by JS O’Brien
Vice-presidential candidate Senator Joe Biden (D-Delaware) ran into a buzzsaw of an interview from Barbara West of WFTV-TV, Channel 9, in Orlando, Fla on October 23. West is the wife of Wade West, a GOP political and media consultant, and her bias was evident as she made more than one statement of opinion, as though it were fact, then proceeded to ask a question related to that opinion/faux fact. The exchange making the rounds most often in the blogosphere is this one:
West: “You may recognize this famous quote: ‘From each according to his abilities, to each according to his needs.’ That’s from Karl Marx. How is Senator Obama not being a Marxist if he intends to spread the wealth around.”
Biden: “Are you joking? Is … is this a joke?”
West: “No.”
Biden: “Is that a real question?”
West: “That’s a real question.”
Biden, of course, being caught by surprise, could say little that would be of much use on a television screen. He could have made the point that all taxation does, in some manner, spread wealth. Even soldiers are paid from tax dollars and, while they earn their pay, there’s no question that they are being paid from taxpayer’s wealth. Anyone being paid to serve taxpayers, from dog catchers to police, are part of a wealth spreading scheme of some sort.
What Biden should have done, had he not been blind-sided, was to make the point that all Obama is doing is adjusting the progressive income tax structure that was supported by none other than Adam Smith, the patron saint of free markets, and introduced to the US, originally, by Republican Abraham Lincoln. Later, the progressive income tax was supported so heavily by Republican Teddy Roosevelt that the Constitution was amended to accommodate the income tax, and Roosevelt made it clear, in a speech delivered in 1910, why he thought a progressive tax was the right way to go.
No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar’s worth of service rendered, not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective, a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.
When it comes to redistributing wealth, good ol’ Republican Teddy was pretty clear, wasn’t he? Maybe Teddy Roosevelt was a Marxist.
What about Republican Ronald Reagan, the modern patron saint of conservatism? Reagan was a big supporter of the earned income credit (EIC), a distribution from wealthy taxpayers to less wealthy ones, saying it is, “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” Both Reagan and George Bush the First increased funding for the EIC. Are they both Marxists?
But perhaps the most effective response might have gone like something like this:
Barbara, I’m glad you asked that question, because words like “socialist” and “Marxist” are getting tossed around by people who are afraid of losing an election, hoping that these words will sway enough votes to get them into the White House, riding on a lie.
The fact is, Barbara, that if there is a socialist or Marxist in this race — and I don’t really believe there is — then it has to be Sarah Palin.
In Sarah Palin’s state of Alaska, every citizen gets a check from the government every year for doing absolutely nothing. Not for work. Not for anything they’ve earned. They get that check just for breathing and living in Alaska. Last year, that check amounted to $3,269 per taxpayer. And all for nothing.
Do you know where Alaska gets that money? They get it mostly from the oil companies that pump oil from the state. More than half of Alaska’s total tax revenues come from separation taxes, which are basically taxes on oil and minerals taken from the ground. Another 25% or so comes from corporate taxes. Because companies are paying so much, Alaska citizens pay no income or state sales taxes.
But they do get a check generated from the wealth those big companies generate. And there is no other state in the Union that doesn’t require either a sales or income tax from its citizens, yet gives them a check every year from money those citizens didn’t earn.
I don’t really think Sarah Palin is a Marxist, Barbara. I think that’s a word made up by desperate people who will do anything to win – even tear our country apart by demonizing their opponents. But if there is a Marxist in this race, Sarah Palin would have to be the one.
Maybe we could get Michele Bachmann to investigate Sarah for being un-American.
Categories: American Culture, Economy, History, Journalism, Media/Entertainment, Politics/Law/Government
Progressive Culture | Scholars & Rogues 
That is one killer post. The answer you imagined for Palin was as devastating as the quotes by Teddy Roosevelt and Ronald Reagan.
Then, perhaps some segments of the readership at S&R will revisit Sarah, and vote for her due to her Marxism…..just kidding…
Jeff
snap.
Any way to get this out to the media? Have Biden read this in a presser or something?
I didn’t realize there were “no” taxes on citizens in Alaska. … that just might mean we DO want Sarah in office, right? She’d drop all taxes on citizens and generate the entire national revenue from royalties on our resources, and tax the hell out of corporate activities.. leaving Joe the Plumber free to do precious little and maybe even get a check!
Hmm… I didn’t realize the level of projection going on from Palin. Why isn’t she running under the Dem ticket?
Yes, that’s what Joe Biden should have said… but then he would be Bill Clinton, wouldn’t he?
Savanster:
Well, there are a few taxes in Alaska. Property taxes, some local sales tax in a few places, and excise tax here and there. But no tax on autos, no state sales tax, and no state income tax to the best of my knowledge.
Sweet deal, huh?
Well, with global warming ramping up.. maybe moving to Alaska isn’t a bad idea.. And, with Stevens probably going out… heh 😀
Oh, if Joe Biden could read this…!
I get so tired of watching the Republican party slinging around the term “Socialist” (and anything else potentially fear-mongering or which might trigger memories of the Cold War in people’s brains) … when economic experts have said that we’re leaning heavily socialist as it is.
They’re banking on the bet that most people don’t know what the background or reality of all these terms.. socialism, Marxism, communism. Socialism and communism actually lean towards the idea of a more Star Trek-like world : one where class boundaries begin to be erased; one where a common, central government can legislate peacefully; one where the government can actually manage to do all the things that they want to do. Now, unfortunately, the execution/reality of these political theories have not, for the most part, turned out successfully or as ideally as their creators imagined. But we’re living in a country where the current President acts like our Constitution – our laws! – is something he doesn’t need to pay attention to, and we have a candidate who *gasp* wants to fix what W. has done wrong, vs. a candidate who seems to desire to get into office regardless of cost to the nation.
My state has early voting, so I’ve already cast my vote – for the smart party.
I was just thinking today, after the DOW shot back up 900 points, that lots of someones on the inside of the stock market are making lots and lots of money during this roller coaster ride. If stock prices were set on actual value rather than hyped up value, the US would be sitting pretty solid right now. The sad fact is that our country has elements of socialism, Marxism, capitalism, and so many other -isms that not even a sharp guy like Joe Biden knows what he’s looking at or how to explain it or defend it. Palin, who is the VP candidate for a party that claims to be for less government and free markets surely doesn’t get it. Voting for the smart party? I wish I could.
Kevin,
Stock prices are discovered at an exchange, not arbitrarily set. If they were set, who would be in charge of setting the prices, and what would be the valuation formula. If equities prices were set, then they wouldn’t be any different than a bond at par or other fixed income security. Where would be the incentive for someone to buy a stock, rather than a bond, bill, CD, or other interest bearing instrument. Also, would there be an inflator if stock prices were set, so the prices could always go up? How would IPO’s be done, and where would the money come from, debt?
As for the roller coaster and people making money in the stock market, just remember that there has been a 42% drop from the highs last year, and today’s 9.8% rally still leave us 32% below the highs. If one had the prescience to buy stocks on 10/13 during the panic, then they made money. However, most people were panic selling at the bottom, not buying as they should have been. The panic of 10/13 offered many good opportunities, and many good dividend paying stocks are yielding much more than one could get at a bank. Right now GE is offering a safe 7% yield at today’s closing price…..you can’t get that at a bank.
Jeff
spot on
Bravo! It was hard not to feel sympathy for Biden, watching that “whack job” (phrase of the day) ambush him with one ridiculously “Have you beaten your wife lately”-type question after another.
All things considered, he handled it well. When humour didn’t work, he retreated to the safety of talking points, instead of becoming hostile with the interviewer (which would have been totally justified, but never looks good).
For the next hour or so though–probably like yourself–I kept thinking: “I wish he’d said X … or I wish he’d said Y!”
This was quite an amazing post. It really turns this whole name-calling game on its head. every American knows in his or her hearts of hearts knows that no one supporting Obama wants true socialism in America, and this whole ‘spread the wealth’ is nothing more than propaganda.
the income tax is against the constitution in the first place and we stupid people should stand up and tell them to go to hell and let the federal government print their own money and not BORROW it from the F.E.D. or is this to simple for people
Poor excuse of a socialist. The communist manifesto says that it must be steeply graduated. The poor must get more. If you work and already earn money you shouldn’t get any, or not as much. What kind of socialist lets everyone have some?
“…and her bias was evident as she made more than one statement of opinion, as though it were fact…”
I didn’t get past this line. Tell me, was the rest of the piece as bitterly disingenuous as this?
This article is blatantly untrue. I can’t seem to find the name of this article which is a problem.
Firstly, Marxism is known to include the REDISTRIBUTION OF WEALTH, which this clearly is not. It’s money from a surplus in profit from its oil pipelines.
Secondly, and perhaps more importantly, this policy was in place before Palin became governor!
This is a disgustingly fallacious attack from the Left and I’m surprised this garbage was even published. Again: WHO WROTE THIS?
MORE LIBERAL IGNORANCE!
Teddy Roosevelt supported higher tax rates for higher income earners, so does President Bush, after all his across the board tax cuts gave a higher percentage tax cut than was given to the wealthy.
The difference between TR, Bush and Obama is that Roosevelt and Bush let people keep their OWN money. Obama, in his dishonest “I’m giving a tax cut to 95% of Americans” policy is sending government checks to millions of people who NEVER PAID ANY INCOME TAX. Thats re-distribution of wealth, thats socialism. And before anyone pulls the asinine “but they pay Social Security tax”, that money is intended to pay for their own benefits when they retire, if they get a refund of their SS taxes without cutting their SS benefits, that means everyone ELSE is paying for THEIR retirement — which is also socialism.
Furthermore, no one has apparently informed you ignorant libs that there is a difference between leasing mineral rights that BELONG TO THE PEOPLE, and taking money that rightly belongs to one person and giving it to another.
But then again, if you weren’t ignorant, you wouldn’t be voting for Democrats!
“…every citizen gets a check from the government every year for doing absolutely nothing. Not for work. Not for anything they’ve earned. They get that check just for breathing and living in Alaska.”
Okay, lets clear something up. You got to understand the cost of living in Alaska is much higher then the states. Having a small population, Alaska depends almost entirely on outside sources for manufacturing and food. The states remoteness raises shipping costs far higher then other states.
And Sarah Palin didn’t start the Permanent Fund (money from the gov.) program. The program started in the 70’s.
I apologize if I made absolutely no sense, my lack of sleeps is catching up on me.
If you look it up you could probably find a much better explanation then mine.
Obama 08
“Anyone being paid to serve taxpayers, from dog catchers to police, are part of a wealth spreading scheme of some sort.”
uh no. they are earning it. that’s different.
What you don’t seem to get is that wealth is CREATED by creating value in the marketplace (any place where someone will pay for something). There’s not a pre-set amount of it left over from the big bang.
Spreading money doesn’t actually spread wealth anyway, but that’s another whole topic.
Cameron, you completely missed the point of the article.
This isn’t actually an attack on Palin, and it’s by no means a sincere accusation of Palin as being a communist/socialist.
The point was rather to show how such name-calling is stupid, and almost unfailingly the name-callers do not even know what the various “slanders” mean (ie. anyone who calls Obama a communist clearly has no grasp of the tenets of communism).
Further, its meant to point out that there are ALWAYS various forms of redistribution, many created and endorsed by republicans, and that such redistribution is not synonymous with socialism.
On another note, how exactly did you determine that taking wealth from resources and distributing it to the citizens is NOT redistribution of wealth?
Marxism is a belief that capitalism is based on the exploitation of workers by the owners of the means of production. The Citizens of Alaska have been recieving this money since 1982. If I recollect correctly Sarah Palin became Governer in 2006. Listed below is the description of why and how the Alaskans get thier money.
The APF is a public trust fund – a diversified stock, bond and real estate portfolio – into which are deposited the oil royalties received from the corporations which extract the oil from the lands of Alaska. The first citizen dividend check from the interest of the APF was issued in 1982 and was for $1000 per every person for everyone in Alaska who had resided in the state for at least one year. Annual citizen dividends have been issued every year since then, for a total of more than $23,000 per person.
I find it quite funny if something isn’t what citizens who sway democrat label capitalism something synonomous with Republicans. I have yet to meet a broke Democratic Senator or Representive.
As for Roosevelt What really mattered, he felt, was to have a national community based on citizens’ political equality, relative economic equality and interdependence. I agree with the motives however the means are misguided. In order to achieve this utopia of equality he wanted it would require every to do similiar jobs, make the same amount, and get the same education. How does that not have Marxist roots?
As for Ronald Reagan and George Bush the EIC was designed becasue families where not having 5 and 6 kids any more. This means less people joining the work force and more retirements. If you have less people and more jobs you will have to find someone to do the job.
Now my view. I served in the US Army for three years. I was offered an early out to go to school by Bill Clinton’s reduction in the military. I worked two jobs to fund my college and eventually achieved a wonderful job which I have been in for 10 years. I have been promoted and hope to continue to. So If I achieve say CIO and make more than $250k I now need to share all my hard work and effort with some people who had no ambition. Although these people did not work their way through school, maybe even not chose to finish school they benefit from the “redistribution of wealth”. This will start kill the free enterprise system. Noone will like to give something and get nothing in return.
Ansel, your faith in human intelligence is touching.
First off, I hate this talk of Marxism and socialism like it’s a bad thing. It’s a very good thing actually, when Marx was writing he was writing at a time when exploitation of the worker was running rampant. He saw wealthy business men making ungodly amounts of profit, while the worker scraped by just to make ends meat. When he wrote the Communist Manifesto it was to say hey enough is enough. What Marx did not for see however, and I hypothesize is the rise of the middle class. Which kept the masses happy for a long time, now the worker had something to aspire to. Skip a head to now what do we see? Well pretty much the same thing, workers are losing more and more jobs or wages. The poverty level is rising, people are starving, and we are seeing a huge rise in older parents having to take care of adult children, because they can’t find work and have to go back to college. There are thousands of social problems to look at that are going on right now, which are very similar to what was going on in Marx’s era. So maybe a more Marxist view of fundamental change would be a great thing for this country. On another note, I bet when everyone read this article and found out that Alaskans do not pay those taxes plus get over 3 grand a year for nothing, everyone thought to themselves, dang I should move to Alaska. If you didn’t at all get somewhat tempted on that, than maybe the way this country is going is what you want, perhaps you are a CEO?
So both parties are socialist, glad people are starting to wake up to this. Now if we can only get them to learn that this is a bad thing. The Austrians were right. Its not too late. Read Hazlitt. Read Rothbard. Read Mises.
John Doe wrote: “income tax is against the constitution in the first place”
Actually, it is IN the Constitution – or at least its Amendments. The 16th Amendment reads: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
I really don’t see a reason for income tax AND sales tax, sure make one higher than the other etc and spread it out to the states correctly but surely there is some efficiency lost by taxing coming and going.
Brandon, I’d like you to explain to me, as you would a child, where you and Republicans got this idea that wealth is “created” by anything, because I sincerely don’t understand. There is a finite amount of money out there. It is true we no longer operate on any kind of mineral backing in this country, and yes, the government can always print more twenty dollar bills, but as you know, “making” more money devalues ALL money after inflation wipes out any benefit. Explain to me how anybody can “create” wealth without it ultimately coming out of someone else’s pocket? If you have created something of value and I buy it, sure, we’re both getting something out of it- but wealth hasn’t been ‘created”- it’s been redistributed. Even if you sit on your stocks until they go up in value, you’ll never actually see any of that money until you sell them and someone else buys them (leaving out, of course, dividends, which are generated from profits made from selling a good or service.)
If I have this wrong, educate me, because you just don’t make sense at the moment.
Garrison, it is absolutely possible that some of your wealth will be spread to those “without ambition.” But it is touching and a little scary that you seem to think that ambition and hard work always lead to wealth, or that there weren’t a thousand little lucky breaks you may have had or unlucky breaks those “lazy” people had that have conspired to make a difference in your incomes. Not one of us is given more than 24 hours in a day to work in. It is, frankly, offensive for you to suggest that everyone in this country who makes less than you do is somehow less hard-working or less capable then you are. Some are, but all of them? No way in hell. Just as I would never DARE to tell you that you’re not a millionaire because you’re “not working hard enough.”
I suppose you think it’s unfair that Paris Hilton is taxed higher than someone working two jobs and raising a family because she “works so much harder,” right?
The self-centeredness and self-deception of this country is sometimes unbelievable.
Calling this “wealth redistribution” makes it sound like the government takes money from people’s paychecks and then writes checks to people not working. That, removed from any context that could give it significance, is indeed a bad thing. It is wholly unfair to do so.
What most people who toss around the “wealth redistribution” label miss is that government doesn’t spend the majority of its “redistribution” on welfare for people not working. In fact, I don’t think public welfare takes up more than a percentage of the budget, though I’m definitely talking out of my ass with that figure. What it does spend money on tends to be intangible to the average citizen, but offering greater returns for standard of living over the long run: investments in public education (working smart instead of working hard), infrastructure maintenance and reform (good roads, non-collapsing bridges, mag-lev trains in the future?), applied sciences and engineering (e.g. the grant awarded NC State University to research “smart electric grids” for renewable energy sources, link), and the subsidizing of the construction costs for new energy needs, hospitals, community centers, and so on.
These things provide benefits that can’t be quantified on an accountant’s ledger. The accountant is concerned with quarterly finances, not the long-run beyond possibly forecasting for the next year. And the free market, as powerful an engine for efficient use of capital as it is, will not provide these things.
So don’t look at the term “wealth redistribution” and see someone getting something for nothing. That oversimplifies what taxes can do if wisely spent, and reaches to the baser, selfish nature in all of us.
Oh, and Garrison? “Give something and get nothing in return?” Really? By your own admission, you’ve gotten a lot from your hard work (and, I might add, by the LUCKY BREAK that you were able to leave the military sooner than you’d planned.) Are you seriously telling me that, when you or anyone else makes $250,001 of taxable income you’re going to pull back from working because you’ll be paying more in tax? Even though, of course, you’ll still have a lot more money with which to buy more and invest more than all those poor slobs making less than 200K? That’s not just selfish- that’s pathological.
AC Walker,
You do have it wrong, but it would be very hard to explain well in a comment.
After this brief comment, I’ll try to explain. Take the average billionaire. Does he/she have billions under a mattress? No. They have wealth, which means assets valued at billions.
A short version would be something along the lines of:
I am the government of Fongo (an island nation).
I start a central bank or federal reserve or whatever like that..
The federal reserve prints ~100 (one hundre Fongo fongollars) on banana leaf paper.
There now exists exactly ~100 on the planet.
The central bank then loans that to a local private Fongon bank. That bank now has the money to loan.
That bank loans the ~100 to 10 local business, at ~10 each.
Those businesses buy raw supplies and pay their employees ~5 total, and invest the other half, in some other businesses … or perhaps they put it in the bank which loans it out again (they are required to keep a percentage in the vault).
Those employes use their fongollars to buy food, plungers, and a fongvo (the Fongon equivalent of TiVo).
So uh, how much money is there now?
The other businesses each use their ~4 or ~5 to do the exact same thing! Pay their employees, buy materials, etc.
Each of these businesses has created something, food, plungers, fongvos, etc and they sell it (some of those sales are as mentioned).
The employees make ~1/year for their efforts.
The business that makes the food runs low margins, so the company isn’t worth a ton more than the gross recipts of the business for the year.
The business that makes the fongvo is able to do so at high margin, so they are very profitable, and they are growing. Therefore they are worth ~10,000 on the stock market. One person owns that company, so he is a 10 fongonaire.
So now we have a thriving flowing economy based on 100 fongollars.
In terms of deposits in the bank, just add up all the people that saved money and didn’t spend it. Bear in mind that because the bank loans some 90% back out, each time they loan you are adding currency to the system.
I would guess that there is like ~350 – ~500 in the system. That’s because i buy something, they buy something they buy something, it gets saved and lent out. Repeat. But the saved amount stays. So I save ~2, so I have ~2; but the guy that borrows it has ~1.8, and he pays me to clean his deck. So now I have ~3.8 (and he owes the bank and doesn’t look like he’ll pay it back).
So … I hope this gives you an idea of how money and banking works. Wealth has really very little to do with CASH. Those fongollars is just cash! Wealth has to do with possession of value! If you add up the actual amount of cash on the planet, it is a fraction of the GDP (the amount of money that changes hands) and a fraction of the total wealth (the total assets) on the planet!
A contracting economy means that the GDP is shrinking because of reductions is people buying stuff. That also means that the value of a company that sells that stuff shrinks because it’s based their income, etc.
I have to stop, but I hope you get the idea. You’re right about one thing for sure, simply printing money causes inflation. If you print it and loan it with the right constraints, however, you can allow for the economy to grow. Mind you, it’s grown by the economic activity (things being bought and sold).
HTH
marx: from each according to his ability, to each according to his need.
palin: from those what have, to those who vote, because I can.
see? not marxist.
AC Walker,
Of course wealth can be created, as well as value can be created. The actual amount of money out there is immeasurable, despite what some economists claim.
If wealth were static, the money supply would remain static, prices would never change, and the civilization would fall apart.
Jeff
So Sarah Palin cut taxes and got money for every Alaska citizen from the oil companies! That’s way more than Obama “The One” has ever accomplished in his life. If you think his tax cuts and wealth redistribution are good ideas, why not elect the team that has someone on it who actually has experience doing that?
Why aren’t these nutjobs called on what they really are? McCarthyists.
Next thing you’ll have some idiot in congress calling for the investigation of politicians who are suspected of being un-American.
Wait – been there, done that. Joe McCarthy – and Michelle Bachmann.
“If wealth were static, the money supply would remain static, prices would never change, and the civilization would fall apart. ”
When gold was backing money, it was fairly static.. which is why they moved off the gold standard, to “create” more money. As they did that, value changed dramatically and we have rampant inflation. Prices artificially change because more dollars are fabricated out of thin air, so those that hold physical items want more dollars.
Prices naturally change (despite your assertion) based on demand and supply, what someone is willing to pay. That fundamental premise of Economics holds true in all models, it’s perhaps one of the only truths in the entire field (all the rest is mostly theory and coincidental observations, superstition that can’t be trusted to function in a vacuum). Given that we consume things, use them up, burn up what’s there, prices for certain things goes up. Things that are common and renewable tend to have static low prices.
Since pretty much all wealth in the world is tied to natural resources in some manner, it’s obvious to anyone with ability to reason that we have a distinctly limited total wealth available to us. You can’t create resources out of thin air, you only have what’s left over from the Big Bang.
Melime, the 16th doesn’t change Article 1, Sec. 8 and Sec. 9. 8 gives them power to tax, 9 limits how
(No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.) (Section in parentheses clarified by the 16th Amendment.)
It’s “commonly accepted” that the 16th allows the “income tax”, but if you study the times when the 16th was written, it’s clear that it was intended to shut down a “loophole” that businesses were using. The court cases of the time established that “wages for labor” weren’t income, they were the fruits of your labor and not taxable. The large companies of the time, being run by just as shifty of dirtbags as we have today, reasoned “if my employees exert labor to add value to resources, then the end result can’t be taxed because the income was derived from labor”.
The 16th clarifies that “income” (not wages from labor) is to be taxed regardless of the “source derived”, to close the loophole the companies were using.
By the nature of the Constitution, no one article/Amendment can contradict another or the entire document becomes nonsensical, right? The 16th can NOT undo Article 1 Sec. 9 simply by contradicting it. The graduated “income tax” on “individuals and their labor” is, in fact, unconstitutional.
That we let our Congress declare that companies are “people”, and deserve the protection of the Constitution is where things got really ugly. It also made it appear that taxing individual compensations for labor was reasonable. .. and you’ll notice from the original tax codes when taxes were first illegally imposed on the masses (in 1913) that there was an “exemption”… a value where if you made less than that amount in a year, you had no taxes. That amount was $2,500. Over the last 105 years, that amount hasn’t been adjusted to keep in line with inflation.. In today’s terms, it’s well over $150,000 a year that was meant to be exempted.
The “income tax” was mostly meant to gather money from companies. It wasn’t mean to take money from the average Joe. Imposts and excise taxes and other taxes (consumption taxes) were meant to do that, things that allowed someone to pretty much opt out of paying based on their purchase decisions.
Savantster,
Sorry, that’s wrong.
1) gold backed currency:
Gold’s value goes up over time. Currency inflation of about 3%/annum is normal and balanced (too much more and too much less each has problems).
Therefore, you MUST print money to stay balanced with gold. So even though you’re right that few currencies are backed by something like gold, you’re wrong about the rest of it.
In addition, gold is added to the reserves (the amount of gold backed at Knox, for example) over time.
2) … pretty much all wealth in the world is tied to natural resources …
get this in your head: “wealth” is the total of your assets of value. “value” is what someone will pay in the marketplace.
So, is $3 of coffee from Starbucks worth $3, or worth more than the $1 from Dunkin Donuts? That cup of burnt beans and over-milked sludge is worth three times the cup from Dunkin, though the costs are probably similar. That’s value.
You can CREATE value! Get this “there’s one pie, divide the pie more equally” idea, and flush it. You CREATE pies.
As for “we consume things.” Sure, but services have value too. Your “resources” argument might hold true in the billions-of-years scale, but not in normal economics.
Another point about “resources”. Fongillium might make great jewelry. So the fact that I own a fongillium mine means that I have certain wealth. But Joe the plummer figured out a way to use fongillium to make … I don’t know, trilithium. That knowledge, the way he markets it, the fact that trilithium powers the enterprise makes his wealth far more than mine.
It’s not about that’s it’s 10 pounds of fongilium vs. 10 pounds of trilithium. It’s the fact that Joe turned something of value into something of even more value!
The statement “it’s obvious to anyone with ability to reason that we have a distinctly limited total wealth available to us” is the foundation of very bad though, bad policy, and just shows the lack of understanding that value and therefore wealth are created.
brandon, if you own the fongillium mine; that Joe can make trilithium from it is irrelavant to him and his “wealth”. He can’t make crap without your resources, and once you see that it has “more value”, your “wealth” just went up at his expense. That is, unless you figure it’s still useless and give it to him for a song (by the way, that’s what industrialized nations are doing to 3rd world nations where the population doesn’t understand that their resources are being used for other things).
That ties right back to supply and demand. Without Joe’s invention, there is no real demand and you have squat, right?
And I do believe I mentioned “adding value” via transforming natural resources into something more useful, exactly what you just said. But at the end of the day, we only have a limited amount of resources. 100 years ago it looked like we had LOTS, but then we started exploding in population. We’re at near full capacity for food, did you realize that? The planet is projected to hold about 8 billion people, we’re at 6.5 billion now. Pretty soon (15 to 20 years) a loaf of bread could cost you a full day’s work.
You’re not looking at the fact that we have finite resources, therefore a finite ability to add value to things. And once a resource becomes scarce but is in high demand, it’s “value” goes up, as does the “wealth” of whomever holds that resource. You didn’t “create” that wealth, simple demand did.
“Gold’s value goes up over time. ”
Perhaps because there are more and more people, but no more gold. More demand and no increase in supply..
Hmm.. where did I read that before.
dear god dude, it was an example. get a clue. value is produced. how about i roll dice and you pay me to do it. there. value. done. same dice over and over again. you keep paying me because you like it. value and wealth are produced. get over it.
obama, mccain, smith, and buffett would agree with this.
as for the fongolium mine, sure… that owner might be really rich.
“value and wealth are produced.”
NO, wealth is transferred. You gain, I lose, that’s not a net gain, that’s the definition of transfer.
Still wrong. I just started a dice-rolling business making $100 a day. That business is worth $100,000 on the open market. I’m now worth $100,000 based on you paying me $100. Sorry. You don’t understand economics.
Actually, brandon, I fully understand.. It seems it’s you that is having a hard time explaining what you mean.
If you “sell” your business, you have no more revenue stream. Your business is “worth” something because someone else wants to have the transfer of wealth go to them instead of you, and the amount of wealth transferred over time is more than the “purchase price” they pay, right?
With your “example” numbers, it would take 1000 days for them to get their money back. And if in 250 days no one wants to play dice any more, he just lost a lot of money. You gained, he lost..
And where did that come from in the first place? Where did he get that $100,000 to give to you? The origin was rooted in natural resources.
And it’s only worth $100,000 if someone is willing to pay you that, if no one else wants to pay you that, it’s not worth that. Hence, it’s not “real” wealth, it’s speculative wealth.
One of the core “rules” that’s used to “value” a company is the “price of HARD assets”, not “potential”. The potential is subjective, and only worth something to an individual looking to buy you out.. from an investment perspective, you have to make VERY clear it’s SPECULATIVE, or you are basically lying to people. The rules that are used to determine just how “speculative” something’s value is is what we call “regulations”. When you remove regulations, you are basically telling someone “make up whatever you want, it’s ok.. no one will care”. Then next thing you know the entire market is collapsing because everyone made shit up so they could transfer more wealth to themselves while not really having anything to back it up. Kind of like your fictitious dice game.
See, you’re trying to get into advanced topics of economics without looking at the base factors. Your example is a “business that transfers wealth”, it doesn’t create anything. The “created value” of the overall company is arbitrary, the “real value” is only based on its physical assets (the cost of a pair of dice).
At the end of the day, all wealth is tied back to resources. Land, minerals, water, air space.. Transforming resources into other usable items is the base for any economy (or should be). If you have a services based system, someone else can and will perform those services for less, and all of a sudden you have a lot less worth than you did yesterday. But if you have physical resources that you make into something else, you have something with a lot more likelihood of being in demand, and something others don’t have to offer.. Think oil in the Middle East.
In America, we’ve sent our “production” jobs away, so we don’t transform resources any more. We mostly transfer wealth, and those at the top of those companies make sure to transfer most of it to themselves. That doesn’t seem fair.
This statement:
One of the core “rules” that’s used to “value” a company is the “price of HARD assets”, not “potential”.
Is false. I stopped reading. Thanks for the nice chat. I’m not coming back here.
Glad you’re heading out.
By the way, in that “false” statement, see if you can understand just why all the banks are failing on Wall Street, hmmkay? Why they aren’t really worth what they say they are, why they need over a trillion dollars of bailout money, and why they are fighting to keep anyone from looking at their books.
Oh, and see if you can find when they started REALLY cooking those books, and “generating the most wealth”. I don’t think you’ll find any direct correlation to deregulation and inflated numbers on the books.
Savanster said
“When gold was backing money, it was fairly static.. which is why they moved off the gold standard, to “create” more money”
Gold supplies have never been static, as new supplies were being mined over the past few thousand years. There is no need to hector me about supply and demand and. There’s no need to show off your grand eloquence with economic theory. I know a little about theory myself, and I’m a professional trader with exchange memberships, so spare me the lecture.
you said,
“Given that we consume things, use them up, burn up what’s there, prices for certain things goes up. Things that are common and renewable tend to have static low prices”
You ought to quit before you put your foot in your mouth some more.