Disconnecting productivity from consumption

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Xan
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Disconnecting productivity from consumption

Post by Xan »

I'm not sure this belongs in Politics but I wasn't sure where else to put it.

There was an interesting comment on this page:
https://news.slashdot.org/story/24/05/0 ... -president
in response to an article about global debt being high.

The problem is freeloading

If everybody owes everybody then it all cancels out, right?

The problem is that debt diverts a large share of actual economic output (goods and services) into passive income (interest paid). Disconnecting productivity from consumption is bad. Communism goes all in on it but runaway capitalism does it too.
Anybody have thoughts?
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ArthurPooh
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Re: Disconnecting productivity from consumption

Post by ArthurPooh »

As I've stated in the other thread, this is the human norm - working poor finance the idle owners. Moreover, modern economy could not function without it - when the issue of new debt stops for even a minute, the economy contracts and the poor suffer even more. Ancient societies used to either hold a periodic debt jubilee or eventually enslave/enserf most commoners who couldn't pay the ballooning debt. Modern societies, that increasingly revert to the basic model of civilization, can use the power of fiat money to indefinitely roll the debt forward instead. And that stuff about productivity needed to be linked to consumption, or earnings linked to sweat... it seems to me like something to tell peasants so they don't kill themselves or join the Interahamwe.
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Re: Disconnecting productivity from consumption

Post by ArthurPooh »

Maybe this is a weird tangent that no one sane would associate with your initial post, but there's no forum rule against mental illness, so...

There once was a civilization where:
  • the ruler was considered a living god, whose daily activities controlled all social and natural phenomena, and whose good health and well-being was essential to the prosperity of the country;
  • after the god-king died, his body was carefully preserved and a large monument built to show it off; he was still talked about like a living person;
  • the society was in practice run by priests with absolute authority, who were considered both the most learned and most holy and who brutally stamped out any blasphemy against the state religion;
  • the economy was run by priests and every economic activity was passing through the temples in some way;
  • most people, while formally free, in practice owned nothing and were completely dependent on the state for their day-to-day survival;
  • then there was a large number of actual slaves with no rights who were worked to death;
  • a lot of that unfree labor was directed to gigantic public projects that had little economic utility but showed off the power and glory of the state and its religion.
Am I talking about ancient Egypt, or "modern" Soviet Union? And their supposedly polar opposites, the National Socialists, were more explicit (if less effective) in their "forward to the past" plans, with their official cult of a divine Fuhrer, their idealized Lebensraum of smallholder farmers ruled over by SS paladins, and their attempts to resurrect Norse gods, occultism and other forms of pre-Christian superstition. It even has a name: Reactionary Modernism.

And before you, a free American, throw a stone at this Europoor stupidity, you might want to make sure you do not live in a glass pyramid yourself. Every time you talk about a "Biden economy" you are expressing a belief that an old man who barely knows where he is at the same time influences daily market behavior of 300 million people (at the very least).

I guess Ancient Egyptian peasants at least understood that while the Pharaoh performs the most important state duties, like interceding with the gods or protecting the Constitution; the boring stuff like collecting taxes, enforcing laws, managing the economy and so on fall to the priests. Thus they wouldn't be surprised that while in this century all sorts of presidents have occupied the White House - starting from an acceptable loyal opposition man like Bush, then a true apparatchik like Obama, then the Orange Mussolini, and finally the First Senior Citizen - the government did mostly the same things. And Ra help you if you talk impersonally about "the White House" making policy - you might remind yourself that the word "pharaoh" literally means "great house". Yeah, I sure do hope too the Big Person in the Big Building makes the tides of Nile lift our stock market, my fellow fellah.

What I'm trying to say through this oversized screed is that the long 20th century was the process of collective rejection of individualist, capitalist economy and a reversion to the standard, timeless model of settled human civilization. In fact, when I see American complaints about such things, it takes me a moment to understand what exactly is the problem. Where I live, it has always been like this: small elite is secure inside the System, the great majority suffers in the ocean of misery around it. Generally, the less like America a country is, the more it conforms to this model; and America itself becomes less "like America" each year. Of course productivity is divorced from consumption. What would be the point of joining the System otherwise?

If you want to see the future, visit a Brazilian gated community, and then go sightseeing (there are actual guided tours on offer) to a favela. Or hell, just walk from Google's campus to a nearest homeless encampment. The clock is ticking, the window of opportunity is closing; there might be little time left to ensure your and yours place in the System before the process of "pharaohization" is complete.
Last edited by ArthurPooh on Thu May 02, 2024 12:08 pm, edited 1 time in total.
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Re: Disconnecting productivity from consumption

Post by Jack Jones »

The disconnection of consumption from productivity is due to the lack of separation between economy and state.
The problem is that debt diverts a large share of actual economic output (goods and services) into passive income (interest paid).
This would be fine in a world where credit is supplied by people with capital. After all, supplying one's capital towards productive endeavors is a win-win. Instead, money is created by banks on demand. Then they charge interest on the money they just created out of thin air! This distorts the capital markets. Capitalists have fewer ways to deploy their capital and zombie companies live on the easy money until the gig is up.
As I've stated in the other thread, this is the human norm - working poor finance the idle owners.
On the flip side, owners create firms that employ the working poor. The janitors at MSFT never had to incur the opportunity cost of studying information technology, but they benefit from Bill Gate's prowess. These same janitors can't offer a similarly lucrative deal to Bill Gates.
The clock is ticking, the window of opportunity is closing; there might be little time left to ensure your and yours place in the System before the process of "pharaohization" is complete.
When the conditions of civilization become intolerable, there is always the frontier. That was the initial promise of America. I believe there is still enough frontier here to live a life of liberty.
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Re: Disconnecting productivity from consumption

Post by ArthurPooh »

Jack Jones wrote: Thu May 02, 2024 8:40 am
As I've stated in the other thread, this is the human norm - working poor finance the idle owners.
On the flip side, owners create firms that employ the working poor. The janitors at MSFT never had to incur the opportunity cost of studying information technology, but they benefit from Bill Gate's prowess. These same janitors can't offer a similarly lucrative deal to Bill Gates.
I think the original contention is not exactly about Bill Gates. I own some MSFT shares and these janitors (and programmers) enrich me too, even though I haven't studied information technology, I just had some spare cash. Production divorced from consumption. And that's even before we get to the fact I had this cash in the first place because of US Government's undying passion for propping up dozens of Potemkin economies around the world with taxpayer money.
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Re: Disconnecting productivity from consumption

Post by Jack Jones »

ArthurPooh wrote: Thu May 02, 2024 12:54 pm
Jack Jones wrote: Thu May 02, 2024 8:40 am
As I've stated in the other thread, this is the human norm - working poor finance the idle owners.
On the flip side, owners create firms that employ the working poor. The janitors at MSFT never had to incur the opportunity cost of studying information technology, but they benefit from Bill Gate's prowess. These same janitors can't offer a similarly lucrative deal to Bill Gates.
I think the original contention is not exactly about Bill Gates. I own some MSFT shares and these janitors (and programmers) enrich me too, even though I haven't studied information technology, I just had some spare cash. Production divorced from consumption. And that's even before we get to the fact I had this cash in the first place because of US Government's undying passion for propping up dozens of Potemkin economies around the world with taxpayer money.
Are you saying that you don’t think investing is a productive activity? You and Bill Gates have put your capital at risk in MSFT. Aren’t you entitled to your riches if the venture happens to pay off?

“I just had some spare cash.”

I think you are devaluing capital here. “Your Money or Your Life” was largely about this point.
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Re: Disconnecting productivity from consumption

Post by glennds »

Xan wrote: Wed May 01, 2024 11:47 am
The problem is freeloading

If everybody owes everybody then it all cancels out, right?

The problem is that debt diverts a large share of actual economic output (goods and services) into passive income (interest paid). Disconnecting productivity from consumption is bad. Communism goes all in on it but runaway capitalism does it too.
Anybody have thoughts?
This talk from Ray Dalio about debt crisis addresses some of the questions you are raising: https://www.youtube.com/watch?v=dfIgxohmpXw. It meanders into political and societal issues, but the section where he talks about the nature and limits of central bank debt should be interesting to you.
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ArthurPooh
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Re: Disconnecting productivity from consumption

Post by ArthurPooh »

Jack Jones wrote: Thu May 02, 2024 3:28 pm
ArthurPooh wrote: Thu May 02, 2024 12:54 pm
Jack Jones wrote: Thu May 02, 2024 8:40 am
As I've stated in the other thread, this is the human norm - working poor finance the idle owners.
On the flip side, owners create firms that employ the working poor. The janitors at MSFT never had to incur the opportunity cost of studying information technology, but they benefit from Bill Gate's prowess. These same janitors can't offer a similarly lucrative deal to Bill Gates.
I think the original contention is not exactly about Bill Gates. I own some MSFT shares and these janitors (and programmers) enrich me too, even though I haven't studied information technology, I just had some spare cash. Production divorced from consumption. And that's even before we get to the fact I had this cash in the first place because of US Government's undying passion for propping up dozens of Potemkin economies around the world with taxpayer money.
Are you saying that you don’t think investing is a productive activity? You and Bill Gates have put your capital at risk in MSFT. Aren’t you entitled to your riches if the venture happens to pay off?

“I just had some spare cash.”

I think you are devaluing capital here. “Your Money or Your Life” was largely about this point.
I appreciate the importance of capital. Nevertheless, it does divorce productivity from consumption to a certain extent.
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Re: Disconnecting productivity from consumption

Post by boglerdude »

Debt? Backed by what assets and can you just print it? (Japan vs Argentina)

Rates? Whose rate. What my neighbor will lend to me for, or what rate the Fed will lend to me, when they want to interfere with the economy?

https://old.reddit.com/r/Libertarian/co ... cam_works/

edit1: Unrelated, but theres a moneystuff podcast https://link.chtbl.com/Money-Stuff-The-Podcast

edit2: attached image. What spending is going to get cut?
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