Sunday, November 22, 2009

A Very Welcome Challenge to What I Posted About Wealth and Poverty....






I recently received an email and the permission to reprint that message (anonymously).


The email comes from a former professor (the one who defended a Kos Kid in a comments section a few posts back)...what follows is his message in response to my previous post on What Poverty IS...and What it is NOT, and my response to him;


His email;


JC,


Why do you continue to constantly do this?


Demagogue to the gullible like this?


I sometimes wonder if you just like being provocative. What you’re doing here is potentially very dangerous.


To start with, I find much of your argument disingenuous, especially the portion about our “dynamic economy” – the old “expanding pie” versus the “fixed pie” model.


While it’s true that the economy is somewhat dynamic and the money supply is somewhat elastic, your argument here is very much overblown. Even you’d acknowledge that there really is only a fixed amount of “hard assets” available at any given time, right?


And since there is only a fixed amount of currency available at any given time, it's then very true that “the more person A takes in, the less available for persons B, C, D, E, F, etc.”


So, in that sense, we really ARE dealing with a “zero sum game,” aren’t we? At least in terms of the currency available at any given time that can be used for income, we are.


With that in mind, I think you’d have to agree that we do need a referee (and only government can fit this bill) to step in from time to time to make sure that there is a fair distribution of that currency, so that a few avaricious people don’t glom all the “hard assets” (especially INCOME) for themselves.


And to claim, as you seem to, that “the poor CHOOSE free time over more productive pursuits” is not merely na├»vely simplistic, but grossly insensitive and offensive, as well and borders upon demonizing the less fortunate as parasites and pariahs.


(anonymous)





My Response:



Well, first of all, currency or the money supply DOES indeed fluctuate both significantly and quite often (many times within the same year, actually)...so, there’s THAT to indicate my position is not really “overblown, as you state.” (Here’s a chart of the fluctuations in the U.S. money supply between 1960 and 2007: http://en.wikipedia.org/wiki/File:Changes_in_US_money_supply_1960-2007.gif)









Moreover, currency and especially INCOME is NOT the sole, or even primary parameter of wealth. The truly wealthy or “super-rich” DO NOT rely upon income for the bulk of their wealth.


Investments grow the economy and in the process, create the vast majority of the new jobs and new opportunities for others. So, NO, we are NOT dealing with a “zero sum game” at all.


When the costs/risks get too high, investors simply stop investing and producers cut back on production and everyone suffers as the economy shrinks in response.


And yes, whether you find it “offensive” or not, specific behaviors and yes, CHOICES are what create BOTH wealth and poverty....and there are indeed myriad forms of wealth, one of which is free/“leisure time,” which producers sacrifice in order to produce, and non-producers maximize at their own peril.


How is telling the truth “dangerous”?


I do believe your argument in this case is inherently flawed by your apparent view that the market process (a/k/a “Capitalism”) is hopelessly and inherently unfair...I believe that the argument I’ve offered here shows that when the full scope and purview of what is called “wealth” is taken into consideration, the market process is NOT really “unfair” at all.


JMK

16 comments:

Fuzzy Slippers said...

JMK, you know I love your comments on my page, but I still think that you are off base on this one. What you call "wealth" in terms of happiness or leisure time or ambition or whatever is not the recognized meaning of the term. We have signs and signifiers in language, and these work, in part, by consensus. "Wealth" to most people means money (this can and does include both liquid and hard assets). France has recently tried to add some strange "happiness" factor to their GDP that sort of follows you reasoning, but it's incredibly faulty. There is a difference between what a word means (what it denotes) and what it evokes (or connotes). "Wealth" means money (and power that goes with it); what it connotes or means to you is very individual.

As to your commenter's response, I agree with much of it, but one thing that seems to get lost in the socialist vision is that it is never "fair" to take anything from one person and hand it over to someone else. If we had a true free market system with a LOT fewer, less expansive entitlement programs (not none, but restructured that they actually provide opportunity rather than eliminate it) and if we returned to values that helped grow America (hard work, personal responsibility, and opportunity), we would not have an ever-increasing problem with poverty. For all the "spreading of wealth" around that we do in this country, it sure doesn't seem to be working, now does it? More and more people are slipping out of the middle classes, more and more people are being forced into poverty . . . not fewer. This suggests to me that it's not working.

I do disagree that people "choose" poverty. I don't think they do, but I do think that government, with its social utopian craziness, limit options to such a degree that people can only rarely dig themselves out or our inner cities, off our welfare rolls, and / or into decent educations and job opportunities. Spreading the wealth is growing our lower classes, not shrinking them. That, in itself, is argument enough against it.

JMK said...

That's a great comment FS! Because it opens this up for much further discussion.

Here's where we disagree, to me and for the sake of this argument, it doesn't matter that "most people (naively, I might add) consider ONLY money (cash, stocks and bonds and real property) when defining or measuring wealth." What matters is the full spectrum of "what wealth is," and that would have to include intangibles like leisure time.

Why?

Because in virtually ALL cases, TIME is exchanged for various kinds of "wealth," most notably income, but that's true for investors and speculators as well...TIME = WEALTH.

If Time = wealth, than, it stands to reason that time is also a FORM of wealth. An often overlooked form, but a form, none-the-less.

Most higher income positions also require much higher investments in time as well - time in education and ongoing training, time in terms of addded hours at work.

The much derided stock brokers of today average over 60 hours per week and many of them take additional work home with them and follow foreign markets all hours of the night, as well.

Same goes for physicians and lawyers as well.

As for people "choosing poverty," YES,whether its a conscious or subconscious decision, those people who CHOOSE "doing what they like," or "valuing their time," as well as those who fail to plan for a more productive and prosperous future (via intensive education, or entrepreneurial efforts) DO CHOOSE the life that they wind up with....generally a poorer one.

I believe that it's important that people understand the behavioral causes of both wealth creation and poverty, because that's the only way such problems can be addressed, as they are, at heart, individual behavioral problems.

The fact that time is a form of wealth is really undeniable in that one of the things that high achievers and producers do, when tax rates get too confiscatory and regulations too burdensome, is that they "pull out of the market." Investors stop or cut back on their investing and high achievers cut back on their hours and efforts, as "diminishing returns" set in.

The fact that when wealth creation is stifled by government excess, the first thing that those with more "wealth" do is to reclaim more of their own time....and that's part of the reason that the economy tends to shrink when government meddles, regulates and taxes more.

Fuzzy Slippers said...

Naive to think a word means what it means? Really? Isn't it more likely that I know what the word means and you are trying, like many others have, to redefine it? And you can do that all you wish; it's perfectly in line with a great many ideologues to do so and in these same terms. I understand perfectly what you are saying; I simply disagree whole-heartedly.

I also think that there is a certain historical or culture "blindness" (perhaps naivete) in asserting that poverty is solely a "behavioral problem." Like most problems, poverty is multi-faceted and multi-rooted. Nothing as complex as rampant and growing poverty can be boiled down to one cause. Surely you know that?

JMK said...

"Naive to think a word means what it means? Really? Isn't it more likely that I know what the word means and you are trying, like many others have, to redefine it?" (FS)
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No, not at all.

I'm not redefining the term "weath," I'm merely defining it within the FULL SCOPE of what that term means.

Again, since TIME is ALWAYS and EVERYWHERE exchanged for "wealth" in the form of BOTH income and investment and/or speculation based gains, then it stands to reason that TIME is a very obvious form of wealth.

The fact that "most people consider ONLY money (cash, stocks and bonds and real property) when defining or measuring wealth," is short-sighted and wrong, in that it ignores one of the principle components of wealth-creation - TIME and time management (as personal focus and discipline).

The PROOF of this fact is that when tax rates get too confiscatory (punitive) and the regulatory burden too great, investors and high-end producers (income-earners_ cut back on their investing AND their workloads as "diminishing returns" set in. YES, people stop putting in extra efforts when the rewards are removed...as the great economist and Nobel Laureate Gary Becker puts it, "People respond to incentives."

So, if high-end producers reflexively reclaim mnore of their time when confiscatory government policies make their efforts less valuable, then it follows that TIME is indeed a form of wealth....the fact that it is an often overlooked form of wealth notwithstanding.

And to be precise, I never said "poverty is solely a behavioral problem." I said it is PRIMARILY that, which is distinctly different.

There are some people who do lack the requisite innate abilities to develop desirable marketable skill sets or come up with entrepreneurial ideas to take advantage of new opportunities that arise, BUT for the most part, the chronically poor tend to suffer from poor impulse control, the inability or unwillingness to delay immediate gratification, they tend to be more reckless and more irresponsible and generally more self-destructive in their personal pursuits.

But CHOICE does play into BOTH wealth creation and poverty, in that individuals CHOOSE how they will use their time....reckless and irresponsible people tend to use their time poorly and more productive tend to use theirs in a more disciplined and focused manner.

As an example, what I've said for over two decades, Poverty DOES NOT cause violence, in fact, violence, or the traits that lead to violence (low frustration tolerance, recklessness and irresponsibility, etc.) are the SAME traits that lead to poverty," is, I believe, undeniably true.

The success of the approach of such criminal justice legends as Bill Bratton and others seems to show that to be very true.

Absent a fuller definition of the term "wealth," we are left with the poor policy choices we've been subject to over the last half century or more....in fact, I think it can be said without much, if any exaggeration, that "Our limited and short-sighted definition of what is wealth is behind much, if not MOST of the poor social and economic policies that we've seen over that period."

Fuzzy Slippers said...

I think we both agree that smaller government and less government dependency are key to helping those living in poverty. That's a great start :)

JMK said...

"I think we both agree that smaller government and less government dependency are key to helping those living in poverty. That's a great start :) (FS)
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Without question!

We agree completely on that.

I'm not being intentionally contentious here, I'm merely passionate about this viewpoint....one I firmly believe, it's being overlooked (time = wealth) has been the source of much of the poor social and economic policy we've seen over the past half century, or more.

I do very much appreciate your input here and I find such disagreements elucidating and stimulating, rather than vexatious in any way.

Reasonable disagreements with actual rationales can often stimulate further thought and a better appreciation of such matters.

Thankyou for indulging me in this inquiry.

Fuzzy Slippers said...

I agree wholeheartedly. It's always good to have a civil discourse on topics, particularly when there is both common and uncommon ground ;)

WomanHonorThyself said...

How is telling the truth “dangerous”?..it is to libs who can not handle the truth my friend!!!

JMK said...

"It's always good to have a civil discourse on topics, particularly when there is both common and uncommon ground ;)" (FS)
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Yes it is.

In this case, I believe our "uncommon grpund" largely seems to be over an "accepted definition."

Yes, "wealth" is generlly defined as money and/or "hard assets," but that is an overly narrow definition and what's more, one that lends itself to the professor's outlook...that the unfair/non-equitable distribution of those hard assets begs for government intervention.

But that narrow definition ignores the basic building block of wealth and something the truly wealthy (those with inter-generational wealth) treasure ony second to power.....which is yet another form of "wealth."

In denying the primary role of BEHAVIOR, or as that great Nobel Laureate in Economics, Ludwig von Mises called it "Human Action," in both wealth creation and poverty (and leftists, social-liberals and socialists all do exactly that), then wealth becomes something that just "happens" to a fortunate few and thus SHOULD be redistributed to all equally.

The very reason that redistribution is, what you call it, "theft," is because it is earned, via the BEHAVIORS of some, just as poverty is brought about by the BEHAVIORS of others.

Since it takes time to create wealth, either through work/effort or investing/speculating, then TIME really is wealth.

We all CHOOSE how we live our lives, how we SPEND our time. More frivolous people tend to be poorer and more disciplined and focused people tend to be more productive, prosperous and affluent.

Think about this, How many of the poor do you really think are afflicted with the innate INABILITY to develop a marketable skill-set or set up an entrepreneurial enterprise?

How many people do you think are so dysfunctional, so marginal, so, in effect, "stupid?"

I'd guess no more than 15%.....20% at the highest, because such dysfunction is NOT all that common among humans, despite what many leftists would have you believe.

The rest are simply those who failed to plan (those planned to fail). People prone to recklessness and irresponsibility, poor impulse control, low frustration tolerance, and the unwillingness to delay gratification/reward until tomorrow, in hopes of garnering a greater reward down the line.

Consider that and then consider the fact that when the tax structure gets too excessive and the regulatory envionment too stifling and "diminishing returns" (less reward for more effort) sets in, the most productive simply withdraw from the market and take back more of THEIR time.....the time they WOULD HAVE spent producing and helping the economy thrive....and then tell me that TIME is not a viable form of wealth.

This is our weakness on the Right, we presume the best of intentions from people who are motivated by the basest form of avarice there is - the pursuit of power over others, which is to say we assume the best of intentions from those who have none and yet profess to having them piously.

The narrower definition of wealth is a construct designed and perpetuated by the left, to make wealth appear merely a "money-blessing" that is magically bestowed, not something hard earned and created by motivated disciplined individuals who sacrifice their time....the bulk of their time in the creative pursuit of enterprise.

JMK said...

"How is telling the truth “dangerous”?..it is to libs who can not handle the truth my friend!!!" (Angel)
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I believe that only about 20% (perhaps even much less) of those counted among the Left are "true believers."

True belieers are people like Saul Alinsky who told everyone what he was in his book Rules for Radicals, when he called Lucifer "the greatest radical...and called his work the counteroint to Machiavelli's The Prince....saying, "Machiavelli wrote "The Prince" to show "the haves" how to hold onto their power, my work shows the "have nots" how to take it away."

Alinsky and his true acolytes are evil....few humans possess such evil.

That's why so few on the Left can make REAL, afirmative arguments for their positions, they parrot, they mimick and they repeat things mechanically....only the true believers can actually make passionate, convincing arguments for their views.

That's probbly why there are so many more "former leftists," then there are the reverse.

Fuzzy Slippers said...

@ WHT and JMK, I think that what you both say about the truth is truer than true. However, I think that there is a difference between what I call "citizen libs" and the political class of today's liberalism, which is in its least destructive form socialism and in a more dangerous form communism.

Citizen libs think they have the truth, they believe (who knows why when all the hard data points to the exact opposite) that the liberal agenda is intended to help people who for whatever reason cannot help themselves. They are the "heart" liberals to only a limited degree, however, because when it comes to things like racism and other isms, they are happy to allow one group to suffer limited liberty and higher taxes to "help" another. It's all very Harrison Bergeron, drag everyone down that makes everyone equal. Bassackwards, of course, but I think they don't really understand what is going on, some basics of economics, or even human nature.

Political libs, however, know exactly what they are doing, and you are correct JMK, that they cannot stand up and defend it because they know that it is indefensible. Those who do dare to state that they want to nationalize our healthcare system are faced with polls that show overwhelming that Americans, including many citizen libs, don't want that. They don't want a government takeover. So they hide it, they ram it through as something else, they work in shadows and darkness (BO's diversity czar, for instance, is busily working out how to get conservatives off the airwaves in the name of "diversity"--which really means all lib, all the time, preferably by a minority, but not necessarily). They have sneaky meetings in secret, as with the one that got out in which the WH was enlisting the National Endowment for the Arts in political propaganda for BO. That's something that they can't announce because it's not only unethical to use tax payer money to promote one party but illegal. They know it.

So for citizen libs, they can't handle the truth because they are too invested in believing the lies, the Alinsky work that's been done on conservatives has essentially made us ignorant, racist hicks. They can't listen to us, they are told they know better and they believe what they are told.

Political libs can handle the truth, they know what they are and what they are working for, but they know that we, the people, won't accept it. So the spoonfeed us, baby step their radical ideas into fruition, and when we all wake up in a country that in no way resembles America, it will be too late. Citizen libs, I believe, will be utterly shocked and feel totally duped, played the fools they're acting, really. Hopefully, enough people are waking up now and we can avert disaster. Time will tell. And not much time at that, this will all play out in the next 18 months or so. And as long as we're tagging great movie lines, we're going to need a bigger boat. So as libs do wake up, we need to welcome them, not vilify them, there will be time for recriminations later.

Skunkfeathers said...

Lordy...I can't converse on things economic like either Anonymous, nor FS, let alone like your esteemed self, JMK. I have a simple view of how things work, and in almost 53 years, a good deal of that simple view is born out by life and experience.

However, natural and artificial intricacies can take simplicity and render it inert.

That said, in reading carefully all that's said here, I disagree wholeheartedly with Anonymous, and am a bit put off by this argument of his/hers, in so far as this is a professor, teaching these socialist/marxist (to me) views?

I'm not sure I am in complete agreement with FS on all the points she raised; but I am respectfully appreciative of the tenor and civility of the disagreements you two exchanged, and the acknowledgment of commonality where the two of you agree. There is far too little of this kind of productive, educational debate in politics today.

I'm more used to the shallow crap that comes from uber liberal "Jane" over at PoorGrrl's Zone.

Thanks to both of you (JMK and FS) for a thoroughly entertaining, and damned well-reasoned argument.

You two could teach a helluva lot of people in Congress -- and some college professors -- a few lessons in productive, civil discourse.

Fuzzy Slippers said...

hehe, thanks Skunkfeathers. I have the utmost for respect for JMK and always find him a delight. :)

JMK said...

"I'm more used to the shallow crap that comes from uber liberal "Jane" over at PoorGrrl's Zone." (SF)
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I think your self-proclaimed "simple view" is probably similar to my own....I look at what works and what doesn't.

GIVING things to people who didn't EARN them never works....neither does making commodities into "rights."

I think Jane is like a lot of follower-Liberals....they're attracted by the inane rationales over their appeal to their emotional senses. Liberalism's appeal to "fairness," "economic and social justice" all appeal to the liberal's emotional sensibilities.

Since most follower-liberals can't make arguments themselves they attack those they disagree with.....after all, those who disagree with what they see and FEEL as emotionally RIGHT and JUST must be "evil," not merely wrong.

The professor here is one of the last Keynesian true believers I know and he DOES make affirmative arguments for that view, although I consider ALL of them to be both short-sighted and wrong for a variety of different reasons, but he's no Jane, or BW (the Kos-Kid he defended in a comments section a few posts down).

And FS is a great Conservative blogger, whom I greatly respect, as I do you as well....she consistently makes solid affirmative arguments in favor of her views.

I believe reasonable people can reasonably disagree over a wide range of issues, though I think it's vital to try and reach some sort of consensus, whenever possible.

Right now, I'm reading Peter Schweizer's GREAT book, Architects of Ruin which arduously chronicles the entire development of the subprime mortgage meltdown and the subsequent global credit crisis....it is a GREAT read and one that is incredibly accurate.

It SHOULD BE a runaway bestseller...

JMK said...

"Citizen libs think they have the truth, they believe (who knows why when all the hard data points to the exact opposite) that the liberal agenda is intended to help people who for whatever reason cannot help themselves. They are the "heart" liberals to only a limited degree, however, because when it comes to things like racism and other isms, they are happy to allow one group to suffer limited liberty and higher taxes to "help" another." (FS)
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I think most of what I call follower-liberals and you "citizen-liberals" are, in fact, fascists in nature. They've accepted an indoctrinated, guilt-ridden version of history that paints "Capitalist whites" as predators who warrant punishment....and in that vain they're willing to forsake property rights, individual Liberty, even free speech rights, so long as doing so stifles or punishes those worthy of punishment (ie. Conservatives, Capitalists, etc.)...ironically enough, the "No free speech for fascists" movement was itself fascistic in nature.

And yes, the true-believers or "political liberals" as you call them are the ONLY ones capable of making affirmative arguments for their views, which ALWAYS revolve around EXPANDING government and giving more and MORE power to a centralized monolithic state.

The likes of Dennis Kucinich and Bernie Sanders ARE able to make raw appeals to emotion" seem reasonable, at least to follower-liberals or "citizen-liberals."

What is most interesting is seeing some of the pseudo-religion that is modern liberalism fall apart, as it's now doing in the wake of those email releases from the UK's CRU (Climate Research Unit) - emails that showed government-funded "scientists" openly lauding the faking of data and the sliming of other scientists who dared to disagree with the "accepted orthodoxy."

I've seen some left-wing bloggers actually focus on "the crime" ("invasion of privacy") by the alleged hackers instead of the calumny of the alleged "scientists."

Such is the fervor of the modern-day liberal fundamentalist.

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