Posts by BenWilson
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Speaker: The Voyage: On Interpreting and…, in reply to Angus Robertson,
Well to be fair there is in element of me that wants bankers to suffer.
That's a widespread feeling. I want to make it clear I actually mostly like your commentary, and agree with a lot of it. But I think you equate all money printing ideas with "quantitative easing". It's not the same thing - to even think that it might be requires buying into theories that have been proved false by the very use of that idea on a massive scale without producing massive inflation. The US public very fairly wonders what the hell happened to the trillion odd dollars that were printed and gifted to banks, why that didn't cascade via the supposed money multiplier effect into many times those trillions in new loans to crank up the economy like the hot air DexterX is talking. It just didn't happen - the money was kept with a great big smiling "thank you for the bailout, now we can insist on tougher lending criteria without going broke". If they had printed that money and simply used it to pay government bills, it would certainly have contributed to the much needed money churn.
Why the hell they didn't insist on actually getting something for that money is beyond me. Instead of gifting money to near insolvent banks, they could have simply purchased controlling stakes, buying the debts up the way any other bailout would work. Then, at least, they'd be getting interest on that trillion dollars, and they'd be in a powerful position to reorganize the companies however they saw fit. But such was the hysteria that government has no place in business that government actually bailed out business without insisting on owning it in the bargain. Just incredible - it managed to actually anger both sides of the political spectrum, even the most right wing ideologue can see that this is not functional capitalism. Nor is it socialism. It's just corruption, driven by ideology and hiding behind the supposed expertise of the managerialism that had slowly taken control of all powerful economic institutions.
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Speaker: The Voyage: On Interpreting and…, in reply to Angus Robertson,
Scenario A - property prices are allowed to fall: loans are defaulted, banks are stressed and some people go bankrupt.
By some people, you mean tens of thousands of families. Possibly hundreds of thousands, if any banks actually collapse, which they easily could.
Scenario B - liquidity is injected at low rates so more people are encouraged to invest in property, but this just delays the crash and the crash that occurs later involves more people.
It could be delayed indefinitely by this method. In fact, it has been.
Scenario C - liquidity is injected in the form of created money so that prices are maintained at high levels forever, but this inflation effectively wipes out savings and this causes suffering in everybody who wants to retire or is retired.
It might not wipe out savings, if they are given high returns. For the enormous number of NZers whose only retirement plan was the high prices of their property they've invested in for their whole lives, this will be business as usual. A crash would, on the other hand, finish them, and they would most likely go bankrupt and die as beneficiaries.
Scenario D: Liquidity is injected simultaneously with stipulations that it is only to be used for debt paydown, and stricter controls over the amounts of equity are put in place
Scenario E: The government buys up the banks, maintaining prices and gaining a very valuable asset.
Scenario F: The government raises taxes, introduces compulsory savings, prints money and invests it directly into the economy, whilst tightening financial controls.
Scenario G, H, I, J, K, L, M, N -> ZZZZZZZZZ....there's no limit to the possibilities. We're talking about the government here, the entity that makes the laws, runs the courts, the police, the military, takes the taxes, controls the bylaws, employs more people than any private enterprise. It has tremendous power to take active control of the economy, and pretending it can't requires an ideology I'm perhaps just not educated enough to buy.
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Speaker: The Voyage: On Interpreting and…, in reply to Angus Robertson,
Yeah, I'm talking about people like you. I think it would be better for people like you if you didn't have to pay so much money for a house.
OK, so how is my losing the house that I already partially own, and owing the bank the difference going to help out with that?
Injecting liquidity by giving money to bankers so that they can write even more loans to more people so that those people buy more property propping up the demand side and keeping prices high is at best a temporary solution.
Again, that's not what Kiwi Nomad said, so far as I can tell. Giving the money to the bankers is not the only way to inject money. It could be spent directly by the government as a far more direct way to inject money into the economy. That spending could be straight into debt paydown, so long as there was accompanying controls put in place so that it couldn't simply be replaced by more debt. Or it could be injected into any number of other things. Your argument against printing money seems to be entirely predicated around the idea that it will be given to the finance industry. This is not a given. I agree that doing that is not a very good idea, and could well perpetuate or exacerbate the problem.
No, it'd be fair to say anybody suggesting that property prices should be allowed to fall isn't considered good company in middle class circles.
I don't know about that. The middle class does include a lot of people who don't own property, but would like to. But I doubt that even those without think that an economic collapse on a scale that could dwarf anything from the 20th Century is going to be good for them either, since it would spill into the entire economy. Especially when it is actually avoidable, when the impossibility of the nation balancing its books is entirely predicated around limitations that are self-imposed, like the impossibility of raising tax or printing money. That these ideas can't be considered by either major party is a sign of just how badly they have bought into the economic idiocy of our times.
Ben, how about if you got swapped into a secure lifetime tenancy with the right to make reasonable changes, etc and pay a fair rent?
I'm not really sure what you're asking. If there was a tremendous collapse (property would have to fall 35% percent before I was bankrupted), I'd probably feel lucky to get such a lenient outcome. But for my mortgage to become unpayable, all that would have to happen would be my wife losing her job. Considering she works in a finance company, this could easily be an outcome of even a much lesser property collapse, indeed she was already made redundant by that same company back in 2008, pregnant with our second son.
However, if someone in a sitting government seriously posed the solution to me that property could and should go belly up just to teach me a lesson, and that I would then be bailed out in the way you suggest, I'd sell tomorrow, since I've invested vast sums of money into this place, done without quite a lot of things for a long time, worked really hard for what I have here. I'd also probably leave the country, because I can only tolerate so much madness, and a government seriously entertaining complete economic collapse as a solution is a government I don't want to live under.
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Speaker: The Voyage: On Interpreting and…, in reply to Martin Lindberg,
Hard to be sure, because the austerity distribution will most certainly be inversely proportional to wealth - the actually rich who own their homes outright will be unaffected, except in losing paper wealth. But those who are the most vulnerable, the ones who scraped a deposit together from years of saving and are riding right on the line of being able to pay the mortgage whilst also eating, they are the ones who would be foreclosed and bankrupted by the discrepancy. In that scenario, every poor family would lose their home, prices would stabilize downwards, and then have a guess who would be sitting around with sacks of cash to buy in again at rock bottom prices? Economic bust is not a progressive redistribution.
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Speaker: The Voyage: On Interpreting and…, in reply to Angus Robertson,
Rich people who purchased at inflated prices and the rich bankers who loaned them the money should suffer losses, because morally we shouldn't reward the greedy rich
Dude, you're talking about me, who purchased a house in a low income area at a time when it simply made more economic sense than paying higher amounts of rent, someone who wanted continuity of their dwelling because they are raising a young family. You're talking about bankrupting me. You're talking about a million other people like me. Is it surprising that middle class turkeys aren't voting for a massive Thanksgiving in honor of your ideology?
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Speaker: The Voyage: On Interpreting and…, in reply to Angus Robertson,
Angus, I struggle to agree with you when you think that a massive scale property collapse would be a good thing. It may be inevitable but it that doesn't make it good. And it's only inevitable if governments buy into the required level of complete apathy about their ability to do something about the problem.
It's also a straw man to suggest that printing money goes hand in hand with bailing out the rich. That's only true if the way in which money enters circulation is not changed at all, in other words if you have failed entirely to grasp what KiwiNomad would seem to be suggesting. It is entirely possible in a sovereign nation NOT to create money by bailing out banks and hoping for them to buy into fractional reserves, rather than just keeping the money, as they have done. Which, ironically, counter to your argument, has not created much inflation at all in the USA where they did exactly that in response to the GFC, which just goes to show how much more the inflation problem is a function of debt availability rather than money supply.
There are a thousand ways that the economy could be handled, Keynes was but one theorist, and by no means the only socialist one. But there does seem to be only one kind of monetarism, and it's had a damned good run at the helm. If economists have any understanding or appreciation of what science is at all, they would have to admit monetarism is one of the few theories that has been proved wrong conclusively, because it has actually been tried, in hundreds of experiments around the globe. It's time for new experiments.
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Speaker: The Voyage: The Engine Room…, in reply to John Armstrong,
No, please don't. You are gold.
Since you ask so nicely, one for the road.
I thought the Graeber article profound and disagree entirely with the suggestions that he should have limited the scope of it to be more convincing. That very suggestion is symptomatic of much that has gone wrong in modern thought, the idea that everyone should have some tiny little parcel of knowledge in which they are respected, and outside of that people should limit their speculations. I found little to disagree with in his words, other than that I'd say he should probably limit his literary claim to "mainstream scifi".
I've been reading Ursula LeGuin lately and I'm struck by the stark realism she decided to superimpose onto her vast tale of interplanetary civilization. She sees on cosmological timescales. So far as I can see, there's no flying cars - she limits her breaking of known physics to exactly one thing, the discovery by Shevek in The Dispossessed that makes faster than light communication possible. Interstellar travel is as slow as all current physics suggests it should be, and as expensive, so it's not done lightly. She makes the lovely observation in The Left Hand of Darkness that scientific progress can go incredibly fast, but it can also go incredibly slow, that Terrans took 30 centuries to discover the number zero, despite making a lot of progress in other innovation. But it only took 30 decades to go from sailing ships to space ships.
Her vision of advanced society is similarly veristic, in disputing the utopianism of progress. She has a utopia, but she spends the whole book showing the limits of it, how very hard it is for humans to set something like that up and maintain it, and how it is subverted extremely fast by suddenly producing something of tremendous value to the rest of humanity (Shevek and his theory). Shevek spends a lot of time wielding a shovel in the story, most curious that LeGuin doesn't even recognize human inventions that have actually been achieved, like diggers and combine harvesters. But then again, perhaps she really was seeing the future there, that getting a physics genius to dig ditches is actually cheaper than the capital outlay on that kind of equipment, even in as egalitarian a society as her anarchic utopia.
Furthermore, resource depletion is a constant theme, and she is not optimistic for us Terrans, the ambassador of whom tells Shevek that Earth was once as lovely as Urras (the planet of origin of his species), but simply ruined itself irreparably and survives at that point only through extreme belt tightening. I think she's overly pessimistic there.
Doris Lessing, another favourite of mine, is even more dark and negative - Shikasta describes Terrans destroying themselves, despite the best efforts of the poor agent of the Canopians (who would seem to be a vast bureacracy) labouring for millenia in different human bodies against some kind of negative energy from a hostile civilization that sucks the goodwill out of our species. In The Making of the Representative for Planet 8 she depicts the destruction of another small civilization faced by the sudden onset of an ice age, for which the Canopians berate themselves for not seeing it sooner and not being able to get there in time to save anything physical at all. So the entire story is devoted to the representative taking on the tragic task of keeping the people alive for as long as possible whilst absorbing everything about them that he/she can, so that at least a memory of them is preserved.
These would be extremely difficult stories to make into movies, even more difficult to make into computer games (although some grand scale strategy games provoke similar thoughts), though, so their widespread popularity will probably grow as slowly as most works of real genius do.
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Speaker: The Voyage: The Engine Room…, in reply to Stewart,
I would love to see an economic equivalent to quantum theory and relativity and the new ways of thinking that they generated. (Current economic theory = mechanical physics & current practice may be better suited to some 'relativistic' economic theory.)
So far as I'm aware, there are a plethora of alternative economic theories, but a very narrow range of them has control of practically the entire field.
Bernard has raised a number of alternative ideas over the last year in the Herald. It's quite amazing to read the shrillness of the commentary that disapproves, how bitterly it opposes even the slightest deviation from monetarism. But also heartening to see a lot of commentary in favour. Well done Bernard, and thank you very much for your post here.
I don't think a theory as amazing as relativity is needed in economics. It just needs to stop being totally dominated by the finance industry, which has a vested interest in the theories that most maximize their power. The great irony is that a lot of very interesting possibilities have been hypothesized in economics for a long time, but the more powerful the finance sector gets, the more impossible it becomes for experimentation to even be allowed, so the discipline becomes less scientific as time passes. I see the revolution needed there to be more akin to the Copernican one than the Einsteinian one. Scientists, by and large, agreed with Einstein, when his predictions started coming true. He was not suppressed. But the barriers to Copernicus' theory were institutional, he was challenging an orthodoxy of tremendous power, with near total control of the academia of the time. Galileo was actively persecuted for his contributions to it.
I do not know whether any economic system is going to give the developed economies of the world the growth they had post-war, though. It may be the wrong question to ask what system will give NZ the most growth, a question that places us against other nations in a rush that we actually don't have any particular reason to be in. A better question might be what gives us the best sustainable growth with a reasonably fair social system attached.
I have thought for quite some time that Marxist economics suffers as an alternative to "purer" capitalist economics by still being a capitalist theory after all, one that still isn't able to look forward to the end game of industrialization and mechanization, to a world in which humans work less, asking the question about what the best way for humans to cohabit without endless work would be. Instead, it deifies work just as much, indeed more so, and in doing so does not really challenge the basic foundation of the economics which would make slaves of us all. It's almost as pernicious as monetarism in this respect, in strangling out every other socialist alternative from academic oxygen. It's most annoying that our main political alternatives are predicated on a tension between two bad theories, and perhaps it is what Marxism has in common with monetarism that explains the poverty of choice we have in our major parties.
But nothing I'm saying here is either news, or anything I haven't said before, so I'm going quiet now.
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OnPoint: Student Loans are Loans (Duh.), in reply to Sofie Bribiesca,
I don't think he was meant to be arguing.
Kind of. I was actually responding, as can be seen in the original comment that I quoted, to:
either you let scientists who have had the experience of working with brilliant people make the choice on who should get funding or you let an accountant in wtgn make that choice on who should get funding.
I don't feel comfortable in either box. Lilith regards my response as uncontroversial, which I'm happy about. I don't really think I'm the one making controversial statements here, just questioning them, asking for a whole lot more substantiation.
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OnPoint: Student Loans are Loans (Duh.), in reply to Russell Brown,
That’s an odd argument.
I said here:
Another option is that many people can have input into the decision, including the shop floor scientists, the scientists who are somewhere up the chain towards management, the specialist managers, and the people who have to pay for it all decide. Also, the books have to balance, or it's unsustainable, so accountants really do need to be involved.
So I'm not making the argument you suggest there. That's a reiteration of Bart's false binary.
Presumably, then, we should ignore anything teachers have to say about education policy.
No, same comment, they're a part of the decision making process, but not the only part.
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