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Old 25th February 2019, 19:33   #436
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Re: Understanding Economics

I dislike labels while discussing complex ideas. That is because it often conveys the wrong impression and dumbs down the idea to a stereotype.

Take socialism, I rather not use that terminology because it used to mean something else because of the way communist countries implemented it.

Communist implementation of socialism basically meant government owned all means of production & distribution. This is what USSR and China advocated and further copied by most communist countries. Unfortunately, democratic India followed this model to some extent in the first few decades by creating PSUs and 5-year plans.

Democratic implementation of socialism is nothing but market economy with checks and balances. The government should only own production/services of common goods, like defense, police, roads, rivers, air, dams, mines, energy, etc. It should allow the rest to be handled by private entrepreneurs, and laying down regulation that they do it without exploiting the public good. For example, industries shouldn't be allowed to pollute water and air, which are public good. It should also lay down regulations to prevent exploitation of people by private industries. It should provide basic necessities like education, healthcare and shelter for free, to people who can't afford it.

After all, a democratic government is elected by all, not just rich people. A family feeds all their family members and not just earning members. A democratic society is nothing but a big family.

So, you get the idea... I hope. Government shouldn't be running businesses like telecom, banks, electronics, automotive, etc, etc. That's the communist influence we got from USSR.
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Old 25th February 2019, 20:19   #437
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Re: Understanding Economics

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Originally Posted by blacksport View Post
Capitalism has its ills, but socialism is not a solution.
What is the Libertarian view of ills of capitalism? And what is the solution?

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In some Nordic countries, socialists piggyback on capitalism, but it will not be long before the ones that create wealth will get fed up with the freeloaders and start revolting.
How exactly will the wealth creators revolt? By burning cars on the street or by leaving the country? Remember that majority of entrepreneurs will have low probability of success in another alien country.

Examples:

- Mukesh Ambani cannot do a Jio in United States of America
- Rajeev Jain cannot start another Bajaj Finance in European Union.

and achieve the same level of success.
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Old 25th February 2019, 20:58   #438
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Re: Understanding Economics

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I dislike labels while discussing complex ideas. That is because it often conveys the wrong impression and dumbs down the idea to a stereotype.
Thanks. Unfortunately this thread too often gets pulled down by rigid compartmentalization. Shades of grey. All aspects of life and economics are shades of grey.
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Democratic implementation of socialism is nothing but market economy with checks and balances. The government should only own production/services of common goods, like defense, police, roads, rivers, air, dams, mines, energy, etc. It should allow the rest to be handled by private entrepreneurs, and laying down regulation that they do it without exploiting the public good. For example, industries shouldn't be allowed to pollute water and air, which are public good. It should also lay down regulations to prevent exploitation of people by private industries. It should provide basic necessities like education, healthcare and shelter for free, to people who can't afford it.
Agree 1000%
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After all, a democratic government is elected by all, not just rich people. A family feeds all their family members and not just earning members. A democratic society is nothing but a big family.
Thank you. It cannot be said any better. I may be a dyed in wool entrepreneur but this statement is the essence of democracy and society. The folks who talk about having no responsibility to the poor or weak are people who have not grasped the need for compassion.
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Old 25th February 2019, 21:08   #439
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Re: Understanding Economics

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Originally Posted by blacksport View Post
Capitalism has its ills, but socialism is not a solution. The only places where socialism is still thriving is where capitalism created wealth first, and socialists are busy eating away the wealth like termites. Other places like Venezuela have a huge starving population. In some Nordic countries, socialists piggyback on capitalism, but it will not be long before the ones that create wealth will get fed up with the freeloaders and start revolting.
This romanticised idea of Capitalism is nice to hear, although that's not what has happened in history. Every time it hits a bust cycle, socialism of varied degrees has been implemented by democracies to come out of it. The wealth is not created out of thin air, it is created by people by working and buying. A good example would the the New Deal in US for the Great Depression. The TARP in US after Great Recession was another example where the capitalist enterprise was bailed out by taxpayers, thereby applying socialism on capitalism.
Now, the purity of capitalism aside, the above examples happened for sure in history. The hypothetical on if the above were not done is a completely open guess to anybody.

A social problem that happens somewhere like the Gilet Jaunes points out to a coming crisis of some kind, which needs attention. In my opinion, the templates of "applying a policy because that is what we call ourselves", is clearly detrimental to the idea of democracy. Its not systems that matter, it is people that matter. Economics is to be applied on a case to case basis.

On another note, I was totally surprised at how the right wing media and social media generally rallied after Amazon after the HQ2 episode. This is the richest in the world, who paid no Federal income tax at all in the last year, and did not even get down to the table with the city when the going got a bit tough. It sure behaved like the spoilt child.
The little criticism they faced from mainstream business media, was appalling. The whole point of capitalism is to have non-permanent structures unlike a USSR. Big corporates trying to armtwist cities is pretty much like privatising USSR.

Last edited by ashokrajagopal : 25th February 2019 at 21:15.
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Old 26th February 2019, 10:41   #440
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Re: Understanding Economics

So AOC decides that fairness starts at home, which means the lowest salary at her congressional office will be $52K, which is the living wage in Washington DC. And she also caps the top salary at her office to $80K.

Fox news is livid, and calls it "Itís actually socialism and communism on display".
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Old 26th February 2019, 10:51   #441
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Re: Understanding Economics

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Originally Posted by Samurai View Post
The government should only own production/services of common goods, like defense, police, roads, rivers, air, dams, mines, energy, etc.
Well-written argument and can't dispute the crux of it.

I would only argue against the adding of Mines, and Energy to the list of common goods.

Why shouldn't a private entity not be able to put a roof top Solar plant? And by extension why should the private entity not be able to sell any excess generated energy?

Similarly for mines; Why should government make decisions on which are the natural resources which is going to be commercially useful? For example, lets suppose, government invests heavily in extraction of coal, and solar/nuclear power becomes abundant and cheap, then all public money that was invested in the extraction of coal becomes a waste.
Usefulness of a resource keeps changing with time and technology available.
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Old 26th February 2019, 10:52   #442
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Re: Understanding Economics

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but it will not be long before the ones that create wealth will get fed up with the freeloaders and start revolting.
...and stop the motor of the world? But who is John Galt?

(Classic Ayn Rand.)
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Old 26th February 2019, 11:21   #443
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Re: Understanding Economics

Democracy itself is the problem. That a group can get together to vote for a policy that enslaves others is a problem. When all the freeloaders get together to vote for a group which promises to take money away from the rich and pay others, democracy is really a problem, not a solution. And when the rich bribes the government to form policies that will benefit them, that is crony capitalism. The problem is not with capitalism, but with cronyism whose root cause is the government itself.

Socialism can work, if you take the govt out of it. People who have concerns for the poor and feel it is the humane thing to do should be allowed to take part voluntary. Rest can be spared. That's not what is happening today. Everybody wants to help the poor, but would like people richer than him to pay for it.

People are basically statists. Rather than wanting to have control over one's life, everybody wants the big daddy to ensure that the other person lives in a way he deems fit.
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Old 26th February 2019, 11:31   #444
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Re: Understanding Economics

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I would only argue against the adding of Mines, and Energy to the list of common goods.
Mines are natural resources, belongs to the whole country. We can't have private entities profit unfairly from it. We all know what happened in Bellary mines. Just one mine lord was making ₹5 crores a day, just by digging ore rich mud and selling it to China. Why was he given that special privilege? Let's not even talk about the pollution and destruction of every highway from Bellary to the coast.

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Why shouldn't a private entity not be able to put a roof top Solar plant? And by extension why should the private entity not be able to sell any excess generated energy?
Nothing wrong with that. The trouble comes with distribution. I can switch telephone/mobile operators, but switching energy operator is impossible. I have lived in US where energy production and distribution is in private hands. Could I switch my energy vendor? Nope. You are at their mercy, and they are not accountable to you. There is no competition possible in energy supply since you are stuck with whoever supplies energy in your area.

Energy production could be done by private companies, but distribution should be government controlled, since it is a common good, like a road.
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Old 26th February 2019, 16:44   #445
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Re: Understanding Economics

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Why was he given that special privilege? Let's not even talk about the pollution and destruction of every highway from Bellary to the coast.
As long as the leases for the mines are given in a transparent auction, and the whole country benefits from the license fee, I don't see a problem. This is what is being done in India with Coal mining auctions since last 4 years, after a Supreme court ruling.

Regarding pollution, mining is an inherently polluting activity. There are Greenpeace reports against govt owned Coal India, and I think KIOCL which destroyed the Kudremukh forests was also govt owned. We need more stricter regulation and enforcement. Ownership has nothing to do with it.

Quote:
Nothing wrong with that. The trouble comes with distribution. I can switch telephone/mobile operators, but switching energy operator is impossible....
Energy production could be done by private companies, but distribution should be government controlled, since it is a common good, like a road.
There are Energy exchanges from where you can buy power from any power producer in India. Currently (no pun intended :-)) only businesses can buy power via such exchanges.
Of course, as you have said it is not possible to switch distributor. But those models may come up, like one company just sets up the cabling part, and you can buy power from any producer.
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Old 26th February 2019, 21:17   #446
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Re: Understanding Economics

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Originally Posted by Samurai View Post
I dislike labels while discussing complex ideas. That is because it often conveys the wrong impression and dumbs down the idea to a stereotype.

Take socialism, I rather not use that terminology because it used to mean something else because of the way communist countries implemented it.
Quote:
Originally Posted by V.Narayan View Post
Thanks. Unfortunately this thread too often gets pulled down by rigid compartmentalization. Shades of grey. All aspects of life and economics are shades of grey.Agree 1000%Thank you.
Plus one to that. While on the subject here are my 2 cents (or going by the length of the post, 2 dollars or 2 roubles, whichever you may prefer)

Actually the problem with all the Ď-ismsí is that they are merely models to help us broadly understand economic systems, whereas overzealous leaders have attempted literal adaptations of these models in the real world, amply aided by ambitious academics and intellectuals.

To say that these systems are theoretical would be an understatement. Any system that completely ignores human and technological progress, inter-linkages between nations and societies is not worth fighting wars over. All the -isms are static and theoretical. I have always treated them as an exercise in academic pursuit and nothing more.

There seems to be some belief that communist and socialist states came into being as reaction to excesses of capitalism. This happens because of cursory reading of history. A common thread that ran across revolutions in Europe was presence of unpopular monarchies which were getting to be a drain on the exchequer. Monarchs needed wars to keep themselves relevant and reasons were plenty - religion, race, historical grudges and of course territory and resources. To finance their wars the monarchs taxed their populations heavily and far from being a capitalistís best friend, they were actually quite unpopular with the mercantile and industrial class who resented the taxes, repeated instability and famines caused due to war. Wars also cut off supply chains and made resources costlier. Monarchies were not synonymous with capitalism. However, since the monarchs were obviously wealthy and centralized power within their families, their antidote was naturally seen to be a system where wealth and power was distributed among the people.

The communist movement ushered in by Lenin and his comrades was one such reaction. In France the revolution did not bring about change in the economic system but more of social reform. Had Karl Marx been born before 1789, who knows the French would have flirted with communism too. In India since we had history of business families being close to politicians, we adopted a Ďmixed modelí, which although allowed private enterprise to exist, also kept a leash on it in the form of license-quota-permit raj.

The confrontation between between capitalist and communist/socialist ideals also served as a proxy power struggle between the two ascendant countries post WW-2 - Soviet Union and US. This is not to say that these are not contrasting ideologies but the demarcations became very rigid as each of the blocs started getting more countries within its fold. ďIf you are not with us, then you are against usĒ may have been coined by George Bush junior after the September 11 attacks, but this is pretty much how the world behaved during the cold war era too.

The casualties of this straight jacketing were the systems themselves. Communism as a system failed because it failed to treat humans as creatures who have needs beyond the basic roti-kapda-makaan. It also failed because it always needed the bogey of capitalism for its own survival, whereas it was born out of a very different struggle. After a point people could see that merely a different economic system is not a solution to all their problems and capitalist countries are not exactly the decadent monarchies that their own pre-revolution countries were. It was not all black and white as you said.

The capitalist bloc on the other hand was not as ruthlessly profit seeking as it was made out to be and had higher tolerance for diverse opinion, which ultimately shaped some of the welfare states that we see today. I doubt today that any country would officially call itself a capitalist country.

Lastly, refugees thronging to the US in tiny boats is not a victory for capitalism or a defeat of socialism. That would be putting it too simplistically. Refugees are fleeing lack of opportunities, corrupt regimes and crime in their native countries. These adverse conditions have been created out of a complex mix of post colonial power vacuums, plundering of natural resources by crony capitalists, entrenched feudal structures and sheer administrative incompetence of so called popular leaders.
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Old 4th March 2019, 10:52   #447
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Universal Basic Income

Economist Guy Standing makes a case of UBI (and Inheritance Taxes) in the Indian context.

Quotes from the article [all emphasis mine]. Please read the entire article, not just the quotes below .


Quote:
Contrary to popular belief, income support does not make the poor lazy, but instead motivates them to improve their material and psychological well-being .....
Quote:
The unconditional aspect is important because it is not paternalistic; in other words, it allows the person to use the money as they decide.
Quote:
Basic income involves direct transfer to an individual, which reduces a whole lot of administrative costs, is transparent and minimises corruption. The debate about welfare (policies) in India is intellectually corrupt due to the pretense that complex schemes can actually work.
Quote:
I am an economist. I donít like paternalism, whether it is from the state or anyone else. I donít like schemes where the state implicitly decides what you need. I start from that presumption. What I donít understand is why most of the subsidy schemes (in India) are chronically inefficient and regressive. I donít believe the welfare state of Europe of the 1960s is the answer for India in the 21st century.
Quote:
With the growth of the precariat, cloud labour, the gig economy, and platform capitalism, where people are doing odd jobs with Uber and Amazon, we are seeing people without a regular full-time stable job. As incomes become volatile from one month to the next, how can you work out a support system based on income levels? In flexible and open labour markets, insecurities will increase dramatically and you cannot have the old welfare system.
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Old 4th March 2019, 12:59   #448
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Re: Understanding Economics

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Originally Posted by Samurai View Post
Nothing wrong with that. The trouble comes with distribution. I can switch telephone/mobile operators, but switching energy operator is impossible. I have lived in US where energy production and distribution is in private hands. Could I switch my energy vendor? Nope. You are at their mercy, and they are not accountable to you. There is no competition possible in energy supply since you are stuck with whoever supplies energy in your area.

Energy production could be done by private companies, but distribution should be government controlled, since it is a common good, like a road.
I have the same experience when we lived in the USA for energy and also telecommunications/internet. Just about everything in the USA was quite cheap for us, coming from Europe, the Netherlands. The exception was gas/electricity and our mobile phone and internet access. Prices were out of this world. Simply because there was no real competition.

In the Netherlands I can switch over gas / electricity provider easily. All on line, dozens to choose from and often with big bonuses when you switch supplier. Just helped my son set up his new apartement and he got a Euro 175 discount by switching from his current supplier to a new one.

My Mobile phone bill in the USA was astronomical. It was on par with my bill in Europe about 10-15 years earlier. Same thing, heavy competition in the telecom space and internet providers.

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Old 9th March 2019, 15:18   #449
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Re: Understanding Economics

CNBC TV, which basically worships wealth and capitalism, had invited a rich person to their panel discussion. Then the $500million worth guest took an axe at their core beliefs. They react in panic to take the control back to the narrative they are trained to preserve.

Few points noted by the guest:
1) Philanthropy cannot fix structural unfairness built into the system. Despite this, one anchor tells her to donate all her wealth to charity. Duh!
2) Jesus Christ himself isn’t worth 500 times his median worker pay in companies.
3) Concentrated wealth leads to extreme unfairness, and removes all meritocracy.

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Old 9th March 2019, 16:38   #450
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Re: Understanding Economics

Understanding Economics-screenshot_20190309163644_chrome.jpg


https://m.economictimes.com/news/int...w/68331173.cms
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