I'm saying that profiting by charging interest rates in general is leeching on value created by others. I think maybe the car is what's confusing you? Just because it's a secured loan with (rapidly depreciating) collateral doesn't mean the person collecting interest isn't trying to get more money simply by the fact of having reserves of cash. There are certainly other mechanisms by which the rich get richer, though, such as by setting punishingly low minimum wages.

I basically agree with this.

With respect, I think you're underrating how anti-social many lending practices really are.

I'm not saying it is or isn't, but if lending for interest is necessarily immoral, then essentially all of capitalism is immoral.

My feeling at the moment is that there are terms of loans and conditions of employment which are non-exploitative and terms which are predatory. And as I implied before and think ameoba misunderstood, I think it's puerile to be absolutist in these things.

Dr Modern, do you believe cars should only be rented out at costs no more than rate of depreciation because it seems that you are opposed to any profit derived from existing assets with no additional labor?

Better yet, what about the borrower who buys a house with a small amount down, flips the house for a healthy profit? He is making a profit off assets that he doesnt even own fully. Is that ok?

What's meant by capitalism here?

I don't mean to be absolutist, but I'm just not seeing absolutism in what I said. There are certainly terms of employment that are non-predatory and loans that are non-predatory. But what's a non-arbitrary cutoff besides "I sort of feel that this not too much?"

I think the rate of inflation--supply of essential consumer goods (&c.) relative to currency in circulation per capita--speaks to the reality of what society can provide as a basic subsistence level existence. It's clear that those at the bottom are already being squeezed. Why demand more from them? Why not demand more from those who already have large stores of wealth?

In other words, I think capitalism is fine--and, in terms of mobilizing our productive capacity as a species toward important goals, potentially good (SpaceX, for instance)--as long there's a powerful democratically elected government willing to tax the rich aggressively.

There isn't one specific spot, but that doesn't necessarily make all or none less arbitrary. There are no rules handed down from heaven. We just pick them based on what we collectively feel is right.

Why do I compare capitalism to lending? Well, investing in an endeavor isn't really much different than lending. You take your previously acquired wealth (whether it results from work or inheritance or theft or w/e) and let someone else use it and get a return on that while taking a risk. Can not the owners of a capitalist enterprise leech off the value created by others?

Perhaps it's a problem that personal debt is too difficult to discharge, but that's not a fundamental difference, but the result of specific laws.

I could see a distinction between unsecured debt and capitalism. So, perhaps a person can never owe something outside of the scope of a specific endeavor or property. (and secured debt would be satisfied entirely by the security, so you can't have your car repossessed and still owe money on it.)

As far as the last paragraph goes, that's just raising taxes or w/e and doesn't suggest anything in particular about lending, interest rates, or employment.

I had a longer post but lost it, but isn't capitalism all about exploiting information asymmetries? taking from the uniformed being a feature not a flaw?
Harris Kupperman

The exchange between capital and labor and even between investor and entrepreneur is different than that kind of competition between buyers and sellers.

don't we sell the dream that laborers can become future capitalists (invest in your 401k, we'll match etc.)? while doing so is def in workers best interest it seems like the system is set up to extract as much value from the lower-classes as possible (maybe this is changing with low-cost index funds, dunno)

I think that's a bit off topic, but our society certainly offers a trade of the hope of wealth in exchange for accepting inequality. That's a little bit like how Christianity hold out the hope for heaven in exchange for subservience.

agree it was a bit off topic, and pretty much agree that people should be compensated for risk. I just feel that social democracies in Northern Europe have a good model (argue about our more heterogeneous society if you like) people need to be rewarded for risk-taking and would still be motivated in the Northern Euro system without the outsized returns to capital our current system produces IMO...

I definitely think the social democracies in Scandinavia are a good model.

Buy a $1000 worth of Amazon 18 or so years ago it's worth around $50,000 today. Similar story with AAPL. Truth is these "outsized" returns on capital aren't just available to rich people. Microsoft was valued at about $1 billion when it went public. Today it is worth $500 billion so $1000 worth of their stock would be worth $500,000.

What? I don't see how that responds to the post you quoted in any way.

What's the point you're making, that lottery tickets are available?

Here's a basic problem with the promise of opportunity and the American dream: yeah, you have a chance at achieving whatever, but only a small percentage of people will get there. "Son, you can grow up to be President." Sure, but that's only true for a few people every generation. That's an extreme example, but you can't placate society just because a small percentage of people will be winners and a large percentage will lose bigly. A system with more equal outcomes is really essential because nothing else is stable. People will not be good losers like in monopoly when it means they and their children will legitimately suffer. And, imo, the whole system only operates by the consent of the masses. The structural elements necessary for this economy like private property, money and the enforcement of contracts are not absolute truths which must be respected. They are part of the social contract which includes making sure losing is not fatal.

This is the grunchiest grunch I've ever grunched but I had to pause and stare in wonderment.

Of course that's what he's saying, the question is if he/they are aware enough to realize they're saying it. My money is on a medium-strength 'no'.

I'd say need to think about this on a policy-by-policy basis. Domestic tax rates certainly don't matter much for global inequality, but a lot of things that undermine the power of domestic labor (FTAs with low-wage countries, liberal rules for cross-border capital flows, [arguably] low effective tax rates on corporate income overseas, [very arguably] lax enforcement of immigration laws) likely increase domestic inequality while decreasing global inequality. On the flip side, the golden age of domestic labor was a time when most of the non-Western world was either politically unstable or unwilling to host U.S. investment.

It would be interesting to see a geographic breakdown in your chart of where the people in extreme poverty were. (I'm also super confused about what happens in that chart after ~1990.) I would wild-ass-guess that a lot of the poverty reduction in the early post-war period reflects countries in Latin America and the Arab world getting to middle-income status by participating in resource extraction, which is more or less complementary with U.S. industry. Post 1970 or so you likely see poverty reduction being driven more by countries in Asia starting to compete directly through export-oriented manufacturing.

No indeed. But it makes bold claims like this:

quite questionable if these disastrous policies are actually leading to fairer outcomes than their predecessors. The fact that things are improving is no argument for complacency, but it is an argument against the "something must be done" syndrome that is often used to advance questionable policies. Maybe there is something useful to be done, but what's currently being done is actually making progress, so perhaps banning lending for profit needs to be closely scrutinized?

Studies are mixed on the FTAs with low wage countries and I think clearly have not had a massive positive impact on the poorest people in the poor countries. Partly that is because FTAs are hardly about free trade and allow plenty of protectionism of the products of rich countries. Corn is the best example of that as our subsidized corn exports have destroyed corn production in Mexico. But the big picture is that there have been winners and losers in the poorer countries and the results are mixed. Still, I wouldn't dispute that there has been a modest positive impact as the increase in trade has led to the proliferation of technology and other secondary effects.

But, mainly in this post I mean to address the immigration point. I'm all for lax immigration laws partly on the grounds of compassion, but also just on the grounds of freedom for humans and not just Americans. But, immigration at best is a drop in the bucket as far as eliminating global poverty while it may be a fairly significant factor in domestic inequality. In fact emigration from poor countries has effects that work both ways. It's like charter schools. It's not just the poorest people in those countries that leave. There is a fair amount of brain drain and investment drain as people with the means to leave are the people leaving while those left behind are in worse shape. Mainly though it's a drop in the bucket.

I'm pretty confident that the overwhelming reason for people moving out of extreme poverty in the world is just the spread of technology and labor saving devices. Life expectancy in the US for a white male born in 1850 was 38. Certainly foreign investment in the developing world brought technology (as well as a lot of terrible things, like theft of land, corruption of governments, slavery, etc), but again I think it's all very much besides the point of the factors driving increasing inequality in the US post 1970 and we could totally have been Trotskyists since the New Deal and they'd still have developed rail roads in India.

As far as the increase in global trade goes I think there's a huge and usually overlooked thing.

http://www.pbs.org/wgbh/theymadeamer...mclean_hi.html

Western country's could solve so many problems if the add just a little line in their constitutions.

"Every citizen shall have the right for free education"

Education does have such a huge ROI for a country it is ridiculous. How student loans in the US work is just a sign of the corruption of the values of the elite.

OK, not every individual loan has to make a profit, but in general, the loans in aggregate must make a profit.

You're nitting it up. Fine. Point for 5ive.

Oddly enough it wasn't that part at all. It was the 2nd part about paying the employees. That's the most bizarre framing of this I've ever seen.