Top problems affecting the world.

[Agathon]

And secondly, even if it did, you just contrdicted yourself. The first argument you made was that it was a stupid statement that the free market will equalize wages. Now you've admitted that it would, but claim the wages will all be crap then. So the first statement I've made was correct regardless of what the wage rate would be, and your whole "that's the most stupid statement" thing actually applies to something that you've admitted is correct. Great for credability.

Of course the market will equalize wages among the poor in both poor and rich countries, but to say that it will equalize overall is nonsense, in practice free markets tend to result in greater inequality. Of course economists are excellent at ignoring reality so I don't expect you to know this.

Nice try, but you'll have to do better than that.

[Kuciwalker]

Originally posted by Chemical Ollie
"Social implications" is a vague term, tells me nothing. Still, war and genocide are much worse of the man-made disasters.

Social implications - that is, how it affects society beyond simply subtracting a number of its members. People killing themselves to cause others to die because their ideology requires them to hate our country generally affects people differently than, say, people dying in a tsunami. A tsunami is a force of nature, not something actively trying to kill you.

[Kidlicious]

Originally posted by Drogue

No you don't, you have to be employed to use it. Most people are not self employed, and most people use tools their employer provides to do there job.

There's a thing in economics called economic rent. The idea being that any economic profit made is attributable to something that company has that is better than it's competitors. That factor then gets the rent earned from that. So if it has an employee that is particularly good, that employee will be paid more to compensate for him being that good, else other companies will offer him more. If the company instead owns a particularly good piece of equipment for the employee to use, then the company gets the rent, due to the equipment, not the employee, being the factor the rent is due to.

Wages are paid, in a totally competative, free market, on the basis of ability at that job (or at least, perceived ability at that job), which has nothing to do with whether or not you can afford equipment, because your employer provides that. I wouldn't expect to be employed as a computer programmer, say, and be asked to bring my own computer. One would be provided, so it doesn't matter whether or not I can afford one to get that job.

Your using language to make capitalism sound very nice, but the fact is that you claimed that capitalism insures that you be paid for your work, and that communism does not. You are not proving your case at all. Your just ignoring reality and using language to distract attention from the real case. You are paid for your capital. That is the fact. Capital is not work.

[Agathon]

From today's Grauniad.

When will the stupid poms wake up?

Punitive - and it works

Sweden proves neoliberals wrong about how to slash poverty. But Brown isn't listening

George Monbiot
Tuesday January 11, 2005
The Guardian

'Does not already the response to the massive tidal wave in south-east Asia," Gordon Brown asked on Thursday, "show just how closely and irrevocably bound together... are the fortunes of the richest persons in the richest country to the fate of the poorest persons in the poorest country?"

The answer is no. It is true that the very rich might feel sorry for the very poor, and that some of them have responded generously to the latest catastrophe. But it is hard to imagine how the fate and fortunes of the richest and poorest could be further removed. The 10 richest people on earth have a combined net worth of $255bn - roughly 60% of the income of sub-Saharan Africa. The world's 500 richest people have more money than the total annual earnings of the poorest 3 billion.

This issue - of global inequality - was not mentioned in either Brown's speech or Tony Blair's simultaneous press conference. Indeed, I have so far failed to find a reference to it in the recent speeches of any leader of a G8 nation. I believe that the concern evinced by Blair and Brown for the world's poor is genuine. I believe that they mean it when they say they will put the poor at the top of the agenda for the G8 summit in July. The problem is that their concern for the poor ends where their concern for the rich begins.

There is, at the moment, a furious debate among economists about whether global inequality is rising or falling. No one disputes that there is a staggering gulf between rich and poor, which has survived decades of global economic growth. But what the neoliberals - who promote unregulated global capitalism - tell us is that there is no conflict between the whims of the wealthy and the needs of the wretched. The Economist magazine, for example, argues that the more freedom you give the rich, the better off the poor will be. Without restraints, the rich have a more powerful incentive to generate global growth, and this growth becomes "the rising tide that lifts all boats". Countries which intervene in the market with "punitive taxes, grandiose programmes of public spending, and all the other apparatus of applied economic justice" condemn their people to remain poor. A zeal for justice does "nothing but harm".

Now it may be true that global growth, however poorly distributed, is slowly lifting everyone off the mud. Unfortunately we have no way of telling, as the only current set of comprehensive figures on global poverty is - as researchers at Columbia University have shown - so methodologically flawed as to be useless.

But there is another means of testing the neoliberals' hypothesis, which is to compare the performance of nations which have taken different routes to development. The neoliberals dismiss the problems faced by developing countries as "growing pains", so let's look at the closest thing we have to a final result. Let's take two countries which have gone all the way through the development process and arrived in the promised land of prosperity. Let's compare the United Kingdom - a pioneer of neoliberalism - and Sweden, one of the last outposts of distributionism. And let's make use of a set of statistics the Economist is unlikely to dispute: those contained within its own publication, the 2005 World in Figures.

The first surprise, for anyone who has swallowed the stories about our unrivalled economic dynamism, is that, in terms of gross domestic product, Sweden has done as well as we have. In 2002 its GDP per capita was $27,310, and the UK's was $26,240. This is no blip. In only seven years between 1960 and 2001 did Sweden's per capita GDP fall behind the UK's.

More surprisingly still, Sweden has a current account surplus of $10bn and the UK a deficit of $26bn. Even by the neoliberals' favourite measures, Sweden wins: it has a lower inflation rate than ours, higher "global competitiveness" and a higher ranking for "business creativity and research".

In terms of human welfare, there is no competition. According to the quality of life measure published by the Economist (the "human development index") Sweden ranks third in the world, the UK 11th. Sweden has the world's third highest life expectancy, the UK the 29th. In Sweden, there are 74 telephone lines and 62 computers per hundred people; in the UK just 59 and 41.

The contrast between the averaged figures is stark enough, but it's far greater for the people at the bottom of the social heap. Perhaps unsurprisingly, the Economist does not publish this data, but the UN does. Its Human Development Report for 2004 shows that in Sweden 6.3% of the population lives below the absolute poverty line for developed nations ($11 a day). In the UK the figure is 15.7%. Seven and a half per cent of Swedish adults are functionally illiterate - just over one-third of the UK's figure of 21.8%. In the UK, according to a separate study, you are more than three times as likely to stay in the economic class into which you were born as you are in Sweden. So much for the deregulated market creating opportunity.

The reason for these differences is straightforward. During most of the 20th century, Sweden has pursued, in the words of a recent pamphlet published by the Catalyst Forum, "policies designed to narrow the inequality of condition between social classes". These include what the Economist calls "punitive taxes" and "grandiose programmes of public spending", which, remember, do "nothing but harm". These policies in fact appear to have enhanced the country's economic competitiveness, while ensuring that the poor obtain a higher proportion of total national income. In Sweden, according to the UN, the richest 10% earn 6.2 times as much money as the poorest 10%. In the UK the ratio is 13.8.

So for countries hoping to reach the promised land, there is a choice. They could seek to replicate the Swedish model of development - in which the benefits of growth are widely distributed - or the UK's, in which they are concentrated in the hands of the rich. That's the theory. In practice they have no choice. Through the International Monetary Fund and the World Trade Organisation, the G8 governments force them to follow a model closer to the UK's, but even harsher and less distributive. Of the two kinds of capitalism, Blair, Brown and the other G8 leaders have chosen for developing countries the one less likely to help the poor.

Unless this changes, their "Marshall plan for the developing world" is useless. Brown fulminates about the fact that, five years after "almost every single country" signed up to new pledges on eliminating global poverty, scarcely any progress has been made. But the very policies he implements as a governor of the IMF make this progress impossible. Despite everything we have been told over the past 25 years, it is still true that helping the poor means restraining the rich.

· The sources for George Monbiot's articles can be found at www.monbiot.com

http://www.guardian.co.uk/comment/story/0,3604,1387400,00.html

All he's saying is what I've known for years: countries with socialist policies of wealth redistribution are better places to live.

[Kidlicious]

Originally posted by Agathon
The problem is that their concern for the poor ends where their concern for the rich begins.

The real problem is that too many stupid people don't understand this. Capitalism can never end poverty, because of conflicting interests. The rich must prey on the poor.

[Urban Ranger]

Originally posted by Drogue
Firstly that's crap. As I showed, as more people are employed in the poor country, the wage rate will rise due to increased demand, while falling due to less demand in the rich country. Indeed, the equalization will lead to the wage rate in each being far higher than it would be if you tried to force the wage rate to tbe the same, with legislation, a la communism.

It's not that simple. Inequality exists not only between nations, but also within national borders as well. The gap between the rich and the poor in the US is extraordinarily wide, this is a clear indication that a free market is not the panacea it is supposed to be.

Secondly, wage will only increase if demand outstrips supply - and there is a staggering supply of cheap labour around the globe. With the population of the developed countries dropping, reducing demand, I am not sure if it helps any.

BTW, communism is not equal wage rate.

[Urban Ranger]

The world's number 1 problem is there are too many people.

Sava is right

[Urban Ranger]

Originally posted by Drogue
Labour is intellectual capital.

Labour is physical work, which is just about as remote from either intellectual activities or capital as you can get.

Originally posted by Drogue
Income from labour is larger for almost everyone than income from capital.

Bingo, that's how capitalists make money - from the labour of their workers.

[Chemical Ollie]

Originally posted by Kuciwalker


Social implications - that is, how it affects society beyond simply subtracting a number of its members. People killing themselves to cause others to die because their ideology requires them to hate our country generally affects people differently than, say, people dying in a tsunami. A tsunami is a force of nature, not something actively trying to kill you.

So does war and genocide. Each of them have been at least 100 times worse than terrorism in the last 10 years.

[Chemical Ollie]

Originally posted by Agathon
From today's Grauniad.

When will the stupid poms wake up?

Punitive - and it works

Sweden proves neoliberals wrong about how to slash poverty. But Brown isn't listening

George Monbiot
Tuesday January 11, 2005
The Guardian

'Does not already the response to the massive tidal wave in south-east Asia," Gordon Brown asked on Thursday, "show just how closely and irrevocably bound together... are the fortunes of the richest persons in the richest country to the fate of the poorest persons in the poorest country?"

The answer is no. It is true that the very rich might feel sorry for the very poor, and that some of them have responded generously to the latest catastrophe. But it is hard to imagine how the fate and fortunes of the richest and poorest could be further removed. The 10 richest people on earth have a combined net worth of $255bn - roughly 60% of the income of sub-Saharan Africa. The world's 500 richest people have more money than the total annual earnings of the poorest 3 billion.

This issue - of global inequality - was not mentioned in either Brown's speech or Tony Blair's simultaneous press conference. Indeed, I have so far failed to find a reference to it in the recent speeches of any leader of a G8 nation. I believe that the concern evinced by Blair and Brown for the world's poor is genuine. I believe that they mean it when they say they will put the poor at the top of the agenda for the G8 summit in July. The problem is that their concern for the poor ends where their concern for the rich begins.

There is, at the moment, a furious debate among economists about whether global inequality is rising or falling. No one disputes that there is a staggering gulf between rich and poor, which has survived decades of global economic growth. But what the neoliberals - who promote unregulated global capitalism - tell us is that there is no conflict between the whims of the wealthy and the needs of the wretched. The Economist magazine, for example, argues that the more freedom you give the rich, the better off the poor will be. Without restraints, the rich have a more powerful incentive to generate global growth, and this growth becomes "the rising tide that lifts all boats". Countries which intervene in the market with "punitive taxes, grandiose programmes of public spending, and all the other apparatus of applied economic justice" condemn their people to remain poor. A zeal for justice does "nothing but harm".

Now it may be true that global growth, however poorly distributed, is slowly lifting everyone off the mud. Unfortunately we have no way of telling, as the only current set of comprehensive figures on global poverty is - as researchers at Columbia University have shown - so methodologically flawed as to be useless.

But there is another means of testing the neoliberals' hypothesis, which is to compare the performance of nations which have taken different routes to development. The neoliberals dismiss the problems faced by developing countries as "growing pains", so let's look at the closest thing we have to a final result. Let's take two countries which have gone all the way through the development process and arrived in the promised land of prosperity. Let's compare the United Kingdom - a pioneer of neoliberalism - and Sweden, one of the last outposts of distributionism. And let's make use of a set of statistics the Economist is unlikely to dispute: those contained within its own publication, the 2005 World in Figures.

The first surprise, for anyone who has swallowed the stories about our unrivalled economic dynamism, is that, in terms of gross domestic product, Sweden has done as well as we have. In 2002 its GDP per capita was $27,310, and the UK's was $26,240. This is no blip. In only seven years between 1960 and 2001 did Sweden's per capita GDP fall behind the UK's.

More surprisingly still, Sweden has a current account surplus of $10bn and the UK a deficit of $26bn. Even by the neoliberals' favourite measures, Sweden wins: it has a lower inflation rate than ours, higher "global competitiveness" and a higher ranking for "business creativity and research".

In terms of human welfare, there is no competition. According to the quality of life measure published by the Economist (the "human development index") Sweden ranks third in the world, the UK 11th. Sweden has the world's third highest life expectancy, the UK the 29th. In Sweden, there are 74 telephone lines and 62 computers per hundred people; in the UK just 59 and 41.

The contrast between the averaged figures is stark enough, but it's far greater for the people at the bottom of the social heap. Perhaps unsurprisingly, the Economist does not publish this data, but the UN does. Its Human Development Report for 2004 shows that in Sweden 6.3% of the population lives below the absolute poverty line for developed nations ($11 a day). In the UK the figure is 15.7%. Seven and a half per cent of Swedish adults are functionally illiterate - just over one-third of the UK's figure of 21.8%. In the UK, according to a separate study, you are more than three times as likely to stay in the economic class into which you were born as you are in Sweden. So much for the deregulated market creating opportunity.

The reason for these differences is straightforward. During most of the 20th century, Sweden has pursued, in the words of a recent pamphlet published by the Catalyst Forum, "policies designed to narrow the inequality of condition between social classes". These include what the Economist calls "punitive taxes" and "grandiose programmes of public spending", which, remember, do "nothing but harm". These policies in fact appear to have enhanced the country's economic competitiveness, while ensuring that the poor obtain a higher proportion of total national income. In Sweden, according to the UN, the richest 10% earn 6.2 times as much money as the poorest 10%. In the UK the ratio is 13.8.

So for countries hoping to reach the promised land, there is a choice. They could seek to replicate the Swedish model of development - in which the benefits of growth are widely distributed - or the UK's, in which they are concentrated in the hands of the rich. That's the theory. In practice they have no choice. Through the International Monetary Fund and the World Trade Organisation, the G8 governments force them to follow a model closer to the UK's, but even harsher and less distributive. Of the two kinds of capitalism, Blair, Brown and the other G8 leaders have chosen for developing countries the one less likely to help the poor.

Unless this changes, their "Marshall plan for the developing world" is useless. Brown fulminates about the fact that, five years after "almost every single country" signed up to new pledges on eliminating global poverty, scarcely any progress has been made. But the very policies he implements as a governor of the IMF make this progress impossible. Despite everything we have been told over the past 25 years, it is still true that helping the poor means restraining the rich.

· The sources for George Monbiot's articles can be found at www.monbiot.com

http://www.guardian.co.uk/comment/story/0,3604,1387400,00.html

All he's saying is what I've known for years: countries with socialist policies of wealth redistribution are better places to live.

This article seems to use Sweden as a proof that socialism works. But our Social-democratic government has slided towards liberalism in the last decades, so the true socialists don't like it. We have a very mild form of socialism, I would define it as "social-liberal".

By the way, commies seem to like the term "neo-liberals" to define the far right, while people like Ned use "liberals" for people he considers extremely left. Just an observation.

[Drogue]

Originally posted by Agathon
Of course the market will equalize wages among the poor in both poor and rich countries, but to say that it will equalize overall is nonsense, in practice free markets tend to result in greater inequality. Of course economists are excellent at ignoring reality so I don't expect you to know this.

I think you're missing the point, I didn't say about poor and rich in either country, because they're non-comparible. The rich in a poor nation can be poorer than the poor in a developed nation. Look at it on one scale - *overall*, the people in the poorer nation, even the menial workers, are poorer than the poor people in the rich nation. So it is a wage rate transfer to the very poor, from the slightly richer. When I said equalize overall, I was talking about nations. A free market without protectionist measures will equalize between nations. The inequality in ta particular nation is down to the government controlling it. So the US can still have an uneven distribution of wealth, as can India, but a fre market will raise the wealth in India, and raise wages there, faster than it does in the US, thus making them more equal. I made no comment about what happens in each nation, as that's not about trade.

However your comment that the free market results in greater inequality is not an "in practice" comment, as it's never been tried. The free market, a perfect free market, allocates income based on how good you are at your job - how much you're worth to your employer. So it's distributed by abilit, perfectly, with nothing to do with need. Thus while it would be unequal, it would be fair and unequal. I don't think it's a good idea for a country to have a totally free market at all, but that is what a free market is, and since it hasn't ever been tried, we can't say it's effect "in practice", just in theory.

If you wish to make comments about economics ignoring reality, please study some economics first so you know what it is that is ignoring reality.

[Drogue]

Originally posted by Kidicious
Your using language to make capitalism sound very nice, but the fact is that you claimed that capitalism insures that you be paid for your work, and that communism does not. You are not proving your case at all. Your just ignoring reality and using language to distract attention from the real case. You are paid for your capital. That is the fact. Capital is not work.

I never claimed that communism didn't pay you, you're misunderstanding my argument completely. However you are paid according to your labour, when it comes to wage rate, as I said. If you're only paid on capital, why does my brother, someone with very little capital but a good job, get paid more than my father, someone who has far more assets, but is retired, and thus get's far less income?

You get income from capital by investing it, and you get income from labour by working. I made no comment about communism not paying. Please show me where my argument is wrong. However saying that you are paid solely for capital, and not at all paid for labour is ridiculous.

[Drogue]

Originally posted by Agathon
All he's saying is what I've known for years: countries with socialist policies of wealth redistribution are better places to live.

The article is right, Sweden is far better run than the UK. However as Ollie said, it's closer to liberalism than socialism. And moreover, there is a completely different culture in Scandinavia. If you enacted those policies in the UK, sadly, they would not work, because people would try and take advantage of them. I was amazed when travelling around Finland that people didn't try and take advantage of things, so the measures to make sure they didn't take advantage weren't in place. For example, I fell asleep on a train, thus did not purchase a ticket for that journey. I was not woken by the conductor, who on all other journeys simply asked if anyone had just come on, could they show him a ticket. The result was I didn't pay (incidentally, I tried to pay when I got off but the conductor refused my money). If you wanted to, that would be so easy to do. In the UK it wouldn't, because if we had that system, almost no-one would pay.

We have a different culture, where people try to get away with what they can. Thus giving them a decent quality of life when they do not work means people will not look for jobs. Thus unemployment benefit is set where it should be liveable, but not comfortable, so people have a drive to find a job and improve their financial status. In Scandinavia, that wouldn't be needed to the same extent, as people are more socially responsible.

Hence why I don't particularly want to live in the UK when I graduate - I don't like the idea of everyone trying to do everyone else over when it comes to money. Given the right culture, Sweden's political policies work fantastically. However that doesn't mean it'll work in the UK until our culture has changed more in line with that.

[Whaleboy]

Terrorism has social implications out of proportion to the number of deaths it causes.

None more so than the likes of an election. 9/11 would only probably be remembered for it's uniqueness and the fact that it stood as a kick-up-the-backside. As for the numbers of people that died, in the historical sense, it is trivial, and the post-9/11 hysteria would not be well understood by history, except in the Orwellian sense.

[Drogue]

Originally posted by Urban Ranger
It's not that simple. Inequality exists not only between nations, but also within national borders as well. The gap between the rich and the poor in the US is extraordinarily wide, this is a clear indication that a free market is not the panacea it is supposed to be.

Very true. I only claimed it equalized between countries, not people in a country, as said above. I was espousing a lack of protectionism, and free trade, not a unfettered free market inside a nation.

Originally posted by Urban Ranger
Secondly, wage will only increase if demand outstrips supply - and there is a staggering supply of cheap labour around the globe. With the population of the developed countries dropping, reducing demand, I am not sure if it helps any.

True, thus any drop in the demand for labour in developed nations would be spread about far wider as a rise in demand for labour in developing nations. However the world does have enough food to feed everyone, so the population level is supportable. However due to the difference in wage rate, it can be enough:

For example, suppose the average wage in the US is around $30k, and that the level of poverty the UN gives is around $1 per day. So suppose in a very poor nation, much of the population is earning less than that, and the poverty level is the average wage. Say there are 3 billion people who have that average wage, and 300 million who have the US wage. A free trade area would likely decrease demand for labour in the US, due to it's price, and increase it in the developing nation, thus decreasing the wage rate in the US by 10%, to $27k per yer. That would mean the US aggregate national income would reduce by $900 billion. Thus the companies employing those people have slashed their labour costs by $900 billion. Suppose they then spend $300 billion hiring cheaper workers abroad, and $300 billion in shipping their work over to the US. The companies make an extra $300 billion, and the demand for labour in the developing nation increases by $300 billion, which spread over the 3 billion people, equals a rise in wages from $365 to $465 for the average wage. That's a far larger than 10% increase. So even with a 66% inefficiency, that is the amount of reduced labour costs not transferred to labour costs in the developing nation, income per capita rises by a higher % than it fell in the US. If the amount it costs to ship theiroutput decreases, more can be spent on labour, and production and wage rate increases by more. With 0 costs involved in transportation, the wage rate would be the same in the US as the developing nation. Yes, that would be a lot lower wage rate than the US currently enjoys, but it means the worlds poorest benefit at the expense of those richer than them. So more people in the US will live in poverty, but *far* fewer in developing nations would.

I don't claim this will mean everyone in a nation will earn the same, nor do I particularly want that. However if each nation has the same starting point, overall world wages will be more equal than they ar currently. Thus, if you have absolute equality policies inside a nation, and free trade with other nations, and no communication and transportation costs, the whole world population will have equal wages.

Originally posted by Urban Ranger
BTW, communism is not equal wage rate.

What does it equal, wrt the wage rate? Each according to his need?