I took a class in economics. I had the feeling of learning medieval scholastics where the model is ideal and perfect while the reality is different. The teacher said that the model is confirmed although he could never show an example in real life.
Great insight. Milton Friedman claimed that Neoliberalism was based on "The Laws of Nature". Well gee whiz, how can one argue with "The Laws of Nature". It reminds me how in feudal societies they claimed, "The Divine Right of the King". Well gosh, how can one argue against God.
It's just kinda appalling that the prospect of another French Revolution is seen as the worst outcome - rather than the worst outcome being a status quo where people are driven to set up guillotines. The monarchy was the problem, not their demise. Same is true today.
Abandon of the use of Money seems to be a logical and benign solution? The Bankers will be forced to be Farmers, or some other worthy form of social contribution and the rest of the world can simply do their best.....
I think I understand what you are saying. I've seen several videos from this channel and all of the interviewed say the same. "Inequality is problematic because it may lead to fascism" or something like that. It's a priveledge point of view I think. Most of these people work safe jobs, nice benefits, nice pay, plenty of holidays all is pretty good. these problems become very theoretical.
Unions correlate with less poverty, less inequality, more happiness, and lead to faster wage growth. To save our society, the workers must hold enterprise in common so the benefits of growth are enjoyed by all.
Pergrinepi and all my previous statements are factually correct and from peer reviewed studies or hard data, here’s just one source www.google.com/amp/s/prospect.org/api/amp/labor/joining-union-good-well-being/ on correlations and here’s one on wage growth www.google.com/amp/s/illinoisupdate.com/2018/09/12/new-studies-show-that-stronger-unions-produce-faster-wage-growth/amp/
Pergrinepi they can increase prices but they equalize bargaining power (normally workers have less bargaining power than the capitalist) so the increase in wages are not all just due to an increase in price, they are in part taken from the profit of the owner
@@pergrinepi3130 i don't like protectionism, but I think the benefits to directly improving many workers' lives is far greater, especially for the pronounced effect it has on raising poorer people's wages, than making goods somewhat cheaper if we were to not have unions. For the last 50 years increases in productivity have not lead to any significant improvement in wages for how much more productive workers became, it is no coincidence that labor unions were in decline that entire period, and in states which have stronger union laws, wages grow faster. There is more profit, but without a labor movement, little goes to those who actually produce that value.
@@pergrinepi3130 Prove that all labor unions CAUSE all governments to be protectionist, and then additionally prove how protectionism always causes society be more poor. I would also like proof of profit margin increases via technological innovation is the only cause in staff getting paid higher wages. And by proof, I don't mean referral to a microeconomics text.
Correction: All think they understand the economy, few really completely don't understand it, but understanding an economy isn't their motive in the first place.
well, it's a bit like the Heisenberg Uncertainty Principle. You learn something, but either in learning it, or in implementing it, you cause a change. The problem is that people want a final solution, and usually aren't honest enough with themselves to realize that you can only hope to get a little ahead of the ball, but catching it is impossible. Mixing metaphors, but whatever.
Anwar Shaikh has a pretty solid theory on how the economy works. He’s one of the only economists I’ve seen that actually factors in social impacts to the economic equations. Most other prominent economists just assume a constant value for labour based on wages and move on from there, then they scramble to explain why their economic model doesn’t match reality. In 2003, Shaikh predicted that there would be an economic collapse in 2008/2009… he was wrong… it happened in 2007/2008. This was a time when many economists were boasting about how great the economy was doing 🙄
@@TheCommonS3Nse Instead of allowing the repeat of the 2008 disaster, we saw the Banksters develop a debt system that distributes the losses equally and prolongs the event that spells doom for economists...... The ability of consumers to feed the system with plastic purchase power was originated by Bernanke and Paulson, to disguise the slow slide into economic decay, as the Banks wallow in related Market increase that promotes an illusion, until the flaws become apparent..... Homeless issues are a common thread in all towns across America, at least those Towns that still exist..... Small Towns across the farming areas of the US have evaporated as the industrial farming becomes a profit producer for Commodity Traders.... The Cities are close to Chucky Hesstons Soylint Green status.....
Saying that rising inequality is due to "capital gains" doesn't clarify. Per Henry George (1879) it's specifically gains from land. Rising inequality is due to the subsidy paid by workers and businesses to landowners and land market credit providers.
Inequality is due to "conflict over profits." Yep. There's plenty of money, it's just mostly being funneled to the top. Productivity is high and yet wages are low. That's all you need to know.
It's created to give to the connected. Fiat currency creates inequality while the intelligencia provides cover for their behavior. Regulators that leftists celevrate hide financial crimes while the criminals get bailed out by banker academics.
There was a moment when I realized that the more I worked the bigger the profits for my boss while I got nothing for me. And the sooner I finish the project the sooner I get fired. So I slowed down until I wanted to leave.
@@Raging.Geekazoid No, wages are low because Ronnie Reagan and every president since has destroyed the power of Labor. Power plays a huge role in what a person gets paid. Before Reagan, wages went up as productivity went up because the workers had the power to demand higher wages and they deserved high wages because they were creating more value.
Economics is a epistemic project that deploys its knowledge to limit what is possible, dictate what is feasible. It does this by holding relevant reality as exogenous, until a ‘shock’ provokes a crisis.
That is sad and true at the same time. At the end of the day I respect more CEOs who work in tbe real world than the mandarins in economics departments in colleges who know theory and models but are ignorant of the history of their own discipline and events.
6:25 *_"Why has the real wage not kept up with productivity growth?"_* Because that's not how economies work, Einstein! When worker productivity increases globally, employers can produce the same amount of goods and services with fewer workers, so some workers get laid off and the ones who didn't get laid off are more desperate to keep their jobs. And demand actually decreases, because unemployed workers can't buy stuff anymore, so employers can lay off even more workers. Why do dogs lick their balls? Because they can. Why do employers keep squeezing their workers harder and harder and hogging the extra profits for themselves? Same reason. 🙄
"Completely unforseen by all the best macro-ecnomists in the world". For an idea of economists who did predict the financial crisis listen to Cassandras Of The Crash on BBC sounds if you can get access to that. In that programme Steve Keen points out that those 'best' economists who failed to predict the crisis still have the same prestige that they did preceeding it.
Seems like what we need isn't a theory it's a simulation. Why can't we have the equivalent of local weather and global climate change simulations and modeling for the economy? I'm suggesting the processing and technical challenges of creating a global economic model are similar in scope and difficulty to our existing global climate and weather modeling system.
Actually there's been some effort on that front. Notably by Australian economist Steven Keen who's been trying to apply a method called Systems Dynamics to economics. Keen is a noted critic of mainstream economic thinking and models (neoclassical/neoliberal economics), and tried to come up with an alternate framework for understanding the economy. He decided to apply a methodology for analyzing complex, non-linear systems that originally came out of the field of engineering: systems dynamics. He crowdfunded a project to develop economic simulation software based on this called Minsky. It got funded and is available online.
They do have simulations, namely, micro economics. In microeconomics you run equations for different scenarios. You plug in a bunch of values for many factors and then calculate an outcome. Some values are more judgement calls, like investor confidence. Others are based on formulas which various theorists have determined. it's been a long time since i studied it. Did better in micro than in macro. In macro you pontificate with words so I suspect this gentleman in the interview is a macroeconomist.
Sorry I should have just said "explain." I'm not sure what you mean by payroll debts, but I follow you. Macro allows for more variables to consider, but I preferred micro for its quantitative method. I remember in micro however we were told that consumer demand was infinitely elastic. I argued (in a "C" paper) that it wasn't, that there are some things that people will not buy, no matter what the price. But that aside, i wonder is there any Econ textbook or book that you would recommend? I feel like studying this topic again.
@5:30 How can Mr. Taylor say this? I understand that Piketty's style is muted as he presents facts, but it was very clear to me while going through Capital that he states that there is a small cabal that wants and keeps CEO pay high for themselves. It is jarring hearing this kind of dismissal from a senior academic @8:40 I am just a layman but I get the feeling that Mr. Taylor is avoiding the subject matter from Capital
It is touch and go whether a climate crisis will kick in earlier than mass poverty and starvation in an economically "wealthy" nation (say across the rust belt of the USA).
'The financial crisis was completely unforeseen by all the best macro economists in the world.' That's a contradictory sentence, because by definition they cannot be the best macro economists if they can't see the biggest macro crisis coming when others did. The 2008 financial crisis was of course primarily the consequence of a housing bubble/land price crash which was accurately predicted back in 1997 by economists Fred Harrison and Fred Foldvary. Indeed with basically the same system of mortgage credit finance now dominating much of the world predicting, barring major wars or hyper inflation, the next major Western crash is highly likely to follow the same 18 year pattern, around 2026- with a mid cycle mini recession around 2018/19. The Asian/emerging cycle is just completing, exactly 18 years since the last regional crisis.
it's not a contradictory if you make the (obvious) assumption he was referring to whoever would have been considered the best macro economists *before* the crisis...
jermy -- it's not exactly a 'prediction' when you don't say when. In the same terms, it was 'predicted' by Steve Keen and a half dozen other economists. Essentially they all said (between 2 and 4 years before the crisis) "the situation is very dangerous (all having slightly different reasons) and if it goes on as now, it will crash soon" not closely specifying how soon was 'soon'. They can claim credit for seeing that the situation was dangerous, but none had any real understanding of why - as is evidenced by the fact that they and many others are still arguing about why, exactly, even after the fact, when all the numbers are available for examination.
The 2008 financial crisis was predictable in 1980 and before. The contract between capalists and the workers was breaking down. The 80's was the beginning of the concentration of wealth. The discussion here is part of the narrow establishment view.
People talk about economics as though the purpose of the economy is to pump money around. That is like saying the purpose of an automobile engine is to pump oil through itself. The purpose of the engine is to move the car, presumably to some destination. The economy has no destination. It is just to keep the peons running on a treadmill making the rich richer. It is curious that economists never suggest mandatory accounting in the schools.
The problems with economics is that there isn't conservation laws because there is not symmetries in the market., so you can't model "equilibrium" because it doesn't exist. Maybe the closest model with deterministic formulation is thermodynamics after you erase adiabatic and diathermal boundaries, because the simplest market, which is growing food, always need matter input.
At 11:10. Translation, if you don't want the 0.5% to get richer save more of your money. Spending it on crap you don't need is the same as handing it over to them.
That's easier for a few of us to say but you need to recognize the massive indoctrination of the general population when every facet of our society is solely based on consumption above all else...
When Lance Taylor answers the question of what would it take to set off social unrest as it relates to inequality, I had to laugh because the answer is so easy: a lack of food and water. If we ever have a food and water catastrophe-and all the science points to potential problems down the road-you'll see me yelling my head off pretty loud (assuming I'll have the energy to do so).
Already a catastrophe the production of food has become an industrial project to enable the commodity market players..... The economic control of farming has turned humans into consumers, and cities into concentrated consumer clusters, who provide more profits. The only escape seems to be to abandon Capitalism?
@Bruzzh 2121 I say Bullshit! When 70% of the Humans on the face of this planet can not afford food, the system is a failure. The ability of a small number of humans to experience the benefits of wealth, certainly do not justify causing the majority to suffer.... You offer no evidence for your Rah Rah cheer-leading for Capitalism, and while I disagree with your estimation of Capitalism, I do not ask to jail any selfish individuals for hogging the funds..... Have a nice life....
@Bruzzh 2121 Forgive me for my rude response but yours seems to avoid consideration of the Majority of the Planets Population? Shall we consider this complex issue farther or just drop it and consider ourselves on different sides of a Wall? Like Thisbe and Pyramus, condemned to discuss Humanity through a hole in the wall.....
@Bruzzh 2121 Napoleon fought his way into Moscow in 1812, they looted the City and headed for home. Most of his army and 99% of the Booty was lost along the road home, in the snow. The US is an arrogant Wall Street nation that only cares for profits. I find the actions of the US Government arrogant and harmful..... More begin to see through the propaganda every day. I hope we can survive this economic warfare?
How about that productivity is not widespread amoung all workers but concentrated in higher educated workers. A function of a more advanced & automated economy.
"if capital gains exceed business profits then there is effectively a transfer of wealth from business to the upper income...." I'm not sure I understand this. Can anyone better educated than me explain?
The big question is "Is it better for the economy in total for inequality to be less? Why? or Why not? Does inequality hamper growth? I think so. Does the reduction of wages result in a reduction in the markets fed by wages? I think it must. Does this result in a reduction of investment into those markets fed by wages? I think so, only super competitive businesses will thrive in a shrinking market. Does this create a vicious circle? I think so. Does this disadvantage wage earners? Yes. does this advantage the rich? No. No-one benefits from these policies except employers, but employers then need to find an escape from the reduction in markets fed by declining wages. The Ford $5 example is widely known but seldom followed. Does inequality increase the quantity of investment capital. I think so. Being rich means that you cannot usefully spend more on consumption, so the difference must be invested. Does it reduce the size of the profitable markets into which investment is possible? Yes. Does this result in a shortage of investment opportunities? Yes. What economic indicators would we expect if this were true? Perhaps a reduction in the ROR which might flow on to interest rates. Are interest rates unusually low. Damn right! Are there other factors that might also result in low interest rates? Yes. Faced with fewer opportunities for investment, investors shift towards protecting their wealth. They invest in assets that have intrinsic value such as precious metals and land. But trading in the ownership of assets does not increase the productive value of assets.This fuels asset bubbles. One day these asset bubbles will burst. Much of this money will then be lost, having added nothing to anyone rich or poor. Is this the best way to run an economy?
I agree with most of what you've said here. The one point I would contend is that increased capital flow to the upper class won't necessarily flow back into investment. When we're talking about corporations, there's only so much that can be invested. Economies of scale only work up to a point, after which you face diminishing returns. There is only so much infrastructure and so many employees that can provide a beneficial ROI. After that point, further investment is a pointless waste of money. At that point further gains are just stockpiled in tax havens, and the capital is removed from circulation. It's just siphoning wealth out of the global economy to further inflate accounts that already contain more than could ever be used in a lifetime.
@@lachlanbell8390 Hello! I stumbled upon your comment and i was wondering whether you could explain something to me. You say "After that point, further investment is a pointless waste of money. At that point further gains are just stockpiled in tax havens" I don't exactly understand this. When you say funds are sitting in a tax haven, what do you mean? Banks or Wealth management companies don't actually keep their money "sitting" anywhere. Those funds are also invested. There is no alternative to investment. That is precisely why the comment above says the rich resort to investing in assets that have 'intrinsic' value. The money that is "stockpiled" in a tax haven is simply invested like everything else minus the taxation. The problem is that its invested in assets instead of businesses that create wealth.
I love it when people with incomes above the median talk about the problem of income inequality. You can give away some of yours any time you like. But they don't, do they? About 20 years ago, the state of Massachusetts lowered its tax rate by about 0.5%. Many Democrats in the legislature said that people would be dying in the streets. So a stinger was put in the bill. At tax time, anyone who wanted to could pay the old, higher rate. How many of those politicians who voted against the tax decrease ever volunteered to pay the higher rate? A columnist looked it up. One.
Arguments can't be one dimensional. If government alone can't do jack, can private sector alone operate in a vaccum created in the absence of a stable state? It's futile to still reiterate a statement that's aged as poorly as a simple caveman figuring out that the earth probably isn't cubic.
The best way to understand macroeconomics is to understand things like car engines (fuel = supply, air = demand, they need to be kept in balance) and the human body's blood supply (blood = money, everybody needs some). Businesses are the absolute worst possible way to comprehend the global economy. Business = micro, the whole economy = macro.
It’s funny how the problem is political and you could see how he was restraining himself from saying so. At the end he made the example of how unions getting destroyed means workers getting paid less…
I'm a clueless engineer just listening just for "fun", but 2:24's response sounds wrong to me. He seems to suggest that the evidence for NOT self-correcting is that the financial crisis too ... devastating? That doesn't make sense. I'm under the impression that these financial disasters occur due to excesses in the economic activities somewhere in the market such that a significant portion of the economy starts to be priced more than it is worth. If this is correct, and the excesses are large enough, the self-correction will be disastrous, isn't it?
The term "self correcting" as used here, is that, if you allowed the system to self correct, you would facing a complete economic collapse. As a feature of the 'capitalism", when this happens, banks fail, wealth disappears, and money becomes scarce...so things slowly grind to a halt. ( as in 1929, and previously....) So, it's not that the system would not self correct...but so called modern economic theory, believes that their are mechanisms available to avoid or mitigate these "self corrections" and avoid the pain associated with them. ( mostly for the haves, the have nots, not so much. ) Unfortunately, all modern economic theory. is based on 'continual or infinite growth', and since this is not possible, all economic theory will fail, since both profit and money are "illusionary" in an empirical sense, and the "interest" that is charged for this "money", is NOT available in the system, so it must be extracted from whatever material "wealth" is produced.....which means, all wealth, must eventually flow to those who control the capital. ( and those who benefit from this, will do whatever it takes to maintain this system. )
J Galt - Yes, all wealth under capitalism must flow to those who control the capital . . . right up to the point where the friction gets so rough that all the economic machinery grinds to a halt. The capitalist know it is coming, but refuse to redesign the engines of the economy so they won't seize up . . . because a sensible redesign would eliminate or severely limit the ability of the capitalist to stay on top (a very neolithic, patriarchal and antiquated cultural remnant we had better lose or humanity's survival is doubtful).
"reconstructing economic theory" eh? Appears to be completely unaware of Georgist economics. He's so certain that there are no external factors preventing the market from self-correcting, that markets are "inherently" (whatever that means) volatile. From the Georgist perspective the tax system massively distorts the most important market of all - land. If we moved taxes from labour and business onto land there is the market might function pretty well - the boom-bust cycle is driven by the land market. Georgist tax reform takes the volatility out of the land market, and wealth gravitates to workers and innovators. Why don't we rejoice at how lucky we are to have such a simple solution?
Economics is the manifestation of the human experience. Could be the most complex subject of them all. When the dragons finally die en masse, who will claim their piles of gold and rubbish? We cannot predict this.
Dunno. Economy is a social science not a science. It has to deal with human irrationality, and trying to predict their actions is well to put it lightly. Extremely pointless to a certain degree.
The economists don't understand the economy because don't understand how works the Four Fundamental Variables (4FV). See that video to know more about the 4FV ruclips.net/video/WKKCFwqWLtI/видео.html&t
Unions tend to put another level of managerial control over the workers and the workers generally feel that they're not really working for them but they of course work for themselves. That was my experience in the union and I've asked many others of different unions whether they agree and they do
At 2:40 he's asked if markets are self correcting as many claim. He says no and cites the 2008 financial crisis as proof. How can you possibly conclude the "market" was at work correcting the problem when the Fed bailed out the banks and then dumped shed loads of money into the system via quantitative easing? The "market" was never allowed to act in any significant way whatsoever. Chase and B of A wouldn't exist today if the market had been allowed to correct things. What's more, it was government interference in home lending practices that created the problem in the first place. Stop trying to pretend you're organic observers of the economic systems, like some kind of econ Richard Attenborough. You're tinkerers, like Attenborough's character in Jurassic Park. You think you're smarter than the hive mind of the market. Our current econ meltdown is just further proof of that.
@@ThomasVWorm Great point. Except that the markets can't self correct when gov mandates pervert them. Fed Gov lending mandates begun in the Clinton administration required mortgage brokers and lenders to lower lending standards and make sub prime loans to people who would not have otherwise qualified. This saturated the mortgaged backed securities industry with a disproportionate number of sub prime loans (those with high defaults) and that's what actually caused the crisis. The movie "The Big Short" depicts this quite accurately. Had the market been left alone, those loans never would have existed and the crisis never would have happened. I could explain why the Fed Gov got involved in the first place, but that's another discussion. Their noble cause perverted market forces so badly it required a correction the size of The Great Recession to correct.
@@ThomasVWorm You have a perverted concept/understanding of the fundamental nature of money. Not entirely your fault. You've only experienced money within a system where government has sanctioned a money monopoly. Hence their regulatory war on cryptocurrency (a market based money) to protect that monopoly. Our government sanctioned central bank money monopoly borrows money into existence, for reasons that specifically benefit them. But it doesn't have to be that way, as cryptocurrency empirically proves. If government (or its private contractor, in our case the Fed Res Sys) didn't create money out of thin air, where would money come from?
@@ThomasVWorm Fortunately, human history proves your first sentence entirely false. Investigate the origin of our word "Dollar" and you'll discover much about the nature of money. Legal tender laws are part of the con game used to convince you government's monopoly on money is a good thing.
@@ThomasVWorm His coins were used throughout Europe not just in his country because of their trusted purity. During the mercantilism era you couldn't run ANY business without being "allowed" to by government. They called it a "charter". We call it a license. In the mercantile era there were many competing mints from many different "countries" whose coins were used all across Europe. During tax season you just needed a coin your government would accept. The mercantile mind set didn't care who minted coins because in their minds amassing precious metals was, erroneously of course, the cause of wealth creation. In that era everybody accepted the Spanish coins minted from their pilfered American gold. That period was the only instance of inflation during the "golden" era of money. Today we have a reverse situation. Not only is the money fiat instead of specie, but in most 3rd World countries you can conduct commerce in US Dollars, particularly where doing so is illegal. Proving yet again that legal tender laws are a fallacy.
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I took a class in economics. I had the feeling of learning medieval scholastics where the model is ideal and perfect while the reality is different. The teacher said that the model is confirmed although he could never show an example in real life.
Great insight. Milton Friedman claimed that Neoliberalism was based on "The Laws of Nature". Well gee whiz, how can one argue with "The Laws of Nature". It reminds me how in feudal societies they claimed, "The Divine Right of the King". Well gosh, how can one argue against God.
The professor i had just told us "if you don't know the answer to something just say something about it being on the margin"
The economy is the single most successful religion in the world.
they believe in rationality but never practice it themselves.
economics*
It's just kinda appalling that the prospect of another French Revolution is seen as the worst outcome - rather than the worst outcome being a status quo where people are driven to set up guillotines.
The monarchy was the problem, not their demise.
Same is true today.
Abandon of the use of Money seems to be a logical and benign solution?
The Bankers will be forced to be Farmers, or some other worthy form of social contribution and the rest of the world can simply do their best.....
I think I understand what you are saying. I've seen several videos from this channel and all of the interviewed say the same. "Inequality is problematic because it may lead to fascism" or something like that. It's a priveledge point of view I think. Most of these people work safe jobs, nice benefits, nice pay, plenty of holidays all is pretty good. these problems become very theoretical.
Unions correlate with less poverty, less inequality, more happiness, and lead to faster wage growth. To save our society, the workers must hold enterprise in common so the benefits of growth are enjoyed by all.
Pergrinepi bitch if they lower wages how do they drive up prices lmao
Pergrinepi and all my previous statements are factually correct and from peer reviewed studies or hard data, here’s just one source www.google.com/amp/s/prospect.org/api/amp/labor/joining-union-good-well-being/ on correlations and here’s one on wage growth www.google.com/amp/s/illinoisupdate.com/2018/09/12/new-studies-show-that-stronger-unions-produce-faster-wage-growth/amp/
Pergrinepi they can increase prices but they equalize bargaining power (normally workers have less bargaining power than the capitalist) so the increase in wages are not all just due to an increase in price, they are in part taken from the profit of the owner
@@pergrinepi3130 i don't like protectionism, but I think the benefits to directly improving many workers' lives is far greater, especially for the pronounced effect it has on raising poorer people's wages, than making goods somewhat cheaper if we were to not have unions. For the last 50 years increases in productivity have not lead to any significant improvement in wages for how much more productive workers became, it is no coincidence that labor unions were in decline that entire period, and in states which have stronger union laws, wages grow faster. There is more profit, but without a labor movement, little goes to those who actually produce that value.
@@pergrinepi3130 Prove that all labor unions CAUSE all governments to be protectionist, and then additionally prove how protectionism always causes society be more poor. I would also like proof of profit margin increases via technological innovation is the only cause in staff getting paid higher wages. And by proof, I don't mean referral to a microeconomics text.
"do economists understand the economy?" a simple question with a simple answer
all think they understand the economy, few actually do
Correction:
All think they understand the economy, few really completely don't understand it, but understanding an economy isn't their motive in the first place.
well, it's a bit like the Heisenberg Uncertainty Principle. You learn something, but either in learning it, or in implementing it, you cause a change. The problem is that people want a final solution, and usually aren't honest enough with themselves to realize that you can only hope to get a little ahead of the ball, but catching it is impossible. Mixing metaphors, but whatever.
@@fusion9619 A darn good attempt at a difficult concept to explain!
Anwar Shaikh has a pretty solid theory on how the economy works. He’s one of the only economists I’ve seen that actually factors in social impacts to the economic equations. Most other prominent economists just assume a constant value for labour based on wages and move on from there, then they scramble to explain why their economic model doesn’t match reality.
In 2003, Shaikh predicted that there would be an economic collapse in 2008/2009… he was wrong… it happened in 2007/2008. This was a time when many economists were boasting about how great the economy was doing 🙄
@@TheCommonS3Nse Instead of allowing the repeat of the 2008 disaster, we saw the Banksters develop a debt system that distributes the losses equally and prolongs the event that spells doom for economists......
The ability of consumers to feed the system with plastic purchase power was originated by Bernanke and Paulson, to disguise the slow slide into economic decay, as the Banks wallow in related Market increase that promotes an illusion, until the flaws become apparent.....
Homeless issues are a common thread in all towns across America,
at least those Towns that still exist.....
Small Towns across the farming areas of the US have evaporated as the industrial farming becomes a profit producer for Commodity Traders....
The Cities are close to Chucky Hesstons Soylint Green status.....
Income inequality = regulatory capture. Summed it up for this guy.
Saying that rising inequality is due to "capital gains" doesn't clarify. Per Henry George (1879) it's specifically gains from land. Rising inequality is due to the subsidy paid by workers and businesses to landowners and land market credit providers.
The current economy is not agrarian.
@@ColonelHathi no, its residential
@@smartiepancake nah, to a large extent but definitely not the biggest factor
@@avinashreji60 What's item number 1 on everyone's monthly bills? Land. The land market dwarfs all other markets.
Inequality is due to "conflict over profits." Yep. There's plenty of money, it's just mostly being funneled to the top. Productivity is high and yet wages are low. That's all you need to know.
It's created to give to the connected. Fiat currency creates inequality while the intelligencia provides cover for their behavior. Regulators that leftists celevrate hide financial crimes while the criminals get bailed out by banker academics.
Wages are low BECAUSE productivity is high.
There was a moment when I realized that the more I worked the bigger the profits for my boss while I got nothing for me. And the sooner I finish the project the sooner I get fired. So I slowed down until I wanted to leave.
@@Raging.Geekazoid No, wages are low because Ronnie Reagan and every president since has destroyed the power of Labor. Power plays a huge role in what a person gets paid. Before Reagan, wages went up as productivity went up because the workers had the power to demand higher wages and they deserved high wages because they were creating more value.
@@roc7880Typical situation of a worker as the workers have no power, they are the mercy of the company.
Economics is a epistemic project that deploys its knowledge to limit what is possible, dictate what is feasible. It does this by holding relevant reality as exogenous, until a ‘shock’ provokes a crisis.
That is sad and true at the same time. At the end of the day I respect more CEOs who work in tbe real world than the mandarins in economics departments in colleges who know theory and models but are ignorant of the history of their own discipline and events.
Rn kn. Can you simplify your thought?
Good question. They probably don't understand the real one, they understand the imaginary one they have in their books.
Great interview, Mostly due to Lynns really god questions. Impressive.
The economist do a great job at keeping the wealth flowing upwards to the top. Then scratch their heads when this goes wrong.
6:25 *_"Why has the real wage not kept up with productivity growth?"_*
Because that's not how economies work, Einstein! When worker productivity increases globally, employers can produce the same amount of goods and services with fewer workers, so some workers get laid off and the ones who didn't get laid off are more desperate to keep their jobs. And demand actually decreases, because unemployed workers can't buy stuff anymore, so employers can lay off even more workers.
Why do dogs lick their balls? Because they can. Why do employers keep squeezing their workers harder and harder and hogging the extra profits for themselves? Same reason. 🙄
"Completely unforseen by all the best macro-ecnomists in the world". For an idea of economists who did predict the financial crisis listen to Cassandras Of The Crash on BBC sounds if you can get access to that. In that programme Steve Keen points out that those 'best' economists who failed to predict the crisis still have the same prestige that they did preceeding it.
Seems like what we need isn't a theory it's a simulation. Why can't we have the equivalent of local weather and global climate change simulations and modeling for the economy? I'm suggesting the processing and technical challenges of creating a global economic model are similar in scope and difficulty to our existing global climate and weather modeling system.
Human behaviour isn't as predictable as physics
Matthew Alexander exactly, thats why
Actually there's been some effort on that front. Notably by Australian economist Steven Keen who's been trying to apply a method called Systems Dynamics to economics. Keen is a noted critic of mainstream economic thinking and models (neoclassical/neoliberal economics), and tried to come up with an alternate framework for understanding the economy. He decided to apply a methodology for analyzing complex, non-linear systems that originally came out of the field of engineering: systems dynamics.
He crowdfunded a project to develop economic simulation software based on this called Minsky. It got funded and is available online.
They do have simulations, namely, micro economics. In microeconomics you run equations for different scenarios. You plug in a bunch of values for many factors and then calculate an outcome. Some values are more judgement calls, like investor confidence. Others are based on formulas which various theorists have determined. it's been a long time since i studied it. Did better in micro than in macro. In macro you pontificate with words so I suspect this gentleman in the interview is a macroeconomist.
Sorry I should have just said "explain." I'm not sure what you mean by payroll debts, but I follow you. Macro allows for more variables to consider, but I preferred micro for its quantitative method. I remember in micro however we were told that consumer demand was infinitely elastic. I argued (in a "C" paper) that it wasn't, that there are some things that people will not buy, no matter what the price. But that aside, i wonder is there any Econ textbook or book that you would recommend? I feel like studying this topic again.
@5:30 How can Mr. Taylor say this? I understand that Piketty's style is muted as he presents facts, but it was very clear to me while going through Capital that he states that there is a small cabal that wants and keeps CEO pay high for themselves.
It is jarring hearing this kind of dismissal from a senior academic
@8:40 I am just a layman but I get the feeling that Mr. Taylor is avoiding the subject matter from Capital
Agreed. I had a similar reaction.
'Oh that's technical' and 'No one knows'.
So, in answer to the question posed as the title of the video, the answer would seem to be no in this case.
What's the sense of studying Economics if political leaders don't even care about it? If it won't be embedded in the public policy?
It is touch and go whether a climate crisis will kick in earlier than mass poverty and starvation in an economically "wealthy" nation (say across the rust belt of the USA).
'The financial crisis was completely unforeseen by all the best macro economists in the world.'
That's a contradictory sentence, because by definition they cannot be the best macro economists if they can't see the biggest macro crisis coming when others did.
The 2008 financial crisis was of course primarily the consequence of a housing bubble/land price crash which was accurately predicted back in 1997 by economists Fred Harrison and Fred Foldvary. Indeed with basically the same system of mortgage credit finance now dominating much of the world predicting, barring major wars or hyper inflation, the next major Western crash is highly likely to follow the same 18 year pattern, around 2026- with a mid cycle mini recession around 2018/19.
The Asian/emerging cycle is just completing, exactly 18 years since the last regional crisis.
schumanhuman the 2008 crises was foreseen and predicted by Peter schiff, someone aught to tell this guy. center for old economic thinking
it's not a contradictory if you make the (obvious) assumption he was referring to whoever would have been considered the best macro economists *before* the crisis...
jermy -- it's not exactly a 'prediction' when you don't say when. In the same terms, it was 'predicted' by Steve Keen and a half dozen other economists. Essentially they all said (between 2 and 4 years before the crisis) "the situation is very dangerous (all having slightly different reasons) and if it goes on as now, it will crash soon" not closely specifying how soon was 'soon'. They can claim credit for seeing that the situation was dangerous, but none had any real understanding of why - as is evidenced by the fact that they and many others are still arguing about why, exactly, even after the fact, when all the numbers are available for examination.
The 2008 financial crisis was predictable in 1980 and before. The contract between capalists and the workers was breaking down. The 80's was the beginning of the concentration of wealth. The discussion here is part of the narrow establishment view.
Maybe a better label would have been the best mouthpieces of the supply-side macro-economists.
People talk about economics as though the purpose of the economy is to pump money around.
That is like saying the purpose of an automobile engine is to pump oil through itself. The purpose of the engine is to move the car, presumably to some destination.
The economy has no destination. It is just to keep the peons running on a treadmill making the rich richer. It is curious that economists never suggest mandatory accounting in the schools.
The problems with economics is that there isn't conservation laws because there is not symmetries in the market., so you can't model "equilibrium" because it doesn't exist. Maybe the closest model with deterministic formulation is thermodynamics after you erase adiabatic and diathermal boundaries, because the simplest market, which is growing food, always need matter input.
Michael Hudson foresaw the 2008 financial crisis.
At 11:10. Translation, if you don't want the 0.5% to get richer save more of your money. Spending it on crap you don't need is the same as handing it over to them.
That's easier for a few of us to say but you need to recognize the massive indoctrination of the general population when every facet of our society is solely based on consumption above all else...
Maybe spending on things we do need is still an artificially large transfer of wealth.
When Lance Taylor answers the question of what would it take to set off social unrest as it relates to inequality, I had to laugh because the answer is so easy: a lack of food and water. If we ever have a food and water catastrophe-and all the science points to potential problems down the road-you'll see me yelling my head off pretty loud (assuming I'll have the energy to do so).
Already a catastrophe the production of food has become an industrial project to enable the commodity market players.....
The economic control of farming has turned humans into consumers, and cities into concentrated consumer clusters, who provide more profits.
The only escape seems to be to abandon Capitalism?
@Bruzzh 2121 I say Bullshit!
When 70% of the Humans on the face of this planet can not afford food, the system is a failure.
The ability of a small number of humans to experience the benefits of wealth, certainly do not justify causing the majority to suffer....
You offer no evidence for your Rah Rah cheer-leading for Capitalism, and while I disagree with your estimation of Capitalism, I do not ask to jail any selfish individuals for hogging the funds.....
Have a nice life....
@Bruzzh 2121 Forgive me for my rude response but yours seems to avoid consideration of the Majority of the Planets Population?
Shall we consider this complex issue farther or just drop it and consider ourselves on different sides of a Wall?
Like Thisbe and Pyramus, condemned to discuss Humanity through a hole in the wall.....
@Bruzzh 2121 Napoleon fought his way into Moscow in 1812, they looted the City and headed for home.
Most of his army and 99% of the Booty was lost along the road home, in the snow.
The US is an arrogant Wall Street nation that only cares for profits.
I find the actions of the US Government arrogant and harmful.....
More begin to see through the propaganda every day.
I hope we can survive this economic warfare?
How about that productivity is not widespread amoung all workers but concentrated in higher educated workers. A function of a more advanced & automated economy.
"if capital gains exceed business profits then there is effectively a transfer of wealth from business to the upper income...." I'm not sure I understand this. Can anyone better educated than me explain?
The big question is "Is it better for the economy in total for inequality to be less? Why? or Why not?
Does inequality hamper growth? I think so. Does the reduction of wages result in a reduction in the markets fed by wages? I think it must. Does this result in a reduction of investment into those markets fed by wages? I think so, only super competitive businesses will thrive in a shrinking market. Does this create a vicious circle? I think so. Does this disadvantage wage earners? Yes. does this advantage the rich? No. No-one benefits from these policies except employers, but employers then need to find an escape from the reduction in markets fed by declining wages. The Ford $5 example is widely known but seldom followed.
Does inequality increase the quantity of investment capital. I think so. Being rich means that you cannot usefully spend more on consumption, so the difference must be invested. Does it reduce the size of the profitable markets into which investment is possible? Yes. Does this result in a shortage of investment opportunities? Yes. What economic indicators would we expect if this were true? Perhaps a reduction in the ROR which might flow on to interest rates. Are interest rates unusually low. Damn right! Are there other factors that might also result in low interest rates? Yes.
Faced with fewer opportunities for investment, investors shift towards protecting their wealth. They invest in assets that have intrinsic value such as precious metals and land. But trading in the ownership of assets does not increase the productive value of assets.This fuels asset bubbles. One day these asset bubbles will burst. Much of this money will then be lost, having added nothing to anyone rich or poor.
Is this the best way to run an economy?
I agree with most of what you've said here. The one point I would contend is that increased capital flow to the upper class won't necessarily flow back into investment. When we're talking about corporations, there's only so much that can be invested. Economies of scale only work up to a point, after which you face diminishing returns. There is only so much infrastructure and so many employees that can provide a beneficial ROI. After that point, further investment is a pointless waste of money. At that point further gains are just stockpiled in tax havens, and the capital is removed from circulation. It's just siphoning wealth out of the global economy to further inflate accounts that already contain more than could ever be used in a lifetime.
@@lachlanbell8390 Hello! I stumbled upon your comment and i was wondering whether you could explain something to me. You say "After that point, further investment is a pointless waste of money. At that point further gains are just stockpiled in tax havens" I don't exactly understand this. When you say funds are sitting in a tax haven, what do you mean? Banks or Wealth management companies don't actually keep their money "sitting" anywhere. Those funds are also invested. There is no alternative to investment. That is precisely why the comment above says the rich resort to investing in assets that have 'intrinsic' value. The money that is "stockpiled" in a tax haven is simply invested like everything else minus the taxation. The problem is that its invested in assets instead of businesses that create wealth.
Economists who believe in ultimate comfort zones could watch these!
I love it when people with incomes above the median talk about the problem of income inequality. You can give away some of yours any time you like. But they don't, do they?
About 20 years ago, the state of Massachusetts lowered its tax rate by about 0.5%. Many Democrats in the legislature said that people would be dying in the streets. So a stinger was put in the bill. At tax time, anyone who wanted to could pay the old, higher rate. How many of those politicians who voted against the tax decrease ever volunteered to pay the higher rate? A columnist looked it up. One.
The best way to understand economics is to understand business, especially small business. Government alone can’t do jack.
Arguments can't be one dimensional. If government alone can't do jack, can private sector alone operate in a vaccum created in the absence of a stable state? It's futile to still reiterate a statement that's aged as poorly as a simple caveman figuring out that the earth probably isn't cubic.
The best way to understand macroeconomics is to understand things like car engines (fuel = supply, air = demand, they need to be kept in balance) and the human body's blood supply (blood = money, everybody needs some). Businesses are the absolute worst possible way to comprehend the global economy. Business = micro, the whole economy = macro.
It’s funny how the problem is political and you could see how he was restraining himself from saying so. At the end he made the example of how unions getting destroyed means workers getting paid less…
I'm a clueless engineer just listening just for "fun", but 2:24's response sounds wrong to me. He seems to suggest that the evidence for NOT self-correcting is that the financial crisis too ... devastating? That doesn't make sense. I'm under the impression that these financial disasters occur due to excesses in the economic activities somewhere in the market such that a significant portion of the economy starts to be priced more than it is worth. If this is correct, and the excesses are large enough, the self-correction will be disastrous, isn't it?
The term "self correcting" as used here, is that, if you allowed the
system to self correct, you would facing a complete economic collapse.
As a feature of the 'capitalism", when this happens, banks fail, wealth disappears,
and money becomes scarce...so things slowly grind to a halt. ( as in 1929, and
previously....)
So, it's not that the system would not self correct...but so called modern economic
theory, believes that their are mechanisms available to avoid or mitigate these
"self corrections" and avoid the pain associated with them. ( mostly for the haves,
the have nots, not so much. )
Unfortunately, all modern economic theory. is based on 'continual or infinite growth',
and since this is not possible, all economic theory will fail, since both profit and
money are "illusionary" in an empirical sense, and the "interest" that is charged
for this "money", is NOT available in the system, so it must be extracted from
whatever material "wealth" is produced.....which means, all wealth, must eventually
flow to those who control the capital. ( and those who benefit from this, will do
whatever it takes to maintain this system. )
J Galt - Yes, all wealth under capitalism must flow to those who control the capital . . . right up to the point where the friction gets so rough that all the economic machinery grinds to a halt. The capitalist know it is coming, but refuse to redesign the engines of the economy so they won't seize up . . . because a sensible redesign would eliminate or severely limit the ability of the capitalist to stay on top (a very neolithic, patriarchal and antiquated cultural remnant we had better lose or humanity's survival is doubtful).
@@coolmodelguy6304 well they r working on a global policing 😏
"reconstructing economic theory" eh? Appears to be completely unaware of Georgist economics. He's so certain that there are no external factors preventing the market from self-correcting, that markets are "inherently" (whatever that means) volatile. From the Georgist perspective the tax system massively distorts the most important market of all - land. If we moved taxes from labour and business onto land there is the market might function pretty well - the boom-bust cycle is driven by the land market. Georgist tax reform takes the volatility out of the land market, and wealth gravitates to workers and innovators. Why don't we rejoice at how lucky we are to have such a simple solution?
Economics is the manifestation of the human experience. Could be the most complex subject of them all. When the dragons finally die en masse, who will claim their piles of gold and rubbish? We cannot predict this.
"more serious social unrest" LFG!
Her voive ❤️
Question: "Do Economists Understand the Economy?"
Guest: "No"
Me: "So why are we listening to the lot of you then?"
Because the have a *degree* in something that they don't understand....
Dunno. Economy is a social science not a science. It has to deal with human irrationality, and trying to predict their actions is well to put it lightly. Extremely pointless to a certain degree.
The economists don't understand the economy because don't understand how works the Four Fundamental Variables (4FV). See that video to know more about the 4FV ruclips.net/video/WKKCFwqWLtI/видео.html&t
And microeconomics won a Nobel this year. Seems like no one actually knows where the global economy is heading.
I agree that economists do not understand enough economy, but my interpretation is different.
+Ante Lauc please share your thoughts.
Of course, only he understands the economy.
So this one guy does understand the economy?
Not a single economist does. At least he is aware of it.
Unions tend to put another level of managerial control over the workers and the workers generally feel that they're not really working for them but they of course work for themselves. That was my experience in the union and I've asked many others of different unions whether they agree and they do
For me it meant a better paycheck, decent health care, vacation time, and a decent retirement than my non-union jobs.
@@eottoe2001 Yes, unions give workers power, without unions they have no power and get exploited.
@@philipangelo595 that's why people like the Koch family push individualism for the working classes.
Talks in circles this guy lol
Interview some well-known economists, please.
Nice critical economic thinking....
Covid and government responses could have changed some of this.
Interesting. But this women has the most sensual voice! Wow. Thx.
commentsforcomments
Nothing complicated about the wealth gap Mr Lance Tylor. Call it what it is - greed.
Lance Taylor ponders the view from hanging off of a lamp post....
This guy is a hard read but he seems to act like gross inequality is no big deal.
The GFC was not unforeseen; not by me or other Austrians.
Minimum wage making a friggin difference as they print a a trillion per year for themselves..... give me a break!
New welcome kaho
At 2:40 he's asked if markets are self correcting as many claim. He says no and cites the 2008 financial crisis as proof. How can you possibly conclude the "market" was at work correcting the problem when the Fed bailed out the banks and then dumped shed loads of money into the system via quantitative easing? The "market" was never allowed to act in any significant way whatsoever. Chase and B of A wouldn't exist today if the market had been allowed to correct things. What's more, it was government interference in home lending practices that created the problem in the first place. Stop trying to pretend you're organic observers of the economic systems, like some kind of econ Richard Attenborough. You're tinkerers, like Attenborough's character in Jurassic Park. You think you're smarter than the hive mind of the market. Our current econ meltdown is just further proof of that.
@@ThomasVWorm Great point. Except that the markets can't self correct when gov mandates pervert them. Fed Gov lending mandates begun in the Clinton administration required mortgage brokers and lenders to lower lending standards and make sub prime loans to people who would not have otherwise qualified. This saturated the mortgaged backed securities industry with a disproportionate number of sub prime loans (those with high defaults) and that's what actually caused the crisis. The movie "The Big Short" depicts this quite accurately. Had the market been left alone, those loans never would have existed and the crisis never would have happened. I could explain why the Fed Gov got involved in the first place, but that's another discussion. Their noble cause perverted market forces so badly it required a correction the size of The Great Recession to correct.
@@ThomasVWorm You have a perverted concept/understanding of the fundamental nature of money. Not entirely your fault. You've only experienced money within a system where government has sanctioned a money monopoly. Hence their regulatory war on cryptocurrency (a market based money) to protect that monopoly. Our government sanctioned central bank money monopoly borrows money into existence, for reasons that specifically benefit them. But it doesn't have to be that way, as cryptocurrency empirically proves. If government (or its private contractor, in our case the Fed Res Sys) didn't create money out of thin air, where would money come from?
@@ThomasVWorm Fortunately, human history proves your first sentence entirely false. Investigate the origin of our word "Dollar" and you'll discover much about the nature of money. Legal tender laws are part of the con game used to convince you government's monopoly on money is a good thing.
@@ThomasVWorm His coins were used throughout Europe not just in his country because of their trusted purity. During the mercantilism era you couldn't run ANY business without being "allowed" to by government. They called it a "charter". We call it a license. In the mercantile era there were many competing mints from many different "countries" whose coins were used all across Europe. During tax season you just needed a coin your government would accept. The mercantile mind set didn't care who minted coins because in their minds amassing precious metals was, erroneously of course, the cause of wealth creation. In that era everybody accepted the Spanish coins minted from their pilfered American gold. That period was the only instance of inflation during the "golden" era of money. Today we have a reverse situation. Not only is the money fiat instead of specie, but in most 3rd World countries you can conduct commerce in US Dollars, particularly where doing so is illegal. Proving yet again that legal tender laws are a fallacy.
Does every physicist understand the cosmos? No.
This has turned into the comedy channel for me.
With all due respect to Professor Taylor, I learned almost nothing from this interview.
Of course they do. That's why they're rich. They just lie to us about it.
3 minutes in and the majority of what this guy is saying is factually incorrect