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[McTraveller]

I disagree that profit-seeking and rent-seeking are identical. I might agree that rent seeking is a subset of profit seeking: they may have the same end result - more money in someone's pocket - but they have massively different practical effects: rent-seeking is gaining more personal wealth without creating overall wealth, while profit-seeking is more general and can include actual production of wealth.

Note here that 'wealth' is a classical definition, meaning the production of more goods and services - not the colloquial definition of 'more money in the bank account'.

[wierd]

The two are tightly coupled though.

That coupling is why merchant capitalism drives product advancement, but is ALSO why end-stage merchant capitalism results in oligopoly, or monopoly. Eventually, the most efficient route to satisfy the desire for more capital acquisition becomes barrier to entry to competitors and other forms of rent-seeking, by exploiting supply side.

This is inevitable, if restrictions against consolidation of the market are not enforced. The consolidations of the market are naturally, HIGHLY LUCRATIVE, and thus HIGHLY DESIRED by those seeking them, and those who stand to have an investment return in the entities that can then exploit the consolidated positioning-- This is why such restrictions against consolidation are not enforced; the powerful and political classes have their hands in the cookie jar.

"Who watches the watchers?"

 

[Naturegirl1999]

We need the watchers to be watched, but then we need watchers of the watcher watchers

[wierd]

You only need 3 sets of watchers.

Watchdog group A, watches Group B.

Group B, watches group C.

Group C watches group A.

With sufficient (dis)incentives in action, the 3 sets of watchers can theoretically evade capture by the oligarchs, but in practice, that does not really occur. They are pernicious, as the powerful and the political classes are empowered, both financially and politically, through that same coupling and resulting lock-out.  That is to say, they are HIGHLY MOTIVATED to circumvent the restrictions, and to capture the regulators.

[anewaname]

@McTraveller

Spoiler (click to show/hide)

Uh... GDP isn't related to taxation, other than taxes are I think included in the government spending component.

GDP = Gross Domestic Product, it's a measure that is intended to represent the economic activity of a large entity like a country.  I can't remember the formula off the top of my head, but I'm sure the internet can help you there:  The one I remember I think is consumption plus government spending plus investment plus net exports.

Yeah ok so I looked, Wiki says it's "a measure of the market value of all goods and services produced within a time period."  So I guess it should theoretically include mowing your own lawn, since that is a service...?

With much humor intended, I would ask you, "Is there any system of wealth measurement that doesn't attract the attention of those in the business of taking or taxing?"

The reason I said, "GDP is an estimate of value for the purpose of negotiating transactions and taxation on those transactions" is, it doesn't matter what the original incarnations of the GDP system were created for because the GDP measurement is now used by governments when negotiating transactions with other governments (trade agreements, aid offerings, access to resources, military assistance, etc), it is used by politicians for promoting themselves, and it is used by persons advocating lower tax rates on the poor, it is used by those lobbying for domestic industries, and all of these political influences are certainly involved in attempts to adjust the GDP numbers to benefit their causes. If you are lobbying for the USA steel industries, you will hold up the inflated-as-possible value (the % of GDP that the steel industry could create) and say, "we need to tax steel imports to protect this % of the USA GDP.

People talk about adding unpaid labor to the GDP, but because unpaid labor rarely results in something that can be stolen or taxed, it will never really happen. "It is very nice that you take care of your kids, but we can't determine how to tax that...". The things that can be taken or taxed will always be measured separately by those that are in the business of taking or taxing.

Any discussion about the value of your own unpaid labor needs to be put in the context of "tax as a substitute for banditry" or it will fail when the goons with guns are introduced.

----------------

So how do you measure the value of that which cannot be stolen but can be destroyed?

I greatly enjoyed your post on inalienable property.

Well, I did too, but maybe for different reasons :p  If I take the time to build a sand castle at low tide, why should anyone have a right come up to me and threaten to remove my enjoyment of watching the ocean take it away from me? The horrifying thing is that, that sandcastle example is an analogy that can be applied to people who watch their children suffer ruin by the influence and actions of others rather than watch their children become free adults. In some ways, figurative "inalienable property" is exactly at the core of "the right to take emo-pets on planes" and other "emo-rights" like the right "to have a public statue of some historic dude who was also a slave-owner or to remove that statue". Because the figurative or literal applications of words can blur, maybe I don't fully understand which "inalienable property" you meant, but if you are suggesting that I meant "inalienable property" referred to in Gambone's reply to this question, that is not what I meant. I only meant that the effort of mowing a lawn resulted in nothing that could be taken or taxed, only destroyed. Mowing a lawn is as much an artistic expression as a functionally useful act. If it has been a high grass lawn and that grass was cut and gathered for livestock, then that grass is something that could be taken or taxed... that is where I was going with that. Taxmen, whether holding weapons or briefcases, want something tangible to take, and while GDP does include "services" that are not tangible, the payment for those services is tangible, which is why "paid baby-sitting" is part of GDP and "unpaid baby-sitting" is not.

[voliol]

Hmm, even if GDP is miraculously adjusted (or changed in how it’s calculated) so that ”self-services” like cutting your lawn is included, it would still not be the best measure. After all, what does it matter how many lawns are cut, how many tvs are sold, how many mansions are built, how many [insert any non-essential, practical or non-practical, service here], if people can’t be guaranteed food, housing, and healthcare? I guess it can be used as a baseline for ”this is how much we should be able to produce, to help ourselves directly or otherwise sell our products to buy what we need”.

In other words, I dislike phrases like ”x is the richest country in this area” or ”the economic growth of last year was y%”, when these don’t correspond to living standard or poverty rates.

[Vector]

Oh, sorry. No, I mean the literal meaning of inalienable, rather than the figurative one: property that cannot be transferred.

[McTraveller]

In other words, I dislike phrases like ”x is the richest country in this area” or ”the economic growth of last year was y%”, when these don’t correspond to living standard or poverty rates.

This is part of what kicked off the recent discussion - an observation that GDP is extraordinarily disconnected from the average person.  It's tied in with all the other observations above - especially the politics part and how as soon as you have a social contract that has the concept of ownership disconnected from physical possession you end up with wealth concentration and all the -opoly and power-mongering abuses, as well as other bizarre effects (like when prices for commodities go negative).

No, I mean the literal meaning of inalienable, rather than the figurative one: property that cannot be transferred.

I'm curious about this - I've never heard of "inalienable" being used to apply to property. "Inalienable" does mean "cannot be taken away," but there is no type of property (of which I'm aware) which cannot be taken away, so I don't know how to think about that.  Or do you mean in the same sense of "inalienable rights" for which basically it comes down to whatever the people with the biggest sticks say goes? That is, yeah those rights (property) can in fact be taken away, but we have written down that taking them away is a Bad Idea.

(I mean after all, if they truly were "naturally" inalienable, you wouldn't need a document saying they were... because it wouldn't be possible to take them away in the first place.)

[wierd]

OK.

Here's an example.


I go to a college, and I am educated there.  The education is clearly something I have paid money for, and received possession of-- I will continue to reap benefits of having obtained that education.

Now, suppose I am unable to pay my student loans.

It is IMPOSSIBLE for the university to extract the education I received from me.  At the best, they can rescind my diploma, but that does not disempower my mind, nor remove the knowledge contained inside.

The knowledge is a good, that cannot be taken away. It is inalienable.

[McTraveller]

Thanks for that example, knowledge is inalienable for practical purposes in that sense.  I'm not sure I'd classify it as "property" or a "good" though.  (Yes yes, I know there is a thing called "intellectual property" but that's an oft-debated controversial social construct.)

Spoiler: rambling pontification (click to show/hide)

"Knowledge" is an interesting category - it's not a traditional economic good in that you can't trade it but can only replicate it.

I think that's why traditionally teaching is treated as a service, but nobody "pays for knowledge" - they pay for replication of knowledge (teaching), use of knowledge (performing a task that requires knowledge and experience), or they pay for records of knowledge (books, images, data files).

[Vector]

I'm curious about this - I've never heard of "inalienable" being used to apply to property. "Inalienable" does mean "cannot be taken away," but there is no type of property (of which I'm aware) which cannot be taken away, so I don't know how to think about that.

Often it refers to property that is literally movable (or whatever) but which can't be fully taken due to the relationship. For example, an Academy Award (the physical statue) can be stolen or whatever, but you can't make yourself the recipient of that award. Kidnapping someone's wife does not make her now, "your wife."

Or a dog you keep trying to sell but which comes back to you faithfully.


I understand that this kind of discussion is somewhat contrary to modern economics, but it is very common in the anthropological world, which is where I'm gathering it from.

[McTraveller]

Sure, but things like awards (or winning a game) are not "economic goods."  Same thing with labels like "wife" or "birthplace" or whatever - they are "things" but they aren't "economic" - even if there is economic activity associated with being granted an award or filing paperwork to keep marriage or birth records or whatever.

Aside: I love how these conversations evolve over time.  Always learning new stuff and being exposed to new viewpoints - it's awesome and it's why I appreciate this community!

[WealthyRadish]

The main "economic good" of history, land, has traditionally been inalienable in most societies to varying extents. Being legally able to buy and sell it is a practice that had to develop and re-develop in many times and places, a product of increased commercialization of those societies in general.

[McTraveller]

Wow it's been almost a year since this thread has been used?

Anyway, my question is this - why does a 3% 10-year treasury interest rate and the specter of a higher Federal Funds Rate target cause the stock markets to drop by more than 20%?  That is - what's the theory behind this huge multiple?

Or is this just a goofy artifact of PE ratios being so high that a small change in expected earnings causes a large effect on stock price?

I don't really have an immediate interest as I don't trade frequently in the markets, but was just wondering.  It's a fascinating phenomenon to observe.

[EuchreJack]

The stock market drops whenever something happens unexpected.

President says some shit, stock prices drop.
President says other shit, stock prices increase.

It's the basic principle under which I'm 100% sure Trump engaged in massive stock manipulation for profit when he was President.
But I doubt he'll get caught for that.  And I doubt he was the first to do it.

Uncertainly hurts the market the most.  That specter is why you have the 20% drop.  Once the Federal Reserve sets its policy, some of it will come back regardless of how bad their policy should be.

Also: I think you're right about the PE rations being part of the problem.