On Fri, Sep 10, 2004 at 06:45:46PM -0400, John Pedersen wrote:
>
> >
> >I'm not talking about scam accounting here. I mean real productivity. If
> >the company in question turns out more widgets (whatever way they do
> >it), it means more productivity/production for that company. As for
> >those laid off, it is assumed that at some point those people will go
> >get jobs and produce something as well.
> >
> >The point is not how we tweak examples to show one thing or another. The
> >point is that if you want to have a profound lasting effect on an
> >economy, your most workable direction is to increase productivity in the
> >aggregate.
>
> You're totally missing my point.
>
> My discussion of the word productivity arises from your claim that,
> your words: "And right now, we _do_ have a healthy economy."
>
> I can't imagine on what evidence you base your claim, (other than some
> kind of "shopping index"!) but since YOU place such emphasis on
> PRODUCTIVITY, I was just cautioning you not to get overly excited
> whenever the government announces increased productivity; it's mostly
> bullshit, same as inflation numbers.
>
That's debatable. I don't think inflation numbers are false, nor
increased productivity numbers put out by the government. You choose to
believe their numbers are falsified and I don't necessarily.
>
> >>Tom, Dick and Harry. Tom has a printing press and prints pictures of
> >>presidents on green paper. He supplies them (lends them) at virtually
> >>no interest to Dick, who buys TVs, VCRs, DVDs, etc, from China. Dick
> >>sells these to Harry, who buys one of everything as soon as it comes
> >>in the store! Harry has no job, by the way, because he used to work
> >>in a factory that closed. But that's ok--he can keep buying from Dick
> >>because he refinanced his house, and besides, Dick often has specials
> >>where he offers no payments for one year. So Harry has a 50 inch LCD
> >>tv, and a Mac dual G5 computer, two new cars in the garage, and pretty
> >>much every toy and gizmo that comes onto the market.
> >>
> >>By your definition, with all this buy and selling, the above is a
> >>vibrant, healthy economy.
> >>
> >
> >
> >Well, if you think you can run a whole economy on examples like that, go
> >ahead. I contend that it can't be done sustainably. Also note that I
> >mentioned earlier: producing nothing while increasing "wealth" isn't
> >productivity. It's a drag on an economy.
>
> Why are you twisting my words? I was trying to show you the fallacy
> of your definition of "healthy economy". These are your words:
> "Buying and selling are simply the opposite sides of the same coin.
> More of both means a healthy economy. And right now, we _do_ have a
> healthy economy."
>
> I use a simple example to show that buying and selling do not equal a
> healthy economy. Anyone who thinks about my example for more than
> five seconds realizes that it's not sustainable. Eventually, some
> day, it collapses. I didn't think that needed explaining.
So let's see if I've got this straight. You've chosen an example that is
obviously not sustainable, and are using that to refute the idea that a
great deal of buying and selling represents a healthy economy. Am I
right so far?
Now, if this example represented the way commerce actually works on a
broad scale in our economy, you'd be correct in asserting that this is
not representative of a healthy economy. However, I don't believe that's
the case. I deem the example very artificial, and not representative of
how commerce broadly works in our society. Since it doesn't represent a
realistic example of our economy, it isn't adequate as an example to
refute the idea that buying/selling = healthy economy. That's about as
plainly as I can say it. My original reaction was a shorthand version. I
could go into vastly more detail about Tom, Dick and Harry if you like.
For example, Harry has no job. However, 94+% of Americans do have jobs.
For example, the cash for most transactions in this economy do not come
from the refinancing of property. At the consumer level, cash mostly
comes from salaries, which arise from production of one sort or another.
For example, most goods purchased do not come from China, and most
purchases are not financed with no payments for a year.
Tom must represent some combination of Treasury, the Fed, and banks. The
Treasury prints money, which the Fed loans to banks at low interest.
Banks, in turn, lend money at a ratio of maybe 18 to 1. That is, for
every dollar they have in cash, they lend $18. Dangerous practice. On
the other hand, I fail to see the harm in lending money to Dick in
general. The fact that Harry has no job because his factory closed seems
to be just a swipe at... I'm not sure what. Maybe just something to make
the example more biting.
Also remember that the key to the economy is _productivity_. Buying and
selling are byproducts of productivity.
So again, I'll say the example is artificial enough that it doesn't
adequately serve to refute the idea that buying/selling = healthy
economy.
Let me assert that I think we've been over this ground before. As I
recall, nothing I could say would convince you that buying and selling
and what I call "productivity" would add up to a healthy economy. As I
recall, you factored out everything that wasn't manufacturing (seems
like I remember a discussion about making tables), and deduced that the
economy wasn't healthy (or similar). The bottom line is that if we don't
proceed from the same basic assumptions, we can never come to terms,
never agree. Your examples will never satisfy me, and my definitions
won't satisfy you.
>
> You dismiss my opinion with "if you think you can run an economy...."
> Well, no, I didn't say that. I was trying to show that "buying and
> selling"!="healthy economy", any more than a housekeeper who raises
> great huge clouds of dust is necessarily doing a good job of getting
> the house cleaner.
>
> I don't know why you always attack or twist my examples. What better
> way is there to examine a concept, which (in my perception) somebody
> doesn't understand, than to SIMPLIFY and look at examples. Would it
> be better to cite a textbook and wait two weeks while you read it?
>
> What the hell is wrong with using simple examples.
Nothing, as long as they're realistic.
> If we were
> discussing the loadbearing strength of a peaked roof vs a flat roof, I
> might propose to construct a simple frame of a house (ie an example)
> out of a few pieces of 2x4. After I have proved my point, you come
> along and say, "Yes, but there are no walls, and no shingles--if you
> think a person can live in that so-called house, you're crazy."
>
If we were discussing the load bearing strength of a peaked versus a
flat roof, it wouldn't be an issue. An engineer can answer that question
in short order, by referring to tables and engineering texts. It isn't a
matter of opinion. It's a matter of engineering fact. Economics aren't
quite in the same league.
> It pisses me off, when I'm making a sincere effort to explain a point,
> to have "examples" dismissed as worthless. I think they are a useful
> tool to understanding, to those with open minds.
>
Your example is either valid or it isn't. If it's valid, I'm going to
agree with you that my assertion was incorrect. You win. However, if I
think your example is invalid, then I'll take it apart to prove that it
doesn't refute my original assertion. Those are the only two choices I
know of.
Paul
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