21-01-2003 06:53									#91
	Support Apolyton, buy Alpha Centauri

quote: We're talking about savings that isn't invested but is used for speculation.

What do you think people keep savings under their beds until the value of money is higher?. Most savings are placed in banks. Banks invest the money they have in their vaults.

quote: And I would say that while the productivity of labor has increased greately with capitalism, real wages have increased little thoughout the era, and have decreased since the 70s in this country.

Check our real wages from 1800 to now. There is an INCREDIBLE spike in real wages per capita in capitalist countries. There will be ebb and flows but capitalism generally will dramatically increase the real wage.

	21-01-2003 06:59									#92
	Suffering from ads?

quote: Originally posted by Imran Siddiqui quote: We're talking about savings that isn't invested but is used for speculation. What do you think people keep savings under their beds until the value of money is higher?. Most savings are placed in banks. Banks invest the money they have in their vaults.

Did you read the discussion in this thread that I had with JohnT? The Law of Diminishing Returns shows us that people will not invest all of their money because they will get less and less return from the next dollar they invest. So, the money that is not invested is used for speculation. This is all according to neo-classical thought except the neo-classical economists just conveniently failed to see that Savings doesn't equal Investment.

	21-01-2003 07:01									#93
	Lose 30 kilos (of popups)

quote: Originally posted by Imran Siddiqui quote: And I would say that while the productivity of labor has increased greately with capitalism, real wages have increased little thoughout the era, and have decreased since the 70s in this country. Check our real wages from 1800 to now. There is an INCREDIBLE spike in real wages per capita in capitalist countries. There will be ebb and flows but capitalism generally will dramatically increase the real wage.

Sure, but you're taking this out of context. I was comparing real wages to productivity gains.

	21-01-2003 07:04									#94
	Put an end to popups!

Edit: Nevermind, I didn't read correctly. Sorry about that, Duncan.

Last edited by JohnT on 21-01-2003 at 07:10

	21-01-2003 08:14									#95
	Support Apolyton, buy Civilization III: Complete

quote: Originally posted by JohnT Edit: Nevermind, I didn't read correctly. Sorry about that, Duncan.

np, i think you meant to put this in another thread though

	21-01-2003 09:01									#96
	Support Apolyton buy from Amazon

quote: Originally posted by DuncanK Savings doesn't equal Investment.

It is hard to save money and not invest it, unless you bury your money into the backyard.
Think, what does the bank do when you give it your money? It invests it! The only dollars that aren't invested are the physical ones that are actually in people's hands - and for each dollar bill, there are whole gobs of dollars that are created through debt and investment.

It is actually very hard to take cash money out of the economic system. Besides burning it and putting it in your sock drawer, there is nothing you can do. If you give it to someone else, they'll spend it, and so on until someone saves it - when it goes into equities, bonds, or the bank, and is invested in any case.

Furthermore, as to your point about diminishing returns, the effect is inversely proportional to the size of the system - in one as big as the economy, it would take a really serious amount of money (such as $10bil) for a well-diversified portfolio to begin to have any real moderating effect on the markets. Similarly for saving in banks - they won't stop borrowing your money for quite a while.

And how many billionaires do you know who keep any money uninvested?

And don't tell me to reread the thread - I did, and everybody's right except you.

	21-01-2003 09:27									#97
	Full PM-box? Change here!

quote: Originally posted by Goingonit It is hard to save money and not invest it, unless you bury your money into the backyard. Think, what does the bank do when you give it your money? It invests it! The only dollars that aren't invested are the physical ones that are actually in people's hands - and for each dollar bill, there are whole gobs of dollars that are created through debt and investment. It is actually very hard to take cash money out of the economic system. Besides burning it and putting it in your sock drawer, there is nothing you can do. If you give it to someone else, they'll spend it, and so on until someone saves it - when it goes into equities, bonds, or the bank, and is invested in any case. Furthermore, as to your point about diminishing returns, the effect is inversely proportional to the size of the system - in one as big as the economy, it would take a really serious amount of money (such as $10bil) for a well-diversified portfolio to begin to have any real moderating effect on the markets. Similarly for saving in banks - they won't stop borrowing your money for quite a while. And how many billionaires do you know who keep any money uninvested? And don't tell me to reread the thread - I did, and everybody's right except you.

Let me start by addressing your comments about banks. The Federal Reserve pumps money into banks to control the level of investment in the economy. As they do this the interest rate drops. The interest rate drops because businesses are only willing to make investments at the lower interest rate. This is due to the Law of Diminishing Returns.

Now lets look at that interest rate. The interest rate that you get from your savings account goes up and down the same way that the interest rate that businesses pay to invest goes up and down. You make a decision to either keep your money in the bank or do something else with it based on that interest rate. Most people tend to buy stocks or bonds or something. Now just because you buy a stock doesn't mean that you have made an investment. Keep in mind that when I'm talking about investment I'm talking about an expenditure that will result in the production of goods and\or services. Back to the stock that you bought. That stock has a speculative value. That means that you have paid for it under the assumption that the price will go up. The only economic value that it has is a store of wealth. The money that you paid for it does not neccessarily go to increase the overall production of goods and services.

	21-01-2003 09:44									#98
	Enter the AD-FREE zone

quote: Originally posted by DuncanK Let me start by addressing your comments about banks. The Federal Reserve pumps money into banks to control the level of investment in the economy. As they do this the interest rate drops. The interest rate drops because businesses are only willing to make investments at the lower interest rate. This is due to the Law of Diminishing Returns.

Interest rate drops are totally artificial. Alan Greenspan decides what they will be. He's not a universal law, he's just head of the bank.

I also don't think you understand the lending process between the Bank of the US and private banks that well.

quote: Now lets look at that interest rate. The interest rate that you get from your savings account goes up and down the same way that the interest rate that businesses pay to invest goes up and down.

No, it doesn't. The interest rate businesses gets depends on the prime rate (ultimately the fed rate, see above) and the amount of risk banks are willing to accept.

quote: You make a decision to either keep your money in the bank or do something else with it based on that interest rate. Most people tend to buy stocks or bonds or something. Now just because you buy a stock doesn't mean that you have made an investment. Keep in mind that when I'm talking about investment I'm talking about an expenditure that will result in the production of goods and\or services.

It's not buying a stock that results in the production of goods and services, it's owning a stock. Owning a share in a company is like owning a company, only you own it with a bunch of other people. Buying a business is clearly an investment, yet the act of purchase doesn't result in creation of goods/services. It's owning the business, and thus, through the business, producing goods/services.

quote: Back to the stock that you bought. That stock has a speculative value. That means that you have paid for it under the assumption that the price will go up. The only economic value that it has is a store of wealth. The money that you paid for it does not neccessarily go to increase the overall production of goods and services.

The money that I pay for it, unless I buy a stock from the company itself, doesn't even go to the company. It goes to some other guy, who will use it for his own purposes, but will also not put it in his sock drawer. The money keeps moving around, effectively creating more of itself.

GNP, a measure of total exchange of goods and serivces, is a product of 2 quantities: "mass" (amount of currency in circulation) and "velocity" (speed at which currency is circulated). If you buy a stock, besides the effect of stock ownership, you're adding to the velocity of the money supply, effectively allowing more people to buy more things.

Lastly, I have problems with your definition of investment. Buying consumer goods isn't an investment, yet it results far more directly in the production of goods and services than, say, buying a stock. Webster's Dictionary defines an investment as, "the outlay of money usually for income or profit".

	21-01-2003 10:09									#99
	Inflate your Upload Space

quote: The Law of Diminishing Returns shows us that people will not invest all of their money because they will get less and less return from the next dollar they invest.

As long as the return is positive from the investment, there will be investment. As Goingonit pointed out it is related to the size of the economy and the immense size of the US economy means that there will be positive returns for just about all possible investment.

quote: Most people tend to buy stocks or bonds or something. Now just because you buy a stock doesn't mean that you have made an investment.

Are you kidding? I know what you are defining investment as (which is flawed, btw... by your definition consumption is investment), but buying ownership in a company results in money going to someone who WILL invest that money. If you buy it directly from the company it goes to them. If you buy it from a broker, then he will use that money and invest it himself.

	21-01-2003 10:14									#100
	Support Apolyton, buy Civilization 2

quote: Originally posted by Goingonit And how many billionaires do you know who keep any money uninvested?

Any who've bought diamonds or furs for their wives, girlfriends or mistresses; any who have bought statutes, paintings, etc. for the pure enjoyment of having them; any who own Rolls Royces; any who own miles and miles of undeveloped land. This was the wealth I was trying to get at when I started this thread, the wealth that's not being used to produce anything.

It makes more sense to tax non-productive wealth than income streams, which by their very nature are indicative of wealth production.

But I see practical problems, and many of you have pointed out more--such as the flight of assets out of the country. Most people have only one or two income streams, so it's fairly easy to track income. But to track assets is slippery.

A few posters have expressed concern that citizens would dump assets in order to put their money into investments. But I perceive a migration of money from idle assets into income-producing investments as a good thing. It means more money for everyone.

I'm going to read the Henry George blub soon. Thanks for the link.

Flubber, give Mrs. Flubber a kiss on the nose for me. Nurses are my very favorite people in the entire galaxy!

	21-01-2003 10:20									#101
	Increase Your PM Length

First of all, I hope nobody's saying that wealth produces anything - only one specific kind of wealth does that, and it's capital.

And it's impossible to convert fur coats and diamond rings to income-producing investments, because only capital can produce wealth. Even if you sell your fur coat to raise capital to pay taxes, someone else is converting their capital to a fur coat.

Wealth is not capital. Capital is the power to make things (along with land and labour) and wealth represents the actual things. Moving wealth accomplishes something (increases the velocity of goods+services transferred), but it doesn't move any more capital into the economy.

Dissuading people from buying luxury goods is also counterproductive, because the fewer fur coats people buy, the more furriers are out of a job.

And this applies to the wealth tax argument too. Not only are investments still wealth, but no amount of asset-dumping by the rich will increase available capital.

	21-01-2003 10:24									#102
	Support Apolyton

quote: any who own miles and miles of undeveloped land.

Land isn't an investment? That's news to me.

quote: It makes more sense to tax non-productive wealth than income streams, which by their very nature are indicative of wealth production.

Income is easy to track. Wealth is VERY difficult to do so.

	21-01-2003 10:39									#103
	Remove this text

Imran, aristocrats who owned large tracts of undeveloped land were the reason why such a large percentage of capital was not being used in the 19th century. One of the only successful uses of a wealth tax was by the British, who managed to take the land out of aristocrats' hands, and thus open to public use many lands which were not developed, and never were going to be.

	21-01-2003 10:43									#104
	Support Apolyton, pre-order Civilization IV

Yes, in the past, Go, but in modern times, land is the ultimate investment!

	21-01-2003 11:58									#105
	Support Apolyton, buy Galactic Civilizations: Deluxe Edition

quote: Originally posted by Goingonit Interest rate drops are totally artificial. Alan Greenspan decides what they will be. He's not a universal law, he's just head of the bank. I also don't think you understand the lending process between the Bank of the US and private banks that well. No, it doesn't. The interest rate businesses gets depends on the prime rate (ultimately the fed rate, see above) and the amount of risk banks are willing to accept. It's not buying a stock that results in the production of goods and services, it's owning a stock. Owning a share in a company is like owning a company, only you own it with a bunch of other people. Buying a business is clearly an investment, yet the act of purchase doesn't result in creation of goods/services. It's owning the business, and thus, through the business, producing goods/services. The money that I pay for it, unless I buy a stock from the company itself, doesn't even go to the company. It goes to some other guy, who will use it for his own purposes, but will also not put it in his sock drawer. The money keeps moving around, effectively creating more of itself. GNP, a measure of total exchange of goods and serivces, is a product of 2 quantities: "mass" (amount of currency in circulation) and "velocity" (speed at which currency is circulated). If you buy a stock, besides the effect of stock ownership, you're adding to the velocity of the money supply, effectively allowing more people to buy more things. Lastly, I have problems with your definition of investment. Buying consumer goods isn't an investment, yet it results far more directly in the production of goods and services than, say, buying a stock. Webster's Dictionary defines an investment as, "the outlay of money usually for income or profit".

I was just trying to teach you some economics. I do have a BA in the field. I know people like to debate here, but what I've told you is nothing more than you would find in an economics text book. Just letting you know.

	21-01-2003 12:16									#106
	Help yourself to an AD-FREE life

Let me try another post to make things clearer. The definition in economics for investment is a purchase of goods and services which is used by a business to produce more goods and\or services. The definition for investment that you use when you talk to your stock broker is money used to purchase stocks or something that you will get a return on (hopefully). They are not the same thing.

The total financial wealth in the country increases every year. That is called the savings rate (you also have some wealth either coming in or out of the country). The savings rate is the money, taken out of total income that is not spent in the economy on either consumption, investment, government spending, and imports. It's a little bit more complicated than this but I don't want to type out a textbook. This money that is saved is a drain on the economy and it is also the increase of the financial wealth in the country.

	21-01-2003 20:10									#107
	Avatar Enlargement: We've got the solution

quote: Originally posted by DuncanK Scarcity..... Why?

Simple -- because certain professions were not paid enough

There have been a scarcity of nurses in many places in North America for instance as nurses migrate to higher paying jurisdictions. This is also true of other health care professionals--

I see now Duncan that I have been debating a person that is talking of their idealized society-- you know free training for everyone, all people will work hard without financial incentives-- its sounds a lot like " from each according to their ability and to each according to their needs "

	21-01-2003 20:41									#108
	Put an end to popups!

quote: Originally posted by Flubber The employer was an economic development association that needed someone to run around in the office, photocopy stuff, answer the phone etc . It paid around 30,000 But the workers could earn their wages at the plant for 14 weeks and then go on unemployment So thats the bastard employer

I'm still right, in both cases the employer is the government.

They're the only ones who pay 30 grand for a girl friday. They are setting the 14 week minimum for UIC there, it's 52 everywhere else unless adjusted.

The whole area sounds like an economic basketcase.

	21-01-2003 20:45									#109
	Put an end to popups!

quote: Originally posted by Goingonit And it's impossible to convert fur coats and diamond rings to income-producing investments

Rentals, just like renting out a Prom Tux.

Anything of value to another person can generate income.

	21-01-2003 21:03									#110
	Got spare money?

quote: Originally posted by Imran Siddiqui quote: any who own miles and miles of undeveloped land. Land isn't an investment? That's news to me.

Glad I could educate you.

Income property such as apartment buildings, minimalls, office buildings, are of course investments. But I was talking about undeveloped land. Sure you can "invest" your money in raw land, speculating that someone someday will pay you more than you originally paid, but you could make the same "investment" with tulip bulbs or a pile of dog poo.

	21-01-2003 21:06									#111
	Support Apolyton, pre-order Civilization IV

How do I remove the black circle from this thread? It bores me and I don't want to check on it.

	21-01-2003 21:21									#112
	Support Apolyton, buy Alpha Centauri

tax estates 75-80% over 10 million dollars and create a sloping curve till you get to 1 million dollars. go inheritence taxes!

	21-01-2003 21:30									#113
	Support Apolyton buy from Amazon

Inheritence taxes are the only types of wealth taxes I have seen. The problem is that the truly wealthy will set up a series of trusts to hold assets such those assets are not part of the estate of any individual when they die.

	21-01-2003 21:31									#114
	Avatar Enlargement: We've got the solution

quote: Originally posted by Flubber Simple -- because certain professions were not paid enough There have been a scarcity of nurses in many places in North America for instance as nurses migrate to higher paying jurisdictions. This is also true of other health care professionals-- I see now Duncan that I have been debating a person that is talking of their idealized society-- you know free training for everyone, all people will work hard without financial incentives-- its sounds a lot like " from each according to their ability and to each according to their needs "

Of course, paying nurses minimum wage would be even worse than it is right now. Of course, nurses (in this country too) are not paid what they are worth to society. That's why there is a shortage, agree?

	21-01-2003 21:32									#115
	Support Apolyton, buy Galactic Civilizations: Deluxe Edition

start taxing trusts

	21-01-2003 21:46									#116
	Enter the AD-FREE zone

quote: Originally posted by MRT144 start taxing trusts

Hey, I'm a beneficiary of one of those!

I would still support a tax on them if it were part of a good overall wealth tax that helped increase investment. Investment comes out of national income you know

	21-01-2003 21:47									#117
	Remove this text

quote: Originally posted by MRT144 start taxing trusts

Trusts do pay income tax but my comment was that you could easily avoid "inheritence" taxes with this type of instrument.

The other simple method is to gift assets to your family during your lifetime. You could tax these transfers with some form of wealth transfer tax but this would run into the same problems as any wealth tax

	21-01-2003 22:05									#118
	Support Apolyton buy from Amazon

quote: Originally posted by Goingonit First of all, I hope nobody's saying that wealth produces anything - only one specific kind of wealth does that, and it's capital.

I was thinking of saying this too. But I was going to say that, in macroeconomic terms, wealth comes from income. Income does not come from wealth like it does in your savings account. The payment that you get from your bonds is a transfer payment. This is calculated seperately than GDP (the production of goods and services).

quote: Originally posted by Goingonit And this applies to the wealth tax argument too. Not only are investments still wealth, but no amount of asset-dumping by the rich will increase available capital.

I'm not sure what kind of wealth you are talking about here.

If you are taxing their luxury goods than the price would drop I guess and that would discourage the production of these goods, true. One could also say that that would divert resources to more neccessary production.

If you are talking about financial wealth, like stocks and bonds I disagree. If a wealth tax convinced the owners to dump these it would both stimulate consumption and investment a great deal. The thing you would really have to worry about is inflation.

	21-01-2003 22:09									#119
	Avatar Enlargement: We've got the solution

quote: Originally posted by Goingonit Imran, aristocrats who owned large tracts of undeveloped land were the reason why such a large percentage of capital was not being used in the 19th century. One of the only successful uses of a wealth tax was by the British, who managed to take the land out of aristocrats' hands, and thus open to public use many lands which were not developed, and never were going to be.

I knew that someone would bring up this point. I wanted to give an example of how wealth tax would encourage capitalist to increase the productivity of capital.

	21-01-2003 22:18									#120
	Remove this text

quote: Originally posted by DuncanK Of course, paying nurses minimum wage would be even worse than it is right now. Of course, nurses (in this country too) are not paid what they are worth to society. That's why there is a shortage, agree?

It's more than that, it's lousy hours and being screwed
around by politically appointed (In Canada) hospital administrators, (like being "on call" but not getting pay, trying to part- time everything but management), a crappy union that if you don't pay your dues to, You LOSE your creditation.

Nurses are intelligent people, they can make just as much doing something else. Alot of them are doing
something else, and will never go back to nursing.