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The Almighty Buck

Journal buffer-overflowed's Journal: Functional Socialism (1 of 3) 19

Journal by buffer-overflowed

There are a few things I need to go into in order for this JE series to work. This is the basis of part one of the series, as well as a little introduction.

Mankind has come up with various economic models. Two are currently successful for accomplishing different tasks. Socialism and Communism are quite good at accelerating 3rd world economies into 2nd world ones, and Capitalism is quite good at accelerating 2nd world into 1st world. I began wondering if there is a way to reach a higher standard, a hypothetical "zero world" and what system would work to quickly do so.

Money, in all it's forms and incarnations, is, beneath many levels of abstraction representative of resources. That dollar, or euro, or paso in your pocket way, way, way down the line corresponds to a material good, a chunk of iron ore, a fleck of gold, something of that nature. Wealth can not ever truly be created, only explored, or mined or grown as at any given time there is only a finite amount of usable resources on the planet. As science increases, we can tap more and more of them, but there is still finite mass.

Ayn Rand coined the term "looters", and I will coin another "hoarders". At a certain point of wealth, there is no more functional use for it. If you make a billion dollars a year, you can't reasonably spend or invest a billion dollars in a year(perhaps you can, more on this later). Therefor, this small subsection in tying up resources they neither truly need or use, will eventually deprive other people of resources needed for survival.

We already see this, when comparing the standards of the first world against the standards of the third world. We see this less domestically, and to claim it occurs here[USA] is a shaky one requiring much defense, thus I will not do so.

However, certain ideas I will record (socialistic), when taken to the extreme destroy the motivation to create (or as I defined earlier, explore, mine or grow) wealth, thus supressing the entire system, retarding it, or causing it to contract.

Historically, we've seen this.

In order for capitalism to work, there must be a continual expansion of resources to compensate for the hoarding of resources that occurs at the top level of income/inheritance. When this machine breaks (and it will (and has) as population grows) people die, or parts of the planet's ecosystem are sacrificed for the creation of new wealth due to the demands of survival.

A little on our current taxation system. At certain places it is balanced against the poor (social security, medicare, medicaid, sales tax) and at others against the rich(income tax, dividend tax). Still others are fairly balanced in their influence (payroll taxes). Government functions off the high end (income taxes/dividend taxes), and the social programs of government function off of the low end (social security, etc). Without highly complex analysis (which I am not qualified for), you can see how the poor(and middle class) support the poor more and the upper support the functions of government more (defense, etc.).

In my next JE. I will explore a possible solution to these failings in our economic system and a possibly better and more fair system of taxation.

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Functional Socialism (1 of 3) More

Functional Socialism (1 of 3)

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  • Wealth can not ever truly be created, only explored, or mined or grown as at any given time there is only a finite amount of usable resources on the planet. As science increases, we can tap more and more of them, but there is still finite mass.

    I think this is not true. Wealth is not generated solely from natural depletable resources. Solar power is nigh-infinite (yeah, it'll be gone in 500 billion years but for the sake of the argument). From that grows all organic life which is (barring natural disast
    • I was going to go into that more, but I thought the finite planet mass addressed it.

      Since the planet is finite (and in turn our currently exploitable universe) energy can only be harnessed to transform pieces of the mass of the planet into either A> energy or B> material goods.

      This covers the corn example. If we come up with a way to harness Solar (and turn energy straight into mass) with 100% efficiency we still have a finite limit defined by the max amount of energy we can store. This limit may
      • That should've read:

        A> energy collection/generation (such as Solar panels)

        and "max amount of energy we can store" should've read harness/transform/store.
        • But we don't need to store energy, we can burn the excess. We can just use it. And outside of solar energy there is gravity (which pushes water for hydro turbines, and along with the mass of the planet creates geothermal forces). The mass of the planet may technically be finite, but there is a supply of energy being beamed into this planet and it's already being harnessed (since solar along with photosynthesis is the root of all organic life on the planet).
          • Ahh, but your gravity argument neglects physics. Hydro is basically solar power (water evaporates, rains, gains potential energy and in turn this potential energy is harnessed through turbines).

            We are exposed to a finite(albeit fluctuating and huge) amount of Solar energy. Our planet also produces a finite amount of geothermal energy and produces a finite amount of gravitational energy. Combined with finite mass (and thus finite resources, such as silicon, metals and the like) the total planetary resour
    • And for this reason people (and chipmunks, and cows, and trees) hoard. You never know if the well will be full or dry when you are next thirsty... so you store as much as you can. Why? Nash Equilibriums. It is the most optimal strategy in this world of poor communication.

      And remember, hoarded wealth DOES have a purpose. It can be reintroduced as loans, sharing the resource at a loss to others. It can be taxed for the benefit of the whole (which is VERY important since a community, a city, a state, a nation
      • Hoarders aren't necessarily a bad thing. Most at the very least invest their stash which makes it availiable for someone else. Many even give it away to causes they support.

        I'd go a little further: hoarders are very rarely - if ever - a bad thing. Bill Gates, for example, has lots of money; you could consider him a "hoarder". Now look where that money is: invested in other companies! A big chunk is still invested in Microsoft; another chunk will be in banks, where it gets invested in people and companies

        • The other problem I with the idea that my cash equates to physical goods is that it doesn't always. It also equates to human effort. When I pay for cable, I am not just paying for the physical equipment that makes the shows and the physical equipment that delivers the signal. And when I buy some object that involves any kind of craft to make, I'm not just paying for the materials it's made up of; I'm also paying for the work and/or artistry it too create.
          • The other problem I with the idea that my cash equates to physical goods is that it doesn't always. It also equates to human effort. When I pay for cable, I am not just paying for the physical equipment that makes the shows and the physical equipment that delivers the signal. And when I buy some object that involves any kind of craft to make, I'm not just paying for the materials it's made up of; I'm also paying for the work and/or artistry it too create.

            Not necessarily physical goods, no - just the slig

            • The original examples of "resources" seemed completely weighted to physical goods. If that was unintentional then of course my point doesn't apply :-)
              • The original examples of "resources" seemed completely weighted to physical goods. If that was unintentional then of course my point doesn't apply :-)

                Yes, it was unintentional; I was trying to think of "things we trade". ISTR I did mention books, though, as having more value than the physical components - you're really paying for the information value, the physical paper and ink is incidental. It's actually the core of the argument, though: the JE's original theory seemed to be "physical matter is finite

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  • How much econ have you studied? There are plenty of existent theories to cover some of what you mention.

    For example, there is no concern with 'hoarding' as you put it. Let's say that someone begins to hoard fossil fuels. The price on the remaining fossil fuels will increase. This will make the profitability of alternatives increase, and society (if free enough) will 'route around the disruption'. That's a theory (which I haven't studied in depth enough for such a long time that I fear I've butchered it).

    A
    • Ok, I feel stupid, what is the difference between economic and financial profits?
      • When an accountant speaks of profit, he means the amount of money made above and beyond the cost of bringing an item to market.

        When an accountant speaks of profit (actually, the term is 'rent') he is referring to a profit in excess of what the market indicates he should make. This is only possible in the long term due to monopolies. These can happen in the short term, while waiting for markets to move.

        Let me try an example:

        Tony sells crack. Crack costs $2/rock to make. Tony gets $10/rock. Antwoine sees a
    • I will try to keep the two seperate. I may need to go back through my econ books since I have an economist reading my stuff. FYI, I only took 3 econ classes (9 hours), 2 accounting classes (6 hours), and 3 business classes (9 hours). My strong suits are in math and comp sci.

  • Socialism and Communism are quite good at accelerating 3rd world economies into 2nd world ones

    What do you mean by "2nd world"? I've only come across the use of 1st and 3rd world. This [dr1.com] article seems to argue that the 2nd world died with the collapse of the USSR.

    As for accelerating 3rd -> 2nd world (assuming some interpolated description for this), can you give an example of a country for which this has occurred? Most so called communist/socialist states have either wallowed in poverty, collapsed, or g

    • 2nd world is where the USSR was. It's a half-way point between 3rd world and 1st. Communism, when it works, has the capacity to rapidly transform an economy into this standard (poorer then 1st, better off than 3rd). It then sputters out and traps the economy there (or causes a collapse, etc.). It's a catalyst for rapid industrialization.

      China is currently playing with mixing in capitalism into their socialistic economy... to great effect I might add.

      Effectively, it is true, because each dollar has pur
  • I don't know where we're headed. I do know that countries that rob the rich to give to the poor needs to do this in small enough doses that the rich don't just move someplace else.

    I would add, though, that capitalism only works if we recognise that we're all in the same boat. The moment that a first world country starts sacrificing needed resources such as the ecology to create yet more wealth, it's headed for breakdown. And that's happening. Third world countries, however, have the opposite problem. In a

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