Let Them Eat Cake

Mitt Romney repeated one of the most malicious and misguided political lies of recent years: that people who criticize Wall Street and inequity in America are driven by “envy.”

Besides the fact that one has to wonder who Warren Buffett envies — he’s one of the richest men in America and he’s been a critique of inequity, as has George Soros, a wealthy international capitalist tycoon — the claim is not only absurd, but fundamentally dishonest.

Rather than look at real issues of power, wealth and opportunity, those who question whether it is good for society to have extreme wealth alongside extreme poverty are dismissed via insult — it’s “envy.”    Occupy Wall Street, nothing but envy.   President Obama’s effort to curb Wall Street excesses – just envy.   Any criticism of the wealth gap and lack of opportunity gets brushed aside as “envy.”

This is a point that President Obama and the Democrats need to turn around on Romney.    It’s best to do it with real stories.  A family who lost health care and couldn’t afford an operation for a child, thereby leaving the child crippled or handicapped, for instance.   Is their problem simply that they envy the rich?   It’s not wrong that the wealthy have excellent insurance as a matter of course and the poor often see their children suffer.   They’re just envious of the health care the rich take for granted.

A worker that lost his job and has nowhere to turn as they can’t afford college for their children or to keep their house thanks to the recession.   They shouldn’t be upset about the shenanigans on Wall Street or how the wealthy have gained nearly 300% in the last thirty years while the poorest have barely stayed ahead of  inflation.   No, it’s just envy.

The message should be clear:  It’s not envy to want real opportunity for Americans.  It’s patriotism.  It’s the values of our constitution, it’s the key to the future of the country.   If we allow these inequities to continue in the false belief that somehow wealth and opportunity will trickle down and the wealthy are all “job creators,” then our country will continue to decline and we’ll find that America’s day in the sun is over.   We need to fight for real opportunity and against a new aristocracy, because that’s a fight for America’s values and future.   That’s got to be the message that the President runs on this year.

And soundbites of Romney muttering “it’s envy” should be ubiquitous on Obama commercials.   An elitist Wall Street insider who has lived of life of privilege sneers down his nose and says the poor unemployed and struggling are just envious of people like him.

“Let them eat cake,” he may as well add.

Don’t get me wrong.   I actually think Mitt Romney isn’t a bad candidate and would probably do well as President.   But as you can probably tell, this claim that “it’s envy” to be concerned about poverty, equal opportunity and wealth disparity has gotten under my skin.

Moreover, if I compare my household income with the rest of the country’s, I’m not in the 1%, but I’m not that far away.   My wife and I work very hard, make good money and are living the American dream.    We’ll be able to provide the best for our kids, help them if they ever have difficulties in school, and get them a good education.    But if I were to say “well, we’re smart and got ahead, those poor blokes down the road who are having a rough go are just envious,” well — what kind of arrogant slime ball would I be?

The second fallacy is the dodge, “oh we should be concerned and help, but government shouldn’t do it, it should be done by individuals.”   Sure.   We should all be concerned about murder, rape and arson, but government shouldn’t handle those protections, let individuals do it.    The fact of the matter is that the collective action problem is real, well documented, and undeniable.   If you leave it to the private sector problems get worse.   You need government to do so because nobody else can do it.   You might get food shelves to keep the poor from starving, but you won’t get real opportunity.

And that is where Obama has the rhetorical upper hand.   He can say “the American dream is that every American has access to the education and opportunity to go into the market, work hard, innovate and be rewarded for the fruits of his or her labor.   We reject socialism and efforts to equalize all outcomes because that makes everyone worse off and undercuts innovation and ambition.  If you doubt that, look at the former Communist world.   But to work capitalism needs to make sure that the elites aren’t rigging the game in a way that denies liberty, opportunity a fair shot to the middle class and poor.

“If we unleash America’s potential of ingenious experimentation, a willingness to work hard and take risks, and freedom to break with the past and try new things, we can achieve anything, we can maintain the American dream for generations.   When a small group of elites rig the game with insider trading, schemes to rob pension funds and retirement accounts, predatory lending practices aimed at the poor and a tax system that gives them advantages that most people don’t have, it’s undercutting the American dream.  It’s contrary to American values.   It’s risking our future.

“It’s not envy to want a fair chance for everyone.   Let those who work hard and innovate well succeed and become wealthy.   Let those who choose to do the minimum and refuse to take the opportunities that exist suffer the consequences.   Let it be the actions of the individual that determines the outcome, not the structure of a rigged game.   It’s not envy to want fair play, it’s a sense of justice.”

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  1. #1 by Black Flag® on January 12, 2012 - 04:58

    Wall Street Protestors are pampered kids, economic illiterates and social collectivists – all expecting their unearned entitlements.

    They will be completely ignored.

    PS: Warren Buffet is the Engels of today – rich capitalist espousing the philosophy of poverty for everyone else. Warren is the complete opposite of his father, who was the “Ron Paul” of his day.

    • #2 by Scott Erb on January 12, 2012 - 13:14

      Argumentum ad hominem.

      • #3 by Black Flag® on January 12, 2012 - 16:36

        Scott,

        No, as common of you recently, you spew without any consideration.

        They are economically illiterate – they do not understand the difference between Corporatism, Mercantilism and Capitalism.

        The are social Collectives – they continue to argue for State provisioned economic goods, which by definition are unearned.

        And Warren Buffet does advocate for Socialism, though he got rich being a Capitalist – similar as Engels who raged against the Capitalism while being a very wealth capitalist shoe manufacturer.

        And Warren’s Dad was the Ron Paul of his day.

  2. #4 by Black Flag® on January 12, 2012 - 04:58

    🙂

  3. #5 by pino on January 12, 2012 - 05:19

    that people who criticize Wall Street and inequity in America are driven by “envy.”

    It’s not far from the truth. The poorest American is better off than the average European, even if you consider the EU15. And a salary of just 35k puts you in the Top 1% in the world.

    To complain may not be envy, but it’s something not attractive.

    Occupy Wall Street, nothing but envy.

    Yes. THIS is envy.

    President Obama’s effort to curb Wall Street excesses – just envy.

    No. THIS is vote buying.

    A worker that lost his job and has nowhere to turn as they can’t afford college for their children or to keep their house thanks to the recession.

    Work harder. Forgo college. Move to a smaller house or rent. Work harder.

    the wealthy have gained nearly 300% in the last thirty years while the poorest have barely stayed ahead of inflation.

    You know this isn’t true. Compensation comes in all flavors. And the lowest paid among us have benefited the most. Additional days of vacation, training, health care and the like. You are purposely using one metric of compensation, salary, and exploiting it.

    We should all be concerned about murder, rape and arson, but government shouldn’t handle those protections, let individuals do it.

    Are you seriously equating murder, rape and arson to economic status? Really?

    Let those who work hard and innovate well succeed and become wealthy. Let those who choose to do the minimum and refuse to take the opportunities that exist suffer the consequences.

    But this is not what Obama or those on the Left want. The Left wants wealth redistribution. Plain and simple.

    • #6 by Scott Erb on January 12, 2012 - 13:10

      The poorest American is not better off than the average German, Swede, Frenchman, Dane, Brit or Italian. Indeed, quality of life in many European countries is better than the US.

      You’re simply wrong, Pino. Calling it envy is arrogance and ignorance of the reality of life in the US. But that’s a battle to be fought in the US political system. I find it disgusting to put concern about equal opportunity down as ‘buying votes.’ That’s wrong, and of course is another way to dismiss the real concern people have for equal opportunity as something bad. Even if those of us on the left are wrong, what you’re doing is pretending that we’re lying about our concerns. That’s not true.

      Moreover, the goal is not redistribution, but equal opportunity and a fair chance to let work, innovation and effort determine success. The aristocratic structure of society we now have doesn’t allow it. You disagree. That’s politics.

      • #7 by pino on January 12, 2012 - 16:14

        The poorest American is not better off than the average German, Swede, Frenchman, Dane, Brit or Italian. Indeed, quality of life in many European countries is better than the US.

        Quite often I’m called to the carpet for lack of data. This time I’m gonna call you. You need to define how you are measuring quality of life and then show me data that has Europeans higher than Americans.

        I find it disgusting to put concern about equal opportunity down as ‘buying votes.’

        Obama’s fight with Wall Street has nothing to do with his concern about equal opportunity. It’s populist garbage meant to get him re-elected.

        Moreover, the goal is not redistribution, but equal opportunity and a fair chance to let work, innovation and effort determine success.

        As I mentioned, the Left has no stomach to let someone fail. The fact that they make poor decisions and fail to work hard does not enter into the calculus when it comes to anti-poverty measures.

        Taxing one man and handing another man a check, straight up, is redistribution.

      • #8 by Scott Erb on January 12, 2012 - 16:20

        Here are a few measures:
        http://en.wikipedia.org/wiki/Quality-of-life_Index
        (See also: http://www.uic.edu/orgs/qli/)
        http://internationalliving.com/2010/02/quality-of-life-2010/
        http://www.economist.com/media/pdf/QUALITY_OF_LIFE.pdf
        – note the Economist is hardly left wing!

        But you also said the average European is worse off than the poorest American. I find that extremely hard to believe having lived in Europe and experienced how well off average Europeans are — and they have health care, pensions, education, and other things poor Americans do not have!

        Oh, you can also create your own index via the OECD and decide how you want to weight certain variables. That’s probably best since quality of life varies depending on what one values: http://oecdbetterlifeindex.org/

      • #9 by Black Flag® on January 12, 2012 - 16:42

        Scott,

        And you display your lack of consideration of time.

        A man stealing his living from the efforts of others most probably will not complain about the standards of style he surrounds himself with.

        You can certainly take his claims and compare it to whomever you wish, and when you find such comparison favorable for your nefarious political goals, argue that such a method is “a great way to get rich”.

        But of course, one day, the victims of his and your theft will revolt – either by resistance or exiting the economy.

        And then your little contradiction will fall to pieces.

        Then what will you say when all of Europe limps around like Spain?

    • #10 by Kristine hunt on January 12, 2012 - 17:57

      “Work harder. Forgo college. Move to a smaller house or rent. Work harder.”

      That’s a rather facile answer. I’ll give you some personal (I know, anecdotal, but that’s what we’re talking about, reality not theory) examples for us to discuss.

      We have a house that is a bit too expensive for our budget. I could point a finger at our lender who approved us for more than what a wise person would want to spend, but I will accept my responsibility in that. BUT, we also can’t afford to simply “move to a smaller house or rent”. We can’t afford closing costs etc. no less repairs that any buyer would demand. We can’t afford to move and rent this house out because we don’t have enough cash savings to cover the mortgage if the renter leaves.

      I have a friend who is a truck driver. He only has a GED, so he is often rejected for jobs because they want at least a diploma and don’t recognize a GED (which is ludicrous, but so be it). He already works as hard as possible: federal law restricts how many hours he can be behind the wheel in any given week. He also switched from long-haul to local driving, because he has a small child that never got to see him more than one week in four. Also, he’s “one of the lowest paid” and has no paid vacation, no health insurance, no free training. Neither do I, as a freelancer, for that matter, even though I make far above the minimum wage.

      Neither my friend nor I are looking for handouts. But a system that didn’t reward financial insecurity by making it normal to take on too much debt, and one that had a living wage for lower-end jobs, would sure be welcome.

      • #11 by Scott Erb on January 12, 2012 - 18:04

        The forgo college bit is also probably bad advice. On average people with a college education earn more than $1 million over their lives than those who don’t. Moreover, lack of a college degree places limits in many companies and businesses on how far one can go. In a bad economy a college degree is often a minimum since it at least proves the job candidate that the discipline to earn that degree.

        Also to his original answer, “work harder” is what many want to do. Unemployment doesn’t more than double because a whole bunch of people suddenly got lazy!

      • #12 by Black Flag® on January 12, 2012 - 18:19

        In a bad economy a college degree is often a minimum since it at least proves the job candidate that the discipline to earn that degree.

        ahahhahahahahah
        indoctrinate-u.com/intro/

        chronicle.com/blogs/innovations/files/2010/10/underemployment-chart.jpg

        You forfeit income earning a degree in order to forfeit income after you earn a degree

        Large corporations – one’s defined by bureaucracy – drive the “we need a degree” mentality. Indeed, if one wishes to work in dull, mundane, bureaucratic organizations, getting a degree is a good way to learn how to survive dull, mundane, mind-numbing tasks for hours on end.

        But if one wishes to become wealthier, it is running your own business or working in a small business – where the jobs are. These smaller companies care little about degrees – most of them are run by people who don’t have a degree. And considering that the richest, most wealth creating companies of the last 30 years were founded and run by men who had no degree.

      • #13 by Kristine hunt on January 12, 2012 - 18:45

        “But if one wishes to become wealthier, it is running your own business or working in a small business – where the jobs are.”

        Another personal example: I do run my own business. Having a degree is required by most of my clients. Before I started this business, I worked in a mind-numbing job in a large corporation, where no degree was required.

        Opposite experience to your assertion, just sayin.

      • #14 by Black Flag® on January 12, 2012 - 19:13

        Kristine

        As 30 years as a consultant, I find the complete opposite.

        I would not be hired by the companies I consult for, since my “degree” is not related at all to what I do for a living. I would not get past the HR dept. of these companies.

        However, I command thousands of dollars per day as a consultant for the very companies that would not hire me as an employee – because the “test” is different.

        An employee’s test is “did you survive years of utter boredom and drudgery, to prove you can survive more years of utter boredom and drudgery?”

        A consultant’s test is “can you solve the problem?”

        I am very good at solving problems.

      • #15 by Black Flag® on January 12, 2012 - 18:06

        Kristine,

        When and at what point does an adult begin taking responsibility for the choices one makes?

        The responsibility to understand your own financial capacity is yours, not anyone else.
        The responsibility to educate yourself so that your labor is more marketable is yours, not anyone else.

        The responsibility to correct the errors and mistakes of your own decisions is yours, not anyone else.

        If a person abdicates all of this responsibility, it will be taken by someone else – and those that cease responsibility also claim with it authority to act and they will dictate and force upon you THEIR demands, which may not be to the best interests of the abdicator.

        But as that was that persons choice to abdicate, they are no longer in a position to negotiate.

      • #16 by Scott Erb on January 12, 2012 - 18:13

        Black Flag, I disagree completely. We’re a society, not just a bunch of individuals. We have a collective interest to stop people who may have inside information, ulterior motives, and the capacity to manipulate people either less informed or intelligent than themselves. The world is so complex no one can manage all of the information. So therefore I think this is something where there is individual responsibility for choices, but as a society we can take collective responsibility for how the structure of the system might create dangers.

      • #17 by Black Flag® on January 12, 2012 - 18:24

        Scott

        Black Flag, I disagree completely. We’re a society, not just a bunch of individuals.

        We are a society of individuals.

        There is no such thing as a “collective” interest. All human action is ultimately individual.

        We have a collective interest to stop people who may have inside information, ulterior motives, and the capacity to manipulate people either less informed or intelligent than themselves.

        You punish knowledge.
        You make broad, fallacious assumptions about motives and punish those that do not agree with you.
        You protect ignorance expecting that will improve wisdom.

      • #18 by Black Flag® on January 12, 2012 - 18:31

        Also to his original answer, “work harder” is what many want to do. Unemployment doesn’t more than double because a whole bunch of people suddenly got lazy!

        Here, I agree with Scott.

        Doubling your effort in digging holes in the ocean is certainly working harder, but all that happens is you double the futility of the effort.

        Working more productively should be the goal.

      • #19 by Kristine hunt on January 12, 2012 - 18:55

        “The responsibility to understand your own financial capacity is yours, not anyone else.
        The responsibility to educate yourself so that your labor is more marketable is yours, not anyone else.

        The responsibility to correct the errors and mistakes of your own decisions is yours, not anyone else.”

        On statement #1, yes, I already agreed to that. I think there is still a major systemic problem that lenders can get away with approving loans that exceed what a reasonable person should pay, however. I’m for regulation of that sort of thing. I was more responding to the overly simplistic attitude of “just fix it”.

        On statements #2 and #3, I partly disagree. Yes, personal responsibility is crucial. My disagreement comes in when there are systemic barriers to making oneself more marketable or correcting one’s errors. In the case of my friend, going to college would help him obtain new skills and a degree (in fact, it’s something he would love to do)… but then he’s putting himself into huge debt through student loans, as he can’t afford college any other way. His goal is to start his own business, but saving up for the funding for that, or building credit with a minimum wage job, is seemingly insurmountable.

      • #20 by Black Flag® on January 12, 2012 - 19:57

        Kristine,

        as he can’t afford college any other way.

        This is not true.

        MIT and others offer their entire courseware and lectures on line for free. He can get all the knowledge without spending a dollar.

        There are dozens of online colleges.

      • #21 by Kristine hunt on January 12, 2012 - 20:42

        You’re giving an overly complicated answer here. Pino said people who get paid less get more/better benefits. Scott and I were simply refuting that. Commentary about taxes is not what we were discussing.

      • #22 by Black Flag® on January 12, 2012 - 21:24

        Kristine,

        It is important, I think, to understand how the concept of “benefits” came to exist – otherwise, understanding how they are applied becomes Scott’s world …. “magic and whimsical”….

        I do not believe there is an adequate measure of “who gets more” in some objective way – the perception is subjective as it is merely a measure of value, and that is individual.

        Some may think 10 extra days of paid vacation is more valuable or instead, a dental plan… (shrug).

        However, (by applying the reason company benefits exist) those that suffer the higher costs of taxation probably receive more “benefit” then those who are not taxed much (or at all).

      • #23 by Kristine hunt on January 13, 2012 - 00:39

        I don’t think it’s subjective or whimsical to state the fact that executives in Fortune 500 companies get far better benefits, whichever ones you might value more, than someone serving up burgers at McDonald’s.

      • #24 by Black Flag® on January 13, 2012 - 01:20

        Kristine,

        …because their income is subject to much higher taxation then a guy at Macdonald’s

      • #25 by Pino on January 13, 2012 - 03:55

        That’s a rather facile answer. I’ll give you some personal (I know, anecdotal, but that’s what we’re talking about, reality not theory) examples for us to discuss.

        To be fair, I was referring to the family that had already lost a job or lost a home. At that point, the prudent thing is to take the hit and get in a better place.

        we also can’t afford to simply “move to a smaller house or rent”. We can’t afford closing costs etc. no less repairs that any buyer would demand. We can’t afford to move and rent this house out because we don’t have enough cash savings to cover the mortgage if the renter leaves.

        I certainly have no insight into your specific condition. But it sounds as if you are doing what you have to. Kudos to you!

      • #26 by Pino on January 13, 2012 - 03:59

        The forgo college bit is also probably bad advice. On average people with a college education earn more than $1 million over their lives than those who don’t.

        The college degree certainly raises the limit of what an earner can expect. However, the journey is just that, a journey. My mother didn’t graduate college. My dad did, but he was the first in his family to ever attend. HIS folks dropped out of high school.

        Who would have thought that the grandchild of high school drop outs could have accomplished what I have?!?

        My maternal grandfather rode a boat from Europe to America. No money, no job. Same story.

        THAT is the American dream. There is nothing, implicit or explicit that this dream is realized within the space of 1 life time.

  4. #27 by Sean on January 12, 2012 - 11:53

    A bit of a strawman argument here. Envy will always play a part of society and it will when someone has up to $250m in net worth. The attacks on Romney though forget that “wealth creators” are those who are prepared to take risks and are not just the wealthy. The real growth in jobs comes from small and medium-sized businesses but if you place too much regulation and the cost of regulation on them, then their capacity to grow diminishes.

    Your argument is that we need government to provide some ladders for people to lift themselves up but you make the error that some of the social programmes implemented by various governments (and I include some regulation) create barriers of growth for SMEs. America needs people like Mitt Romney who are prepared to take risks investing directly in small or failing companies (Bain Capital’s specialty in the 80s and 90s) to ensure that these companies have the right capital structure to become bigger companies.

    Is it envy? Or is it misdirected anger? Maybe it is both. Either way, emotions like this should mean knee-jerk political decisions.

    • #28 by Scott Erb on January 12, 2012 - 13:13

      I think that current programs are often poorly developed and actually themselves do create barriers, so the right does have legitimate arguments against programs as they are now constituted. That’s a fair debate. We all have the same goal — for all Americans to have an opportunity and for work and effort rather than birth status to determine outcomes. Only the far left wants some kind of egalitarian distribution of wealth, I’m arguing only for a truly level playing field (or as close as we can feasibly get without creating unintended negative consequences). I also am not critical of Romney at Bain. But dismissing concerns about opportunity and wealth distribution as envy got my goat a bit.

      • #29 by Black Flag® on January 12, 2012 - 16:31

        Scott,

        for all Americans to have an opportunity and for work and effort rather than birth status to determine outcomes.

        It is one and the same.

        If a man, from his own effort, cannot allocate his wealth as he wishes, you are destroying the very opportunity of that man to begin with – you are conceited to assume you know how he should spend his money – your only debate is on the timing of your control.

        As usual, you position requires contradictions.

        Only the far left wants some kind of egalitarian distribution of wealth, I’m arguing only for a truly level playing field (or as close as we can feasibly get without creating unintended negative consequences

        You can never avoid creating devastating negative consequences because your MEANS of action is evil – coercion and violence.

  5. #30 by Scott Erb on January 12, 2012 - 15:54

    Pino and Sean, a smarter political way for Mitt to respond would be: “There is a problem in America with too many people being stuck in poverty and finding it hard to overcome obstacles to success. The Democrats think the solution to this is for government to simply take from the rich and give to the poor. But that’s not been working. My goal would be to focus on creating opportunities by unleashing private enterprise with less regulation and more opportunity…” Or something like that. In other words, by dismissing concern about this as “envy” he has not only insulted people who have legitimate concerns, but has created a real opening for the Obama campaign in the general election.

    I am concerned about lack of real opportunity and inequality in America. I envy no one, and would not trade my life for anyone’s. Now, I don’t mind someone telling me I’m wrong in my views or analysis — we can discuss and debate that. But when it gets dismissed as envy, well, that’s not only insulting but it’s factually wrong in my case and I suspect many other people who have real concerns.

  6. #31 by Black Flag® on January 12, 2012 - 18:21

    Professor Richard Vedder, an economist, has reported the following in the professional journal, Chronicle of Higher Education.

    Over 317,000 waiters and waitresses have college degrees (over 8,000 of them have doctoral or professional degrees), along with over 80,000 bartenders, and over 18,000 parking lot attendants. All told, some 17,000,000 Americans with college degrees are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree.

  7. #32 by Scott Erb on January 12, 2012 - 18:38

    I’d also point out how sad it would be for someone to give up an education that adds true value to life in order to simply make more money (even though lacking a college education more often than not condemns one to substandard wages). To live life only to pursue consumption and material gang would in my view be a pointless existence. But I think I’ll just do a whole blog post on that!

    • #33 by Black Flag® on January 12, 2012 - 18:55

      Scott

      I’d also point out how sad it would be for someone to give up an education that adds true value to life in order to simply make more money (even though lacking a college education more often than not condemns one to substandard wages).

      No one says to “give up education”.

      I am suggesting that college does not deliver an education for the expense.

      You can get education from far more sources then that place.

    • #34 by Pino on January 13, 2012 - 04:02

      I’d also point out how sad it would be for someone to give up an education that adds true value to life in order to simply make more money

      If someone forgoes a “hard degree” for a “soft degree” for love of learning, we should value that “soft degree satisfaction” in terms of dollars.

      In other words, when that #Occupyer with a degree in Sub-Saharan Feminism doesn’t have a job that pays 80k, she should be reminded that she valued education in such topics at 80k a year and she is perfectly compensated.

      • #35 by Scott Erb on January 14, 2012 - 23:33

        That’s not really the point. Majors are in fact not the point here either (but I made my point in my next blog post).

  8. #36 by Scott Erb on January 12, 2012 - 18:54

    It also is wrong to say everyone could start a business and make more money. There’s only so much room for profitable businesses – and there are would be business owners ready to leap in when there is opportunity. Many go out of business, a few hang on. The idea that the market could absorb more businesses and they’d all be profitable isn’t logical. The market already determines through supply and demand the number of profitable businesses.

    It’s sort of like “anybody can grow up in America to be President” or “anybody can become a doctor.” That’s true of individuals, but if everyone tried to most would fail (or we’d be so overrun with doctors they’d not make much money). Oh, and Pino, OWS activists are anti-Obama, seeing him as Republican lite.

    I disagree with you on compensation. The higher your pay, the better your insurance plans, retirement plans, vacation opportunities and the lack. The lowest paid tend to have little of those. Benefits are better the higher up the ladder you are.

    • #37 by Black Flag® on January 12, 2012 - 19:05

      It also is wrong to say everyone could start a business and make more money.

      Didn’t say that.
      Repeat:
      “But if one wishes to become wealthier, it is running your own business or working in a small business – where the jobs are

      There’s only so much room for profitable businesses

      There is infinite room for profitable business.

      Many go out of business, a few hang on.

      True, the only test of economic viability is by “doing”, and only then can one absolutely know one way or another.

      The idea that the market could absorb more businesses and they’d all be profitable isn’t logical.

      Your economic understanding remains faulty.

      If what you claim is true, the extra several hundred million people in the USA since the turn of the century would all be unemployed.

      Every person who has a job is fundamentally a business

      You are trading your labor (your product) for the product of others, and you are doing so profitably.

      You have more of your needs and desires satisfied then if you actually tried to provide them to yourself on your own effort – this is the profit.

      You confuse the discovery of what is and what is not in demand of others in the market to be an example of a limit of the market – it is not.

      I disagree with you on compensation. The higher your pay, the better your insurance plans, retirement plans, vacation opportunities and the lack. The lowest paid tend to have little of those. Benefits are better the higher up the ladder you are.

      Again your view is distorted because you do not understand the fundamentals.

      The reason it appears that the higher compensation, the more benefits is because of the progressive nature of income tax

      The higher the compensation, the more lost to taxes.

      To compensate, companies instead offer untaxed benefits.

      If taxation did not exist, company “benefits” would be moot.

      • #38 by Kristine hunt on January 12, 2012 - 19:25

        No, I think you’re not addressing what Scott said. Pino said “Compensation comes in all flavors. And the lowest paid among us have benefited the most. Additional days of vacation, training, health care and the like.” That is what Scott was responding to. Has nothing to do with tax rates, but rather with what is offered to whom at what level. I think Pino may have been referring to government benefits not employer benefits, however.

      • #39 by Black Flag® on January 12, 2012 - 19:52

        Kristine,

        Company “benefits” came to exist due to the effects of progressive taxation.

        Without taxes, it makes utterly no difference to company or the employee to be pay “insurance” from the company pocket or the employee pocket – the amount is exactly the same.

        But with progressive taxation, it is very much different – the difference between paying with pre-taxed money or post tax (where the real cost is about double).

        After decades of such an effect, the average person does not understand how such a thing came to exist. It now becomes an expectation of employment – like a salary.

        Thus, the demand for benefits now is universal, not just relegated to the higher income earners. It still makes “sense” in that the benefits are paid in pre-tax dollars – which is why companies pander to such demands.

        Who benefits the most? No one.

        Taxation distorts the entire calculation of wage and benefit – and the resulting confusion adds unnecessary expense on everyone.

  9. #40 by Scott Erb on January 12, 2012 - 19:19

    Oh, BF, if only reality were so simple and clear cut as your sanitized abstracted recasting of it in simplified dichotomies makes it out to be. Alas, it’s not.

    • #41 by Black Flag® on January 12, 2012 - 19:43

      It is simple, except to those that need to hide behind manufactured complexity.

  10. #42 by Black Flag® on January 12, 2012 - 19:29

    Kristine

    On statement #1, yes, I already agreed to that. I think there is still a major systemic problem that lenders can get away with approving loans that exceed what a reasonable person should pay,

    Why is that a “problem”?
    Why is this “problem’s” solution solvable by “regulation”?

    First, what is the problem?

    You are correct that it is systemic – that tells us something of the nature of the problem.

    The only way an economic problem can be systemic is because of some manipulation at the core and essence of a modern economy

    No one segment, company or individual has the economic power to shift the economy in a systemic way. It is impossible.

    Therefore, this can only be from the direct manipulation of the money – as money is the most central item of an economy, essentially involved in every single transaction – and as money and its manufacture is wholly controlled by a government directly or through a central bank, this is where we must apply our review.

    The artifical lowering of interest rates combined with the massive manufacturing of digital money via the fractional reserve banking system provides the fundamental reason why massive loans are issued

    It follows that a bank, to earn money to pay its employees, gains its income from interest on the loans it makes.

    If interest rates are artificially low, and the amount of money available to loan is high – a bank can only afford to earn its way by issuing massive volumes.

    Initially, the loans go to large capital enterprises – and when that is maximized, the loans must continue to be made.

    On top of this, President Carter issued a decree that loans must be made to people who could not afford them.

    On top of this, nearly everyone bought into the economic theory that houses always increase in value.
    The evidence that supported this fallacy was the circle of fractional reserve lending – making available ever more money for loans, creating ever more money to buy, creating ever more increase in the prices.

    It became the theory that a person could earn more money by the increasing value of the house they owned then actually earning it by working productively.

    A simple man could buy a $700,000 expecting it to appreciate by 10%, then sell it for $70,000 profit – well exceeded his expected “job” income by twice!

    But simple economic review, the economy is not producing anything – hence, the eventual and predictable collapse.

    So your solution to this situation is more of the very same regulations that created it.

    The Federal Reserve is created by regulation.
    It operates on regulation.
    It dictates regulation.
    Carter created legislation and regulation that created the bubble…….

    The answer you provide:
    let’s keep making regulation.

    The real answer:
    End the FED and fractional reserve banking.

    • #43 by Kristine hunt on January 12, 2012 - 20:49

      I don’t disagree with anything you’re saying here, necessarily. I would add that packaging and selling loans was also a large part of the systemic problem, creating profits from nothing, or from at best very bad initial investments.

      “It follows that a bank, to earn money to pay its employees, gains its income from interest on the loans it makes.” From what I have read, this is a widespread fallacy. Income on loans is minimal, whereas receiving ever-larger credit within the banking industry via investments in various vehicles that are based on nothing and no-one’s production, is where most banks make their income.

      I am skeptical that leaving human beings to do what they will, will lead to anything better than what we have. Human beings, much as I believe they are at their core loving beings, tend toward self-preservation, which doesn’t necessarily work too well when millions of them are trying to coexist.

      • #44 by Scott Erb on January 12, 2012 - 21:03

        Yes, that was a big problem in the recent fiasco. The big financial institutions bought mortgages from whoever would sell them so they could package them into bonds that they could get rated AAA. AAA means super safe, so these bonds sold well. But the mortgage generators stopped worrying about the ability to pay back the loans since they didn’t carry the risk. The banks didn’t care and simply demanded bigger loans. The mortgage generators figured out ways to profit (high fees) and make more loans (no doc loans, interest only mortgages). The big financial institutions didn’t worry about risk because they were selling the mortgages off in bonds.

        But they got caught up in their own game, and not only owned a lot of the bonds but even sold insurance to people betting the bonds would become worthless – credit default swaps. Alas, when the market came to extract its price — failure of the big banks, it was clear that this would cause all credit to seize and economic collapse. So the banks were bailed out. This is why BF’s individualism doesn’t work — people all over would have been devastated by a collapse of the economy and credit drying up. Consequences are felt by people who are not responsible for the actions that create them.

      • #45 by Black Flag® on January 12, 2012 - 21:13

        Kristine

        From what I have read, this is a widespread fallacy. Income on loans is minimal, whereas receiving ever-larger credit within the banking industry via investments in various vehicles that are based on nothing and no-one’s production, is where most banks make their income.

        I can’t disagree – there are numerous articles and notes that show the dire straits of interest income due to the very low rates – forcing banks into a search for alternative means of income.

        I would be wary, however, it attributing value or a lack of it in measuring derivatives. They exist for the reason of distributing or concentrating risk etc. and there is a value for doing this.

        I am skeptical that leaving human beings to do what they will, will lead to anything better than what we have. Human beings, much as I believe they are at their core loving beings, tend toward self-preservation, which doesn’t necessarily work too well when millions of them are trying to coexist

        There is nothing inherently good or bad in the goal of self-preservation – it is the means by which one attains this is the core of the matter

        In Scott’s world, it is violence and coercion that is the means.

        In the most of the rest of the “real” world, it is cooperation and trade that is the means.

        The Free Market system absolutely supports the individual’s goal of survival – that is why we effort and trade. Its succeeds because for an individual to succeed, he must solve other people’s problems in trade for others to solve his problems.

        The Free Market is in fact a system of compassion – for it demands that a man must evaluate his neighbors needs and wants, and then effort, peacefully and non-violently, to satisfy them.

      • #46 by Black Flag® on January 12, 2012 - 21:19

        Scott,

        This is why BF’s individualism doesn’t work — people all over would have been devastated by a collapse of the economy and credit drying up. Consequences are felt by people who are not responsible for the actions that create them.

        So Scott would have us believe that a problem created by government and the manufacture of digital money is really a problem of the Free Market, and the solution to the perversion by government is more government.

        It is a fallacy to believe that the global economy would have “collapsed” by the failure of some of the banks. This is the “too big to fail” fallacy.

        In fact, that is exactly what should have happened – they should have failed. Their surviving assets then sold off to the highest bidder and cleared away.

        Certainly people would suffer loss – but believing one can avoid suffering loss by piling up more of the same ill-conceived action is bizarre.

        The action has not saved the economy – it is in even worse shape and when the inevitable correction occurs, the suffering will be even deeper and worse.

        As far as the innocent suffering – well, welcome to Scott’s world.
        That is politics – the shifting of consequences away from the actor and onto the innocent.

  11. #47 by Scott Erb on January 12, 2012 - 21:20

    My world is the real world BF. It’s one full of cooperation and help alongside power relations and violence of various sorts (not just crude physical violence — that’s probably one of the least effective methods of using power against others). Your posts demonstrate your problem — it’s all abstract and theoretical – word games, assumptions, and assertions. Anyone can create an abstract philosophy, yours simply doesn’t take reality into account.

    • #48 by Black Flag® on January 12, 2012 - 21:26

      Scott,

      My world is the real world BF. It’s one full of cooperation and help alongside power relations and violence of various sorts (not just crude physical violence — that’s probably one of the least effective methods of using power against others).

      As usual, you need to redefine words so to justify your cause.

  12. #49 by Scott Erb on January 12, 2012 - 21:56

    Your world is one of subjective whimsy, BF- abstractions that float around, connected by assumptions you apparently draw arbitrarily. I don’t accept your definitions, but I don’t think any social scientist would.

    • #50 by Black Flag® on January 12, 2012 - 22:22

      Scott,

      I don’t accept your definitions, but I don’t think any social scientist would.

      I know you don’t – you make your up on the fly and at the moment whenever necessary to justify your pograms.

      Whether other social “scientists” do the same… (shrug) – maybe it is endemic among you that requires this….

  13. #51 by Titfortat on January 14, 2012 - 02:16

    BF

    Funny, but I must concur with most of which you speak. I drink your lemonade. 😉

    Scott

    Read the book, “The creature from Jeckyll Island”. Very telling for sure. Its a good read too. 🙂

  14. #52 by Black Flag® on January 17, 2012 - 17:27

    Scott,

    Your prescription is the poison.

    (the 1965 Moynihan Report)

    Moynihan generally concluded in the report: “The steady expansion of welfare programs can be taken as a measure of the steady disintegration of the Negro family structure over the past generation in the United States”

    This was well observed in 1965.

    The response: an increase in welfare programs.

    The result: as predicted, a continuation of the steady disintegration – but now, also infecting “white” family structures.

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