

Biases Against the Creation of Wealth - dstowell
http://www.reason.com/news/show/122019.html

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thomasp
I am a libertarian capitalist, who has made a reasonable amount of wealth.
This article is good, but it ignores several _institutional_ sources of
"unfairness" in common parlance. The most obvious ones through history were
slavery, government-sanctioned racism, widespread sexism and so on.

Leaving those things aside, today active government policy promotes borrowing
vs saving (through Federal Reserve credit policy), and actively bails out Wall
Street speculators - who made a mint during credit bubbles.

Common people aren't stupid if they feel at times "the system is stacked
against me". It often _is_ stacked against them. I am no socialist, but
libertarians recognize that the fastest way to push people into socialism is
to institutionalize unfairness this way.

~~~
fauigerzigerk
Unfortunately capitalism doesn't help much in establishing what is fair and
what is not.

~~~
eru
Depends on your definition of capitalism.

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davidw
I'll take a contrarian point of view, just for fun:

> But economists who debate certain issues about the perfection of markets are
> not debating, say, whether prices give incentives. Almost all economists
> recognize the core benefits of the market mechanism; they disagree only at
> the margin.

Sometimes, though, you wonder how marginal the 'margins' are. For instance,
information asymmetry (<http://en.wikipedia.org/wiki/Information_asymmetry>).
In a modern, advanced economy with complex products and services, who can
really judge a product just by picking it up and looking at it? Even something
so simple as the food we eat might be grown with toxic weedkillers, and we
can't tell that just by picking it up and looking at it.

Not that I'm actually anti-market or free trade... far from it. I just like to
push back, at times, it's healthy to question things.

~~~
jimbokun
I'll bite.

We likely have more information about product quality than at any time in
history through the Internet. This is also an argument for allowing legal
action like the class action lawsuit to discourage faulty and negligent
craftsmanship. Although, if that is an argument for or against market forces
I'm not sure.

~~~
davidw
Sure, but having that information is not the same as being able to utilize it.
I can't look up everything I buy every day, nor would I really want to. It
makes things easier if I can basically trust that people aren't trying to rip
me off. I think in _most_ markets, it's in the interests of the vendors to not
attempt that, but still, it's an interesting question, and I'm suspicious of
all-or-nothing answers on any side (the market/government should take care of
everything).

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trekker7
One thing I have wondered is if enterprise software (like CRM and ERP
packages; process automation stuff) is actually helping the common man. The
theory is that all this enterprise software makes large companies more
efficient by cutting their costs. Then since these large companies are so
competitive, they will pass on the savings to the consumer by cutting the
prices of goods/services. Thus consumers can more easily afford higher quality
lives.

But it seems like in the past 20 years, prices have stayed the same or gone
up, employee salaries have stayed the same or gone down, but executive pay
packages have sky rocketed. Does this mean that all the innovation and
"wealth" created by enterprise software is just making the rich more money?

~~~
Xichekolas
How can you say prices have stayed the same or gone up? In 1996 I paid $2300
for a 486 with 16mb of RAM. A month ago I paid only $1700 for a Core 2 Quad
with 4gb of RAM. Seven years ago a 50 inch plasma cost $10k.

Even outside electronics, which experiences persistent price deflation (and
hence rising volume), prices are not rising as fast as wages. In constant 1990
dollars, gasoline cost $1.10/gal in SF in 1987. This rose to $1.66 (1990
dollars) in 2007.
([http://www.mtc.ca.gov/maps_and_data/datamart/stats/gasprice....](http://www.mtc.ca.gov/maps_and_data/datamart/stats/gasprice.htm))
Median wages in the same period rose from $14,498.74 to $23.962.20.
(<http://www.ssa.gov/OACT/COLA/central.html>) $1.66/$1.10 = ~1.51 ...
$23,962.20/$14.498.74 = ~1.65. Even gas is getting cheaper.

As random anecdotal evidence on food. My dad told me he started his career 33
years ago at $4.10/hr, and finished it in 2006 at closer to $40/hr, at the
same company, without climbing into upper management. When he started, a
week's worth of groceries cost him about $25-30. Now, they cost around
$75-100. A threefold increase in the cost of food, but a tenfold increase in
his income.

Sure, the sticker price may go up, but over the long run in a growing economy,
wages increase just as fast, if not faster.

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fauigerzigerk
The trouble with these ideologic arguments is that the hard questions are
never debated.

For instance, my own opinion is that it is good that you can get rich by
creating things that others need. On the other hand we know that inequality of
income creates inequality of opportunity in the next generation. Which means
that not everyone has the same opportunity to get rich by creating something
that others need.

~~~
rms
Capitalism isn't perfect but it's the best income redistribution method we've
come up with combined with a small government tax. What scares me is that
capitalism is probably still going to be around once scarcity of energy is
eliminated on Earth -- it seems like copyright is keeping a market around for
information when there is no reason for one to exist anymore.

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Xichekolas
All I can say is wow, I wish someone would print 300 million copies of that
and mail it to every man, woman, and child in the country.

~~~
inklesspen
Nobody would read it. (For approximate values of nobody.)

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jimbokun
Here are some contrarian positions (to go with those already presented):

The article currently refers to "a society's wealth" but not the distribution
thereof. The American economy has grown significantly since 2000, for example,
but the median wage has not. Is there any point to a growing economy when the
median citizen is not benefiting from it?

There is a brief mention of the irrationality of voters who do not trust
increasing market forces as a means of solving health care problems. However,
one can argue that we have a more market based health care system than the
systems of Western Europe, for example, but worse health outcomes. How can we
be sure, then, that increasing market forces even more will improve the
situation?

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mynameishere
_we have a more market based health care system_

Health care, whether anyone likes it or not, can never be a free market. A
free market requires willing buyers and sellers. Health-care consumers are
uniformly unwilling. This prevents the occurrence of something you see in
penny stock markets: The formation of a spread, in which buyers and sellers
are _unwilling_ to trade. In health care, the sellers can force a sale in such
situations.

~~~
eru
Sorry, I do not know if I really get your argument. Could you please
elaborate?

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mynameishere
It's simply that economists often assume that _all_ markets are (or
potentially are) free, when that isn't the case. Some markets come close
(items on eBay, stocks, commodities, currencies, etc) while others don't. If
you start with a naturally "unfree" market, the same set of rules don't apply.

It's just economists' long-standing physics-envy coming through. They want to
think their field has "laws of gravity" that are always true.

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karzeem
I've always found religious prohibitions on "usury" to be particularly
disturbing. My parents are from Lebanon and are familiar with people who've
gone through life with only cash transactions. The tight-knit communities
there make things easier for people who won't pay interest, but even so, it
must cool growth. Saving up to buy a car or a house in cash is no small order,
and forget about entrepreneurship. (I wonder if applying to YC would be
verboten...)

~~~
eru
Yes. Luckily, often enough there are lots of loopholes in the religious laws.
Just think of Islamic Banking.

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mynameishere
Immigration shouldn't be debated in the same way as other sorts of trade. It's
90 percent externalities, good or bad.

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awt
This is the kind of story that I used to love seeing on reddit. More please!!
:)

