[Samurai]

Richest country in the history of the world.
The DOW stock market index is at 30000, the highest ever point.
The most capitalistic country in the world.

Yet, thousands are people are standing in line to collect free food from food banks in many cities. Isn't that socialism? How come the richest and the most capitalist country is having this situation?

https://www.crossroadstoday.com/thou...food-in-texas/

I remember hearing about food lines in USSR in my teens. Now it is the turn of USA.

[ninjatalli]

Originally Posted by Samurai

Yet, thousands are people are standing in line to collect free food from food banks in many cities.

....

Now it is the turn of USA.

What blows my mind is there are thousands lined up, all in CARS - and these are not run-down, broken-down old cars; there are 4X4s, SUVs, swanky sedans standing in line.

A similar scene I have seen over the last ~6 months outside my apartment complex on the artery road (LBS) of Mumbai is a food van stopping every night for an hour, distributing food packets to folks - even before the van, arrives, I see a lot of folks seated around. Not a single guy comes in a car or even a 2 wheeler to pick up the food packet, every one of them is on foot.

That's the difference I guess between a developed and developing country.

[Cessna182]

Originally Posted by Samurai

Yet, thousands are people are standing in line to collect free food from food banks in many cities. Isn't that socialism? How come the richest and the most capitalist country is having this situation?

There was a recent report about food support for people laid off by one of the largest corporations (Disney) in the pandemic. It was strange to see people in cars driving up to get food support in the richest country. This is the fall out of just a few decades of "trimming the fat" in consultant speak, which in real life means to destroy whatever little job security there existed for the frontline employees. The situation in private equity owned companies is even worse- employees are getting laid off, stores are closing, and yet the PE bosses can get their bonuses out of a leveraged buyouts facilitated by super cheap credit. It is shocking that this is allowed legally. If only the credit went to the businesses that were starving for it, this pandemic could have been an opportunity to restructure the global economy to make it more equitable.

In other news, I learnt to my surprise that Netherlands is the most unequal country on earth. There's this channel that posts informative videos about economics and may be relevant for folks who want to learn about the subject but not through an academic curriculum.

https://youtu.be/Ot4qdCs54ZE

[adithya.kp]

FED balance sheet expanded from 4T to 7T in about 3 months. ( It took 108 years to get to 4T in Feb 2020)
I think the global market absurd rally can be attributed to this.
And we we are reading about food lines. The sense I get is that central banks will keep supporting capital markets, no matter what. This actually is bad. Because not everybody will participate in equity. Only rich will get richer.

Originally Posted by Samurai

Richest country in the history of the world.
The DOW stock market index is at 30000, the highest ever point.
The most capitalistic country in the world.

https://www.crossroadstoday.com/thou...food-in-texas/

I remember hearing about food lines in USSR in my teens. Now it is the turn of USA.

[Dry Ice]

Originally Posted by ninjatalli

What blows my mind is there are thousands lined up, all in CARS - and these are not run-down, broken-down old cars; there are 4X4s, SUVs, swanky sedans standing in line.

True. And the only logical explanation is gas is cheaper than the food they are out to collect. The vehicles might be EMI free, but who knows!

It's indeed unusual for us to wrap our heads around this.

[Samurai]

Originally Posted by ninjatalli

What blows my mind is there are thousands lined up, all in CARS - and these are not run-down, broken-down old cars; there are 4X4s, SUVs, swanky sedans standing in line.

This is what I don't understand. In the following video, a food bank worker says that folks are showing up in Merc, Lexus & Range Rovers to collect free food. In the end of the video, you can see a Merc in the line. I can't wrap my head around that one. If they can afford those cars, how are they not able to buy food? The DOW is at 30000, can't they sell their stocks? Surely folks who own luxury cars would have quite a stock portfolio... or other assets.

https://www.youtube.com/watch?v=eJot9n8H2Qo

Originally Posted by ninjatalli

Not a single guy comes in a car or even a 2 wheeler to pick up the food packet, every one of them is on foot.

That's a socialist food line. USA has a capitalist food line, so people come in luxury cars.

Originally Posted by Cessna182

In other news, I learnt to my surprise that Netherlands is the most unequal country on earth. There's this channel that posts informative videos about economics and may be relevant for folks who want to learn about the subject but not through an academic curriculum.

Wealth inequality is different than income inequality. One can lead a decent life without having wealth, if they have a regular income all their life. When it comes to quality of life index, Netherlands is in 5th place out of 200 countries. So it is alright.

Not having food to eat means these Americans have no income. So income inequity is a greater problem. If they didn't have socialist programs like food banks giving away free food, these citizens of the richest country in the world, with their stock market at the peak, will be starving to death in their luxury cars and fancy homes.

Can some defender of capitalism explain this paradox to me?

[sunishsamuel]

Originally Posted by Samurai

This is what I don't understand. In the following video, a food bank worker says that folks are showing up in Merc, Lexus & Range Rovers to collect free food. In the end of the video, you can see a Merc in the line. I can't wrap my head around that one. If they can afford those cars, how are they not able to buy food? The DOW is at 30000, can't they sell their stocks? Surely folks who own luxury cars would have quite a stock portfolio... or other assets.

This is scary and eye opening too. Well, not everyone who afford cars and luxury invest in Stock markets.

Agree with you, they may have had other income generating sources like Rental property, farms, car leasing/taxi agencies and so on. And in the current situation it looks like every income source is affected. So they ran out of money, probably. And whatever left is used for gas, utilities (internet, electricity, heating, water etc)

Further, if they want to sell their luxury cars/house/assets to recover some money where are they buyers ?

Considering the cheap credit and available options, affording a merc or lexus isn't a big deal in countries like US. I'd be surprised if people coming in Ferrari or Lamborghini queued up for food.

The stock markets are not reflecting the reality. Same with India and US. Index and Prices of some of the stocks are going through the roof based on rumours/assumptions etc. So the ones making money are the fund managers and shorter gang ! Not sure where it will end.

That said, I am not sure if situation for the salary/wage dependent workers are going to improve any sooner. With Work from home more popular and home delivery becoming a norm, you no longer need Supermarket staff, Taxi drivers, Housekeeping etc. Thats huge unemployment and hunger waiting in the queue !

[alpha1]

Originally Posted by Samurai

Not having food to eat means these Americans have no income. So income inequity is a greater problem. If they didn't have socialist programs like food banks giving away free food, these citizens of the richest country in the world, with their stock market at the peak, will be starving to death in their luxury cars and fancy homes.

Can some defender of capitalism explain this paradox to me?

It is simple. Capitalism values tradeable capital assets.
House & vehicles are physical assets for which I can easily get loans at discounted interest rates. These mortgages payment may be allowed to be deferred or the assets may be seized altogether - minimizing the losses to the lender.

Food consumption and human health/life are not treated as tradable capital assets, and neither can be be seized by the lender. (Otherwise you will have to make slavery legal once again).

Actually, hey, capitalism promotes private ownership of all assets - why not human beings?

[ashokrajagopal]

Originally Posted by Cessna182

In other news, I learnt to my surprise that Netherlands is the most unequal country on earth.

Tangential to the discussion, but the subject of inequality can only be made sense of in the context it is being used.
Inequality in itself is not the problem (although a lot of people try to strawperson it that way), as much as the material condition of those at the receiving end.
Its very visible where you will see a lot of folks go on and on about how an Alto owner shouldnt be jealous of an Audi owner etc. Inequality should be focussed more towards how some people have no option but to burn themselves out to stay alive.
OT

Originally Posted by Samurai

If they can afford those cars, how are they not able to buy food? The DOW is at 30000, can't they sell their stocks? Surely folks who own luxury cars would have quite a stock portfolio... or other assets.

I don't know the car distribution, but tada,




What can anybody sell?

These graphs should go down in history as classics, like the Monalisa or the Guernica.
Should be called "Schrodinger's class war"

If they didn't have socialist programs like food banks giving away free food, these citizens of the richest country in the world, with their stock market at the peak, will be starving to death in their luxury cars and fancy homes.

Starving to death is not the right illustration. What do you think all the guns in US are for?

[Jeroen]

Originally Posted by Cessna182

T
In other news, I learnt to my surprise that Netherlands is the most unequal country on earth.

Thanks for sharing that video! It is worth watching! But to start with how the presenter finished: I would rather live in the bottom 10% populations of the Netherlands, then the top 10% of Ethopia, despite Ethiopia doing so much better than the Netherlands on this particular matrix.

It does make for some interesting thought though. If anything it shows one need to be very careful drawing conclusions from a single metric.

Even thought this video appears to be quite recent, it is full of inaccuracies

Yes, home ownership is a big thing in the Netherlands. And lots of families will have a mortgage. However, getting a 100% mortgage, let alone more than 100% is virtually impossible these days. Rule of thumb is you need to bring 10% of the montage amount as your own money and there are strict rules on ratio income to mortgage amount.

Yes, there is this so called Mortgage guarantee plan. It is only available to first buyers and up to a (low) maximum. And no it doesn’t make the mortgage risk free for the borrower, only for the bank. So the bank is guaranteed the mortgage is paid back, if the borrower defaults. The borrower would still have to sell and is still likely to be left with a remaining debt. What this mortgage guarantee plan does is it lowers your mortgage interest rate, because you are of less risk to the bank!

The Dutch housing market has only once seen a major set back and that was the only time when people found themselves with negative equity. Not a problem as long as you can still pay your mortgage and don’t need to or want to sell.

House ownership is very popular in the Netherlands. As long as you can get a mortgage, with the tax deduction house ownership tends to be cheaper than renting. And the Dutch do like cheap deals. Two of my kids have recently, together with their partner (so two incomes) bought homes. Around Euro 400.000. Which gets you a typical what we call terraced starter home in the suburbs of the large towns. Sitting/dining room, kitchen and 3-4 bedrooms upstairs. They have friends (same age, around 30) who have less income and also less savings that don’t qualify for a mortgage. They live in a small rental apartment and end up paying substantial more in rent every month then my kids and their partners in mortgage repayments. Even before the tax break!

You might find it interesting to know that in the Netherlands mortgage interest rates tend to be fixed for very long period. typical mortgagesperiod is thirty years and it is possible to fix your interest for that full thirty years. As mortgage rates have been extremely low for the last 10-15 years, most people get their interest rate fixed for the duration of the mortgage.

And yes, as the presenter mentioned, mortgage interest is deductible from income tax. The more tax you pay (higher tax bracket) the more you can deduct. BUT, that system is changing and we will be at system where mortgage interest is only deductible in the lowest tax bracket in a few years.

Does it promote building a estate portfolio as the video suggest. No it does not, because the mortgage interest deduction is only applicable to your primary residence. So if you buy a second home, that mortgage interest is simply not deductible.

What is not mentioned at all, is the wealth tax in the Netherlands. Which as far as I am aware is unique: You pay tax on your total (worldly) estate. So all you bank accounts, shares, bonds, estate etc is calculated and you pay tax on that every year, irrespective whether you are making a profit or a loss. It is a gliding scale and it is being upped every year. Average about 1,5%. So if you have Euro 100.000 savings in the bank at the end of the year you will have to pay euro 1500 on it. Your primary residence is excempt from this calculations. But for instance, when we owned some properties overseas that was included every year.

On the upside, income generate through these means. (e.g. interest received or rental income from a second home) is not taxed at all. Only the wealth tax and no property gain tax either.

So mortgage rate decuction is only allowed on your primary residence, but all your other assets are taxed under this wealth tax. And it is the same tax for everybody! (

The biggest error the presenter makes is around inheritance. He suggest that family wealth is handed down to a carefully selected (one) child. thus preventing splitting of the estate. This is simply not true. The Dutch inheritance laws are very simple and straightforward. Every child is entitled an equal amount. By law! You can write all the wills you want but you can’t change that. You can not disinherit your partner and or child. It is impossible. So that part of his storyline is completely wrong.

E.g. when I would die, my wife and three children have a legal equal claim to our total estate. In fact the kids could claim their legitimate portion. Which would mean my wife would have to sell the house! What happens is that through a will, you can restrict the kids claims until both partners pass away. But you need a will, with in the Netherlands means paying (literally) a visit to a notary public. Most couples (you don’t need to be married) will have a will in favour of the so called, longest surviving partner. It just means the kids can’t claim their parts until both partners pass away.

What is true is that the number of children per family has always been relatively low in Calvanistic the Netherlands. Even more so after WW2 with efficient birth control becoming available to the general public.

Charlene de Carvalho-Heineken (richest woman in the world) was not a carefully selected child from an inheritance point of view, she was the only child and thus inherited everything when both her parents passed away. She is also a very nice lady by the way. I used to run into her from time to time in the village where she used to live.

The Netherlands does have lots and lots of family business. For instance farmers. And if they have children and one them wants to continue the family business it is a huge problem. Many farms have huge assets (land), but not so much ready cash. If there are two children and one wants to continue the family business, he/she needs to buy out the other child as it is entitled to half of the inheritance. So in fact you might see companies having to sell assets in order to be able to continue and to hand the family business to a particular child.

Careful estate planning is required, but that does not change the (inheritance) law, it just provides sufficient time to work out the financial over a couple of decades.

Jeroen

[DigitalOne]

Originally Posted by Samurai

I remember hearing about food lines in USSR in my teens. Now it is the turn of USA.

I have read in the last decade or so in the Socialist "utopia" of Venezuela, the most oil rich nation in the world. It is a every year phenomenon.

Originally Posted by Samurai

If they didn't have socialist programs like food banks giving away free food, these citizens of the richest country in the world, with their stock market at the peak, will be starving to death in their luxury cars and fancy homes.

Can some defender of capitalism explain this paradox to me?

This is a charity program giving away food on eve of Thanksgiving. Not a government sponsored "socialist program" as you claim. Charity towards fellow citizens is neither capitalism or socialism. It is just basic humanity.

During this once in a century pandemic crisis, I am sure pretty much everybody who is well off now are doing their bit more charity (time/money/food) towards the less fortunate. Let us extrapolate one time crisis' responses to economics.

Do you seriously believe US will be having starvation or food lines a year or two down the line? How about Venezuela?

[AltoLXI]

Read somewhere people mentioning that they were stocking food for the Thanksgiving day from these food banks though they were pretty well off. Incidentally these people were already in quarantine. My guess would be these well to do people drove to the food banks not because they do not have food but are infected and need the daily food during quarantine. Probably these were the guys seen in the high end sedans.

But then a few articles in NYTimes couple of months back depicted the ground reality of the American society - Hispanics with no alternate income to fall back upon, illegal immigrants who have no state support, women divorced and burdened with half a dozen kids from multiple marriages, "students" who moved from Mexico who were working illegally and who lost jobs during pandemic. The list goes on but one common factor underlying all these stories was that people either had no money saved for the rainy day or could not save enough. These people still have cars bought on loan and had no means to pay back. Cars do not equate to prosperity but necessity in US as many of us know. One may be broke but may still retain the car as it makes sense. People have been using the cars as home during the pandemic.

Read in another article where a well to do farmer asked people to come and collect the produce from his farm for free instead of going to church organized charity. Believe it or not, people actually had the gall to ask him to harvest the produce and donate it to them. Isn't this laziness taken to another level?

[Jeroen]

Originally Posted by DigitalOne

I
Do you seriously believe US will be having starvation or food lines a year or two down the line? How about Venezuela?

The USA has always had food lines. The level of poverty in the USA is something that is not well understood. But it is very real and it is a substantial number of people.

As there are very few Governmental social safety nets, you will find that in many place food lines are run by charities. When we lived in Kansas City there were several. If you had any left overs, especially after a party or so, you would take your left overs to these charities. Every day you can see food lines in many towns and cities across the USA.

Corona has just made it so much worse and around Thanksgiving the food lines always hit the news big time. But food lines are a fact of life in the USA. you can close your eyes and it is very easy to ignore. But that does not alter the fact that many people in the USA live on the brink of survival and are dependent on mostly charities, for their survival. That includes food!

My wife worked at one of the worst schools in all of the USA. Troost Elementary in Kansas City. Almost all black students. You would not believe the family situation of most of these kids.

Have a look here, you can look up reviews, statistics etc:

https://www.schooldigger.com/go/MO/s...79/school.aspx

These schools do provide free lunches to most of the kids. Let me tell you, very often that was the only square meal per day those kids would get!

Almost always very broken up families, typically dad was in jail, about to come out of jail, or about to go into jail. We always had a number of families living in cars, because they could not afford to rent a home etc. etc.

USA has many great things going for it, but as a society as a whole it has many very dark sides too it as well.

And yes, every year we see a few photographs of a few people rocking up in a big new car to the food line. It is the same here in the west, where every year at least twice you will see a story about some persons claiming welfare whilst driving a fancy Mercedes. Those images are just exceptions and take away the attention from the real problem: In the USA there are a lot of very very poor people, who find it extremely difficult to make ends meet, financially. And end up on a food line.

Jeroen

[DigitalOne]

Originally Posted by Jeroen

The USA has always had food lines....

Corona has just made it so much worse and around Thanksgiving the food lines always hit the news big time.

Thanks, Jeroen ! Great points.

I am aware of the food lines, soup kitchens and such in the USA. US system has its defects, and nobody in their right mind would call it perfect.

I was just responding to Samurai's extrapolating a Thanksgiving food line during a once-in-a-century crisis as a failure of Capitalism.

Whereas you can contrast this with the chronic food shortages/riots in Venezuela, which is failure of Socialist policies.

Originally Posted by DigitalOne

Let us extrapolate one time crisis' responses to economics.

Please read my earlier statement as "Let us not extrapolate one time crisis' responses to economics."

[Samurai]

Originally Posted by DigitalOne

I have read in the last decade or so in the Socialist "utopia" of Venezuela, the most oil rich nation in the world. It is a every year phenomenon.

You want to compare USA to Venezuela? That's where we are now?

Originally Posted by DigitalOne

This is a charity program giving away food on eve of Thanksgiving. Not a government sponsored "socialist program" as you claim. Charity towards fellow citizens is neither capitalism or socialism. It is just basic humanity.

Socialism is often compared to charity. Doesn't matter who is doing the charity. Why do so many residents of the richest country with record stock market index need charity?

Originally Posted by DigitalOne

Do you seriously believe US will be having starvation or food lines a year or two down the line?

I don't have to believe, the facts are available. In 2018, that is even before the pandemic hit, around 35 millions Americans suffered from food insecurity. Pandemic pushed it to 50 million this year. Food insecurity is "a household-level economic and social condition of limited or uncertain access to adequate food.".