Jay Reding.com

Predictions 2007

As is my annual tradition, I’m releasing my inner Nostradamus and coming up with a few predictions for the coming year…

Iran will announce that they have completed work on a nuclear weapon and will conduct nuclear tests, showing once again how the intelligence community got it wrong.

However, Ahmadinejad will face great political backlash as the Iranian economy begins to collapse.

Iran and the US will enter a state of de facto war as Iranian naval vessels blockade the Straights of Hormuz and more Iranian fighters stream into Iraq.

President Bush will announce significant troop withdrawals from Iraq, as the situation in Iraq grows even more dire. His attempt to “surge” troops into Baghdad will be too little, too late, and not long enough to make a difference.

The al-Maliki government will collapse when SCIRI and the Sadrists both walk out.

The biggest success in the War on Terror will be when Ethopian troops take down the Islamist government in Somalia in a decisive victory.

As a consequence of the above, the US will begin training Kurdish peshmerga to fight al-Qaeda as US troops withdraw.

Apple will release a cell phone that runs a stripped-down version of Mac OS X, creating the hottest gadget since the iPod.

President Bush’s approval ratings will stay low, but not lower than they are now. (Which granted, isn’t saying much at this point.)

The Democratic Congress will push through a substantial tax raise, and the Bush Administration will capitulate. The stock markets will plunge in response.

Hizballah will continue their reign of terror in Lebanon, as Syrian forces take control of the country once again.

More critics of Vladimir Putin will find themselves dead.

Socialist Ségolène Royal will defeat Nicolas Sarkozy in the French elections.

Barack Obama will continue to flirt with running for the Presidency throughout 2007, just to keep Hillary guessing.

John McCain will emerge as the front-runner in the 2008 GOP race while Rudy continues to keep everyone guessing as to what his intentions really are.

23 responses to “Predictions 2007”

  1. Nicq MacDonald says:

    “Apple will release a cell phone that runs a stripped-down version of Mac OS X, creating the hottest gadget since the iPod.”

    I want!

    “The Democratic Congress will push through a substantial tax raise, and the Bush Administration will capitulate. The stock markets will plunge in response.”

    I doubt. The Democratic Party ™ – partly owned subsidiary of Goldman-Sachs – isn’t likely to do anything the stock market won’t like.

    “Socialist Ségolène Royal will defeat Nicolas Sarkozy in the French elections.”

    Unfortunately, you’re probably right. I hope not, though…

    Other than that, no other disagreements with your list…

  2. Seth says:

    I predict that the average CEO in America will make as much money as the average American worker does in a year by 8:20 p.m. on January 1. Oh, wait, I was already right on that one.

    I predict that CEO pay will increase another 40% this year, and that President Bush will thrwart the Democrats’ attempts to stand up for working people in America and do something about this.

  3. Jay Reding says:

    I predict that the average CEO in America will make as much money as the average American worker does in a year by 8:20 p.m. on January 1. Oh, wait, I was already right on that one.

    For one, that press release is two years old. You must have done a real fine job reading that thing…

    Yeah, great prediction there. I also predict that the Titanic will sink, Walter Mondale will lose in 1984, and Caesar will be assassinated in the Forum…

    And so what? Do CEO paychecks come out of the hands of other workers? Does the fact that Steve Jobs makes what can only be termed a metric shitload of money mean that he’s ripping off everyone else? For that matter, why not apply the same logic elsewhere? Does the fact that Madonna gets paid millions for sounding like a cat in a washing machine mean that someone else has to go without a meal? Or the fact that Bret Favre made more in one season than any of us ever will mean that he’s screwing everybody else over?

    The economy isn’t a fixed pie that if someone takes “too much” the rest of us are forced to eat the tin.

    We need a program to root out economic illiteracy, too many people believe crap like that.

    I predict that CEO pay will increase another 40% this year, and that President Bush will thrwart the Democrats’ attempts to stand up for working people in America and do something about this.

    Of course, “standing up for working people” means taking more money out of productive areas of the economy and giving it government. Not removing bureaucratic red tape that keeps individuals from finding their dreams. Not making it easier for small businesses to expand and create new jobs. Not fixing our horribly broken system of education. Nope, we gotta go after the rich.

    It’s just another example of how the Democratic Party wants to lead us all towards “Harrison Bergeron” rather than the American Dream.

  4. Erica says:

    The economy isn’t a fixed pie that if someone takes “too much” the rest of us are forced to eat the tin.

    Until the day when it’s legal to print your own money, that’s exactly what it is. Economies are zero-sum. That should be obvious to the most casual observer. Of course, you’ve denied that for years without providing a single argument for where all the infinite money is supposed to come from. I doubt you can tell me, now.

  5. Seth says:

    1.) Since Bush and the Republicans have run roughshod over the middle class for the past two years, I don’t doubt that the disparity has increased.

    2.) Could you ask any more annoying rhetoricals in your second paragraph? Are you turning into Eracus? Did anything you wrote have anything to do with what I said? Don’t you think you were just putting words into my mouth? Did I even take a position on whether CEO pay was just? Or was that just an observation? Is the reason you get so offended by that observation the fact that you know your policies will never win over the middle class?

    3.) Let’s talk about economic illiteracy. Say Ford motors makes $2 billion profit (remember, this is a hypothetical now, I know you have trouble with those so bare with me). $1 billion of that goes into infastructure and innovation. That leaves $1 billion for wages. If we give $200 million to the CEO, that leaves $800 million for the workers. If we give $400 million to the CEO, the pie doesn’t expand, it stays the same, leaving only $600 million for the workers (and, incidentally, less money to buy more Ford products). It’s pretty simple, really.

    4.) No one is talking about socialism here except you. I’m talking about reigning in a corrupt corporate culture and paying American workers what they are worth. I’m not sure how the fourth hundred million dollars of a CEO’s salary can be construed as one the “productive areas of the economy,” I’m not sure how that fourth hundred million affect small businesses, and I’m definitely not sure where I said any of it should go to government, but nice try. The American taxpayers subsidize these corporations. If they are going to take American taxpayer dollars, then they need to be active participants in a social contract with the American workforce. Here’s the deal: you want to pay your CEO that much and take American taxpayer dollars? Then you have an obligation to pay your workers a decent wage. Want to slash worker pay and increase your own? Then forget about any corporate welfare for you or your company. It is, again, pretty simple.

  6. Jay Reding says:

    Until the day when it’s legal to print your own money, that’s exactly what it is. Economies are zero-sum. That should be obvious to the most casual observer. Of course, you’ve denied that for years without providing a single argument for where all the infinite money is supposed to come from. I doubt you can tell me, now.

    Making that argument is about as dumb as me proclaiming that all insects have 27 legs. It’s like saying that things fall up. In short, it’s something so vastly dumb that it makes you look a lot more foolish than you really are.

    No, economics is not a zero-sum game. For one, real GDP in the US has doubled over the last 35 years. If economics were zero-sum, an economy could never grow because the amount of capital would never be able to increase. The principle of capital is as important to economics as gravity is to physics. There are plenty of quite clear explanations of this rather basic principle.

    Thomas Sowell has an excellent book called Basic Economics: A Citizen’s Guide To The Economy that does a very good job of explaining basic principles of economics. You should read it. Everyone should read it. There’s no excuse in this day and age for people to walk around with a fundamental ignorance of how an economy works, and what you said demonstrates a level of economic knowledge that’s about on par with what a creationist would argue in biology.

  7. Jay Reding says:

    1.) Yup, they’ve done such a good job of running roughshod over the middle class that the economy is in nearly the same position that it was in the boom years of the late 1990s. Apparently to some the difference between Hell and Nirvana is who occupies the White House…

    2.) Given that you can’t answer those hypotheticals, it’s pretty clear that you don’t even understand your argument. Inability to deal with Socratic questioning is how you figure out someone who doesn’t understand what they’re arguing.

    3.) Your hypothetical doesn’t have anything to do with reality. It doesn’t work that way. For one, Ford couldn’t afford to pay its CEO that much, which is why most CEO “pay” comes in the form of stock options. On paper, that CEO gets millions of dollars every year. The problem is that money isn’t liquid — they can’t sell it without first clearing it with the SEC, they can’t sell it within a certain window of time before the company reports, and there are a web of insider trading laws that prevent them from selling as well. (And again, a quick visit to Wikipedia would have helped you.)

    Not only that, but there’s a reason why CEO pay is so high: because so few people can run a multimillion dollar company. In the US, an executive can easily jump ship to another firm, which is why boards tend to bend over backwards to keep executives in place. In places like Europe and Japan executives stay with one company for life — which means that they get less pay, but a company with a bad executive is stuck with that person for a long time – and it makes the executive field much more incestuous (see Airbus or the Japanese kieretsu model).

    But hey, sorry to interrupt your little fantasy with such a nasty thing as reality. Please, indulge in your little hypothetical construct while the rest of us go on in the real world.

    4.) Your Fruedian slip is showing… I never said anything about socialism. However, what your argument boils down to is enforcing government mandated wage controls. While that puts you in the Richard Nixon camp, it’s idiotic public policy that has failed everywhere it has been tried. The state has no business trying to decide what the “correct” wage is for a given unit of labor — some pencil-pushing bureaucrat has no business deciding that a phone operator in Walla Walla, Washington should get paid $17/hour. The way that workers are paid what they are worth is through the market, and markets are a hell of a lot more efficient at sorting those things out than central planning agencies — which is why North Korea is a shithole and South Korea has one of the highest standards of living in the region.

  8. Erica says:

    No, economics is not a zero-sum game. For one, real GDP in the US has doubled over the last 35 years. If economics were zero-sum, an economy could never grow because the amount of capital would never be able to increase. The principle of capital is as important to economics as gravity is to physics.

    You can’t spend product, and you can’t spend capital. You can only spend money, and the amount of money in the system is set by the government. Obviously – it’s illegal to print your own.

    There’s only one actor in the economy that can make a transaction that actually creates money, rather than simply transfering it between actors. That’s the government. For everybody else, there’s a fixed amount of wealth in the economy. If you get money, it’s because somebody paid you.

    These are extremely obvious concepts, Jay. It’s a wonder that someone so obsessed with lording economic knowledge over people doesn’t see them. And its no wonder that the “Nobel” prize in economics is the fake one, given out by a Swedish bank – economics as a field clearly is without rigor if its proponents can’t even recognize that economies are zero-sum, a fact obvious to even the most casual observer.

  9. Jay Reding says:

    Please tell me you’re kidding — nobody with a college degree could possibly be that dumb.

    The government doesn’t “set” the amount of money in the economy. Ben Bernanke doesn’t spend his day sitting around and deciding how much the US economy actually has. What monetary policy does is set the interest rate at which central banks will lend out to private banks — but that doesn’t have anything to do with the total amount of wealth in the system.

    If only the government creates economic value, I guess we should close down Wall Street since there’s no such thing as a stock market – after all, stocks can’t gain value because that would be creating money. Oh, and obviously you should never invest in anything that claims to get a better interest rate than the standard Treasury rate because that is apparently impossible since nothing can grow faster than the government says it can. I guess the whole foundation of economics is crap because Erica the Wise said so…

    An economy is not a zero-sum game because there is not a fixed amount of wealth in the system. New wealth is created all the time through technological achievements, new resources, etc. The argument that an economy is a fixed pie that requires someone’s gains to come from someone else is completely, utterly, and absolutely wrong.

    Any dumber, and they’re going to end up electing you to a school board in Kansas.

  10. Erica says:

    Please tell me you’re kidding — nobody with a college degree could possibly be that dumb.

    The more you call me names, the more right I suspect I am. If you had a counter-argument, you’d provide it – not just deliver playground insults.

    What monetary policy does is set the interest rate at which central banks will lend out to private banks

    Those loans are functionally the same as printing money, since the government doesn’t need to have the dollars in order to lend them out.

    I mean, duh. Obviously. Do you even think about these things before you say them, or are you just cutting and pasting from another one of your voodoo economics books?

    If only the government creates economic value, I guess we should close down Wall Street since there’s no such thing as a stock market – after all, stocks can’t gain value because that would be creating money.

    Stocks only gain value because the price you can sell them for goes up. The stock market doesn’t create money, it moves money around. You get nothing from the increasing value of a stock until you sell it, which means that every extra penny you made came from somebody else’s pocket – that is, whoever you sold the stock to.

    Are you even thinking through these transactions? How do you think the stock market works, Jay? Buy low, sell high. Did you forget the “sell” part? The increasing value of a stock is theoretical until you actually sell it. The increasing value of any investment is virtual until somebody pays you in exchange for it. Investments don’t create wealth; they move money around. If I make money on a stock it’s only because I was paid that money by the stock’s buyer.

    I guess the whole foundation of economics is crap because Erica the Wise said so…

    It’s crap because, apparently, economists don’t know anything about economies. You’d think they’d never spent any money, or something.

    New wealth is created all the time through technological achievements, new resources, etc.

    Technological achievements are simply the exchange of labor for money. Everybody does that. Labor doesn’t create wealth because even the self-employed don’t print their own money. They still have to provide a service or something that people are willing to exchange money for.

    There’s only one transation in the economy that creates wealth, and those transations are completely controlled by the government. It’s printing money, and doing the things that are equivalent to printing money.

    The argument that an economy is a fixed pie that requires someone’s gains to come from someone else is completely, utterly, and absolutely wrong.

    It’s hilarious that it’s apparently so wrong, you can’t succesfully explain why. I know what a non-zero sum economy looks like, as does anybody who plays an MMO game, where the computer system instantiates new money under some conditions, and actually deletes money under others. In such an economy, nobody has to lose 4 gold for you to earn it killing a monster.

    But in the real world, you don’t gain until somebody pays. Which, oddly enough, is a principle you don’t seem to have any problem with when you’re talking about “oppressive taxes and regulations.” Funny, when the government wants to take its cut, suddenly the money’s coming out of people’s pockets. But when it’s anybody else, hey! It’s a big infinite money pie! Free money for everybody!

    It’s obvious that what I’m saying is completely and obviously true; I’m simply taking the logic you use to argue against any taxation whatsoever and turning to the entire economy. If you can’t take a tax without picking someone’s pocket, then every other transaction besides printing money must work exactly the same way. And they do. When you earn, someone must pay. When you tax, someone has less. When you invest, others must purchase your investment or you gain nothing. That which cannot be sold, of course, has no value whatsoever – the first economic principle. I’m obviously right which is why you have no recourse, apparently, but insults against my intelligence (that the rest of us, of course, are barred from reciprocating.)

  11. Jay Reding says:

    It’s obvious that you simply don’t understand the topic you’re discussing enough to have an intelligent conversation on the subject. No, an economy is not a zero-sum game. Again, it takes a modicum of thought to figure that out. Economic competition is not zero sum in the same way that the sky is not pink and insects don’t have 27 legs. It’s not an arguable proposition. And taxation isn’t zero-sum, it’s a misallocation of resources (negative sum).

    But hey, I get my information from school, and not playing World of Warcraft, so obviously I don’t know anything. After all, those people at the Nobel Foundation clearly are all a bunch of fools because they don’t see the obvious fact that everything about the science of economics is clearly wrong.

    However, in the spirit of comity, I’ve decided that you are in fact a banana. I know that biology says that you’re not, but all biologists are wrong. You are, in fact, a banana.

  12. Caroline says:

    Erica,
    Why does everyone hate on economists these days? :)

    Jay is right even if he is annoying about it. The economy isnt zero sum. Money is just a reflection of the value of goods and services. So, when somebody starts a new business, that means that they’re creating additional value. They aren’t printing money, but they’re contributing to the increase in value which then means that the government can create more money. What happens when the government doesn’t create enough money to match the amount is you get deflation. Deflation is really bad, so the Fed doesn’t let that happen.

    You’re both confusing -money- and -value-. Money is created by the government like Erica says, but Jay’s right in saying that the big economy is not zero sum. Just because I get a raise doesn’t mean that Jay has to take a pay cut. My raise has to come from -somewhere– like me working harder and being more productive. It doesn’t come from the government printing more money, it comes from my bosses making more money and giving me a cut. Not enough of a cut IMHO but I still get some.

    I think CEO pay is -way- too high, but that doesn’t mean that my boss was stealing from my pocket when she bought her lexus.

  13. Erica says:

    No, an economy is not a zero-sum game. Again, it takes a modicum of thought to figure that out.

    It also takes a modicum of thought to develop a counterargument rather than simply call your opponent an ignorant idiot, so it’s no surprise you don’t seem to be capable of it.

    But hey, I get my information from school, and not playing World of Warcraft, so obviously I don’t know anything.

    I’ve noticed that. Clearly that’s why you’re unable to provide a single example of a money-creating transaction beyond those involving the government.

    Maybe you should play a little more WoW. You might learn something. Plenty of economists have:

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=544422

    It’s not an arguable proposition.

    Lol! Well, judging from your non-response, it looks like I just did argue it – completely successfully. Try again sometime, Jay. Bring an argument next time. Oh, and by the way –

    After all, those people at the Nobel Foundation clearly are all a bunch of fools because they don’t see the obvious fact that everything about the science of economics is clearly wrong.

    I know this will shock you, even though it shouldn’t since I’ve told you this three times now, but the Nobel Foundation doesn’t award the Nobel prize in Economics. The winner is chosen by Sveriges Riksbank and awarded by the bank at the same ceremony.

    Why does everyone hate on economists these days? :)

    Because it’s clear that their “field” has no rigor whatsoever. In science, wrong ideas are discarded and forgotten, except by historians. You won’t find Lysenkoism in a biology text – because it’s wrong. In economics, falsified ideas are enshrined. (See “supply-side economics.”)

    It’s as bad as philosophy – economists can make up whatever they want. There’s no rigorous model testing or rejection of hypotheses. Just ad-hoc explanations that offer very little predictive value. I suspect the entire field will be subsumed by game theory and genetic programming within about ten years (though it’ll take the economists a lot longer to realize it.)

    Money is just a reflection of the value of goods and services.

    That’s precisely backwards. The value of a good or service is simply a reflection of how much money you could get for it if you sold it today. Something that cannot be sold has no value. Even economists realize this. It’s why you can’t sue somebody for the value of your organs – organs can’t be sold, so they have no value.

    My raise has to come from -somewhere– like me working harder and being more productive. It doesn’t come from the government printing more money, it comes from my bosses making more money and giving me a cut.

    But think it through. Where does your boss’s additional money come from? His revenues increased. Why did they increase? Either people paid more for his services, or more people paid for them.

    Your boss didn’t print the money. He (or you) simply convinced more people to exchange their money for the goods and services your corporation provides. The money didn’t come from thin air. It didn’t even come from your efforts (unless you work at the federal Mint.) It came out of people’s pockets when they spent money on your company.

    I think CEO pay is -way- too high, but that doesn’t mean that my boss was stealing from my pocket when she bought her lexus.

    That’s up to your corporate guidelines, I guess. Obviously, if the CEO got a big raise, but company revenues fell or were static, that money had to come from somewhere. Whether or not it was “rightfully yours” depends on your contract with the company, I guess.

  14. Jay Reding says:

    It also takes a modicum of thought to develop a counterargument rather than simply call your opponent an ignorant idiot, so it’s no surprise you don’t seem to be capable of it.

    If someone says that the sky is pink and the moon is made of cheese, such a statement requires no counterargument. It’s prima facie wrong.

    I’ve noticed that. Clearly that’s why you’re unable to provide a single example of a money-creating transaction beyond those involving the government.

    Except money isn’t the issue — wealth is. Stock markets create wealth. Business investment creates wealth. Any kind of productive economic activity creates wealth. Again, this is basic economics. If it were otherwise, there wouldn’t be an economy. You can remove the concept of money completely and the economy would still not be a zero-sum game.

    Maybe you should play a little more WoW. You might learn something.

    I prefer reading things. You should try it some time.

    I know this will shock you, even though it shouldn’t since I’ve told you this three times now, but the Nobel Foundation doesn’t award the Nobel prize in Economics. The winner is chosen by Sveriges Riksbank and awarded by the bank at the same ceremony.

    Wrong again. The Royal Swedish Academy of Sciences picks the winners. The Sveriges Riksbank just instituted the prize.

    Because it’s clear that their “field” has no rigor whatsoever. In science, wrong ideas are discarded and forgotten, except by historians. You won’t find Lysenkoism in a biology text – because it’s wrong. In economics, falsified ideas are enshrined. (See “supply-side economics.”)

    No, you’re wrong, and the field of economics is right. Spoken like a true creationist, it isn’t your ideas that are wrong, it’s that the entire field is!

    It’s as bad as philosophy – economists can make up whatever they want. There’s no rigorous model testing or rejection of hypotheses. Just ad-hoc explanations that offer very little predictive value. I suspect the entire field will be subsumed by game theory and genetic programming within about ten years (though it’ll take the economists a lot longer to realize it.)

    You have got to be kidding. Again, you’re making a statement that’s so completely stupid as to be unworthy of refutation. It’s a self-refuting proposition.

    That’s precisely backwards. The value of a good or service is simply a reflection of how much money you could get for it if you sold it today. Something that cannot be sold has no value. Even economists realize this. It’s why you can’t sue somebody for the value of your organs – organs can’t be sold, so they have no value.

    No, it’s because the law doesn’t allow you to sell you your organs. Human organs are greatly valuable, which is why there’s a large black market in them overseas. Again, your entire proposition is based on an utterly false premise.

    But think it through. Where does your boss’s additional money come from? His revenues increased. Why did they increase? Either people paid more for his services, or more people paid for them.

    Which doesn’t make the economy a zero-sum game.

    Your boss didn’t print the money. He (or you) simply convinced more people to exchange their money for the goods and services your corporation provides. The money didn’t come from thin air. It didn’t even come from your efforts (unless you work at the federal Mint.) It came out of people’s pockets when they spent money on your company.

    Which again, still doesn’t show that the economy is zero-sum. Unless every time you buy something, you get no value from it in return, which would be rather silly.

    In short, if you don’t understand the subject being discussed, it’s best not to say such wildly stupid things. I know you’re not an idiot, which suggests you’re just trolling.

  15. dbs says:

    I’ve noticed that. Clearly that’s why you’re unable to provide a single example of a money-creating transaction beyond those involving the government.

    While I find myself in the unenviable position of supporting Jay in his arguments, I think Erica is, as someone else has mentioned, confusing ‘money’ with ‘value’. To give a concrete example of ‘money being created’…

    I decide to buy a hundred pretty dresses. They cost me $1 each, they are all identical. If I sold them all for $1, then, as you say, a zero-sum economy would be in place.

    But I am smart, I dress up my sister, who is very attractive, in one of these dresses, and tell her to walk around the local market for a while in it, saying “Like my dress? It’s for sale over here!”

    Many people come to my shop, and I sell all the dresses for $100 each. I have just made $99,000 dollars. My no-cost advertising has increased the VALUE of the dresses, which was realized as MONEY as soon as they were sold.

    Your argument is that that money is just moving around cash already in the system, and that it is a loss to the consumer, and a gain to the seller.

    Lets substitute all the buyers for foreign investors. They buy all the dresses for $100 each. The economy in my country has just INCREASED due to an influx of $99,000. The government did not print this money, it did not come off the backs of other citizens. Money has just been created in my economy by an influx of cash.

    There is also the matter of inflation and dollar valuation to consider, which constantly changes what exactly a dollar represents as VALUE. A dollar today may or may not buy what it could yesterday. If the economy is zero-sum, and the dollar amounts have not changed, what accounts for this imbalance?

    Economics is a very very complex topic. It’s base tenets cannot be applied to an economy as large and hideously complex as the US economy. The best models work in very simple controlled situation, such as the example given here.

  16. Seth says:

    1.) The economy looks great on paper in the macro sense. Too bad the middle class isn’t seeing it that way. See the comment from Aaron B for a representative example. The thing is, you Republicans keep telling the middle class the economy is great, when most people in the middle class feel like they are falling farther and farther behind and are less able to get ahead. A large GDP growth rate is fine, but it doesn’t make people feel better about their health care or retirement options. For example, since 2004, 85% of corporate income growth in Minnesota went directly to profits, while only 15% went to increases in wages. Some people are doing wonderfully in this economy. Problem is, I don’t know any of them.

    2.) Only Jay Reding would contend that a paragraph starting with “And so what?” is one full of Socratic questioning. There is more to Socratic questioning than ending sentences with question marks. You should have your professors give you a tutorial.

    3.) If CEO pay is related to stock options, and stock options of a company go down–as it has recently with Ford–then you would expect CEO pay to fall, not rise. The simple fact is that in recent years, CEO pay has been largely shielded from any dips in the economy or stocks. And also, you’re just flat out wrong on your assertion that “most CEO “pay” comes in the form of stock options.” You again prove yourself to be a moron lecturing me about a quick visit to Wikipedia, because this article from Wikipedia quite clearly says otherwise. Also, learn the difference between stock options and vested stock options some time, since the majority of CEO stock option benefits are vested. It should be noted that making stocks rise in the short-term is a pretty ridiculous strategy for long-term sufficiency and efficiency, however, which is a good part of the reason the corporate culture and the middle class finds itself in the predicament it is in today.

    4.) I’m sure you wouldn’t call “Harrison Bergeron” a functioning capitalist society. I apologize if you meant Harrison Bergeron and not socialism. Either way, no Democrat is talking about making a Harrison Bergeron society, so just give the hyperbole a rest.

    And quit pumping words into my mouth. I’m not talking anything about government controls. I’m talking about an approach that keeps government out of the issue, and quits giving businesses incentives to screw over the middle class. It’s not that hard, even for you. Workers should have wages determined through the market. Problem is, the market doesn’t work in a vacuum the way the right thinks it does. It’s full of inefficencies and social stigmas. Let me know if you can ever get that through your head and we’ll have an actual discussion about it.

  17. Erica says:

    If someone says that the sky is pink and the moon is made of cheese, such a statement requires no counterargument. It’s prima facie wrong.

    No, they’re empirically wrong. I can point a spectrograph at the sky and show you that its emitted spectra falls within the wavelengths defined as “blue.” I can put some material known to be from the moon through the GC-MS and show you that it contains silicon oxide, not casein, salt, annatto, or cultures.

    So let’s see the empirical evidence that I’m wrong. The fact that some of your voodoo economists disagree is meaningless – for one thing, consensus doesn’t determine truth; anyway, economists don’t agree on anything. They can’t even determine if economies are driven by supply, demand, or both.

    What I’m saying is obvious to anybody who could do kindergarten math. Billy, Bob, and the Taxman walk into a room, and Billy has $100 and Bob has a duck. If Billy buys Bob’s duck for $50 and the Taxman takes his dime, it’s easy enough to sum up the total changes in wealth for all individuals:

    (-$50 + 1 duck) + ($49.90 + -1 duck) + ($.10) = 0.

    Look at that! It adds up to zero. There’s no magic voodoo money creation going on. With the exception of the government printing money, all economic transactions add up to zero. Are zero-sum, in other words.

    A system that is made up of nothing but zero-sum transactions has to be zero-sum itself; that’s the Commutative Property of Addition, one of the cornerstones of mathematics. There’s simply no mathematical possibility for an economy to be anything but a zero-sum game.

    Stock markets create wealth.

    You can’t spend wealth; wealth is irrelevant. Stock markets make money for some people. Your hot stock sell that makes you all that money? Somebody paid money for the stock. Zero-sum. If the stock markets create so much wealth, why do so many people lose so much of their money in the stock market? Because it’s zero-sum. If you’re selling a stock at the top of its rise, bully for you – but it means somebody else bought it. Sucks for them. Sucks, in fact, in exact inverse proportion to how much money you just made.

    Zero-sum.

    If it were otherwise, there wouldn’t be an economy.

    100% nonsense. You can have a zero-sum economy; obviously, since we live in one. But if you’ve now completely changed your assertion from “our economy is zero-sum” to “no economy is zero-sum”, I’d like to see the evidence for that assertion.

    The Royal Swedish Academy of Sciences picks the winners.

    No, the Swedish Academy gets economists to choose the prize. It’s like the Oscars in that regard, and about as meaningful.

    Unless every time you buy something, you get no value from it in return, which would be rather silly.

    No. It’s because you get value to it that it’s a zero-sum game. Every transaction of money is balanced by a transaction in value, and the zero-sum is preserved.

    Many people come to my shop, and I sell all the dresses for $100 each. I have just made $99,000 dollars. My no-cost advertising has increased the VALUE of the dresses, which was realized as MONEY as soon as they were sold.

    You can’t spend value. Value is simply a reflection of how much money you were eventually able to sell the dress for. Value is nothing more than poker chips. It’s worthless if you don’t cash it in, and when you do cash it in, that’s a zero-sum exchange.

    Sure. You raised the price, so people paid more. Perhaps many more people paid more. For exactly as many $100 dollar dresses as you sold, there are people walking around with $100 dollars less money.

    Which makes it zero-sum. You can’t make any money unless people spend some.

    Maybe you have to be a biologist to understand. Maybe you have to be used to thinking about the whole ecology, not simply a part of it. Clearly the failure of economics is that, like all the examples given above, the box of consideration is drawn too closely. It’s like the foxes and the rabbits.

    An economist sees foxes and assumes an infinite supply of rabbits, just to make the problem simpler and keep the example about foxes. But a biologist intuitively understands that the population of rabbits that are the foxes’ prey is limited, too. Limited, in fact, by the predation of the foxes.

    If you’re not seeing the whole picture – if you’re seeing the dress shop, but not seeing the finite bank accounts of the people buying the dresses – it’s easy to make the mistake that the economy is some kind of positive-sum infinite money pie. But that’s obviously false, as I’ve shown. There’s only one economic transaction where the loss and gain of money isn’t precisely symmetric, and that’s when the government prints money. That’s the only aspect of the economy that isn’t irrefutably zero-sum.

    It’s base tenets cannot be applied to an economy as large and hideously complex as the US economy.

    Then economics, as I’ve said, is completely useless if the best it can be applied to is an example that omits more than half of the relevant economic actors.

  18. dbs says:

    Sure. You raised the price, so people paid more. Perhaps many more people paid more. For exactly as many $100 dollar dresses as you sold, there are people walking around with $100 dollars less money.

    Which makes it zero-sum. You can’t make any money unless people spend some.

    Congratulations for editing out the parts where I said this example was inaccurate when applied to the US economy. You argue like a scientist. Trying to simplify and simplify and narrow and focus down to one particular nugget of information, saying “Look, my hypothesis on this hyper-narrow experiment is proven, therefore my entire premise must be correct”, when, while narrowing down your focus, you’ve eliminated, naturally, all the arguments that can prove your premise inaccurate.

    IN a cleanroom model of boys in a room, where money doesn’t leave, and money doesn’t enter, your theory is accurate. But let me add a few things.

    Bob in your example takes the $50 and lights a match. VOOMF! $50 is gone. The total sum in that economy is now $50 + a duck. Your zero sum economy has now diminished by $50. So much for that theory. But wait! Billy has a duck! He says “I now decree that feathers are equal to a dollar.” All parties agree, a new currency is in play. Now the amount of money in the system has INCREASED from $50 to $500.

    You can add in variables constantly, and eventually you may come to see something similar to the US economy. Money is not just dollar bills. Wealth is not defined by the number of dollar signs next to a bank account. In a desert, the one with the oasis is the wealthiest around, no matter how many sacks of ben franklins you have.

  19. Erica says:

    Congratulations for editing out the parts where I said this example was inaccurate when applied to the US economy.

    But that’s what we’re talking about, DBS. The US economy. The one we live in. That’s the economy that’s obviously zero-sum.

    Not made-up, hypothetical, or corner-case economies. I’m very aware that some economies are not at all zero-sum. I’ve given a few examples. But the one we live in? The one that’s the topic of conversation? Zero-sum.

    you’ve eliminated, naturally, all the arguments that can prove your premise inaccurate.

    I’m still waiting for the arguments that prove my premise inaccurate. Examples of dress sales don’t do that, because any increase in revenue as a result of selling more or more expensive dresses is counterbalanced by the fact that people paid more for the dresses. The amount extra that you made is exactly equal to the amount extra that people paid – zero-sum. You didn’t get a slice of Jay’s magic infinite money pie; a lot of people’s wallets are a little more empty. They paid their money to you. You didn’t acquire money out of thin air.

    Now the amount of money in the system has INCREASED from $50 to $500.

    As I’ve said several times, printing money is the non-zero-sum exception. I don’t know how I could have been any clearer about that.

    Money is not just dollar bills. Wealth is not defined by the number of dollar signs next to a bank account. In a desert, the one with the oasis is the wealthiest around, no matter how many sacks of ben franklins you have.

    I’m sure that’s what the economists tell you. But you can’t spend value. Value is just an abstract snapshot of how much money you could make selling something. Money is what you have to spend. Honestly this should be obvious to anybody with a wallet, and stock traders understand it intuitively – they know they eventually have to sell some stocks, take them off the table, if they want to actually make any money off their rising value. But apparently it takes a masters degree in entomology or something to see these very obvious points.

    As a suggestion – put down the economics textbooks. Economics is not a science; it’s a snow-job. No two economists agree on anything. There’s absolutely no rigorous methodology for hypothesis testing. In the 200+ years that economists have been studying the central problems of economies – chaotic cycles of boom and bust, resource misallocation that leaves so many starving on a world of plenty – there’s been zero progress. They don’t even know if it’s supply that drives economies, or demand, or both! These are central questions that would have been answered by now if economics represented a rigorous science.

    But it’s not. Like philosophy and theology, it’s simply a game of developing ad-hoc “models” with ultimately zero predictive value. You can make up anything you want in economics, like Jay’s magical money pies that, amazingly, get larger the more people sit down to them. That might be fun for a lot of overpaid stiff shirts, but it’s ultimately useless. Which is why Jay’s vaunted Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel is largely given out to sociologists, these days.

  20. Jay Reding says:

    dbs: Don’t bother. Erica is a fanatic who wants to reject an entire field of inquiry because it doesn’t fit into her little worldview. Like someone who believes in creationism, alien abductions, or ghosts, she’s not willing to rationally examine her beliefs.

    You can’t rationally argue with someone whose beliefs are based in a rejection of reality.

  21. Erica says:

    Like someone who believes in creationism, alien abductions, or ghosts, she’s not willing to rationally examine her beliefs.

    No, you’re not willing to rationally examine my position, because it doesn’t fit with your ideology. The proof of this is how you immediately abandon intelligent rebuttal to deliver insults.

    And anybody who says a word like “worldview” like it’s something that everybody has clearly has their brain switched off. Sure, some people filter reality through ideology. Typically these people are known as “conservatives”, or sometimes, “supply-side economists.” The scientific method, on the other hand, makes it clear that observation takes primacy over theory.

    Your theory is that our economy is not substantially zero-sum; that there’s a magical money pie that gets bigger every time someone sits down with a fork. The observation of reality makes it abundantly clear that this is nonsense, and every example given – yours, DBS’s, mine – has only made my case.

  22. emir says:

    about hezbollah , u are such a noob that i cant begin to explain it. they do not spread the terror , they defend the country from american dogs like izrael and lebanon goverment witch is proamerican aswell. so read a few books,or atleast try wiki for some info about this thing called HISTORY before making idiotic comments. omg what a noob

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