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pietillidie
Joined: 07 Jan 2005
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| Mugwump wrote: | | pietillidie wrote: | Yes, until someone asks Maggie to define "socialism". *Silence*
David, the problem with inheritance concerns substantial estates which hand over unearned capital control and therefore reduce competition. The maintenance of class in this way is substantial cause of inflation because it creates a fossilised stratum which has great power and a major role in the economy, but has never competed to demonstrate its fitness for that role.
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Inflation ? Huh ? Inflation is caused by too much money chasing too few goods (demand side), or demand running ahead of the productive capacity of the economy (Supply side). The ownership of capital is likely to be irrelevant to these issues, presuming the money is spent or invested and can be allocated to productive uses. |
Inflation is misallocation; misallocation is inflation; this is the E=MC2 or F=MA of economics, isn't it? The street definition focuses on tangible artifacts such as prices, or a tangible cause such as money printing, but actually they're all just forms of "misallocation" 
The whole point of the exercise of economics is that while we don't actually know the abstract "value" of anything, we do know "poor allocation" by definition sends money where it doesn't belong, which by definition gives us a theoretical inflation over some theoretical base line, which (hopefully, sometimes) eventually surfaces at some rate of price increase (again, as opposed to some known fixed "value") that gives us a handle on things.
Thus, back to my answer to David, the unearned, unqualified inherited job of distributing capital will result in misallocation and inflation. The different schools of thought then argue over the locus of that misallocation, some obsessing over the fed, others systemic frictions ("stickiness"), and such. I didn't think this was controversial.
To my knowledge, no one calls non-allocation or deflationary hoarding "misallocation", though there's no reason why you couldn't logically, it's just not the default logic. (Not that I care for tradition, but I'm leaving that to the experts).
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Mugwump
Joined: 28 Jul 2007
Location: Between London and Melbourne
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| stui magpie wrote: | ^
Yesterdays policy that doesn't apply to Australia. |
Except David wants to bring it back in 
_________________
Two more flags before I die! |
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Mugwump
Joined: 28 Jul 2007
Location: Between London and Melbourne
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| pietillidie wrote: | | Mugwump wrote: | | pietillidie wrote: | Yes, until someone asks Maggie to define "socialism". *Silence*
David, the problem with inheritance concerns substantial estates which hand over unearned capital control and therefore reduce competition. The maintenance of class in this way is substantial cause of inflation because it creates a fossilised stratum which has great power and a major role in the economy, but has never competed to demonstrate its fitness for that role.
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Inflation ? Huh ? Inflation is caused by too much money chasing too few goods (demand side), or demand running ahead of the productive capacity of the economy (Supply side). The ownership of capital is likely to be irrelevant to these issues, presuming the money is spent or invested and can be allocated to productive uses. |
Inflation is misallocation; misallocation is inflation; this is the E=MC2 or F=MA of economics, isn't it? The street definition focuses on tangible artifacts such as prices, or a tangible cause such as money printing, but actually they're all just forms of "misallocation"
The whole point of the exercise of economics is that while we don't actually know the abstract "value" of anything, we do know "poor allocation" by definition sends money where it doesn't belong, which by definition gives us a theoretical inflation over some theoretical base line, which (hopefully, sometimes) eventually surfaces at some rate of price increase (again, as opposed to some known fixed "value") that gives us a handle on things.
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Not really - "allocation" (usually called "allocative efficiency") in economics is a term related to the consumption and production functions of an economy. There is allocative efficiency when there is a close relationship between the marginal cost of production and the marginal benefit/utility to the consumer. Who actually owns the factory may be irrelevant to that, if supply is meeting demand.
You can send money where it doesn't "belong" (not sure what that means in economics) by taking $0.5 trillion from the spendthrift public and putting it in the bank vault of the notorious Mr Scrooge, who's never spent a penny in his life and will not lend it. That would cause deflation. So ownership/capital concentration and inflation will interact, but misallocation does not always cause inflation. It depends on the nature of the owner and the uses to which he or she puts it.
_________________
Two more flags before I die! |
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pietillidie
Joined: 07 Jan 2005
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| Mugwump wrote: | | pietillidie wrote: | | Mugwump wrote: | | pietillidie wrote: | Yes, until someone asks Maggie to define "socialism". *Silence*
David, the problem with inheritance concerns substantial estates which hand over unearned capital control and therefore reduce competition. The maintenance of class in this way is substantial cause of inflation because it creates a fossilised stratum which has great power and a major role in the economy, but has never competed to demonstrate its fitness for that role.
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Inflation ? Huh ? Inflation is caused by too much money chasing too few goods (demand side), or demand running ahead of the productive capacity of the economy (Supply side). The ownership of capital is likely to be irrelevant to these issues, presuming the money is spent or invested and can be allocated to productive uses. |
Inflation is misallocation; misallocation is inflation; this is the E=MC2 or F=MA of economics, isn't it? The street definition focuses on tangible artifacts such as prices, or a tangible cause such as money printing, but actually they're all just forms of "misallocation"
The whole point of the exercise of economics is that while we don't actually know the abstract "value" of anything, we do know "poor allocation" by definition sends money where it doesn't belong, which by definition gives us a theoretical inflation over some theoretical base line, which (hopefully, sometimes) eventually surfaces at some rate of price increase (again, as opposed to some known fixed "value") that gives us a handle on things.
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Not really - "allocation" (usually called "allocative efficiency") in economics is a term related to the consumption and production functions of an economy. There is allocative efficiency when there is a close relationship between the marginal cost of production and the marginal benefit/utility to the consumer. Who actually owns the factory may be irrelevant to that, if supply is meeting demand.
You can send money where it doesn't "belong" (not sure what that means in economics) by taking $0.5 trillion from the spendthrift public and putting it in the bank vault of the notorious Mr Scrooge, who's never spent a penny in his life and will not lend it. That would cause deflation. So ownership/capital concentration and inflation will interact, but misallocation does not always cause inflation. It depends on the nature of the owner and the uses to which he or she puts it. |
Oi, you missed my last paragraph, which says that!
| pietillidie wrote: | | To my knowledge, no one calls non-allocation or deflationary hoarding "misallocation", though there's no reason why you couldn't logically, it's just not the default logic. (Not that I care for tradition, but I'm leaving that to the experts). |
So yes, back to David and my answer to him, yes, it does cause misallocation and to quote my 100% accurate statement again: "...[is] a substantial cause of inflation".
Here I am explaining it logically to David, and you're confounding it unnecessarily! You could have just added ("...which also implies the misallocation of deflationary hoarding") for his knowledge, instead of drowning him with received definitions.
Geez, it's usually me getting chastised for that!
So yes, David, the misallocation ante-partner of inflation is deflation, only buttressing my original point about the ills of non-competitively-earned control of capital via inheritance.
And, to be clear, general economic activity is predominantly talked about in terms of inflation. That's just a metaphorical constraint not a logical one (as I mentioned), probably because unless we're in a recession or depression (such as the recent GFC), we tend to focus on growth and productive capital allocation by default.
Thus, we talk of "inflation targets" regardless of the direction of misallocation. No one in public life wants to declare they've reached a deflation target! They always talk about being above or below or around about an inflation target. Again, that is not my doing!
_________________
In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm |
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David 
I dare you to try
Joined: 27 Jul 2003
Location: Andromeda
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| Mugwump wrote: | | stui magpie wrote: | ^
Yesterdays policy that doesn't apply to Australia. |
Except David wants to bring it back in |
Not sure why the 'sad' emoticon - not like I'm in a position of power to do anything about it! In any case, I don't think striving for a more equal society - and I do mean equality of opportunity, not equality of outcome - is a bad thing. Is it really so vital that John Citizen has access to Great Aunt Mabel's fortune? Let's end the free rides and start shifting our society into a place where, say, owning a house isn't a privilege and having a decent education isn't a privilege. We can do better, so let's try something different.
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All watched over by machines of loving grace |
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pietillidie
Joined: 07 Jan 2005
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For everyone else, the basic point I was making is that one of the key advantages of competitive markets is optimisation: The better woman for the job, the capital invested in the better opportunity by a more competent person, etc.
But when people inherit large amounts of wealth, they inherit a task they haven't competitively demonstrated competence for: Allocating that wealth to some active part of the economy.
This matters at the level of large inheritances, but is unimportant at smaller amounts. So, my argument is to tax inheritance only over some fairly high level.
The principle here is that power over people and society at the very least needs to be earned. But let's no over-complicate it by worrying about small and even modest inheritances.
_________________
In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm |
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Mugwump
Joined: 28 Jul 2007
Location: Between London and Melbourne
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| David wrote: | | Mugwump wrote: | | stui magpie wrote: | ^
Yesterdays policy that doesn't apply to Australia. |
Except David wants to bring it back in |
Not sure why the 'sad' emoticon - not like I'm in a position of power to do anything about it! In any case, I don't think striving for a more equal society - and I do mean equality of opportunity, not equality of outcome - is a bad thing. Is it really so vital that John Citizen has access to Great Aunt Mabel's fortune? Let's end the free rides and start shifting our society into a place where, say, owning a house isn't a privilege and having a decent education isn't a privilege. We can do better, so let's try something different. |
The sad emoticon is because I thought I'd explained that it's a bad tax that doesn't achieve what you want.
Inheritance taxes and housing affordability is a red herring. You improve housing affordability by reducing demand (discouraging investors in existing stock, reducing immigration and foreign ownership) or by building more houses. Inheritance tax does none of those things. A few extra publicly-built houses, perhaps, but very few given the money it raises and not enough to impact the problem.
Finally, education is fully government funded to age 18 and heavily government subsidised (via deferrable loans and direct subsidy) beyond that. If you think that makes it only accessible to the "privileged", then you'll prove very hard to satisfy ; and sooner or later you'll run out of other people's money.
_________________
Two more flags before I die! |
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pietillidie
Joined: 07 Jan 2005
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I don't disagree with David at all except in the sense explained, namely that modest inheritance and the minor stuff is not worth sweating.
Have you seen wealth distribution any time in the last half a century? Have you seen relative mobility stats? Democracy-undermining political capture to the, err, far right:
US mobility in detail:
David, the biggest problem at the moment is the Old Darwinian view which unofficially holds that the ability to avoid tax is evidence of a human superiority which by definition ought to draw its own line in the sand "just because it can".
For those who can still see the wider view, the quality of the whole obviously sustains the whole, so damaging the whole by inflicting falling standards of living on the majority and their environment is obviously a nonsense.
Notice how talk of international tax treaties to limit avoidance and meet community standards of living expectations have magically evaporated now economies are "recovering"? Of course, this is faux bone tossed to the vast bulk of society as a substitute for dealing with the real problem, namely long-term real income stagnation and/or decline.
Remember the other variable in housing affordability is wages; there's nothing wrong with housing prices going up if real wages are also going up. But, over time, for the most part they're not.
Don't get trapped over-focusing on one area because value can be created, stored and lost right across the major economic proxy variables, from unemployment rates, to real wages, to interest rates, to exchange rates, to public services, to political and legislative capture, and so on.
So, stick with the big and obvious problems, like stagnate or declining real wages versus rising productivity (the very heart of any version of the social contract you care to name); tax collection not meeting community standards expectations (basic democracy); political capture, minimally-competitive buddy contracts and asset handoffs (capture); and immobility (and inheritance) at the top end (effective competition); interfering middle-upper welfare such as negative gearing (obviously people can't say "interfering in the housing market makes things worse" and then quietly support negative gearing out of the other side of their mouths lol) and private school handouts (counter-productive ideological interference); health and education services decline; and major externalities, such as idiotic wars, terrorism and international threat creation through captured, idiotic foreign policy; and things like f&^%ing up the GBR for dirty, short-term coal (plain old Whacko Joe narcissism).
The lesser stuff conveniently makes the whole impossible for people to understand unless they have unusual levels of mobility and time.
The basics are obvious and are rarely out of public discourse for long. But you have to piece them together into a workable story which moves the whole forward without micromanaging or micro-obsessing.
_________________
In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm |
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think positive
Side By Side
Joined: 30 Jun 2005
Location: somewhere
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| Mugwump wrote: | | David wrote: | | Mugwump wrote: | | stui magpie wrote: | ^
Yesterdays policy that doesn't apply to Australia. |
Except David wants to bring it back in |
Not sure why the 'sad' emoticon - not like I'm in a position of power to do anything about it! In any case, I don't think striving for a more equal society - and I do mean equality of opportunity, not equality of outcome - is a bad thing. Is it really so vital that John Citizen has access to Great Aunt Mabel's fortune? Let's end the free rides and start shifting our society into a place where, say, owning a house isn't a privilege and having a decent education isn't a privilege. We can do better, so let's try something different. |
The sad emoticon is because I thought I'd explained that it's a bad tax that doesn't achieve what you want.
Inheritance taxes and housing affordability is a red herring. You improve housing affordability by reducing demand (discouraging investors in existing stock, reducing immigration and foreign ownership) or by building more houses. Inheritance tax does none of those things. A few extra publicly-built houses, perhaps, but very few given the money it raises and not enough to impact the problem.
Finally, education is fully government funded to age 18 and heavily government subsidised (via deferrable loans and direct subsidy) beyond that. If you think that makes it only accessible to the "privileged", then you'll prove very hard to satisfy ; and sooner or later you'll run out of other people's money.
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Where are those big hands clapping? Brilliant and to the point post.
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You cant fix stupid, turns out you cant quarantine it either! |
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pietillidie
Joined: 07 Jan 2005
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There's nothing to cheer about here, let me assure you.
Financial stress on the majority of families, children and young people is rising. There is a giant spike at the top of incomes, and real wages for the vast bulk of people is for the most part either stagnating or declining.
People can't afford housing at prior standards because their incomes and job security are in decline. Build more houses, and you get a sub-prime mortgage crisis because too few people can afford the mortgages those in the income spike at the top fund.
We've just tried building like the seven dwarfs on speed and steroids; did you miss how that turned out? Did anything about the GFC and empty suburbs from New Mexico to Cork look like a housing supply problem to anyone?
Focusing on supply is a mischief in present conditions; sure, build dog kennels on the salt flats and affordability will magically be fixed through supply! But this is just another way of saying economic and social decline is A-ok.
Cut domestic life quality; increase work travel times; increase work hours; cut social services; increase child stress; increase stress-driven domestic and child violence and mental illness; increase education costs; hell, do them all at once; regardless, every single one of them in the present context signals only one thing: An acceptance of decline.
Meanwhile, laughably—or perhaps repulsively—education costs are rising, placing downward pressure on the best path for lifting wages, while a trend of tax revenues falling short of short of needs is becoming entrenched, inspiring the genius of a further decline in social quality through public service reductions.
Meanwhile, international competition is increasing, and the old arrangement between a saving Asia and the spending West collapsed at the GFC.
I for one haven't seen any inspiring effort by anyone to find a workable way through what is—and let's not mince words—evidence of economic decline.
Mal has steadied the mindset; now it's time to face reality with creative, forward-thinking solutions, not a regurgitated, dated, inward denialism.
All I see is 1950s left/right Internet cheer squadding, detached from a growing pile of economic facts that look very challenging indeed.
_________________
In the end the rain comes down, washes clean the streets of a blue sky town.
Help Nick's: http://www.magpies.net/nick/bb/fundraising.htm |
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think positive
Side By Side
Joined: 30 Jun 2005
Location: somewhere
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| pietillidie wrote: | There's nothing to cheer about here, let me assure you.
Financial stress on the majority of families, children and young people is rising. There is a giant spike at the top of incomes, and real wages for the vast bulk of people is for the most part either stagnating or declining.
People can't afford housing at prior standards because their incomes and job security are in decline. Build more houses, and you get a sub-prime mortgage crisis because too few people can afford the mortgages those in the income spike at the top fund.
Focusing on supply is a sleight-of-hand; sure, build dog kennels and affordability will be fixed through supply. But this means an acceptance of economic decline. And that's nothing to cheer on, I would've thought.
Education costs, meanwhile are rising, placing downward pressure on the best path for lifting wages, while a trend of tax revenues falling short of short of needs is becoming entrenched in the absence of a further decline in social quality through public service reductions.
Meanwhile, international competition is increasing, and the old arrangement between saving Asia and the spending West collapsed at the GFC.
I for one haven't seen any inspiring effort by anyone to find a workable way through what is—and let's not mince words—evidence of economic decline.
All I see is 1950s left/right Internet cheer squadding, detached from a growing pile of economic facts that look very challenging indeed. |
true, recession time. time for everyone to tighten their belts, or put in a bit more effort. And that includes those draining the welfare system.
8million dollars is what the government will save by closing the loophole that is allowing people to get paid for minding their own kids at home. Over two hundred cases in Wyndham alone, mostly by Sudanese refugees, 99% according to my sister in law who has been dealing directly with the problem to help stamp it out. You go on and on about making the top end give, well how about stopping the bottom end from taking in excess of what they are entitled to? How about making people accountable?
Plenty of kids from that area have got off their arse, put themselves through uni, got a well paid job, built themselves, or bought themselves a house, travelled, found a partner, had kids, and have a good life. Do it in the right order and it's doable,
Yes by all means stop negative gearing, it served its purpose when it needed to, but that times done. Kind of like the cane toad.
But double dipping the taxes of the average man wanting to give his kid a leg up, no way. David, yes some parents can afford it, a lot though, can afford it because they chose too. That's the luck of the draw, just like the good looks lottery. You make the best of what you have, but don't expect it to land in your lap. It's to late to have a society where everything gets shared, and man is too $£$%^%%$ greedy for power and glory to go back.
You know if everyone that can, do, then there will be enough welfare to go where it is needed, to the sick, the honestly poor, the elderly, and to building better things to benefit society. Right now greed, selfishness and laziness are killing that. It's the generation of entitlement, expectation that it will all just come. It won't.
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You cant fix stupid, turns out you cant quarantine it either! |
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Mugwump
Joined: 28 Jul 2007
Location: Between London and Melbourne
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^ ptid, the country at the right is the one with the inheritance taxes and (until recently) a higher top tax rate than Australia. Australia at left has no inheritance tax. So your argument eludes me.
Real wages are not stagnant in China and most of SE Asia and Eastern EU. They are stagnant in the west because globalisation is moving low-skilled jobs and manufacturing to those countries. That is what is really at the root of most of the Western economic issues of our time - from declining real wages, to government indebtedness, to trade imbalances, the decline of union power, social mobility ossification and much besides. Take a look a government share of GDP across time in the West. If more government spending fixed it, we'd be in clover. You're fitting your "more governent" narrative over facts that do not fit.
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Two more flags before I die! |
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HAL
Please don't shout at me - I can't help it.
Joined: 17 Mar 2003
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| It seems logical to me. |
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stui magpie 
Prepare for the worst, hope for the best.
Joined: 03 May 2005
Location: In flagrante delicto
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The graph with the countries is pretty. What's it mean?
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Every dead body on Mt Everest was once a highly motivated person, so maybe just calm the **** down. |
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David
I dare you to try
Joined: 27 Jul 2003
Location: Andromeda
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