The future of neoliberal capitalism

Honestly, wouldn't it be just wonderful if everyone just wiped everyone else's debts clean? 😁

Amanda Allen4 said:Don't worry, you won't fall into a depression because a truly free market doesn't even exist. Look at the global economy—whether you're looking at "communist" China or "capitalist" USA—it functions as a planned economy where the political and fiscal privileges of certain nations act as a monopoly tool for their domestic currencies, effectively sabotaging the market. Today's version of capitalism is nothing more than a degenerate, grotesque caricature of a free market—much like the portrait of Dorian Gray.

Of course that’s obvious. Markets aren't split into "free" or "unfree"; it isn't a binary. It's a spectrum. On one end, you have Singapore, Hong Kong, and Australia; on the other, you have Cuba and North Korea.
The real question is which end of that scale we are aiming for. Honestly, looking at the direction things are heading in the States, I'm losing hope. 😁

The reason I'll end up depressed is that politicians will eventually succeed in convincing everyone (if they haven't already) that a lack of regulation was the culprit behind all this. Naturally, a general deficiency in economic theory and basic rational logic certainly doesn't help the cause. If you want to see how the average person views a crisis, it looks something like this:

Capitalist bankers caused the crisis because they were greedy and prioritized extra profits over the common good. The government gave them too much freedom, so we can prevent future crises if we just hand more power to the state to rein in those damn capitalist bloodsuckers. Plus, we should slap them with massive taxes since they make so much money—maybe then a few bucks might trickle down to me.

Maybe I'm being too pessimistic, but I highly doubt even 5% of people understand anything about the central banking system, the function of interest rates, the flaws of fiat currency, or any of it.

Perhaps it's unfair to use the USA as a local proxy for global sentiment (actually, it's incredibly unfair 😁), but around here, the most prominent "economist" is some guy rambling about nationalization whose "theory" sits somewhere between mercantilism and classical Marxism. And the government is so pervasive now that nobody even notices the state or its meddling anymore. We're in trouble, and yes, it's precisely because there is no unhindered market. It's because the market has vanished without a trace.

@Jack Rodriguez85, got a few questions since you clearly know your stuff, especially regarding your point about how capitalist bankers basically triggered the crisis for everyone else.
It’s all pretty much the same thing: what actually are financial derivatives, who came up with them, how do they even touch the real economy, and why did Warren Buffett call them a "weapon of mass destruction" way back when?
Look, I'm no expert. But that's exactly why I want to hear from one (well, anyone except Buffett 🙂)

Jack Rodriguez85 said:Of course that’s obvious. Markets aren't split into "free" or "unfree"; it isn't a binary. It's a spectrum. On one end, you have Singapore, Hong Kong, and Australia; on the other, you have Cuba and North Korea.
The real question is which end of that scale we are aiming for. Honestly, looking at the direction things are heading in the States, I'm losing hope. 😁

The reason I'll end up depressed is that politicians will eventually succeed in convincing everyone (if they haven't already) that a lack of regulation was the culprit behind all this. Naturally, a general deficiency in economic theory and basic rational logic certainly doesn't help the cause. If you want to see how the average person views a crisis, it looks something like this:

Capitalist bankers caused the crisis because they were greedy and prioritized extra profits over the common good. The government gave them too much freedom, so we can prevent future crises if we just hand more power to the state to rein in those damn capitalist bloodsuckers. Plus, we should slap them with massive taxes since they make so much money—maybe then a few bucks might trickle down to me.

Maybe I'm being too pessimistic, but I highly doubt even 5% of people understand anything about the central banking system, the function of interest rates, the flaws of fiat currency, or any of it.

Perhaps it's unfair to use the USA as a local proxy for global sentiment (actually, it's incredibly unfair 😁), but around here, the most prominent "economist" is some guy rambling about nationalization whose "theory" sits somewhere between mercantilism and classical Marxism. And the government is so pervasive now that nobody even notices the state or its meddling anymore. We're in trouble, and yes, it's precisely because there is no unhindered market. It's because the market has vanished without a trace.

America is basically a welfare state. Total social safety net vibes.

Jack Rodriguez85 said:Of course that’s obvious. Markets aren't split into "free" or "unfree"; it isn't a binary. It's a spectrum. On one end, you have Singapore, Hong Kong, and Australia; on the other, you have Cuba and North Korea.
The real question is which end of that scale we are aiming for. Honestly, looking at the direction things are heading in the States, I'm losing hope. 😁

The reason I'll end up depressed is that politicians will eventually succeed in convincing everyone (if they haven't already) that a lack of regulation was the culprit behind all this. Naturally, a general deficiency in economic theory and basic rational logic certainly doesn't help the cause. If you want to see how the average person views a crisis, it looks something like this:

Capitalist bankers caused the crisis because they were greedy and prioritized extra profits over the common good. The government gave them too much freedom, so we can prevent future crises if we just hand more power to the state to rein in those damn capitalist bloodsuckers. Plus, we should slap them with massive taxes since they make so much money—maybe then a few bucks might trickle down to me.

Maybe I'm being too pessimistic, but I highly doubt even 5% of people understand anything about the central banking system, the function of interest rates, the flaws of fiat currency, or any of it.

Perhaps it's unfair to use the USA as a local proxy for global sentiment (actually, it's incredibly unfair 😁), but around here, the most prominent "economist" is some guy rambling about nationalization whose "theory" sits somewhere between mercantilism and classical Marxism. And the government is so pervasive now that nobody even notices the state or its meddling anymore. We're in trouble, and yes, it's precisely because there is no unhindered market. It's because the market has vanished without a trace.

Well, they kind of are. Derivatives evolved way too fast for any legislature to keep up, and you'd need global oversight to actually fix it. That's just too massive a logistical nightmare to pull off.

Jack Rodriguez85 said:Of course that’s obvious. Markets aren't split into "free" or "unfree"; it isn't a binary. It's a spectrum. On one end, you have Singapore, Hong Kong, and Australia; on the other, you have Cuba and North Korea.
The real question is which end of that scale we are aiming for. Honestly, looking at the direction things are heading in the States, I'm losing hope. 😁

The reason I'll end up depressed is that politicians will eventually succeed in convincing everyone (if they haven't already) that a lack of regulation was the culprit behind all this. Naturally, a general deficiency in economic theory and basic rational logic certainly doesn't help the cause. If you want to see how the average person views a crisis, it looks something like this:

Capitalist bankers caused the crisis because they were greedy and prioritized extra profits over the common good. The government gave them too much freedom, so we can prevent future crises if we just hand more power to the state to rein in those damn capitalist bloodsuckers. Plus, we should slap them with massive taxes since they make so much money—maybe then a few bucks might trickle down to me.

Maybe I'm being too pessimistic, but I highly doubt even 5% of people understand anything about the central banking system, the function of interest rates, the flaws of fiat currency, or any of it.

Perhaps it's unfair to use the USA as a local proxy for global sentiment (actually, it's incredibly unfair 😁), but around here, the most prominent "economist" is some guy rambling about nationalization whose "theory" sits somewhere between mercantilism and classical Marxism. And the government is so pervasive now that nobody even notices the state or its meddling anymore. We're in trouble, and yes, it's precisely because there is no unhindered market. It's because the market has vanished without a trace.

Heh, derivatives were mostly built by physicists. In theory Black-Scholes works fine. It's not about learning how to run the model; it's knowing when the model is garbage, which happens more often than those physicists realized. They were throwing Monte-Carlo simulations at things they shouldn't have. Result? Total failure in risk assessment.

Jack Rodriguez85 said:Of course that’s obvious. Markets aren't split into "free" or "unfree"; it isn't a binary. It's a spectrum. On one end, you have Singapore, Hong Kong, and Australia; on the other, you have Cuba and North Korea.
The real question is which end of that scale we are aiming for. Honestly, looking at the direction things are heading in the States, I'm losing hope. 😁

The reason I'll end up depressed is that politicians will eventually succeed in convincing everyone (if they haven't already) that a lack of regulation was the culprit behind all this. Naturally, a general deficiency in economic theory and basic rational logic certainly doesn't help the cause. If you want to see how the average person views a crisis, it looks something like this:

Capitalist bankers caused the crisis because they were greedy and prioritized extra profits over the common good. The government gave them too much freedom, so we can prevent future crises if we just hand more power to the state to rein in those damn capitalist bloodsuckers. Plus, we should slap them with massive taxes since they make so much money—maybe then a few bucks might trickle down to me.

Maybe I'm being too pessimistic, but I highly doubt even 5% of people understand anything about the central banking system, the function of interest rates, the flaws of fiat currency, or any of it.

Perhaps it's unfair to use the USA as a local proxy for global sentiment (actually, it's incredibly unfair 😁), but around here, the most prominent "economist" is some guy rambling about nationalization whose "theory" sits somewhere between mercantilism and classical Marxism. And the government is so pervasive now that nobody even notices the state or its meddling anymore. We're in trouble, and yes, it's precisely because there is no unhindered market. It's because the market has vanished without a trace.

In America, people struggle with basic grammar, let alone economics. I saw a segment on a news show where they asked 100 people what an interest rate is, and only two of them knew. Yet, 40% of them were carrying debt... wtf

Jack Rodriguez85 said:Of course that’s obvious. Markets aren't split into "free" or "unfree"; it isn't a binary. It's a spectrum. On one end, you have Singapore, Hong Kong, and Australia; on the other, you have Cuba and North Korea.
The real question is which end of that scale we are aiming for. Honestly, looking at the direction things are heading in the States, I'm losing hope. 😁

The reason I'll end up depressed is that politicians will eventually succeed in convincing everyone (if they haven't already) that a lack of regulation was the culprit behind all this. Naturally, a general deficiency in economic theory and basic rational logic certainly doesn't help the cause. If you want to see how the average person views a crisis, it looks something like this:

Capitalist bankers caused the crisis because they were greedy and prioritized extra profits over the common good. The government gave them too much freedom, so we can prevent future crises if we just hand more power to the state to rein in those damn capitalist bloodsuckers. Plus, we should slap them with massive taxes since they make so much money—maybe then a few bucks might trickle down to me.

Maybe I'm being too pessimistic, but I highly doubt even 5% of people understand anything about the central banking system, the function of interest rates, the flaws of fiat currency, or any of it.

Perhaps it's unfair to use the USA as a local proxy for global sentiment (actually, it's incredibly unfair 😁), but around here, the most prominent "economist" is some guy rambling about nationalization whose "theory" sits somewhere between mercantilism and classical Marxism. And the government is so pervasive now that nobody even notices the state or its meddling anymore. We're in trouble, and yes, it's precisely because there is no unhindered market. It's because the market has vanished without a trace.

I'm actually grinding on a project right now with some guys from IJF focused on this exact thing: finding the sweet spot for government size, efficiency, and how much it actually drives growth. Looking at the early data, I don't think the issue is how big the state is—people vote for the size they want, so a welfare state is just a social preference. The real killer is efficiency. If people want free education, fine, the government should provide it, but they need to do it without wasting everything. The problem here is that the inputs required to produce public goods are massive compared to the pathetic outputs we get. For instance, looking at the Global Competitiveness report, it claims America has a high quality of education in science and Math, yet our PISA math scores are absolute garbage. What's the reality? This country can produce one world-class mathematician in a million, but on average, it's failing to teach its kids basic math.

brightlynx11 said:America is basically a welfare state. Total social safety net vibes.

Well, they kind of are. Derivatives evolved way too fast for any legislature to keep up, and you'd need global oversight to actually fix it. That's just too massive a logistical nightmare to pull off.

Heh, derivatives were mostly built by physicists. In theory Black-Scholes works fine. It's not about learning how to run the model; it's knowing when the model is garbage, which happens more often than those physicists realized. They were throwing Monte-Carlo simulations at things they shouldn't have. Result? Total failure in risk assessment.

In America, people struggle with basic grammar, let alone economics. I saw a segment on a news show where they asked 100 people what an interest rate is, and only two of them knew. Yet, 40% of them were carrying debt... wtf

I'm actually grinding on a project right now with some guys from IJF focused on this exact thing: finding the sweet spot for government size, efficiency, and how much it actually drives growth. Looking at the early data, I don't think the issue is how big the state is—people vote for the size they want, so a welfare state is just a social preference. The real killer is efficiency. If people want free education, fine, the government should provide it, but they need to do it without wasting everything. The problem here is that the inputs required to produce public goods are massive compared to the pathetic outputs we get. For instance, looking at the Global Competitiveness report, it claims America has a high quality of education in science and Math, yet our PISA math scores are absolute garbage. What's the reality? This country can produce one world-class mathematician in a million, but on average, it's failing to teach its kids basic math.

Are you seriously telling me that you need actual results—and preliminary ones at that—to conclude that if a state efficiently delivers what its citizens demand, there is no issue with the size of the state? 🤣
I suspect Keynesianism might be getting the better of you. ☕

Andrew Booth29 said:Are you seriously telling me that you need actual results—and preliminary ones at that—to conclude that if a state efficiently delivers what its citizens demand, there is no issue with the size of the state? 🤣
I suspect Keynesianism might be getting the better of you. ☕

If voters consistently pick parties that don't touch the size of the state, that's a social preference. If people want free college, healthcare, and everything else the welfare state provides, then the real challenge is figuring out how to pay for it. Look at Sweden—they have a massive state, but they make it work by being efficient and forcing market principles in other sectors to balance things out.

What choice does America actually have? Either slash spending—meaning cutting citizen benefits, slashing public sector wages, auditing procurement, etc.—or maintain current spending levels while boosting efficiency. Either way, shrinking the state doesn't guarantee you'll actually get more efficiency out of it.

Look, for twenty years, the same parties have held power in America by either maintaining or expanding social rights. It’s logical to say a large state is a social preference here. That's not some academic theory; it's just reality. Anyone in America running on a platform of cuts isn't winning an election. You'll always have one libertarian for every hundred socialists. 😁

And that brings us to the big question: how do you change social preferences?
Through incentives—and not necessarily cash ones.
Video: http://www.youtube.com/watch?v=3ELnyoso6vI
Behavioral economics. 🙂

Libertarians in America can only take power if social preferences shift or through a revolution. Honestly, I'd bet on the second one. 😂

DISCLAIMER: My personal take is that if the state is inefficient, it's better not to crack down on the shadow economy—let people dodge taxes as much as possible if that money isn't being used for anything smart anyway. That income will eventually surface somewhere as effective demand. 😁

brightlynx11 said:If voters consistently pick parties that don't touch the size of the state, that's a social preference. If people want free college, healthcare, and everything else the welfare state provides, then the real challenge is figuring out how to pay for it. Look at Sweden—they have a massive state, but they make it work by being efficient and forcing market principles in other sectors to balance things out.

What choice does America actually have? Either slash spending—meaning cutting citizen benefits, slashing public sector wages, auditing procurement, etc.—or maintain current spending levels while boosting efficiency. Either way, shrinking the state doesn't guarantee you'll actually get more efficiency out of it.

Look, for twenty years, the same parties have held power in America by either maintaining or expanding social rights. It’s logical to say a large state is a social preference here. That's not some academic theory; it's just reality. Anyone in America running on a platform of cuts isn't winning an election. You'll always have one libertarian for every hundred socialists. 😁

And that brings us to the big question: how do you change social preferences?
Through incentives—and not necessarily cash ones.
Video: http://www.youtube.com/watch?v=3ELnyoso6vI
Behavioral economics. 🙂

Libertarians in America can only take power if social preferences shift or through a revolution. Honestly, I'd bet on the second one. 😂

DISCLAIMER: My personal take is that if the state is inefficient, it's better not to crack down on the shadow economy—let people dodge taxes as much as possible if that money isn't being used for anything smart anyway. That income will eventually surface somewhere as effective demand. 😁

I reached a similar conclusion as a layman about a year or two ago. I kind of suppressed the thought, though, partly because of the moral side of things and partly because of how a shadow economy might mess with fair market competition in certain sectors (though maybe those segments are just trivial).

brightlynx11 said:If voters consistently pick parties that don't touch the size of the state, that's a social preference. If people want free college, healthcare, and everything else the welfare state provides, then the real challenge is figuring out how to pay for it. Look at Sweden—they have a massive state, but they make it work by being efficient and forcing market principles in other sectors to balance things out.

What choice does America actually have? Either slash spending—meaning cutting citizen benefits, slashing public sector wages, auditing procurement, etc.—or maintain current spending levels while boosting efficiency. Either way, shrinking the state doesn't guarantee you'll actually get more efficiency out of it.

Look, for twenty years, the same parties have held power in America by either maintaining or expanding social rights. It’s logical to say a large state is a social preference here. That's not some academic theory; it's just reality. Anyone in America running on a platform of cuts isn't winning an election. You'll always have one libertarian for every hundred socialists. 😁

And that brings us to the big question: how do you change social preferences?
Through incentives—and not necessarily cash ones.
Video: http://www.youtube.com/watch?v=3ELnyoso6vI
Behavioral economics. 🙂

Libertarians in America can only take power if social preferences shift or through a revolution. Honestly, I'd bet on the second one. 😂

DISCLAIMER: My personal take is that if the state is inefficient, it's better not to crack down on the shadow economy—let people dodge taxes as much as possible if that money isn't being used for anything smart anyway. That income will eventually surface somewhere as effective demand. 😁

What I was actually trying to get at is this: if a government can honestly and efficiently deliver what its citizens actually want, then the sheer size of the state isn't the issue. Period.😁

God forbid we actually look at the data.🤣

Yeah, I mean, if you assume the government is going to run everything just as smoothly as a free market would, then everything is totally fine, right?
Like, if a Wartburg was cruising along as fast as an F1 car, then we wouldn't have any issues
with it only having 55 horsepower, I guess.

But seriously, why on earth would a state actually be efficient? The whole world is basically full already, and the borders are all locked down.
That pretty much means countries aren't really out there competing for people to move in. I mean, Sweden isn't even efficient, honestly.
We could maybe say it’s efficient once there were like ten different Swedens sitting right next to each other, all with
similar geography, and if there was space for ten more or even a hundred more versions of them nearby, and
people actually had the choice of which Sweden to live in, or if they wanted to just go off and start a brand new one.

True efficiency—which I guess means getting way more services for less tax, or maybe fewer services for lower taxes—just isn't
really possible in the world we live in right now. The first thing to get sacrificed in the name of efficiency would probably be those
generational solidarity pension systems. I mean, why would a productive group of people just agree to have their money taken
for pensions? They’d probably just pack up and move across the border to somewhere where that doesn't happen. If they got old and
the government tried to tax their kids to pay for those pensions, those kids would just move away too, I bet. Such a setup
would definitely lead to an efficient state where the government does way fewer things than it does today, while also having
lower taxes.

But, I guess the big prerequisite is that new states need to be able to pop up, just like how new companies can start up,
but that's just simply not how things work here.

Maybe we could eventually say that Sweden is more efficient than some other country, if we could somehow come up with
some kind of metric to compare government services across different nations; comparing taxes is easy enough,
but you can't really call a state efficient when every single department is pretty much inefficient, I suppose.

Andrew Booth29 said:What I was actually trying to get at is this: if a government can honestly and efficiently deliver what its citizens actually want, then the sheer size of the state isn't the issue. Period.😁

God forbid we actually look at the data.🤣

It’s definitely an issue, though. Plenty of research shows the ideal state size sits around 17% of GDP, which is a far cry from the average in the EU-USA where the government takes up about 35-40%. My point is that shrinking the government isn't easy—it requires shifting social preferences. People aren't going to vote for a party promising to cut their benefits just because they want to preserve what they already have. Libertarians in the US could dump endless money into campaigns, but they still won't win elections or shape economic policy. Don't get me wrong, I'm all for a prudential, minimal state. 🙂

Brian Wood said:Yeah, I mean, if you assume the government is going to run everything just as smoothly as a free market would, then everything is totally fine, right?
Like, if a Wartburg was cruising along as fast as an F1 car, then we wouldn't have any issues
with it only having 55 horsepower, I guess.

But seriously, why on earth would a state actually be efficient? The whole world is basically full already, and the borders are all locked down.
That pretty much means countries aren't really out there competing for people to move in. I mean, Sweden isn't even efficient, honestly.
We could maybe say it’s efficient once there were like ten different Swedens sitting right next to each other, all with
similar geography, and if there was space for ten more or even a hundred more versions of them nearby, and
people actually had the choice of which Sweden to live in, or if they wanted to just go off and start a brand new one.

True efficiency—which I guess means getting way more services for less tax, or maybe fewer services for lower taxes—just isn't
really possible in the world we live in right now. The first thing to get sacrificed in the name of efficiency would probably be those
generational solidarity pension systems. I mean, why would a productive group of people just agree to have their money taken
for pensions? They’d probably just pack up and move across the border to somewhere where that doesn't happen. If they got old and
the government tried to tax their kids to pay for those pensions, those kids would just move away too, I bet. Such a setup
would definitely lead to an efficient state where the government does way fewer things than it does today, while also having
lower taxes.

But, I guess the big prerequisite is that new states need to be able to pop up, just like how new companies can start up,
but that's just simply not how things work here.

Maybe we could eventually say that Sweden is more efficient than some other country, if we could somehow come up with
some kind of metric to compare government services across different nations; comparing taxes is easy enough,
but you can't really call a state efficient when every single department is pretty much inefficient, I suppose.

Nobody is comparing the state to the market here; we're comparing different states. 😛

Brian Wood said:Yeah, I mean, if you assume the government is going to run everything just as smoothly as a free market would, then everything is totally fine, right?
Like, if a Wartburg was cruising along as fast as an F1 car, then we wouldn't have any issues
with it only having 55 horsepower, I guess.

But seriously, why on earth would a state actually be efficient? The whole world is basically full already, and the borders are all locked down.
That pretty much means countries aren't really out there competing for people to move in. I mean, Sweden isn't even efficient, honestly.
We could maybe say it’s efficient once there were like ten different Swedens sitting right next to each other, all with
similar geography, and if there was space for ten more or even a hundred more versions of them nearby, and
people actually had the choice of which Sweden to live in, or if they wanted to just go off and start a brand new one.

True efficiency—which I guess means getting way more services for less tax, or maybe fewer services for lower taxes—just isn't
really possible in the world we live in right now. The first thing to get sacrificed in the name of efficiency would probably be those
generational solidarity pension systems. I mean, why would a productive group of people just agree to have their money taken
for pensions? They’d probably just pack up and move across the border to somewhere where that doesn't happen. If they got old and
the government tried to tax their kids to pay for those pensions, those kids would just move away too, I bet. Such a setup
would definitely lead to an efficient state where the government does way fewer things than it does today, while also having
lower taxes.

But, I guess the big prerequisite is that new states need to be able to pop up, just like how new companies can start up,
but that's just simply not how things work here.

Maybe we could eventually say that Sweden is more efficient than some other country, if we could somehow come up with
some kind of metric to compare government services across different nations; comparing taxes is easy enough,
but you can't really call a state efficient when every single department is pretty much inefficient, I suppose.

They aren't exactly closed... You can find plenty of counterexamples, like how labor moves freely within the EU. A quick Google search gives you this... http://www.workpermit.com/news/2005_...unemployed.htm

Brian Wood said:Yeah, I mean, if you assume the government is going to run everything just as smoothly as a free market would, then everything is totally fine, right?
Like, if a Wartburg was cruising along as fast as an F1 car, then we wouldn't have any issues
with it only having 55 horsepower, I guess.

But seriously, why on earth would a state actually be efficient? The whole world is basically full already, and the borders are all locked down.
That pretty much means countries aren't really out there competing for people to move in. I mean, Sweden isn't even efficient, honestly.
We could maybe say it’s efficient once there were like ten different Swedens sitting right next to each other, all with
similar geography, and if there was space for ten more or even a hundred more versions of them nearby, and
people actually had the choice of which Sweden to live in, or if they wanted to just go off and start a brand new one.

True efficiency—which I guess means getting way more services for less tax, or maybe fewer services for lower taxes—just isn't
really possible in the world we live in right now. The first thing to get sacrificed in the name of efficiency would probably be those
generational solidarity pension systems. I mean, why would a productive group of people just agree to have their money taken
for pensions? They’d probably just pack up and move across the border to somewhere where that doesn't happen. If they got old and
the government tried to tax their kids to pay for those pensions, those kids would just move away too, I bet. Such a setup
would definitely lead to an efficient state where the government does way fewer things than it does today, while also having
lower taxes.

But, I guess the big prerequisite is that new states need to be able to pop up, just like how new companies can start up,
but that's just simply not how things work here.

Maybe we could eventually say that Sweden is more efficient than some other country, if we could somehow come up with
some kind of metric to compare government services across different nations; comparing taxes is easy enough,
but you can't really call a state efficient when every single department is pretty much inefficient, I suppose.

Ugh, I don't know about that...
http://www.rree.gob.pe/portal/enlaces.nsf/3f08cf720c1dbf4805256de20052913d/66e8af8a917e7abf0525716a0077f484/$FILE/International%20Migration-Facts%20and%20Figures.pdf

Brian Wood said:Yeah, I mean, if you assume the government is going to run everything just as smoothly as a free market would, then everything is totally fine, right?
Like, if a Wartburg was cruising along as fast as an F1 car, then we wouldn't have any issues
with it only having 55 horsepower, I guess.

But seriously, why on earth would a state actually be efficient? The whole world is basically full already, and the borders are all locked down.
That pretty much means countries aren't really out there competing for people to move in. I mean, Sweden isn't even efficient, honestly.
We could maybe say it’s efficient once there were like ten different Swedens sitting right next to each other, all with
similar geography, and if there was space for ten more or even a hundred more versions of them nearby, and
people actually had the choice of which Sweden to live in, or if they wanted to just go off and start a brand new one.

True efficiency—which I guess means getting way more services for less tax, or maybe fewer services for lower taxes—just isn't
really possible in the world we live in right now. The first thing to get sacrificed in the name of efficiency would probably be those
generational solidarity pension systems. I mean, why would a productive group of people just agree to have their money taken
for pensions? They’d probably just pack up and move across the border to somewhere where that doesn't happen. If they got old and
the government tried to tax their kids to pay for those pensions, those kids would just move away too, I bet. Such a setup
would definitely lead to an efficient state where the government does way fewer things than it does today, while also having
lower taxes.

But, I guess the big prerequisite is that new states need to be able to pop up, just like how new companies can start up,
but that's just simply not how things work here.

Maybe we could eventually say that Sweden is more efficient than some other country, if we could somehow come up with
some kind of metric to compare government services across different nations; comparing taxes is easy enough,
but you can't really call a state efficient when every single department is pretty much inefficient, I suppose.

I'm pretty sure Andrew Booth29 mentioned somewhere that the government basically stepped in to play the role children used to fill...

Brian Wood said:Yeah, I mean, if you assume the government is going to run everything just as smoothly as a free market would, then everything is totally fine, right?
Like, if a Wartburg was cruising along as fast as an F1 car, then we wouldn't have any issues
with it only having 55 horsepower, I guess.

But seriously, why on earth would a state actually be efficient? The whole world is basically full already, and the borders are all locked down.
That pretty much means countries aren't really out there competing for people to move in. I mean, Sweden isn't even efficient, honestly.
We could maybe say it’s efficient once there were like ten different Swedens sitting right next to each other, all with
similar geography, and if there was space for ten more or even a hundred more versions of them nearby, and
people actually had the choice of which Sweden to live in, or if they wanted to just go off and start a brand new one.

True efficiency—which I guess means getting way more services for less tax, or maybe fewer services for lower taxes—just isn't
really possible in the world we live in right now. The first thing to get sacrificed in the name of efficiency would probably be those
generational solidarity pension systems. I mean, why would a productive group of people just agree to have their money taken
for pensions? They’d probably just pack up and move across the border to somewhere where that doesn't happen. If they got old and
the government tried to tax their kids to pay for those pensions, those kids would just move away too, I bet. Such a setup
would definitely lead to an efficient state where the government does way fewer things than it does today, while also having
lower taxes.

But, I guess the big prerequisite is that new states need to be able to pop up, just like how new companies can start up,
but that's just simply not how things work here.

Maybe we could eventually say that Sweden is more efficient than some other country, if we could somehow come up with
some kind of metric to compare government services across different nations; comparing taxes is easy enough,
but you can't really call a state efficient when every single department is pretty much inefficient, I suppose.

That metric isn't made up; I actually use it. It’s called perform Envelopment analysis. My bad, maybe I should have said "relatively efficient." 🙂

brightlynx11 said:It’s definitely an issue, though. Plenty of research shows the ideal state size sits around 17% of GDP, which is a far cry from the average in the EU-USA where the government takes up about 35-40%. My point is that shrinking the government isn't easy—it requires shifting social preferences. People aren't going to vote for a party promising to cut their benefits just because they want to preserve what they already have. Libertarians in the US could dump endless money into campaigns, but they still won't win elections or shape economic policy. Don't get me wrong, I'm all for a prudential, minimal state. 🙂

Nobody is comparing the state to the market here; we're comparing different states. 😛

They aren't exactly closed... You can find plenty of counterexamples, like how labor moves freely within the EU. A quick Google search gives you this... http://www.workpermit.com/news/2005_...unemployed.htm

Ugh, I don't know about that...
http://www.rree.gob.pe/portal/enlaces.nsf/3f08cf720c1dbf4805256de20052913d/66e8af8a917e7abf0525716a0077f484/$FILE/International%20Migration-Facts%20and%20Figures.pdf

I'm pretty sure Andrew Booth29 mentioned somewhere that the government basically stepped in to play the role children used to fill...

That metric isn't made up; I actually use it. It’s called perform Envelopment analysis. My bad, maybe I should have said "relatively efficient." 🙂

The real issue here is that your entire premise simply doesn't hold water. States don't function optimally. Period. If they actually did, we wouldn't even be having this debate—you wouldn't need a white paper to tell you that. What you've actually gathered from your research is just a confirmation that states are objectively worse than markets when it comes to allocating capital and managing other trivialities.

...
I believe Andrew Booth29 was even discussing at some point how the state has essentially stepped in to take over the role once held by children...
...

Exactly. Children have been subsidized and effectively turned into state property. They've become a public good, and as a result—Tragedy of the commons.

Andrew Booth29 said:The real issue here is that your entire premise simply doesn't hold water. States don't function optimally. Period. If they actually did, we wouldn't even be having this debate—you wouldn't need a white paper to tell you that. What you've actually gathered from your research is just a confirmation that states are objectively worse than markets when it comes to allocating capital and managing other trivialities.

...
I believe Andrew Booth29 was even discussing at some point how the state has essentially stepped in to take over the role once held by children...
...

Exactly. Children have been subsidized and effectively turned into state property. They've become a public good, and as a result—Tragedy of the commons.

This is what I actually work on: http://ime.bg/uploads/335309_Optimal...Government.pdf

You completely missed the point on "optimal." I’m not claiming the government is perfect—I'm saying there's a specific size where things actually work best. It's an empirical question: what's the sweet spot for state size to drive economic growth? Basically, how much do I need to trim the fat (or beef it up) to spark more growth? You're swinging at nothing. 🙂

So, you’ve concluded that a country's size isn't the issue—provided it actually runs efficiently. And you're basing that entire premise on some preliminary data. Personally, I don't need a spreadsheet to see that. Then you pivot, arguing that scale *is* an issue because you're seeing economic growth dip as countries get larger. My point remains unchanged: that specific claim of yours still holds water. What you’re actually measuring is how inefficient nations—and let's be honest, aren't they all somewhat inefficient?—drag down economic growth. You also seem a bit tripped up by the empirical fact that the curve representing the relationship between state size and growth isn't a strictly monotonic decline. That’s hardly a mystery, is it? In fact, I think it's already been explained elsewhere. 😬
And you're certainly never going to calculate that percentage. That much is certain.

coppercyclist2 said:Regulators—specifically central banks—are obviously worried about this rapid decay, so they end up engineering artificial stimulus to prop up the markets.
One interesting factor lately has been the capital adequacy weighting applied to sovereign bonds. Within the European Union, that weight was set at 1.0, which essentially creates an artificial imbalance by slashing regulatory costs. It made buying government bonds a sweet deal for banks, but now they’re stuck; they didn't value them properly according to market realities, and now they don't know what to do with them.

Actually, the weight is 0, not 1.0—you might want to double-check that.