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Old 31st January 2019, 15:04   #376
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Re: Understanding Economics

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Originally Posted by Samurai View Post
Government didn't take any risk with public money.
In hindsight, it turned out well for the US government. At the time the government provided the loan, it didn't know that Chrysler would pay it back, right? If it hadn't turned out well, we would have called it crony-capitalism.

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Listen, bailouts are a financial tool available to the government. It can be used by either socialistic or capitalistic government. While Chrysler bailout of 1979 by a democratic government was $1.5B, the 9/11 Airlines bailout was $15B, by a republican government. The latter didn't even have a repay clause, it was a donation.
You are comparing an extraordinary situation (like 9/11), and that too when the entire sector is under distress for no fault of theirs to a situation like Chrysler's where they went under because of bad business bets.

Even as we speak Jet airways is going down. Would you agree if Indian government bails it out?

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Are you under impression that India moved from socialism to capitalism in 1991? China did, but not India. Like most countries, our economic system is a mix of socialism and capitalism.
Whatver -ism it was and whatever -ism it changed to, it happened for the good. And I guess you also agree.
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Old 31st January 2019, 15:29   #377
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Re: Understanding Economics

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In hindsight, it turned out well for the US government. At the time the government provided the loan, it didn't know that Chrysler would pay it back, right? If it hadn't turned out well, we would have called it crony-capitalism.
It was a loan secured by prime properties owned by Chrysler as collateral. If Chrysler hadn't paid back, government would have gotten their money back by taking over those prime properties. I don't know why you keep insisting this secured loan was not a good thing.

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You are comparing an extraordinary situation (like 9/11), and that too when the entire sector is under distress for no fault of theirs
Why was there no payback clause like Chrysler? Why no collateral like in Chrysler loan?

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Even as we speak Jet airways is going down. Would you agree if Indian government bails it out?
As in a secured loan? Why not?
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Old 6th February 2019, 11:00   #378
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Re: Understanding Economics

Trump supporters are finally finding out that the Trump tax cut was not really for them.

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Old 11th February 2019, 16:02   #379
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Universal Basic Income

Early (very early !) data seems positive from the biggest UBI experiment done till date.

Critics say that it will make people lazier, but data doesn't seem to suggest that:

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There was no difference between the two groups in terms of the number of days in employment in 2017 – both groups worked on average 49 days.
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The surveys also showed that the UBI group perceived their health and stress levels to be significantly better than in the control group.
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Old 12th February 2019, 00:43   #380
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Re: Understanding Economics

We should reached the UBI stage long ago. But we didn't because of a concept called BS jobs.

If you are not familiar with BS jobs, check this out.

In a famous essay drafted in 1928, John Maynard Keynes projected that, a century on, technological efficiency in Europe and in the U.S. would be so great, and prosperity so assured, that people would be at pains to avoid going crazy from leisure and boredom. Maybe, Keynes wrote, they could plan to retain three hours of work a day, just to feel useful.

It is from this article.

So, it is really a toss up between UBI and BS jobs.
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Old 13th February 2019, 16:25   #381
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Re: Understanding Economics

This kind of discussion is becoming more and more common these days...

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Old 14th February 2019, 18:51   #382
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Re: Understanding Economics

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This kind of discussion is becoming more and more common these days...
Actually it is scary. The left is slowly taking over the USA. All the progress that USA made is by embracing Capitalism. Now it is the turn of the left to take over and ruin it all. 25% supporting socialism is worrying.

Understanding Economics-51920782_1033114543561247_5514015255262396416_n.jpg

Last edited by civic-sense : 14th February 2019 at 18:53.
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Old 14th February 2019, 18:55   #383
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Re: Understanding Economics

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A record 7 million Americans are 90 days or more behind on their auto loan payments, the Federal Reserve Bank of New York reported Tuesday, even more than during the wake of the financial crisis.

Economists warn that this is a red flag. Despite the strong economy and low unemployment rate, many Americans are struggling to pay their bills.
Source: https://www.washingtonpost.com/busin...=.b984ff647514
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Old 14th February 2019, 19:46   #384
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Bail outs.....

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Even as we speak Jet airways is going down. Would you agree if Indian government bails it out?
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As in a secured loan? Why not?
If I am permitted to say so, hypothetical bailing out of Jet Airways by Government of India, even if they have recourse to a security, may be a bad break for honest tax payers.

Look at it this way -

Remember the Unit Scheme 64 fiasco? Govt. of India did actually bail out US64 scheme, considering that savings of public was involved. It was a good deal for GoI because the end result was something no one would have predicted then (UTI Bank -> Axis Bank Ltd.) (in this case the move was to protect the investments of public and the credibility of the government backed entity).

Jet Airways, on the other hand, is a commercial enterprise. A shareholder of the company stands to gain (or lose) based on how the business fares. If the company goes down, the 'service' provided by them may no longer be available - but does this warrant the Govt. to intervene to take over?

If yes, a systemically important NBFC looks like a basket case now, right? Not just shareholders money is involved, but there is plenty of bank funds lent to them. The company takes care of a sizable quantum of infrastructure projects in India & abroad. So, shouldn't the same yardstick apply and it get bailed out?

If yes, managing such kinds of 'failed businesses' become a part of Governments' role.

Forget Air India (Indian Airlines) - BSNL is perpetually bleeding. IFCI has resulted in a lot of grief. There are plenty of such examples. Where will one draw the line?

Finally, if bail out is seen as a remedy, then Insolvency & Bankruptcy Codes aren't going to hold much water, if large business continue to be taken care of by the Government.

Ultimately, the law of economics must prevail. It is the entrepreneur who must take home the reward as well as the risk. Government would do well not to play a white knight, with tax payers money. I am firm in my belief that the tax I pay should benefit the have not's and used for commoners welfare.

Last edited by vrprabhu : 14th February 2019 at 19:49. Reason: grammar mistake
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Old 14th February 2019, 19:57   #385
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Re: Understanding Economics

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Actually it is scary.
Please allow me to scare you further. That poll you mention is skewed because it asks about labels. It finds 59% unfavorable to socialism, because they are responding to the label. If they ask the same question about the policies based on socialism, without mentioning socialism it finds lot more support from the same people.

For example, same fox news poll found 59% voters backing AOC's plan to tax the richest Americans up to 70%. That's a socialist policy, but the question doesn't say socialism. If you ask about social security benefits, again the overwhelming support will be seen, because they don't understand it is a socialist measure.

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The left is slowly taking over the USA. All the progress that USA made is by embracing Capitalism. Now it is the turn of the left to take over and ruin it all. 25% supporting socialism is worrying.
But I am not worried or scared. USA has slide into extreme capitalism beginning from the Reagan era, now it is time to bring it back to the center. You have to read my earlier post to understand my POV.
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Old 14th February 2019, 21:04   #386
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In my experience, having lived and worked for over three years in the USA, Americans have a very different view on what they consider socialism from most of the rest of the world. It was the first time that I began to understand that political left and right views are not absolute. But relative to the country and culture. Ask my kids and they will tell you I am a hardcore right wing type. Ask my American friends and they will go, him? The loony lefty from Europe! What I believe and say is not different, but how people rate or perceive this is very different.

Irrespective of left, right, socialism or capitalism, i would not consider American society or the USA as a nation, great at all. It is great for some at best.

To go back to the labels, if anything it shows that capitalism is only great for a select group and that substantial parts of society do not benefit at all.

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Old 14th February 2019, 23:34   #387
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Re: Understanding Economics

There is a belief among general public that democracy and capitalism go hand in hand. That they are natural partners. But economists on both side disagree with that.

I'll give an argument from right and the left. Both agree one is bad for the other.

Here is a capitalistic economist arguing in a Forbes article that democracy is bad for capitalism.

Here is a professor of social and economic policy arguing in Foreign Policy article saying capitalism is bad for democracy.
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Old 15th February 2019, 08:30   #388
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Re: Understanding Economics

Responding to 3-4 posts here.

I suspect that lots of the “support” for dumb policies like wealth taxes is driven by how the question is asked. Yes, the hard left of the Democratic Party has been emboldened by the disgust against Donald Trump, and sees a chance to push its agenda of envy. That leads to outcomes - such as Amazon deciding not to invest in a depressed area of New York. But already, people are waking up to the fact that this leads to the loss of about 80 k direct and indirect jobs - not trivial even in New York. If the Democrats keep going down this path, it’s a recipe to get Trump re-elected.

On Jet Airways - half it’s problems are because it is competing with an Air India susbidised by taxpayers and without any need to turn a profit. I however do agree that a bail out would be wrong. But converting debt to equity and diluting existing shareholders makes sense. That roads to a faster and more certain resolution than an IBC filing where lessors will take their planes back, Jet stops operations on key routes and loses slots in airports like Bombay to Indigo et al. What we need to see is at what price the conversion takes place - if it is low enough, that would not be a bail out. Mr Goyal has his virtues - but if he does not have the money to fund the airline, he should lose control.

On Europe, the people seem to have Made a choice that they would like to lead a reasonably comfortable life with leisure instead of trying to up their standard of living further. That’s a legitimate choice even if not one I would make.

Last edited by Hayek : 15th February 2019 at 08:33.
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Old 15th February 2019, 11:47   #389
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Re: Understanding Economics

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On Europe, the people seem to have Made a choice that they would like to lead a reasonably comfortable life with leisure instead of trying to up their standard of living further. That’s a legitimate choice even if not one I would make.
We need to be a bit careful of thinking of Europe as one entity. There are considerable difference in just about everything within Europe too.

Last time I checked I saw very little evidence in the USA that made me believe they are worried about the standard of living for society at large. The standard of living improves from those that already have it pretty good and deterioates for those that have not.

The fundamental choice most European countries have made is they favour a society that provide more equal chances for everybody. And recognises that not everybody gets those from birth, or during life. There are some basic things you need to get right:

- equality for all
- access for all to good medical care
- access for all to good education

Just as an example, we have all seen what happened with Obama-care. To date the Americans are still debating whether there should be some medical care program and if so what the role of the government would be. Funding or otherwise.

In Europe that choice has been made a long time ago. The government has a big role to play in how it is organised and funded. The discussion tends to be around some of the details on how the basic choice is made.

To my earlier point, the gap between Republican and Democrats tends to be a lot smaller than those outside the USA belief. On a European left-right wing scale your typical Democrat tends to be pretty much right wing if you really drill it down to content on how they would like to do things.

Most European countries I am familiar with all try to improve the standard of living (whatever definition). But they tend to pay special attention to those who have limited means, be in financial or otherwise.

The green agenda is a very hot topic across the political spectrum at a scale and breath the Americans will never understand. Breathing clean air, making sure you do not lumber your kids/next generation with the results from how you lead your life is part of standard of living too.

I am not saying which system is better or worse, but I do have a strong preference for a more caring society, then the each to its own USA style. We absolutely loved our time in the USA do not get me wrong. But as a society at large there was little we could admire. It only works for those that already got it. For those it works real well and it gets better.

Jeroen
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Old 15th February 2019, 12:01   #390
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Re: Understanding Economics

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To go back to the labels, if anything it shows that capitalism is only great for a select group and that substantial parts of society do not benefit at all.
One could argue either ways on the above subject, which Samurai has already indicated.

I would rather modify your statement and say that 'Capitalism is great for a select group with lesser benefits to substantial part of society'. Reason being, one cannot deny that there are bound to be ripple effects which will trickle down (like investment, employment, support services etc.) - the lowest strata may not derive the entire benefit, but will certainly benefit from overall growth / development.


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I'll give an argument from right and the left. Both agree one is bad for the other.
Thanks


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On Jet Airways -
What we need to see is at what price the conversion takes place - if it is low enough, that would not be a bail out. Mr Goyal has his virtues - but if he does not have the money to fund the airline, he should lose control.
News today - banks propose to convert their debt into equity at Re. 1/-. Which means substantial haircut today (which is ultimately flowing from taxpayer's and depositor's money) with a prospect of recovering it a later date when the operations improve and share price picks up.

I agree with the latter part of your view.
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