calls to your friends and relatives around the world are almost free, and most people can afford to fly.

Both positions are stupid, they cherrypick data, and his pro-regulated economy examples are often vague or connect things that don't actually connect, like high growth post WWII and high taxes.

It's a dumb article

Norman Bernstein
02-06-2016, 09:17 AM
He has a before: Govt regulated the economy after: companies could do what they want, electricity prices in California shot up. He is right about that, but if I wanted to argue the other way I would say:

Before: Govt regulated the economy, a phone call to California cost $4 a minute, and airline tickets were too expensive for most people to fly after: phone calls to your friends and relatives around the world are almost free, and most people can afford to fly.

The key phrase in your analysis: "If I wanted to argue the other way..."

It's a tradeoff, isn't it? Deregulation gave us cheap phone calls and low cost air flights.... but it also gave us the worst recession since the Great Depression, and it exacerbated income inequality, which has put real economic and political power in fewer and fewer hands, and it's not hyperbole to wonder just how far we go towards an oligarchy before we end up with an uncomfortable reaction against it.

My argument: it's a balance, and needs a balanced viewpoint. We're decidedly out of balance, at the moment.

Too Little Time
02-06-2016, 10:00 AM
Nope. Wrong as stated. Maybe you'd like to elaborate? Or go hole up in your library and read up for a bit. I'd suggest 3-4 years.
As the following quote indicates it is a game.

3. Regulations are put in place to remove the causes and enablers of the crash.
Whatever rules are made. Someone will figure a way to play the game.

No one who plays the game is concerned about the overall "economy." If the economy crashes, they will play the new game.


As a side note. I read the ski bum thread. Looks like a number of people played that game. Not a lot of upside. Not much risk of global economic collapse.

oznabrag
02-06-2016, 10:19 AM
http://forum.woodenboat.com/images/misc/quote_icon.png Originally Posted by David G http://forum.woodenboat.com/images/buttons/viewpost-right.png (http://forum.woodenboat.com/showthread.php?p=4792292#post4792292)
Nope. Wrong as stated. Maybe you'd like to elaborate? Or go hole up in your library and read up for a bit. I'd suggest 3-4 years.


As the following quote indicates it is a game.


http://forum.woodenboat.com/images/misc/quote_icon.png Originally Posted by Peerie Maa http://forum.woodenboat.com/images/buttons/viewpost-right.png (http://forum.woodenboat.com/showthread.php?p=4792538#post4792538)

3. Regulations are put in place to remove the causes and enablers of the crash.


Whatever rules are made. Someone will figure a way to play the game.

No one who plays the game is concerned about the overall "economy." If the economy crashes, they will play the new game.


As a side note. I read the ski bum thread. Looks like a number of people played that game. Not a lot of upside. Not much risk of global economic collapse.

Hi David.

I know a guy who was born to a single mother on the wrong side of the tracks in Topeka, Kansas.

He dropped out of high school.

Today, he is a multi-millionaire.

Everything he did for money is strictly legal.

He would agree with TLT. It is a game, and my friend was born with an aptitude for learning the rules. An intuitive understanding of Money. Not the kind you stuff in your wallet to go on a beer run, the kind you put on the game board.

He knew that if you have basic economic freedom, meaning freedom from debt and the means to move even the smallest pieces on the game board, and you understand the game, you too can become very well-to-do.

As I have observed before, TLT has an odd perspective on the game, meaning that he seems to understand Money as a living organism (I have no idea if this is accurate, but Money seems to have a life of its own in the right hands) but he seems to have difficulty expressing that perspective in a way that is easily comprehensible to those of us who do not understand the game. IMO he deserves a measure of respect from you nonetheless.

David G
02-06-2016, 11:42 AM
Oz - you'll note that my first suggestion to him was to elaborate. Meaning - I recognize that he may have a legit perspective to share, though I remain skeptical based on what he's said. Because he's said enough things that are just enough off the mark, or completely askew to suggest he does not understand much. And if he does have something germane to offer, you're right, he hasn't presented it comprehensibly. So elaboration might expose the nugget. Or the error.

The rest of what you say is correct, though. Capitalism is a game. Monopoly writ large. I understand that, and take it as a given. I understood it back when I walked away from a career in economics to instead make sawdust. As such decisions are... it was push/pull. I was pulled by the joy of making useful, nice things. It really IS a joy that floats my boat in so many ways. But, more to the point, I was pushed by an understanding of what playing The Game meant on a day-to-day level. While such a life spoke to the competitive part of me, and would have offered rewards both in that department and by way of financial success... that sort of 'winning' just didn't speak to me.

And someone who has achieved success in that realm deserves kudos for his accomplishment.

I, too, know some very successful self-made people. And I recognize that their success in that one realm gives them a certain useful perspective... but mostly, the ones I know, a very limited one. Opinionated, but not well-informed. And I'd suggest that we make a mistake to lend credence to their opinions about other matters based upon that facility with The Game.

It's like thinking that Trump or Romney must be great potential as presidential stock... because they're good at playing The Game. It's possible that they might have turned into good presidents. And that might, in some part, be because of their background in The Game. There are certainly transferable skills, if one has the wisdom to recognize and use them. But mostly that limited perspective leads folks like that to think they know more than they know, listen to advisers too little, and jump into very bad conclusions & decisions in areas outside of theirs natural talent. A phenomenon much like Dunning-Kruger.

And thus... we have circled back to the beginning.

oznabrag
02-06-2016, 11:46 AM
Fairy Nuff, I guess.

Paul Pless
02-06-2016, 11:57 AM
The excesses of laissez-faire
one of the problems, perhaps one of the biggest problems with laissez-faire economic policies, is that large corporations and financial institutions and the people who run them don't play by the rules; when they are in a crisis they find ways to get bailed out by taxpayers or get special forgiveness for debts owed, this can be especially galling when those entities are often to blame for creating the crisis in the first place. . .

oznabrag
02-06-2016, 12:09 PM
one of the problems, perhaps one of the biggest problems with laissez-faire economic policies, is that large corporations and financial institutions and the people who run them don't play by the rules; when they are in a crisis they find ways to get bailed out by taxpayers or get special forgiveness for debts owed, this can be especially galling when those entities are often to blame for creating the crisis in the first place. . .

https://upload.wikimedia.org/wikipedia/commons/4/43/Ex%C3%A9cution_de_Marie_Antoinette_le_16_octobre_1 793.jpg

David G
02-06-2016, 12:11 PM
one of the problems, perhaps one of the biggest problems with laissez-faire economic policies, is that large corporations and financial institutions and the people who run them don't play by the rules; when they are in a crisis they find ways to get bailed out by taxpayers or get special forgiveness for debts owed, this can be especially galling when those entities are often to blame for creating the crisis in the first place. . .

Symptomatic.

This urge among financial entities always exists. It's when we slack on on the regulation and oversight that they come to the fore, and impact things on a large scale. Harken back to the 1890's, the 1920's, and the more recent Bush Crash.

Symptomatic, along with crony capitalism, bribery - both 'legal' and not, and a general tilting of the playing field. Too great a concentration of wealth & power is perverse in a plethora of patterns.

Paul Pless
02-06-2016, 12:15 PM
Symptomatic.

This urge among financial entities always exists. It's when we slack on on the regulation and oversight that they come to the fore, and impact things on a large scale. Harken back to the 1890's, the 1920's, and the more recent Bush Crash.

Symptomatic, along with crony capitalism, bribery - both 'legal' and not, and a general tilting of the playing field. Too great a concentration of wealth & power is perverse in a plethora of patterns.


absolutely

Too Little Time
02-06-2016, 12:27 PM
Oz - you'll note that my first suggestion to him was to elaborate. Meaning - I recognize that he may have a legit perspective to share, though I remain skeptical based on what he's said. Because he's said enough things that are just enough off the mark, or completely askew to suggest he does not understand much. And if he does have something germane to offer, you're right, he hasn't presented it comprehensibly. So elaboration might expose the nugget. Or the error.
Perhaps you should have read your link. It comes to the conclusion

Thus, the big financial and broader economic crisis that began in 2008 is explained by the way neoliberal capitalism worked.
One might say it is explained by the way good players played the under neoliberal capitalism rules. But it would have happened under any set of rules.

Economic theory divides nicely between game players and scientists. By posting that link and your original comments you are clearly a scientist. You are not going to change sides.


Capitalism is a game. I understand that, and take it as a given. I understood it back when I walked away from a career in economics to instead make sawdust. ... and by way of financial success... that sort of 'winning' just didn't speak to me.

One law of the game: You cannot get out by not playing. Despite your words you don't believe there is a game.

David G
02-06-2016, 12:34 PM
TLT - Good job. Much better job of being coherent.

skaraborgcraft
02-06-2016, 12:36 PM
I think its very hard to come up with an accurate explanation that works, when most of the markets are rigged, or the big players can change the rules as and when they sit fit. If capitalism was a system that worked, there would be no too big to fail.

oznabrag
02-06-2016, 12:39 PM
I think its very hard to come up with an accurate explanation that works, when most of the markets are rigged, or the big players can change the rules as and when they sit fit. If capitalism was a system that worked, there would be no too big to fail.

Exactly. It's all moonlight-and-roses-capitalism-is-the-greatest-thing until they screw it up, and then it's we-need-a-socialist-bailout . . . And a bonus.

SCROOM!

David G
02-06-2016, 12:57 PM
I think its very hard to come up with an accurate explanation that works, when most of the markets are rigged, or the big players can change the rules as and when they sit fit. If capitalism was a system that worked, there would be no too big to fail.

Capitalism, it is true, sucks in a lot of ways.

AND... as far as I can tell... it is still the best mechanism we've been able to invent for the purpose.

So, while there are always things to improve, and injustices to ameliorate, and efficiencies to be incorporated, capitalism works passably well.

IF AND ONLY IF IT IS WELL-REGULATED. People keep wanting to take our present-day circumstance and conflate it into a description of What Capitalism Is. That's a false image. The present-day situation is, instead, one of the most stark examples of the sorts of ways that capitalism can become dysfunctional with insufficient regulation and oversight.

oznabrag
02-06-2016, 01:01 PM
. . .

IF AND ONLY IF IT IS WELL-REGULATED. . .

This will only happen when people grasp the fact that Capitalism is an Economic System.

It is NOT a Political System.

We need a strong Socialist Democracy to regulate our Capitalist Economic System.

Combining these two elements should yield a Robust, Egalitarian Civilization.

David G
02-06-2016, 01:02 PM
This will only happen when people grasp the fact that Capitalism is an Economic System.

It is NOT a Political System.

We need a strong Socialist Democracy to regulate our Capitalist Economic System.

Combining these two elements should yield a Robust, Egalitarian Civilization.

Well... I'd say that's one promising route, but not the only one.

oznabrag
02-06-2016, 01:08 PM
Well... I'd say that's one promising route, but not the only one.

Fine.

I will say that people must grasp that Capitalism is NOT a political system, or we are SCREWED.