terça-feira, 17 de julho de 2012

Keynes - debate The Economist

Apenas quem defende a liberdade individual, propriedade privada, meritocracia, estado de direito, economia de mercado, democracia representativa, responsabilidade individual, eficiência e transparência, poderia repercutir o debate mundial (abaixo e anexo) patrocinado pela Economist (EIU) Intelligence Unit sobre Keynes e sua influencia na economia atual. Como este assunto está vinculado aos valores e prioridades da comunidade: liberdade de produzir e consumir – estou divulgando o debate e espero receber sua avaliação, até para constatar a honestidade de princípios e ética do liberalismo conseqüente defendido amplamente. Anexo, um sumario só das minhas intervenções no debate e texto acadêmico meu que esclarece conceitos e valores – penso que Keynes formulou sua teoria econômica aplicável a crises e não para desenvolvimento de uma sociedade, motivo pelo qual o desemprego assola o mundo atualmente. Proponho avaliar a situação antes de Keynes, ou a critica de Marx sobre a deterioração da força de trabalho no capitalismo, sem resposta até hoje pelos fecundos pensadores que o sucederam. Desta forma, proponho um novo pacto social entre trabalhadores, empresários e governo, onde os protagonistas privados assumem responsabilidades de nutrição, saúde e educação e governo reduz a tributação correspondente, num ambiente de liberdade total de produzir e consumir – resgatando a mão invisível de Adam Smith e o pleno emprego produtivo. Penso que este debate serve para refletir, entender e apontar rumos para este “imbróglio” sócio econômico e político que assistimos atualmente no mundo. Cordialmente. Ronaldo Carneiro – 061 33472745 – 061 99681388 Economist (EIU) Intelligence Unit world debate - may 2012 It’s Official: Keynes Was Right, Paul Krugman: The Big Wrong krugman.blogs.nytimes.com Austerity, RIP -- except that it won't. 21 dias atrás Ronaldo Carneiro • Keynesian monetarists legitimated the presence of Government in the economy, in a world destroyed by war. That was like taking an aspirin to relieve a headache – but in the medium and long term results have been disastrous. 17 dias atrás 0 José Milton dos Santos Pestana Barbosa.'. • In the long term we will be all dead!! 1 Michelle Pelescak, MS in biotechnology, MBA, RAC • I think the real world scenarios provide pretty undeniable proof - Europe and Britain vs. US. Austerity vs stimulus. Would you prefer to live in Europe or the Great Britain or here? Granted, our recovery is not smooth, linear, or complete but we are closer than anyone else with similar economy. 0 Ronaldo Carneiro • Some presence of the State can only be justified during a limited time, to regain balance. A constant presence of the government in the economy replaces the invariable law of supply and demand on the free market with the questionable action of human will. "In the medium term we will all be dead", could have been the response of Keynes to the implications of his proposals. He is now dead and cannot witness the disaster, after nearly seven decades, of his proposals to formalizing government interference in the economy. 1 Michelle Pelescak, MS in biotechnology, MBA, RAC • Ronaldo, can you describe the disaster? Ronaldo Carneiro • General Theory of John Maynard Keynes - one must recognize that the monetarist proposals were conceived in a post-1929 crisis and discussed in Bretton Woods in 1944, in a world where Europe had been destroyed by World War II. Though recognized in its time, in the long run the Keynesian theory proved to be a disaster. After 68 years of practical application, this economic formulation exposed stagflation as its best result: a compromise solution between unemployment and inflation. An offence to human intelligence. By enthronizing government in the economy, that is, by replacing the inexorable and impersonal law of supply and demand by the questionable and personalist aegis of human will, Adam Smith and all responsible thinkers must have revolved in their tombs, trying to understand the obscene inconsequences of the Keynesian theory. I blame the monetarist theory for the vast social exclusion disseminated all over the world and for all the armed conflicts too: many resources in the hands of a few, to decide according to human will is anti-democratic by definition! And children are lacking food and minimal comfort! Michelle - look at unemployement rate of US and Europe - in Spain 1 from 4 is unemployed!!!! social exclusion all over the world and so on> Forward your mail and I´ll send you some of my academic texts. 1 José Milton dos Santos Pestana Barbosa.'. • Ronaldo x Paul Krugmann and Joe Stiglitz!! Michelle, I suggest you don´t lose your time. 0 Ronaldo Carneiro • Government, as the Supreme human ethical creation, in Hegel's view, should be revised – erring is not tragic, the tragedy resides in not learning from error! 0 Michelle Pelescak, MS in biotechnology, MBA, RAC • Ronaldo: Thank you for your insights. I am not as deeply versed in the theory of economics. My is more practical - Europe and Britain vs. the US. Cyclical vs. structural debt and different ways to deal with both. Government should play a limited role to even out the excesses of economical cycles and disturbances and to inject some level of oversight of market players. We have clearly seen that supply and demand principles are not always valid. 1 Peter Temple • Umm, is this where someone needs to point out that Keynesian economics and Monetarist economics (i.e. Friedman et al.) are actually not the same thing. I'm not exactly sure what a Keynesian monetarist is, or if they even exist? It's a bit like saying that a US politician is a Democratic Republican. Can someone enlighten me? 2 Michelle Pelescak, MS in biotechnology, MBA, RAC • Ronaldo: My email is mpshiloh at gmail. Thank you. Michelle 0 Peter Temple • BTW Keynes central argument was that GDP=C+G+I+NX and so where private consumption (C) declined the government could fill the void by increasing government spending (G) until such time as private sector demand recovers. There's nothing terribly socialist about that, it merely recognises the role that government plays as part of the GDP equation. I agree that government needs to pull back from trespassing into the economy, but let's not confuse political ideology with economic theory. 3 Troy Hageman • The problem with the Keynes theory isn't the theory. Lots of thing a fine theoretically. The problem is when implemented the government spending creates its own sector and isn't pulled back upon private sector demand increasing because private sector demand doesn't increase where the government is spending money. This just perpetuates the growth of government and the spending by an entity that can't create real money through economy. At our present tax rate every $0.25 the government spends in the private sector would have to create $1.00 for the government to break even on the investment, there is no way this is possible. Rather then fancy economic theory perhaps governments should try to only spend the money that they have. If not enough money is coming in to sustain programs then choices should be made, that's leadership. Krugman is nuts, this isn't new or news but to claim that pumping trillions of dollars into the U.S. economy to keep it stagnant and not allow the privet sector to gain ground and the idea that any of the EU countries even tried so called "austerity" ,which they didn't, is proof of his theory is stretching it even for him. 0 Ronaldo Carneiro • • Economics is a science in which all agents are governed by the impersonal and inexorable law of supply and demand, whenever there is no market manipulation; • Politics is an art in which the protagonists decide according to questionable, circumstantial and personalistic human desires We are living the consequences of monetarism, that places abundant money in the hands of politicians and bureaucrats, but scarce food in the mouth of children. It would be comical, were it not tragic, to imagine that the control of financial flows: currency, exchange and credit, could generate development. Only simple productive work can generate capital which, in its essence, is nothing more than cumulative work 0 Peter Temple • I think the government can play a role to stimulate the economy and that it can engage in projects that drive an increase in private sector demand. This is evidenced by the relative flattening out of cyclical fluctuations since the broad adoption of Keynes' ideas. He only advocated intervention under extreme conditions where the market had failed (as in the depression). Sadly, the left have seen Keynes as a convenient rationale for an increased role for government intervention in the economy under all conditions; they have selectively read Keynes to suit their political ideology. 0 Jose Antonio Poncela • @Ronaldo Maybe that is right in a theoretical perfect competition world that doesn't exist in reality. Real markets are imperfect, with uncertainties, asymmetrical information, irrational behaviour and market power. Economic theory deals also with these markets when you advance to Microeconomics II. The outcome is far from optimal and a good example is to consider risk taking, herding, euphoria and overshooting in financial markets. Besides, there is no economy that could stand an absolute no intervention of the government in the economy. So, what are we talking about? A good discussion could be about how far this intervention should go but not if there is a need or not of intervention. 3 Bernardo Javalquinto, Economist, MBA • neither keynes nor Smith were right alone they can fix anything they must lear to work together and Yunus is the final winner...A third industrial revolution......but also a "New Global Industrial Revolution" we are starting a new chapter, the world has changed and we humans are starting a new stage in how to do things in our society. Governments will have to play a stronger role, and the financial sector will have to behave moraly. Human Rights will take an important role since neither private or public sector are assuming their responsabilities toward human capital and society. One sample of this, is prof. Yunus initiative showing the world that the only way to cope with our problems is via social business (new paradigm). 1 Michelle Pelescak, MS in biotechnology, MBA, RAC • @Peter Yours is a good summary of what the expectations or an ideal situation should be. Except no single right or left ideology is correct, again. There must be a balance between no involvement and too much government. We have seen examples of both - unbridled lack of regulations and the resulting global disaster as well as too much government weighing down the economy in the opposite direction. Our challenge is to meet in the middle, accept and embrace ideas from both spectra and recognize that no one ideology or approach is perfect or even appropriate under all situations. And that is why the US does not have a financial crisis but a political one because the polarized ends of the political spectrum refuse to compromise and come up with sound fiscal and economic policies. 1 Peter Temple • @Michelle There is not a single economist I know of that would argue for greater government intervention into markets or for activist government involvement all the time. Macroeconomic lags generally prevent the sort of fine control that is assumed in the arguement for activist counter cyclical fiscal policy. So let's understand and accept what is possible and what is not. Jose made the point earlier. It's a matter of how involved in the economy the government needs to be given the circumstances. The reality of the situation is, as you point out, somewhere between the extremes of political discourse. I would argue that Keynes wasn't far from that middle ground. Sure there are some real world issues with his theories but unlike other scientific theories some would seek to throw Keynes out rather than build upon his work. There has to be some way to reconcile monetarists, who have some solid points, and Keynesians. 2 Michelle Pelescak, MS in biotechnology, MBA, RAC • No dispute with any of that. 0 José Milton dos Santos Pestana Barbosa.'. • And now the results are in: Keynesians have been completely right, Austerians utterly wrong — at vast human cost. God sake, see PIIGS, England, France. They will not make with austerity. 0 José Milton dos Santos Pestana Barbosa.'. • SEE SPAIN IN SPECIAL: The German banking got huge profits, profits that certainly has not invested in Germany (as Oskar Lafontaine, former Minister of Economy and Finance of the German government, and today one of the most far-sighted economists in Europe, wanted to be done and that the not be done, broke with Chancellor Schröder, the German Social Democrat Chairman responsible, along with Chancellor Merkel, the austerity policies at German and European policies promoted by the German banking). Instead of stimulating demand for German (and European), Germany used the large profits, he could with his speculative activity in Spain (and other peripheral Eurozone countries like Greece and Portugal), to accumulate more euros, converting It is the largest source of euros in Europe. The euro did very well to the German banking. Now, when the real estate bubble burst, the German banking panicked because I had most of its borrowed capital to banks and Spanish, to a lesser degree, the Spanish state (about 10% of its investment banking). And he began to promote the false idea that the euro was in danger. Its value has fluctuated but not declined substantially in value compared to the dollar. And then derive the austerity policies, whose sole purpose is that they pay the German banks (and French) to both public and private debt they hold. The ill-named EU aid and the IMF to help peripheral countries is that banks pay to the German and French, mainly. But these austerity policies, with low wages, declining social protection and cuts in public spending, are creating a very serious problem which is called Great Recession, caused by the huge drop in domestic demand and tight credit, and What is the cause of the decline in economic activity and thus the decline in state revenues (and the consequent increase in the deficit of public debt). Here is the hidden problem that some of us have been reporting from the beginning (see the book "Hay alternatives", in V. Navarro, J. Torres and A. Garzón in vnavarro.org). The scientific evidence that supports this diagnosis is overwhelming. The policies that the German banks and French (and Spanish) and their political spokesmen, including Merkel, Sarkozy and Rajoy, are imposing is economic suicide. Next, you should do yourself the question: why continue to promote it? One answer is that the economic dogmas are so irrational as religious dogmas. The thought is a neoliberal dogma impervious to data and facts. But it continues to reproduce itself because it serves certain interests, the interests of banking, with the complicity of political allies (the Minister of Economy of Spain, President of the ECB as well as large numbers of persons responsible to conduct and stimulate the austerity policies are close to the bank or bankers), who assume that the banking interests coincide with the general interests of the country, which is not true, as well as document the rigorous studies that show that the causes of the crisis are the behavior negative of the ECB and the Bank of Spain, and supervise banks in theory, but actually profiting at the expense of general interest. In fact, the solutions are easy to see. It consists in the application of economic stimulus policies, with a public intervention to stimulate the economy, job creation, along with the establishment of public banks and regulation of the banking sector, forcing it to recover its social function, the supply of credit . But this does not happen due to the enormous influence of banking and other components of financial capital in political and media institutions in Spain and Europe. 0 Jose Antonio Poncela • I mostly agree with you, José, except in the creation of public banks. Public banks in Spain (the cajas) are those on the brink of bankruptcy and the main responsibles of the credit crunch. Regulating especulation and risk taking and imposing a fee (an interest rate on deposits held at the European Central Bank) seems more apropiate to me 1 José Milton dos Santos Pestana Barbosa.'. • In France they do lack four or five laws to radically change the nature of the link between financial markets and the real economy. With a law on financial transactions, the other on the separation between the public and bank to bank business, the other on bank charges, other than point to a pension reform based on the tax to capital, and another on taxation for the pay much income tax as profits obetidos through work. With these laws would have a considerable change. There is nothing revolucionpariuo it, everything is authentic social democratic. " In the program goals listed as Francois Hollande deficit reduction to 3% of GDP in 2017 thanks to higher taxes, the separation of banks into two categories, the deposit and speculation, up 15% of banking benefits, elimination of the products financial toxic and creation of a tax on financial transactions. Regarding fiscal policy, Hollande put the barrier very high: 45% additional tax for those who have more than 150 000 euros in profit, and 75% for the upper house of one million euros, with restoration of the tax on large fortunes, ISF, and taxation of so-called 'tax exiles', ie citizens domiciled in Monaco, Switzerland and Lichtenstein to avoid paying taxes. 1 Lorrie Leaver • I wish I'd been involved in this one earlier to be honest. If it were down to the technocrats then Europe would be plain sailing but, alas it is not. The cultural variations within the EEC are, in my opinion, causing more divergence and greater disparities. The dictatorial role of say Germany is too great to stimulate the southern countries. How can they cope with further austerity? I wish Christine Lagarde could comment however, she seems to be busy on Google+ and has fled Linkedin for now:-) Do carry on regardless..... 1 Zahid Khalid • My question to all is when a tax payer goes bankrupt does any government come to his rescue? It is doubtful that the governments will be able to even pay the social security benefits to the their citizens in the near not distant future keeping in mind the economic mess they are in. The banks and big corporations in USA, Europe and rest of the world were bailed out by the governments. Did those banks and big corporations share the benefits of the bailout with their clients and customers? I think it will be more appropriate to keep the ground realities in mind instead of theoretical perceptions. What I think is wrong with theoreticians like Krugman, who declare that those who are warning of an inflationary spiral as a consequence of government bail outs are IDIOTS See here: http://read.bi/GZy7NC, is that the noble prize has gone to his head and brain has slipped to his knees. He is oblivious of the emergence of "non-state enterprises." Do I have to define a non-state enterprise for him? The non-state entrepreneurs take their money where the return is higher! It does not require a Nobel prize to understand that. The problem of USA is not that of liquidity!!! The problem is Capital Flight and consequent unemployment. No matter how much money you inject in big banks and big corporations capital flight will not stop and rising unemployment percentage will not be contained. Why the big corporations are showing signs of unimpressive recovery and growth and from where does this recovery and growth come? This growth and recovery is visibly a blessing of growth in Emerging Markets and not in USA and Europe!!! Secondly, short term signs of recovery in stocks do not indicate long-term recovery in any way. No sensible investor will buy short term recovery. He will stay on the sideline and take his money to a country or a region where the return is higher and economy is resiliently stable. 0 Zahid Khalid • What is the way out? The way out is to create a COMPETITIVE pro-investment environment based on globally competitive business vision. Only those banks and corporations will qualify for bailout that invest in their own countries, create jobs in their own countries and have the ability to outperform emerging markets. When an outstanding businessman like Steve Jobs takes thousands of jobs to China only because he was not given certain concessions then why the others will not follow him too? The question is that after his meeting with Obama why was President with all his executive powers failed to oblige Steve Jobs? Was his demand unjustified? Was he asking for something that was beyond Presidential authority and regulatory or fiscal limits? The answer is China's pro-investment environment built on that country's far more stronger elements of national power than those of America like market size, economy of scale and export potential to mention just a few! The challenges that USA is facing today are not new. It has happened earlier when Japan was giving much tougher time to USA and Europe than China is giving today. "Japan's massive trade surplus and FDI ratio of one to ten to twenty in favor of Japan," according to a book Strategy and Performance of Foreign Companies in Japan by Sikander Khan and Hideki Yoshihara, "had become the source of a trade war and fueled a growing call for protectionism from major trading partners of Japan." What did USA do in a situation like that? It commissioned a "A Survey on Comparative Competitiveness," re-configured its priorities and options and consequently where is that Japanese Edge of 80s today? So the magic words are not capital injection through printed money and bailout but "COMPETITIVENESS" built on "A SENSE OF CORPORATE PATRIOTISM." It is not corporate patriotism to take the bailout money from USA and invest it in China! 0 Ronaldo Carneiro • @Poncela - you´re right - real markets are different of our dreams, but think about: What would be happened if government stayed out of energy markets? or in other words: monopoly / oligopoly is an economy distortion in private or public sector. What´s the government responsibility in all carbohidrate dependency as a source of energy? Too much money in hands of politicians and bureaucrats and scarce food in mouth of our children. Too much money according rulers human will instead market forces. I Learned with Mises and Hayek that nothing beats the power of the spontaneous organization of the market price mechanisms. Vast amounts of resources to be allocated by acts of human will stimulates unscrupulous politicians to search power at any cost, "not disdaining, in certain cases, to establish an alliance with cheating, fraud and corruption", in the words of Vilfredo Pareto. Michelle - have you receive my academic texts? 0 Zahid Khalid • "The prices of some commodities," Krugman maintains, "especially oil and gold, has soared, but overall inflation has remained muted. (Not non-existent, by any means. But certainly not runaway hyper-inflation.)" He forgets that "Oil Price Related Inflation" is the "Mother of across the board Inflation." Nothing moves without transport and oil moves the transport. Consider the following: European Central Bank (ECB) announced Thursday that it has underestimated oil prices and inflation in the last 10 years – a fact which probably led to wrong decisions on monetary policy of the bank. http://www.ashiinvestments.com/2012-03-22/ecb-underestimated-oil-prices-inflation-10-years/ A very interesting report "Global Economic Impact of High Oil Prices" http://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=r0dEek2upu&n=291964.PDFby HSBC Global Research states, "For net oil consuming nations, higher oil prices have an effect similar to a rise in indirect taxes. Seen this way, an easy way to smooth over the effects of higher oil prices is either to offer an offsetting tax cut or, alternatively, to subsidize the price of oil and other energy products (in reality subsidies are simply negative taxes). By doing so, inflationary pressures can be MASKED and real incomes can, FOR A WHILE at least be preserved." So, what Krugman suggests is a temporary solution and not a permanent way out! 1 Zahid Khalid • @ Dear Mr. Ronaldo Carneiro Does the government really have the money? It does not. The money you are talking about is printed by Federal Reserve. U. S. government's known debt has reached to its nose. I hope you have access to the research papers of "genuine research scholars" who have declared USA as economically and financially INSOLVENT!!! Do you really expect such an indebted government to feed the hungry mouths with artificially created money. The money created by artificial means does not go to poor people, it goes to undeserving banks and big corporations as has evidently happened in the near past. What is needed is A GENUINE ECONOMIC RECOVERY VISION for global competitiveness to survive. It is no time to print money for enriching the already rich and making the poor, poorer. 1 Jose Antonio Poncela • Most energy markets are natural monopolies and that deserves public regulation. Also, there are strong externalities associated with the functioning of energy markets starting with pollution that deserve regulation. I just do not believe that politicians are evil and the CEOs and presidents of big corporations angels (since market forces are not millions of independent and perfectly informed producers but, in most cases, a few big corporations). Take a look at the financial sector. Along history it was clear that risk taking by banks should be regulated and insured (in the US by the Fed insurance of bank deposits). 25 years ago we dismantled this regulations and the result has been...We all know how this story ends, right? What we should do is abstract ourselves from our believes about this group of people or this other one and start managing the economy as (advanced) economic theory advices us to do. Leave to the market what belong to the market and to government what belongs to the government and follow Keynes. Lorrie Leaver • Good morning Jose. I am flitting between G+ and facebook this morning and, have some tweeting to do. BTW Can you please send me the emails you had as I'm discussing them with the Met today? I'm enjoying this discussion and will join in again later. 0 Ronaldo Carneiro • Dear Mr. Zahid Khalid - that´s not my proposal - if you are interested seriously in discussing issue I´ll be glad to forward you some of my academic texts, as already send to Michelle by request. (I need your mail). But don´t lose your time, according Mr Jose Milton advise - he is trying to find solution discussing financial flows, it´s better Mr Jose stay there - banking system is not the solution - he will die thinking that people eat currency or paper. My focus is over human being. 0 José Milton dos Santos Pestana Barbosa.'. • In fact, the solutions are easy to see. It consists in the application of economic stimulus policies, with a public intervention to stimulate the economy, job creation, along with the establishment of public banks and regulation of the banking sector, forcing it to recover its social function, the supply of credit. 0 Ronaldo Carneiro • The lack of equal opportunities has led some governments worldwide to take from the strong to give to the weak, impoverishing the rich to enrich the poor – this robin-hoodian philanthropic view in fact destroys two of the most powerful driving forces of man: initiative and dignity. Whatever the concept that one may have of democracy, the fate of citizens cannot depend on the virtue of their rulers. The quest for world peace is inexorably determined by the progressive reduction of resources in the hands of Governments, to take them to the private provision of nutrition, health and education for all. It is a great inconsistency to imagine that manufacturing TV sets is an economic process and that providing health is a social process. Both processes are socio-economic. When in charge of providing health, the government will take resources from the television factory, by levying taxes on the workers salary and the entrepreneurs profit, since it does not generate its own resources. The world witnesses nowadays, between perplexed and impotent, the supremacy and domination of the bureaucratic class, for in their practical evolution the capitalist and communist systems converge inevitably to a totalitarian regime. That is to say, the inequality of opportunities under the rules of human coexistence is generating the most terrible process of domination and human bondage: the dictatorship of bureaucracy. Ronaldo Carneiro • If development were left in private hands, we would have several energy sources being developed simultaneously, using the sun, the wind, hydrogen, alcohol, etc., all competing among themselves for a lower cost and reducing the vulnerability of most societies It is even understandable when politicians adopt issuance of currency without economic growth, ignoring the economical consequences of their decisions. But any technocrat who lends credibility to this solution is a charlatan more interested in keeping his post than in managing a sound financial system. Job-generation is not a task for the State, which produces only lesser jobs. It is private initiative that creates productive employment Government is an institution that invariably spends more than it collects, either because of the high social demand in societies with concentrated income, or because of a perverse desire to feed the military might in rich societies Capitalism and socialism are two dated theories that did not work in the history of mankind. They can be compared to a boat with two oars: one is the social, the other the economic dimension. Directing this boat is the political dimension. Capitalism concentrates on the economic oar, whereas socialism emphasizes the social oar. That is why the boat keeps turning around itself, with evident damage to the political dimension. These two systems of human coexistence are circular theories: no matter what the starting point, their dynamic will always bring you back to where you started. It is useless to change the oarsman or to replace the ruler, because the mechanism remains the same. Without any unjustified nostalgia, I want to emphasize my belief in the values defended by outstanding thinkers: Adam Smith, Karl Marx, Joan Robinson and Von Mises, according to whom an independent, active and productive human being writes his own history. To better understanding forward me your mail and I´ll send, for reflections, some of my academic texts. I´ll be out of office from may 2 to 10. 0 Jose Antonio Poncela • If development would be left in private hands we would have just one single source of energy, the cheapest one which happens to be, the one that pollutes the most. People don't compete just for the sake of the competition, they compete to earn profits and, if it were not for taxes and other forms of public intervention, renewable sources of energy would not have a chance since energy dependency and pollution free are different things from profits. Regarding the oarsmen parable, politicians and technocrats usually try what they think is in the best interest of society. I know they are not the most popular guys in town right now but I find it hard to believe in miraculous solutions 0 Peter Temple • Hmmm, I get the sense that we've strayed back into the realms of political discourse and away from economics. If the private sector was in charge of the supply of energy, economics tells us that, through competition, economic profits would be zero. It does not hold that we would have only one source of energy. David Ricardo long ago proved that each country would specialise and exploit their competitive advantages. So why would a country with no coal develop a power industry run on coal? Surely, they would develop a locally efficient power supply. We might see a proliferation of energy generation technologies specific to the resources available to each country. However, if they were to look across the way and see a country rich in coal making cheap power, and they had a government to appeal to, they might ask for the public sector to fund the building of the first coal fired power plants, and perhaps to import the coal (or at least provide a subsidy), and perhaps to run the power plants or to subsidise companies that did. Then the world might only use the one source of energy, paid for by taxation. The arguement you lot are having is political not economic. 1 Lorrie Leaver • You have my agreement on that one Peter. We need to hear some viable answers not technocrat theories..... 0 Ronaldo Carneiro • Mr Poncela - let me underline your comment - "people don´t compete just for the sake of the competition, they compete to earn profits" - I absolutely agree, but, and about in a new social pact where health become a private companie´s responsibility? They already pay the health bill through tax system!! Link health to profit, or in other words - profit will depend in the level of communities health? We´re close to my proposal. Mr. Lorrie - there is no solution discussing financial flows - that´s the reason keynesians followers are trying using public tax to open a hole in earth in day shift and close it in night shift to create jobs!!! Human being needs must be the focus - equal opportunities for all - nutrition, health and education No productive job was created. Results are: unemployment and inflation Mr Peter - political and economics discourse must be discussed togheter - see above my concept: boat and oars Lorrie Leaver • Mr Lorrie is Ms Lorrie!! 0 Peter Temple • I must respectfully disagree. I think the most significant hurdle in developing a more comprehensive economic understanding is the constant interplay with political ideology. If economists took a genuinely scientific view and dispassionately enquired into phenomena which occur in reality, the dismal science might not be so dismal. There have been many brilliant mathematicians who would have us believe that they were economists but were really looking for ways to declare the supremacy of one particular political philosophy over the others. Economics ought to seek an active separation from political matters. I liken the current situation in the field of economics to the church's involvement in the study of cosmology. Everyone claims to want to know the truth of the matter, thinking that the findings will support their beliefs. But when they don't like the findings, they attempt to discredit both the findings and the scientist. This is an intolerable situation for any genuine field of enquiry. If there is one way for people to organise their productive efforts which will see improvement in everyone's life, so that we can all have what we want, whatever that may be, then lets have it. Why argue about socialist vs capitalist, left vs right, liberal vs conservative? These are social and political constructs, nominal values which, as we all know, have no bearing on real values. 1 Peter Temple • Ha, Lorrie, I knew you'd like that! You really need to upload a picture. Lorrie Leaver • If I knew how to upload a ruddy picture you would have one for every day of the week LOL!! Help is coming and a picture is forthcoming:-)) Cheers Peter. BTW Jose can't wait as he is on my facebook:-) José Milton dos Santos Pestana Barbosa.'. • The Census publishes data on infrastructure spend in the US. The Highway system maintenance/expansion is funded by the Highway Trust Fund, which is gasoline tax funded. By no stretch of the imagination has infrastructure spending kept up with wear and tear. The American Society of Civil Engineers estimates it would take $2.4 trillion to bring US infrastructure back to a state of good repair. To repair the highway bridges alone it would cost $160 billion according to Rutgers University engineers. The Highway Trust Fund is insolvent, the $30 billion allocated this year was to maintain solvency. There are $8 billion accumulated in the Harbor Maintenance Tax fund. All unspent by Bush or Obama. The US had $800 billion to save Wall Street from their brilliant investment/trading activities and only a few billion dollars for the TIGER fund. In short, by no stretch of the imagination has a true Keynesian policy been followed, I mean that in the sense of what I understood from having read the General Theory about 25 years ago. As far as I can tell, we are still in the throes of a depression. The Fed's errors, particularly letting Lehman declare insolvency, but also the result of years of not supervising banks (not intervening in their actions but making sure they were not doing stupid things). In 2006 there was a WSJ article about Wall Street banks having a backlog of 6 months of unsettled credit default swap trades and that some had sold CDSs on underlying assets that did not exist. This is very similar to the 1920s. Rogoff's book provides excellent insight that not even Keynes had. Please do not interpret any of these comments as political. My job is to forecast economic activity and trade. The models I used include reaction functions by policymakers. That is the extent of my interest in politics.From a colleague of mine, Kemmisies. 0 Ronaldo Carneiro • Sorry Ms Lorrie 1 Eric Thomson • I don't know why no one ever mentions the work of the Nobel Laureates Mundell and Flemming. Basically, the model posits that under a fixed exchange rate, government fiscal policy can be used to manage the economy. But, under a floating exchange rate - at least in the simplest version of the Mundell-Fleming model - government spending has no effect on the economy. European austerity is sure to prove that Mundell and Flemming didn't win the Nobel prize for nothing. 0 Sudhanshu Saxena • Very interesting discussion. I have followed Krugman for years and read text of Sir John Maynard Keynes. I too believe in free market theory, but believe there is always a role for the govt. I see the role of govt in regulation as well as market intervention: 1. In absence of the govt, the market will be ruled by the free agents of the society for whom the sole objective will be to optimize their utility function (in other words be selfish). The financial crisis was an example of that. Just imagine if the govt would not have intervened to stop the falling financial industry. 2. It is fact now that govt intervention is useful in flattening the cycles. Without this the recessions would actually become depressions and booms would be extraordinary. The rich would continue to become richer and the poor would continue to become poorer. The last point I want make is on the effect of govt intervention. Ofcourse, if the intentions of the people are wrong (corrupt), no good can come from anything. In theory, if the govt spends money on productive activities in the economy, the economy will grow. The markets have always acted positively to govt intervention. 1 Jose Antonio Poncela • @Eric That applies to the case of an small and open economy, which I don't think is the case of Europe or the USA. Moreover, a coordinated fiscal policy does have effects in the Mundell-Fleming environment with floating exchange rates even in the case of an small open economy. In this case, of a coordinated contractionary fiscal policy, the fall in GDP is even greater than in the case of a policy in one single country. That is what is happening in Europe and why austerity measures have failed to restore growth and even to restore budget equilibrium. 2 Lorrie Leaver • The kettle is on Jose:-) 0 José Milton dos Santos Pestana Barbosa.'. • Just a quick picture. On the right, it’s an item of faith that the crisis in Europe represents a failure of the welfare state. So what is the correlation between the size of government and recent economic performance? http://krugman.blogs.nytimes.com/2012/05/03/big-government-and-the-crisis/?smid=tw-NytimesKrugman&seid=auto None at all, as far as I can see. 0 Peter Temple • I'll stand to be corrected but isn't it a bit dishonest to plot the change in GDP over the period 2007 - 2012 against government spending as a percentage of GDP in 2007 alone? Is Krugman suggesting that government spending in 2007 took 5 years to filter through the economy? Wouldn't it be more accurate to compare the two variables over the same period? 0 Sudhanshu Saxena • Hi, My understanding is that Fiscal policy compared to Monetary policy takes more time to show its effect. Depending on the type of govt investment it could include the tender process, contract signing, construction, etc. I would think taking a two-three year period after the official announcement would be appropriate. Agree that 5 yr may be too long 0 Jose Antonio Poncela • Most estimates show the biggest effects of fiscal policy around 18 months after the decisión is taken and those of monetary policy around 24. This doesn't mean that these policies don't have any effect till motnhs 18 or 24. usually, fiscal policy is faster than monetary policy 0 Troy Hageman • Jose Milton, you really can't see any correlation between the amount of GDP consumed by the non productive sector to the economic performance of a country? Jose Antonio, if this is an accurate time frame then we have seen most of the net gain from the U.S. stimulus money as well as the federal reserves efforts. This means we have spent trillions to, at best stabiles our economy at a very marginal level teetering on the narrow edge between growth and recession, at worst prop it up artificially and unsustainably. I want my money back. 0 Jose Antonio Poncela • @Troy, but what would have happened in any other case? The United States had a speculative bubble in the real state bigger than that of Ireland or Spain, the worst part of the financial crisis was in the United States, where would the country be without a stimulus? In a worst shape than Spain or Ireland, with unemployment well above 20%? Would you prefer that? Don't you prefer to keep your job and your wage even if your public debt per citizen has increased? 0 José Milton dos Santos Pestana Barbosa.'. • Before the Great Recession, I would sometimes give public lectures in which I would talk about rising inequality, making the point that the concentration of income at the top had reached levels not seen since 1929. Often, someone in the audience would ask whether this meant that another depression was imminent. Well, whaddya know? Did the rise of the 1 percent (or, better yet, the 0.01 percent) cause the Lesser Depression we’re now living through? It probably contributed. But the more important point is that inequality is a major reason the economy is still so depressed and unemployment so high. For we have responded to crisis with a mix of paralysis and confusion — both of which have a lot to do with the distorting effects of great wealth on our society. Put it this way: If something like the financial crisis of 2008 had occurred in, say, 1971 — the year Richard Nixon declared that “I am now a Keynesian in economic policy” — Washington would probably have responded fairly effectively. There would have been a broad bipartisan consensus in favor of strong action, and there would also have been wide agreement about what kind of action was needed. But that was then. Today, Washington is marked by a combination of bitter partisanship and intellectual confusion — and both are, I would argue, largely the result of extreme income inequality. 0 José Milton dos Santos Pestana Barbosa.'. • On partisanship: The Congressional scholars Thomas Mann and Norman Ornstein have been making waves with a new book acknowledging a truth that, until now, was unmentionable in polite circles. They say our political dysfunction is largely because of the transformation of the Republican Party into an extremist force that is “dismissive of the legitimacy of its political opposition.” You can’t get cooperation to serve the national interest when one side of the divide sees no distinction between the national interest and its own partisan triumph. So how did that happen? For the past century, political polarization has closely tracked income inequality, and there’s every reason to believe that the relationship is causal. Specifically, money buys power, and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties, in the process destroying any prospect for cooperation. And the takeover of half our political spectrum by the 0.01 percent is, I’d argue, also responsible for the degradation of our economic discourse, which has made any sensible discussion of what we should be doing impossible. Disputes in economics used to be bounded by a shared understanding of the evidence, creating a broad range of agreement about economic policy. To take the most prominent example, Milton Friedman may have opposed fiscal activism, but he very much supported monetary activism to fight deep economic slumps, to an extent that would have put him well to the left of center in many current debates. Now, however, the Republican Party is dominated by doctrines formerly on the political fringe. Friedman called for monetary flexibility; today, much of the G.O.P. is fanatically devoted to the gold standard. N. Gregory Mankiw of Harvard University, a Romney economic adviser, once dismissed those claiming that tax cuts pay for themselves as “charlatans and cranks”; today, that notion is very close to being official Republican doctrine. As it happens, these doctrines have overwhelmingly failed in practice. For example, conservative goldbugs have been predicting vast inflation and soaring interest rates for three years, and have been wrong every step of the way. But this failure has done nothing to dent their influence on a party that, as Mr. Mann and Mr. Ornstein note, is “unpersuaded by conventional understanding of facts, evidence, and science.” And why is the G.O.P. so devoted to these doctrines regardless of facts and evidence? It surely has a lot to do with the fact that billionaires have always loved the doctrines in question, which offer a rationale for policies that serve their interests. Indeed, support from billionaires has always been the main thing keeping those charlatans and cranks in business. And now the same people effectively own a whole political party. Which brings us to the question of what it will take to end this depression we’re in. Many pundits assert that the U.S. economy has big structural problems that will prevent any quick recovery. All the evidence, however, points to a simple lack of demand, which could and should be cured very quickly through a combination of fiscal and monetary stimulus. No, the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority. And the key to economic recovery lies in finding a way to get past that minority’s malign influence. Paul Krugman 0 José Milton dos Santos Pestana Barbosa.'. • For several neighbors of France the victory of socialism is already provided. And it is also desired. Why? The fact is that the Socialist candidate is seen as the antidote to Angela Merkel. The hope is that he loosen the straitjacket with which Merkel and Sarkozy held the exhausted body of Europe, with the risk of choking her. Greece is the first in line of supporters of Hollande. To Ehtnos According to the newspaper, the first cracks have already appeared in the wall of the German budget rhetoric. Hollande was enough to present an economic program to become the leader of the "Southern Europe". The newspaper El Pais, Madrid, Jose Ignacio says he is tired of seeing France from Sarkozy to bow to the diktats Germans. "It's time to give a 'just' to Berlin." In Britain, Michael White, The Guardian, follows the same line. "Hollande's victory will not be a revolution. If well managed, it can be a step in the right direction for us." We could extend this anthology of European supporters of the Socialist candidate. Of course the most include newspapers or politicians on the left. But what is interesting is the fact that the European left to take advantage of Hollande. The novelty is that the left is unanimous in the belief that socialism could put an end to austerity programs that make Europe weaken rapidly. No doubt the applicant is granted a great power. The fact is that the remedy prescribed by Merkel and Sarkozy is in the process of "killing the patient" (the Greeks, Spaniards and others) and people cling to Hollande for the Old Continent change score. And to provide the means of "growth" instead of orchestrating a "deflation". This desire for growth is not new. Several months ago a small music attempts to replace the German Symphony. And what does this song? Rather than devote himself exclusively to the reduction of debt and deficits, Europe should seek the "growth" that alone will feed the tax revenue and eliminate debts. Those who are against Merkel have a simple argument. Despite plans of rigor applied to heroism by the Europeans, the situation does not improve but worsened. Europe, Greece, Italy and even Ireland or the Netherlands, in short, everywhere, austerity has had dire effects. There are about two years, several Nobel laureates, leaders of the IMF, the Financial Times editorial, respected experts such as Joseph Stiglitz, Paul Krugman and Dominique Strauss-Kahn have been making predictions. In the New York Times columnist Paul Krugman writes: "In March, EU leaders signed a pact imposing austerity budget. Any economics student could predict the outcome, it will only aggravate the recession." Hollande announced that if elected, will require a renegotiation of that covenant and want to complete it by adding a component: growth. 1 José Milton dos Santos Pestana Barbosa.'. • 36% of Americans of working age is unemployed, the highest rate since 1981. Unlocking economic statistics: 169,000 fewer people working in the U.S.. But the unemployment rate fell because 342,000 gave up looking for employment. 0 José Milton dos Santos Pestana Barbosa.'. • When will U.S. house prices recover? Likely never. But that’s no reason not to buy. The latest S&P/Case-Shiller numbers, reported last week, show that prices in 20 major markets declined 3.5% over the year through February. They’re now back to 2002 levels. If we subtract for inflation, they’re back to 1998 levels. But consider: After subtracting for inflation, prices are also back to 1986 levels. And 1955 levels. And 1895 levels. That’s because the natural rate of price appreciation for houses is zero after inflation. Prices will eventually stop falling. They’ll resume rising. But over the long term, they’re unlikely to resume rising faster than inflation. That’s why prospective buyers should stop focusing on the vague hope that house prices will jump from here and focus instead on the functional value houses provide for the money. In most markets, they provide enough of that to make buying a good deal. To see why house prices and inflation are linked, consider that inflation is a general rise in the price of consumable goods and services. We measure it as a nation just as you might think: pollsters collect prices on thousands of items and statisticians turn those prices into an index, called the Consumer Price Index. The inflation rate over the year through March was 2.6%. Behind that number is a lot of variation; dairy products got 6.3% more expensive, while utility gas service got 9.1% cheaper. That’s because inflation isn’t the only thing that drives individual prices. Short-term supply and demand factors drive them, too. For example, the U.S. has a severe glut of natural gas at the moment. But prices have a way of self-correcting over time. Power companies have already sharply increased their electricity production from natural gas while pulling back on coal. Few things escape the gravitational pull of the inflation rate forever. Even health care and college tuition are showing signs of slowing price growth. U.S. housing had spectacular booms and busts in the 1920s and mid-2000s, but smoothing out the swings and adjusting for inflation, prices have gone nowhere for more than a century. Houses are ordinary consumable goods: wood, stone and metal bound pieced together through labor. There’s no reason to believe they should enjoy a special rate of return distinct from those for, say, apples and shoes. My best guess for the rate of price increase of all three is 2.2% a year over the next 10 years—equal to the rate of inflation. To get that number, I looked at yields on Treasury Inflation-Protected Securities. Those are a special kind of bond that adjusts in value each year for the rate of inflation. The difference between the yields on 10-year TIPS and those on regular 10-year Treasurys shows what investors expect inflation to look like over the next decade.http://articles.marketwatch.com/2012-05-01/finance/31511038_1_inflation-rate-house-prices-rate-of-price-appreciation 1 Zelda Harrison • @Jose Milton: many thanks for the insightful comments and reminders. Cd you share more resources that inform your opinion on the USA tuition/higher education pricing. Anecdotally, I believe that pricing for higher education in the US will still creep upward because of the pressure on the labour mkt (i.e., people going back to re-tool, hide out until the mkt improves) as well as an unprecedented demand for American education (largely by Asian students). Any comments on the Higher Education loan bubble that the mass media has been speculating about lately? See any bailouts in our future? José Milton dos Santos Pestana Barbosa.'. • Zel, let me make a little research and if I find somethig I will post. 1 José Milton dos Santos Pestana Barbosa.'. • Eurozone service PMIs confirm that the region's recession is becoming deeper. What is the ECB waitin for? Nouriel Roubini says that ecb should buy treasuries. 0 Adriano Carnauba • I can see much light within Bernardo quote. Our actual political systems can´t deal properly with our governance issues ... We need interorganizacional governance trough international systems wich can provide trust into our economical systems. Nowadays, nondemocratic states are taking advantage of our lack of direction...financial elite don´t get upset about dealling with the evil, so ... social business look like a good path, although we must have to best understand this concept. 0 Troy Hageman • Mr. Milton where are you getting your unemployment sat's for the U.S.? The government reported unemployment rate is somewhere between 8 and 9 percent and the best guessers put the actual rate at somewhere between 11 and 12. Did you group everyone from age 8 to 80 who don't have a job weather they want one or not and call it the unemployment rate. The so called housing bubble was caused by prices being inflated above there actual value, there were a whole lot of reasons for this but housing like many hard commodities can't appreciate over the natural rate of inflation without there being an inevitable adjustment. Prices have been stable at the level they are now for close to two years in most area's. This has caused a rise in consumer confidence along and with very low interest rates homes are selling faster and inventory is declining. It my area there has been little new construction over the last the few years and at present sales rates we will run very low on inventory before the new builds are ready. As construction heats up to replace the increasing demand employment numbers will be better more money will be naturally produced in the economy. This is the cycle of economy, artificial stimulus doesn't create economy, it creates artificial markets which aren't sustainable because they didn't occur naturally. Income inequity isn't a real problem in any country that doesn't have an actual poverty problem. The average median income in the U.S. is around $47K this is plenty to live comfortably and consume enough goods to make the economy flow. If this median income saw and exponential increase, say %20 that would make the average income about 56k. This isn't enough to change the lives of the median earners or the economy. Maybe someone got a new car or a slightly larger house. Perhaps they got to switch to a better brand of scotch all good things. The %20 increase had to come from somewhere and to create equity you took it from the high earners. If you take %20 from my income it doesn't mean I buy cheaper scotch it means I don't have the capital to bring forward a new project, it means I don't hire contractors, it means I don't develop property or create housing. The Robin Hood philosophy in economics isn't very well thought out. 0 José Milton dos Santos Pestana Barbosa.'. • 46 million under the poverty line in USA, millions in famine risk. Read, research and find the truth! Troy Hageman • .What it means to be poor in America is what it means to be comfortable in the rest of the world. The average poor person in the United Sates has a car, a home, A/C, cable t.v and a cell phone. Of the people below the poverty line only %4 experienced even temporary homelessness last year and only %15 experienced any kind of food shortage or hunger. Don't confuse the "poverty line" with abject poverty. 0 Peter Temple • Are you saying that there can be no real growth in the price of housing in the long run? Any kind of housing? Anywhere? I'd argue that the reason we have a net zero growth in housing prices is because of the boom and bust nature of the housing market brought about by regular ill-considered intervention by the government. Where there has been real growth in the market, supply increases at a rate which is unsustainable until such time as we get a bust and down we go. If there is to be an intervention in the US housing market it should be to keep supply capped at a rate which protects the value of housing stock so that the cycle is flattened out. This is not going to happen because people are constantly crying out for "affordable housing". A more Keynesian intervention would be to provide a stock of publlic housing to meet the needs of the homeless instead of providing incentives for private suppliers to build houses for people who can't afford to pay for them in the long run. 1 Troy Hageman • Individual properties and sections of a market can increase sustainably over the natural inflation rate but the housing market on a whole can't and doesn't. The market can control supply and demand fine on it own, yes there will be ups and downs. Its not realistic to maintain any kind of free market with the government putting restriction on how many houses can be built, but the reality is they already do. Individual municipalities put restrictions on growth through different governmental zoning tools every day. I, in some cases, agree with this in order to build sustainable communities, but this never something that should be legislated on a federal level. Affordable house in another and very interesting problem. This I also feel should be handled on a state or even municipal level. In a county as broad as the U.S. having the federal government impose one size fits all solutions doesn't allow the solutions to be tailored to the problem. 1 José Milton dos Santos Pestana Barbosa.'. • A more Keynesian intervention would be to provide a stock of publlic housing to meet the needs of the homeless instead of providing incentives for private suppliers to build houses for people who can't afford to pay for them in the long run. As you said and I agree 100% Peter. 1 Troy Hageman • Jose, I find it very tell telling you spout statistics but when asked to back them up you have nothing. Its funny how people who make no money and create no economy always think the world should be brought forward for the benefit of all on the shoulders of the produces of economy when in realty that is exactly what happens every day. The only difference in vision is that I think the creators are due their reward. You think everyone is do an equal reward regardless of effort or success. I like my world better. 1 Adriano Carnauba • Dear Troy. I run my own business and pay 30% of taxes. I have a home, a car, good schools for my kids, no debts, but I do not expect to be rich, as I don´t need anything else. I just expect a better place to live in, with less poverty, less violence, and more cooperation. I really do not expect any "reward" as I am, and suspect, you and Jose both are either, in good situation. US and EU must expend in direct investments, and stop bayiling out banks, because bankers just want an extra reward, and they will not put that money on investment. They will put that money on commodities, bringing inflation to poor people. Krugman is not, obviously, a silly guy. 2 Ronald Raymond • Its Official: Keynes admires Schumpeter! Proof Pareto: From the 70...http://cafehayek.com/2011/06/schumpeter-on-keynesians.html Proof Cournot: From the 30: http://www.downsizinggovernment.org/keynesian-policies-have-failed Proof Nash: http://www.creativeclass.com/_v3/creative_class/category/work/by-the-numbers/ Theory Schumpeter: http://www.nsf.gov/sbe/sbe_2020/submission_detail.cfm?upld_id=210 and : Says Mr. Langlois...Let playaz play G! http://www.rocrastination.com/thoughts/2011/3/20/keynesian-schumpeterianism.html 0 Zelda Harrison • The notion that there are people who "make no money" and "create no economy" (aka "poor people") is ludicrous. While our services are indispensable and shd be properly compensated, I'm not convinced that economic middle-men (brokers, traders) are the sina qua non wealth-creators either. Yes, we've done an extremely bad job of tracking the spending/consumption habits of the poor, and poor people are more susceptible to life hazards (bad health, limited economic choices, poor housing), many of us would like to avoid. But to discount the economies built off of the poor (Wal-Mart, Chinese/Japanese economies, the US government, yes even Drugs & Underground Economies) is IMHO very short-sighted. I just dont think the old paradigm of "winners/losers" and trying to get into "the winners club" is meaningful or sustainable. 1 Troy Hageman • Of course there are people who make no money and create no economy. I deal in housing, among other thing my company manages residential housing. There is a single mother of three who stays in a property we manage. She has never worked, she receives state vouchers for housing, food stamps, and SS and wouldn't have it any other way. I have another tenant that has been receiving housing voucher for 22 years, she keeps a part time job but has said she can't pursue better employment because they would cut off her subsidy. These are just to personal examples. This is not uncommon. We are becoming a country where the creators may soon be over run by the users. No one was discounting the contributions of the working poor, they are a irreplaceable cog in economy and obviously produce economy. They provide a service or make a product in exchange for a wage earned this is how economy is created. Troy Hageman • Adriano, I couldn't agree more about the banks, I give them enough money have to do business with them. Quite bailing them out and make them run their businesses responsibly. Where we part ways is with the direct government investment. The government should take the money they were going to invest and not collect it. Leave it in the hands of the private sector where investment should be handled. If the government puts into a sector and finds it not to be viable they lost my money by have no repercussions. Let me invest my own money because I have a lot more riding on it I will do a better job. Zelda Harrison • @Tony, even the so-called "users" are an integral part of the economy, whether we agree with their lifestyle or not. We can't dismiss them as being zero. The problem is that we've done a poor job of tracking their economic activity and developing systems to have them add more value to the economy. As for the "working poor", the dirty secret is that it's always been a moving target of "work" and "non-work" especially for single moms (I recommend Cold New World by William Finnegan, and Barbara Ehrenreich's Nickel and Dimed). I can't speak to these people you mentioned or their motivations, and I don't see any convincing proof of their weight in our economy either. But I would submit that your company makes a profit off of these "users". Could it be that in a consumer-driven economy, corporate welfare market, having "users" than "creators" is actually desirable and encouraged?! Troy Hageman • They are not an intagral part of the economy. How can using more then you produce be a bonus for anyone or anything. That there is profit made from the governmental subsidies handed out by private sector companies is a myth. This perceived profit is gross gain not net. The government collects far more in taxes from me then the small earrings I get from servicing the subsides. Just don't hand out the subsides and don't collect the money. Saves a lot of trouble and bureaucracy . Eric Thomson • @Jose I was thinking more for the small economies on the Euro periphery that are being made to undertake the most drastic austerity measures. Of course, many countries are undertaking austerity measures at once under a fixed-exchange rate swiftly transmits the effects of austerity through the region. 1 ZEESHAN HASHIM • can we leave people on the will of investor who are only crazy about their wealth and its maximization.? Peter Temple • Zelda, If Troy's company was making any money out of his "users", it doesn't come from them but from the taxes he, and every other business and individual pays, for making a profit or being gainfully employed. Keynes and even Paul Krugman recognise that the pathway to better outcomes for everyone in an economy is productivity improvements. Just how will these productivity improvements be made when people refuse to work for fear of having their public subsidy removed. Yes I know that the shift from unemployment to work does somethimes cost people money (i.e. that they end up with less money after tax than if they were on a welfare payment) but shouldn't the policy settings be different so that people want to be employed? Shouldn't government try to make it easier for people to transition into work so that the nation's prodductivity improves? What Troy is arguing isn't a terribly controversial point. Unproductive people are a drag on teh economy. It mightn't sound nice but that's how it is. 0 Zahid Khalid • @ Peter From where does the subsidy come? Does it come from FEDs or Obama's or Congressmen's pockets or from the peoples' taxes that they are paying through their noses. You will ask what about corporate taxes? Ask Warren Buffet, one of the riches few in the world, who, according to him, pays less tax than his secretary!!! Warren Buffet is an honest God fearing man. What about others? Come out of world of like of Krugmans who have been made towers of wisdom you must try to know by WHOM. The bottom line is LIVE WITHIN MEANS. Subsidies do not benefit the public. They go out of the pockets of the public in the form of taxes to big corporations. The only business that needs genuine support is Small and Medium Enterprises. They pay taxes, they create jobs and they keep their investments in their own countries. The big corporations have, I repeatedly say, become non-state corporations. They no longer belong to any country. The word patriotism has been deleted and erased from their dictionaries. SO YOU HAVE TO WAKE UP BEFORE IT IS TOO LATE. 1 Zelda Harrison • @Troy, Temple et al: I commented on what has been mostly a theoretical debate because it is false and condescending to declare welfare beneficiaries persona non grata. I would also assert that there isn't a difference between welfare recipients and the working poor. Of course a growth in transfer payments is doesnt spur economic growth and is undesirable. But I'm yet to hear data as to the real impact of hardcore welfare recipients on the (american?) economy. As I've said before we're doing a pretty bad job of tracking their activity in the underground economy as well. If we're going to throw out labels, perhaps we could share some data to go with it? Peter, there is a notion that this situation could change not only by "giving poor people jobs" --which wealthier countries probably won't do well this decade--but also by actually reducing the cost of being poor. It's expensive!! (and big, profitable business) These links gives some indication http://www.businessweek.com/magazine/content/07_21/b4035011.htmhttp://www.businesspundit.com/the-cost-of-being-poor/ Honestly though, Mr. Khalid has pointed out, the real elephant in the room is the welfare recipient many people in this discussion group seem reluctant to mention: the global corporation. It doesn't take much imagination (or data) to guess the impact government transfers and tax cuts to corporations is having on the economy. Apparently chickens are coming home to roost http://www.youtube.com/watch?v=nPqpEScCGB8 but the jury's still out as to beneficiaries... Yes, ideally, Welfare rolls shouldnt be growing, but let's not scapegoat poor people (and countries). ps: if anyone has links to data on the economics of poverty and government transfers, would you care to share? 0 Peter Temple • Zahid, I did say that welfare payments come from people's taxes. I'm a little concerned that you don't understand that large corporations actually pay billions of dollars in tax every year and receive relatively little of it back. So if your arguement is that the multi-national corporation has led us into a ruinous situation, the like of which we've never endured before, by paying less tax than they ought to and raping the public purse then I guess you'd just be completely wrong. Zelda, I think you've misconstrued what I was trying to say. The point I was trying to make was that recipients of transfer payments, as opposed to the working poor, don't contribute to the economy in a positive way. At best the money they receive is recycled back into the economy. This is contrary to that which everyone knows to be the way to overcome poverty. They are being compensated for being unproductive. In order to break the cycle of poverty and welfare dependence governments must provide incentives for the unemployed and under-employed to start working. This raises the national productivity rate and everyone is a winner. I was absolutely not trying to say that poor people are the problem. Poor people are a symptom of bad government policy. In any case, I feel we've strayed irretrievably off topic. 1 Zahid Khalid • @ Peter I clearly understand what you are trying to convey. You need to look into the working of the big corporations and the way they create unemployment, make money and evade taxes. I am watching them and interacting with most of them since the time of the "Invisible Corporate Empire." I suggest you to kindly visit johnpilger.com and watch: "The New Rulers of the World," "War by Other Means," and "Burp! Pepsi v Coke In The Ice Cold War." You will find a number of documentaries on democracy, military intelligence, media and arms and ammunition sale. Once you see a few of these documentaries then we will discuss the role of Big Corporations, Poverty and Government subsidies, their so-called austerity measures to fool the world with reference to thousands not hundreds of documents which I have in my personal library. Please keep in mind that I have not referred to dozens of credible documentaries and hundreds of documents that are categorized as "conspiracy theories" by mainstream media and the journalists on their pay role. The writers like Krugman do not stand near the authors of these conspiracy theories as far as their professional and academic credentials are concerned. Most of the theories that are discussed in mainstream media and taught in universities, according to Peter Drucker, are "DISGUSTINGLY" (added by me) outdated. Their concepts are wrong. Their logic is childish and their approach is dangerously destructive for the mankind. They have no sympathy for the poor people. They are working for something far beyond that. The Big Corporations, those you trying to defend are creating unemployment by exporting jobs to third world countries where the governments are corrupt, the labor can be easily exploited by paying them only that much which keeps only their bodies and souls together. On top of that, they are manufacturing sub-standard low-quality, even hazardous products which are sold at higher prices in Europe, USA and rest of the world. Also, look at the role of international donors and UN agencies what they are doing for the poor. Entire system and the institutions behind this system including mainstream media are playing hell with the world economy and lives of the poor people across the globe. 0 Troy Hageman • Zelda, you are the only one who keeps grouping the working poor with the non productive. I don't see how the difference is lost on you. People are, by and large, rewarded for their production those who produce more receive a larger reward, and in an actual free market would get to keep it. Large corporations pay the lions share of all the taxes and employ the lions share of all the people and, the bastards, they even make a profit after all that. We should defiantly find a way to legislate away profits. That way the government can decide who really deserves to get the money. (I hope sarcasm isn't lost on the international crowd) Peter Temple • Zahid, I am familiar with Pilger's work. I have been managing businesses since 1999 and have been engaged in some form of academic pursuit since 1996. I have never been taught a theory as presented by Peter Drucker. Perhaps my management studies have been lacking. The reason large corporations do what they do is so that they can make more money. Why? So that the management can be paid more, so that the board can be paid more, so that the shareholders can be paid more, so that everyone with an interest in that business gets more money...including the governments in the regions in which they operate. Why do corporations go to set up operations in low cost countries? So that they can generate more profits from every unit they sell. How do they sell more units? They keep the price down, because as we all know, the demand curve for normal goods is downward sloping (i.e. the cheaper they are, the more of them we want). Is this the corporations fault? Is the fact that governments in some of these unsavoury places abuse their power and expolit their own people the fault of corporations? No. Is it unethical to exploit people? Yes. Would we rather buy a product that was ethically produced for a few dollars more? No. Most people just don't care so long as the things they buy are cheap. We all want to buy cheap products. We all want to be paid more money. So we drive up the cost of labour here and then demand that corporations produce goods cheaply. We all don't care about the exploitation of people in far off countries because they are far off and we are not confronted with it, just give me that thing for a dollar and not a penny more. We, Zahid, you and I are to blame, not some shadowy evil corporation. Zahid Khalid • @ Peter Kindly check the archives of Forbes. You will find an article, "Management's New Paradigms" by Peter F. Drucker published in October 5, 1998 edition of Forbes as a cover story. I hope you and others will find it very interesting and enlightening too. The editor's intro says: In a fast changing world, what worked yesterday probably doesn't work today. One of the fathers of modern management theory here-in argues that much of what is now taught and believed about the management is either WRONG or seriously OUT OF DATE." Do you know what the problem is? The problem is that we do not want to change and reform the corporate system and business values. I can not give any business house the right to either exploit the workers or to fleece me in the name of so-called "HOLLOW-FICTITIOUS-DEVALUATION OF CURRENCY" popularly and wrongly propagated as GROWTH which to me is ILLUSIONARY like today's DEMOCRACY. I do not blame myself for that because in my own country since late 80s and now at a platformform like EIU Group I am fighting against it and I will continue doing so. I am not against globalization. I am also not against global corporations. I am also not against reasonably justified profit. I am also not against going to markets where labour is cheap, raw material is in abundance and marketing potential is great. I am against exploitation and cheating. I am against false economic perceptions. I am against those scholars and authors and journalists and analysts who can not see beyond there nose. THAT IS WHAT WORRIES AND IRRITATES ME! José Milton dos Santos Pestana Barbosa.'. • I strongly recommend you to watch THE CORPORATION; see the official home page - http://www.thecorporation.com/ Zahid Khalid • Thanks Jose. People are doing excellent work. Unfortunately these works do not find their right place in mainstream media. What is the reason? The reason is that the owners of mainstream media themselves have evidentally no values. See what is happening to Rupert Murdoch and the way he and his hand picked editors with whom he talks to every early morning have done and are now trying to find a reason for the wrongs they have done! What can we expect from this kind of mainstream media and the journalists / analysts (yes...there are definitely exceptions too and they may count themselves out) on their pay role. To me media is the main culprit behind this mess and it needs to be targeted first. Once the bad eggs and bad apples are cut to their size in media everything else will fall in place. José Milton dos Santos Pestana Barbosa.'. • Zahid, in Brazil happens exactly the same!!! Unfortunately! Peter Temple • Zahid, I am reasonably sure that the majority of corporations are looking for new ways of doing things most of the time owing to pressure to provide greater shareholder returns. In fact, it is established fact that most of what management students learn in Year 1 is obsolete by Year 4 of their studies. So I'm not sure what point you're trying to make. Managers constantly do things differently. I'm a little confused by what you're arguing with your next point. Are you saying that the real cost of things doesn't go up, only the nominal value does? If that's the case then inflation masquerading as growth is the exact reason economists report movements in real GDP alongside nominal GDP. None of which rebuts my earlier point that corporations respond to their markets and their market (i.e. us) want to be paid more for doing the same stuff (creating inflation) and want to buy the same stuff for less money (providing corporations with incentives to exploit low cost countries when they can find them. No one likes cheating and unethical behaviour, however lots of people like the low prices that they help bring to market. @Jose Milton I have read the book. What message would you like me to take from it? That all publicly listed companies are bad and we ought to revert to a system of guilds and subsistence farming? Peter Temple • What exactly would you do to the media? Zahid Khalid • @ Peter The expansion in the number of stake/shareholders minimizes the ROI to each of them. It is as simple as that. Consequently, to keep the stake/shareholders happy the corporations have to earn more profits either by fair or foul means. Majority of them are evidently using foul means. The prices of inputs, products, services and commodities are unrealistically and artificially increased by manipulation and speculation. No doubt the increase in the cost of "inputs" and prices of products / commodities have increased the profits of the companies too but across the board salaries and wages have not increased proportionately reducing both the purchasing power of the currencies across the globe and increasing the number of people below poverty line. If you make a comparative analysis of investment and return on investment minus unfair price increase through government patronized speculation and manipulation you will notice that real return on investment has alarmingly gone down resulting in downsizing, negative growth, unemployment and flight of capital and human resource outsourcing to countries with poor human right record and lawlessness. In this game of over-profiteering to keep the share/stakeholder/board members happy the ultimate victim is genuine economic growth. So what is the need of the time to address? The priority number one is to stop market manipulation and speculation and to control unjustified price hikes to contain inflation to make the living affordable for majority of the people. If the governments continue the policies of keeping a few happy at the cost of intentionally making majority unhappy than social exclusion and unrest will destroy anything that will come in its way. Zahid Khalid • @ Peter I am doing what I can and sometimes I make my point to media owners. They understand and some of them quietly do what they can. The others, like Rupert Murdoch are falling in their own trap. To me TIME IS THE BEST JUDGE and this judge does not spare anyone no matter how powerful and above law one is. Soon the people will start asking questions. They are already doing that at social platforms. These platforms like Linkedin, Facebook, Slideshare, Wordpress, twitter and others are becoming stronger and stronger with the passage of each minute. You can see what I have done, what I am doing and what is more to come soon at: zahidhkhalid.wordpress.com and http://www.slideshare.net/19540201 It is a small insignificant step - just a humble beginning. I am sure each passing moment and sincere effort will ultimately make it significant and add to its substance. The purpose is to make the world a happy place to live. Zahid Khalid • Though a little out of context but hopefully the participants of this discussion will like to read the following observation by Carl Bernstein from one of his articles captioned "The Idiot Culture." "It is now nearly a generation since the drama that began with the Watergate break-in and ended with the resignation of Richard Nixon, a full twenty years in which the American press has been engaged in a strange frenzy of self-congratulation and defensiveness about its performance in that affair and afterward. The self-congratulation is not justified; the defensiveness, alas, is. For increasingly the America rendered today in the American media is illusionary and delusionary—disfigured, unreal, disconnected from the true context of our lives. In covering actually existing American life, the media—weekly, daily, hourly—break new ground in getting it wrong. The coverage is distorted by celebrity and the worship of celebrity; by the reduction of news to gossip, which is the lowest form of news; by sensationalism, which is always a turning away from a society’s real condition; and by a political and social discourse that we—the press, the media, the politicians, and the people—are turning into a sewer." Ronaldo Carneiro • Finally back home. Congratulations on level of discussion: Back to basic: "A General Theory on Employment, Interest and Currency" (1936). This book was, undoubtedly, the most influential in the industrialized societies after World War II, in an Europe destroyed by war, where governments started to play a decisive role in the economy. Certainly, the success of FDR's New Deal in the 1930s spurred this English economist to advocate the presence of the State in the economy. Keynes' treatise was a response to the crisis that struck the economy of that time, dominated by the marginalist theory, that was unable to explain the great depression that had hit the Western world in the thirties of last century. According to Keynes, the State can play a very important role in preventing economic crises, by an increase in public spending that will prevent the rupture of aggregate demand, at a time of negative expectations among private agents. "We must therefore equip the State with effective instruments of economic policy, to regulate the interest rate in order to keep it below the " marginal efficiency of capital ", to increase consumption by expanding public spending and to expand investment through government loans that will absorb idle resources." It would be comical, were it not tragic, to imagine that the control of financial flows: currency, exchange and credit, could generate development. Zahid Khalid • I think most of the participants of this discussion have already read this report: "The Credit Overhang: Is A $46 Trillion Perfect Storm Brewing?" http://www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&asset ID =1245333370039 Now the question is not of either austerity or bailout! The question is how to get out of this mess? For that the triumvirate challenged entities governments, public and corporations will have to play their respective roles by re-prioritizing the items on their respective balance sheets. This mess can not be handled by any one of the three individually. The situation is tricky in the sense that if any one of three is economically hurt the other two will automatically feel the pain with equal severity. What is need of the hour? A focus on "Cardia" (Heart) AND "Dynamis" (The WILL to FIGHT). In this economic war, the government is the King, the corporations are the Commanders and Public is the Army. Naturally, the King has to prepare a Strategic Economic War Plan keeping in view the "Heart" (Depths of their respective pockets) and "The Will to Fight" (The Capacity (Will) to Share Responsibility Honestly). What I see missing is Cardia Dynamis across the globe. Each of the three players in the economic war are insisting to remain on the sideline, protected and unhurt. Is it possible? So instead of debating on "Austerity," "Bailout," "Growth," "Inflation" and "Unemployment" it will be better to read IMF's Managing Director Christine Lagarde Calls for "Anchoring Stability to Sustain Higher and Better Growth" http://www.imf.org/external/np/sec/pr/2012/pr12160.htm Troy Hageman • The answerer is responsibility, we have already printed as much and perhaps more currency then is responsible since its not being supported by growth. So call it austerity call it not spending more then you have, what ever, but unless the public sector can stop spending more then the private sector can create we're in big trouble. I don't like the vision of governments generalling the army that is business and economy. This means that your generals will always be behind the game because the pivate sector is always faster moving and more creative then the public sector because they have to be, because there is competition. The only way government can general corporations is to dictate what they do, how they do it, and how many of them are allowed to do it. This is just socialism and sounds great but it has been tried many times over and never worked. In the end human nature won't allow it so it collapse. I believe a French man named Jean de Gourney said it best. "Laissez faire et laissez passer, le monde va de lui même!" ("Let do and let pass, the world goes on by itself!"). Zahid Khalid • @ Hi Troy, The Global Economy is passing through a War Like Situation. In order to fight and to win a war every country needs a War Plan. So government like a King has to lead and that is what a leader of a country and not a company CEO is supposed to do. For that what does a leader need? He needs a Strategic Vision BASED Economic Plan the purpose of which is to "FACILITATE" Corporations and SMEs and Keep the public happy and prosperous. Why did I use the world King, Generals and Army? All three are equally responsible both for prosperity as well as poverty to win any war - social, political, economic, diplomatic and military. The governments or the Kings have to create a strategic policy balance between the interests of the corporations and individuals as equals and not treating unevenly anyone of the two either by design or by default. Why? Corporations like army generals are few but the army is a big mass of individuals. Preferential treatment of anyone of the two can be disastrous from economic and social perspectives. If the government or the king does not judiciously facilitate the corporations / SMEs the economy will go down. If on the other the citizens of a country are agitated or annoyed for any reason, social or economic, their agitation will bring the economic activity to a halt. So government's balancing act and tact creates an environment of understanding and mutual cooperation between government, corporations/SMEs and people. This is what I meant to say. This is what the need of the time is. It has nothing to do with capitalism, socialism or any other religion or ideology. It is Art of Good Governance and nothing else. Troy Hageman • Zahid, I disagree with a core principle in your theory. You always work for the positing that governments have the best interest of the citizens in mind and corporation always have the worst intentions. The realty is that through this global recession corporations large and small have adapted, they have streamlined, they have reorganized and they are still profitable. Governments have steadfastly keep doing the same things they were doing only more of it. Were governments to really lead they would have the courage to tell people that hard ships will exist and that people must produce and society can only justify a reward equal to production and remain sustainable. Government has acted like an irresponsible parent pampering its spoiled children while they are loosing the family home. Government's job is to keep order and protect sovereignty not to champion economy or dictate the terms of business. It has everything to do with ideology. Peter Temple • The core principles of Zahid's arguements are fundamentally wrong. Zahid Khalid • @ Troy, You have every right to disagree with me. I never said that the governments have the best interest of the citizens in mind. They do not! They have failed to protect the citizens from a specific gang of speculators and manipulators who WERE evidently working from within the White House Core Team assisting the War President then and the President for Change Now! They succeeded in bringing the governments of the European Union too on board. I have all the details with me but this is not the subject of this discussion. What I am emphasizing repeatedly is that the governments, big corporations / SMEs and people will have to think and work together for coming out of the economic mess they are in. Forget what the governments, the big corporations and people have done in the past. THINK ABOUT THE FUTURE to get prepared for the more difficult times ahead. Is there anything wrong with that? What is happening today is the outcome of something wrong for which some leaders, some CEOs or some institutions and people at large are all responsible to different extents. Let us give all of them benefit of doubt and give them an opportunity to look into the realities on ground, to analyze them, to come up with a rescue plan and work together to make it successful. Is there anything wrong with that? The most important thing is to WORK TOGETHER for everyone who has been hit hard by the economic mess. There is no need to go into the terminologies and theories and who said what. The world has no time for that. Keep focus on REALITIES on ground and see who is effected to what extent and who needs what kind of relief and how much? Why I want the governments to clear the mess is for the reason that the governments, as you yourself have said, have failed to protect the economic rights of NOT THE BIG CORPORATIONS but the people by giving free hand to the big corporations in the past to do as they wished and they EVIDENTLY have messed up everything. This is evident from government documents, research reports and working / discussion papers of the experts on such subjects. The corporate champions, for whom you are feeling pain in your chest, have not committed management mistakes and blunders, in most of the cases, they have EVIDENTLY and ADMITTEDLY violated the laws and regulations too. STILL I INSIST TO FORGET ABOUT THE PAST and join hand and heads for a better future. Government will not interfere if the Big Corporations and their bosses behave, keep core corporate values in mind and take them seriously. This time the have been PARDONED but if something goes wrong in the future I bet the people will make sure that they and their supporters in the government and regulatory body also GET HANGED. I hope I have made myself very clear or do you need something more if have some specific agenda in mind? Zahid Khalid • @ Peter, will you please take a little time out to explain how my core principles are wrong? Or you also do not have any reason or argument in support of your opinion. José Milton dos Santos Pestana Barbosa.'. • Now I suggest you watch the best docummentary, Oscar awarded in 2011. INSIDE JOB! http://www.sonyclassics.com/insidejob/ Any crisis explanation different is a LIE!! In this film you will see what happens when government is absent. Troy Hageman • How very totaltiarian of you. Governement will not intrefer as long as corprations and boses and people do what they are told when they are told. People should be told what to do not only for their own good but for the good of those around them and the world in general. Zahid, you have a very dangerious vison of working together. No we should never forget the past, as George Santaynaa so sagely said "Progress, far from consisting in change, depends on retentiveness. Those who cannot remember the past are condemned to repeat it." Bernardo Javalquinto, Economist, MBA • “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” John Keynes Peter Temple • Zahid, You are proposing the dismantling of the corporate structure which has brought so much wealth to the world. You are proposing that governement take charge of corporations "if they don't behave"... and so who becomes the arbiter of "correct behaviour" and who trusts government not to expropriate corporate assets to fix their economic mismanagement. You are proposing massive wealth redistribution so that the poor and the profiligate gain the benefit of the rich and the responsible's aggregated wealth thereby removing the incentive to continue to work for gain. You are living in a dream world, some type of quasi socialist totalitarian utopia where a benevolent father figure dressed up as Robin Hood takes from the rich and gives to the poor and nobody minds. The fundamental principles of your position are completely wrong. You need to climb down off your caps lock key and think critically about the things you propose. There is no set of circumstances where I'd support less freedom, less competition, and less economic growth. The government's you proclaim as the saviour of the moment are in fact the problem. They create market distortions through illconceived policy settings that pander to minority interests, they erect ridiculous trade barriers and prevent the growth of the third world, and they do this at the urging of self interested and short sighted people who can't see the benefits of a truly global economy. The corporations you want to dismantle, have made goods and services cheaper for everyone who has access to them, they have made finance cheaper and easier to obtain allowing those who have access to it to create wealth for themselves, they have created innovations which have made the lives of everyone who haas access to them easier, better, healtiher, and longer. You'll notice throughout I've qualified my claims about the benefits of corporatisation with the words "everyone who has access to them". Who controls access to these things Zahid? Governments. Troy Hageman • Bernardo, good quote. I think it pretty telling that Mr. Keynes is trying to sell that theoretical economists rule the world. It would be hard for him to swallow that people who create economy are a lot more important then people who talk about it. Nobody ever accused him of lacking ego. Bernardo Javalquinto, Economist, MBA • I think if the EU any country in the world that think that they can make it without mixing monetary policies and fiscal policies to keep a balance in the economic cycles are in deep trouble. Austerity measures will make worst the problem and after the great depresion he proved his point, increase fiscal policy to lower unemplyment. Classical economics was not able to solve the problem. Then we have classic economists that think that the market solve all problems and liberal economists that think that classic is fine but there are some externalities that government should keep and eye on it. Like environmental Issues, education, labor issues, control oligopolies, monopolies, economic abuses like the subprime crises or somo kind of control in the private sector. You should see the mess we have here in Chile, and we have an open market economy and mixed. (Monetary and Fiscal) José Milton dos Santos Pestana Barbosa.'. • Why We Regulate By PAUL KRUGMAN Published: May 13, 2012 One of the characters in the classic 1939 film “Stagecoach” is a banker named Gatewood who lectures his captive audience on the evils of big government, especially bank regulation — “As if we bankers don’t know how to run our own banks!” he exclaims. As the film progresses, we learn that Gatewood is in fact skipping town with a satchel full of embezzled cash. Fred R. Conrad/The New York Times As far as we know, Jamie Dimon, the chairman and C.E.O. of JPMorgan Chase, isn’t planning anything similar. He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders. So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing. Just to be clear, businessmen are human — although the Lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on. Why, exactly, are banks special? Because history tells us that banking is and always has been subject to occasional destructive “panics,” which can wreak havoc with the economy as a whole. Current right-wing mythology has it that bad banking is always the result of government intervention, whether from the Federal Reserve or meddling liberals in Congress. In fact, however, Gilded Age America — a land with minimal government and no Fed — was subject to panics roughly once every six years. And some of these panics inflicted major economic losses. So what can be done? In the 1930s, after the mother of all banking panics, we arrived at a workable solution, involving both guarantees and oversight. On one side, the scope for panic was limited via government-backed deposit insurance; on the other, banks were subject to regulations intended to keep them from abusing the privileged status they derived from deposit insurance, which is in effect a government guarantee of their debts. Most notably, banks with government-guaranteed deposits weren’t allowed to engage in the often risky speculation characteristic of investment banks like Lehman Brothers. José Milton dos Santos Pestana Barbosa.'. • This system gave us half a century of relative financial stability. Eventually, however, the lessons of history were forgotten. New forms of banking without government guarantees proliferated, while both conventional and newfangled banks were allowed to take on ever-greater risks. Sure enough, we eventually suffered the 21st-century version of a Gilded Age banking panic, with terrible consequences. It’s clear, then, that we need to restore the sorts of safeguards that gave us a couple of generations without major banking panics. It’s clear, that is, to everyone except bankers and the politicians they bankroll — for now that they have been bailed out, the bankers would of course like to go back to business as usual. Did I mention that Wall Street is giving vast sums to Mitt Romney, who has promised to repeal recent financial reforms? Enter Mr. Dimon. JPMorgan, to its — and his — credit, managed to avoid many of the bad investments that brought other banks to their knees. This apparent demonstration of prudence has made Mr. Dimon the point man in Wall Street’s fight to delay, water down and/or repeal financial reform. He has been particularly vocal in his opposition to the so-called Volcker Rule, which would prevent banks with government-guaranteed deposits from engaging in “proprietary trading,” basically speculating with depositors’ money. Just trust us, the JPMorgan chief has in effect been saying; everything’s under control. Apparently not. What did JPMorgan actually do? As far as we can tell, it used the market for derivatives — complex financial instruments — to make a huge bet on the safety of corporate debt, something like the bets that the insurer A.I.G. made on housing debt a few years ago. The key point is not that the bet went bad; it is that institutions playing a key role in the financial system have no business making such bets, least of all when those institutions are backed by taxpayer guarantees. For the moment Mr. Dimon seems chastened, even admitting that maybe the proponents of stronger regulation have a point. It probably won’t last; I expect Wall Street to be back to its usual arrogance within weeks if not days. But the truth is that we’ve just seen an object demonstration of why Wall Street does, in fact, need to be regulated. Thank you, Mr. Dimon. Peter Temple • Hmmm, how much of the taxpayer's money did JPMorgan lose? That's right, none. Peter Temple • Without private sector investment, the economy ceases to grow. Investment is undertaken by taking on debt. The government needs finance to be cheap and easy to get. They have effectively underwritten bank debts in order to provide them with the security they need to write loans to a lot of people at lower rates of interest. You can't have it both ways. Either you have cheap accessible credit and underwrite bank debt or you have more expensive credit, accessible to less people and lower private sector investment and lower rates of growth. What's the harm of a bank that makes $19B a year losing $2B of their own money? Zahid Khalid • @ Try and Peter I admit my ignorance and bow out of responding to your excellent arguments convincingly authenticated by credible references. What you want is to let the big banks and big corporation to continue losing money, governments to "REPEATEDLY" bail them out with "PRINTED MONEY," Big Banks and Corporations to get the bail out money and "INTEREST FREE LOANS" from FEDs and engineer dangerously faulty SIVs to fool the small and medium investors and ultimately show the empty pockets to FEDs for getting bailed out again! You want the governments to cruely and unjustifiably turn the world's resource rich geographical regions into conflict zones for artificially increasing the prices of commodities and products for pushing the people from middle to lower-middle and from lower middle to deprived classes and turn them into slaves. ON TOP OF THAT you want to LEAVE THE PEOPLE AT THE MERCY of CORPORATE AND POLITICAL VULTURES! What a LOGIC? I fail to understand what are you upto? I had in mind a way out through "ONE COUNTRY" and "TWO SYSTEMS" but unfortunately that way out is about to be closed AGAIN thanks to "GLOBAL DEBT MERCHANTS" who have made sufficient arrangements to turn the Chinese ECONOMIC BOOM into about to burst BUBBLE! I am sure if the Chinese rulers followed your advice they will also join the Europeans and Americans crying for BAIL OUTS! Only America will be able to rescue them by printing money and DROWNING the world into unrecoverable debt in an ocean of uncontrollable flood of inflation. Zahid Khalid • @ Jose Do you think that you can convince people like Troy and Peter under the influence of jounalist, scholar, author and noble prize winner Paul Krugman? I think it is useless to even quote Keynes himself, which I have already done, to prove what did he actually mean and how he is brutally misquoted. He must be turning sides in his grave and trying to get out of it shouting: "PLEASE STOP HONORING ME WITH THE ULTIMATE BLAME FOR WORLD'S ECONOMIC DOOM." Troy Hageman • No Zahid we don't want the bail outs either. How about just try a noninterventionist policy. Nobody is blaming Keynes he just talked about economics other people made it happen. Jose the only bank regulation that need be in place is to limit the size of institutions to a point where the failer of one can't effect the overall flow of money and credit for a whole country. Then let them be, let them compete, let them profit. Peter Temple • Zahid, I believe that Keynes was correct in his appraisal. I'm not suggesting there's no role for governments in flattening out cyclical fluctuations. I'm suggesting that there is no role for governments as active participants in the market. This is really the only point we differ on. I agree that corporations act unethically. I agree that they shouldn't be able to. I agree that they shouldn't expect taxpayers to bail them out of their gambling debts. Good policy can relieve us of these issues. Sadly, its bad policy that's created an environment in which these things are made possible. Given government's propensity to be induced cajoled and corrupted into regulating for the benefit of special interest groups, no faith can be placed in their ability to solve the problem now. You're essentially making political arguments in place of economic ones. Bernardo Javalquinto, Economist, MBA • our opinion in this issue will not solve any of the problems the world unless citizen get their act together and do something i creating a social business school offering and MBA in social business an initiave taken by prof Yunus I ask my self what are you doing? Do something. Ronaldo Carneiro • Peter - corporations act unethically cause they´re acting in no full productive employment - think how things change in this situation? free market at the beggining of industrial revolution cause a big development - What I´m suggesting is intervention x austerity is a false question, cause both mean a strong presence of government in the economy. Keynes was perfect for crisis, all economic formulation was to achieve a balance among economic agents, but, what are the solution preconize by Keynes for social exclusion? that´s a big difference between economic formulators and thinkers - I strongly suggest to read more Adam Smith and Karl Marx. That´s the reason why priviledged brains as nobel laureates Stiglitz, Krugman and potential formulator like Jose Milton don´t reach solution - they´re reading a wrong book. All solutions are more of the same and the result will be the same - nothing new in the area!!!! After 68 years of practical application, Keynes economic formulation exposed stagflation as its best result: a compromise solution between unemployment and inflation. An offence to human intelligence. Peter Temple • Ronaldo, Clearly there has to be some way to reconcile monetarist economic theory with Keynes. Sadly, so far all people have done is take sides and throw stones at each other. Friedman was right to point out stagflation as a likely end result of the application of Keynes theory as it was being applied. But was it being applied as it was meant to be? I get a sense that the world took a large lurch to the left back in the 1960's and 1970's and that Keynes was used as a readily available academic justification for expanding socialist ideology. The application of socialist policy combined with the resource shocks of the early 1970's led to stagflation. I don't know that its entirely accurate to lay the blame at the feet of Keynes. Friedman's critique of Keynes was excellent and insightful but his position has been over stressed by the right and so has been devalued by association. Neither position provides all the answers and so the solution probably lies somewhere in the "no man's land" between the Monetarist and Keynesian trenches. Ronaldo Carneiro • Peter - what I´m suggesting is appraise situation before Keynes - marxist critics on capitalism never answered so far - I have learned from Marx that the workforce must not suffer wear – "The worker sells his labor to keep it unscathed, except for the natural wear, but not to have it destroyed." Workers need to eat and to have access to health and education systems, so that their labor does not get destroyed. many have been sensible to recognize errors in capitalism but then acted like Marxist priests burning incense to their god. Nutrition, health and education are biologic needs and not fluctuate according free market laws. A constant presence of the government in the economy replaces the invariable law of supply and demand on the free market with the questionable action of human will. I am talking about introducing the substantial criticism of Marx – on the deterioration of the labor force – into the basic research of Adam Smith, and substantially reduce the presence of the State in the economy, to rescue the situation of full productive employment observed at the beginning of the 19th century Troy Hageman • Ronaldo, I don't think I quite understand. I obviously agree that sate intervention doesn't help employment. The market will find its own equilibrium but I doubt that this will lead to continually full employment. There is an inevitable amount of unemployment which will wax and wane through cycles like every thing else. Keynes felt public money pumped into the system could soften this; maybe it could if applied correctly but there is no way to know what that correctly is so in practical application its just a waste. How are you reaching this "full productive employment" Adriano Carnauba • Peter, I couldn´t agree more. Economic theories are pieces of knowledge. The way we use them refers to issues of governance. Just like trigonometry is no better than algebra, but a good mathematician should know both. The solution is not at one side of politics. Adriano Carnauba • Ronaldo. I believe your point is that work force is a resource, even to Marx. So, we must aim the full employment, as, sometimes, in equilibrium, it is not the expected result. And we also should protect this resource, as It can be destroyed trough bad times, without enough care. In fact, Brazilian growth is not as big as It could, right the way because of that. We need engineers and technicians, but we didn´t preserved our human resources to this growth cycle. Bernardo Javalquinto, Economist, MBA • well... all we know is with auterity measures the social discontent will continue and will only survive the most competent very sa, and social and human avances in the knowledge revolution will move backbards Einstein was right about human stupidity Benoit Maghoma • How far can countries continue borrowing or printing money to support their life style? If countries print or borrow money for investment, then what investment are they going to make to be able to pay back? New technologies are able to create a real boost of the economy and create sustainable new jobs. How much money is invested in that regard in Europe? Keynes' theory is like a pain killer but does not really answer the fundamental problem. To get to the bottom of the fundamental issue, we need an antibiotic! Ronaldo Carneiro • Troy and Adriano It is clear that, with the current rules for human coexistence, the government needs to intervene increasingly, but the real need for government intervention is in the fact that 3 sectors: agriculture, health and education cannot walk alone – The government needs to pump resources into these 3 sectors – something necessary, even if inefficient. Under the current rules, the reduction of government intervention in the economy would considerably increase the distance between poor and rich. But in a new social pact where nutrition, health and education became private responsibilities in the productive process, the Government would proportionately reduce taxation and its interference in the economy. Instead of transferring resources from rich to poor, society would provide equal the opportunities for nutrition, health and education. This is not philanthropy, but a new concept of human labor as a transformation process of human energy into physical or intellectual power. It will replace the changing logic of ideas – ideology – with the invariable logic of life - biology. Total freedom to produce and consume will reach a full productive employment – “laissez fare, laissez passer” – invisible hands acting in a whole economy. Send me your mail and I´ll forward some of my academic texts. Troy Hageman • The rules if human coexistence have never changed. Ambitious men have tried to change them; some for good some for bad, but human nature has always been the same. Marx couldn't change it I seriously doubt you can either. Bernardo Javalquinto, Economist, MBA • exactly that is why Albert Einstein, said Two things are infinite: the universe and human stupidity; and I'm not sure about the the universe. but we will change it with humanizing the economy leaded by prof Yunus http://www.wix.com/negociossociales/mba2012 Ronaldo Carneiro • Troy - change human nature is not my proposal - a new social pact considering actual human nature - redistribution of responsibility is my focus - at first glance it seems to be difficult - but consider a big social imbroglio with high unemployment in US and Europe and rulers applying more of the same with no results. I´m not sure if I make me understand - cause your insight is rerverse of my convictions. Marx never try to change human nature - he and Adam Smith understood as nobody did a human nature. Human stupidity is apply more of the same - financial flows and financial stimulous is a joke to heal such a huge disease Benoit Benoit M. • @Ronaldo Help me to understand your interesting proposal. One of the basic assumption of Econonmics is "Homo Economicus". That is, human beings are primarily motivated by the desire to optimize their own satisfaction. Are you trying to bypass this assumption? If so, most of economics basic laws will disappear, the law of supply and demand will disappear! 3 dias atrás Ronaldo Ronaldo C. • Benoit - no, not at all - homo was, is and will be "economicus". Supply and demand law always acting as never before. Religious rules are trying to change human nature since at least 4000 years without success. All my proposal is based in real human nature - thats why I do not understood Troy insight??? Let´s clarify my proposal: The productive process, that is workers and entrepreneurs, will directly take responsibility for providing nutrition, education and health care to the social nucleus depending on the production of goods and services, after acquiring them for their free market prices; and the government will reduce its taxes in an amount corresponding to the cost of these new responsibilities taken by the productive process. I´m just redistributing the bill payer - nothing more. 2 dias atrás Adriano Adriano C. • I think homo-economicus concept is such a simplification that many outputs can fail, as we all are social beings. In fact, supply and demand forces are very important, but they can´t be directly adressed without transaction costs analysis and also increasind gains effects. I agree with Ronaldo that markets can not deal with food and health needs, as the obvious equilibrium in those markets would be at high prices and low supply, 2 dias atrás Troy Troy H. • If the obvious equilibrium is high food and health care costs why are food costs relatively low even in impoverished nations and the cost of health care all over the board depending on the level of government involvement? In free market systems companies do provide for he health, nutrition and health care of their workers. The workers provide a service and are provided a wage based on how valuable that service is. With this wage they have the opportunity to purchase what they need. If the wage is insufficient to provide what they need they should provide a more valuable service. Prof Yunus's assertion that credit is a right is ridiculous. This is just saying that people are entitled to wealth that someone else has created. 2 dias atrás Adriano Adriano C. • Dear Troy, the cost of food is relatively low in face of strong subsidies and huge inequalities around the world. With the growth of China and India, we are now watching the increasing in food prices. The EU subsidies to food production is a part of european nations´ debts. As you pointed, the cost of health is correlated with the level of government involvement. Why? Because without direct government action in this sectors, prices go high, and the supply go short. As you live at US, I don´t need to tell you know how expensive is the health service, and how short is the supply of these services to the poor. 2 dias atrás Bernardo Bernardo J. • Internet Economy “THE OLD AND THE NEW ECONOMY” Internet and the Telecom industry will define how business are done in the future specially in how to add value to people, products and whole business sectors will the key elements in the New Economy. The rules have change. 2 dias atrás Adriano Adriano C. • I agree that companies should not provide health services to their workers, as we saw that movie on GM history. The weight of these costs are too high. The indirect paying do not reply the lead to high costs, as the demand for health care is almost infinite. In this matter, the right path is to limit private health services, as they compete for the resources (doctors), leading to high costs. Why does our society need so many plastic surgeons driving porsches? We would be in better situation with more general doctors. Many have the vocation, but can not afford with the costs of formation... 2 dias atrás Troy Troy H. • In the U.S we pay farm subsides to growers to not plant crops to hold up the prices. There are some many plastic surgeons driving Porsches because there is a market demand for their services. There is nothing wrong with that. The cost of health care in the U.S. is high because those that pay pay for those that can't. There is a federal law that no one can be turned away for their ability to pay so the cost of their care is passed on through higher insurance and healthcare costs to those who can pay, far from ideal but nobody get left bleeding in the streets. 2 dias atrás Ronaldo Ronaldo C. • Lets nominate "Humanist regime" this new social pact and speculate on results: In the Humanist Regime agriculture no longer requires subsidies, because it becomes an extremely attractive sector, spontaneously capitalized through the stock market under totally free prices. The Malthusian limiting law will no longer impose itself. In an equal manner, the sectors of education and health care no longer need the crutches of the State and become naturally profitable, receiving resources from the stock market. With the spontaneous capitalization of agriculture, the development of this sector is tied to the other sectors of the economy, that is, the results sought by land reform are obtained: land for the working peasants. Ethical principles are not violated and the right to property is respected Decentralization will be automatic, because the social cost will become one of the factors for companies to choose their location. The stagnation and later reversion of the migratory flow will promote a balanced occupation of rural and urban areas, bringing evident advantages to the quality of life 2 dias atrás Bernardo Bernardo J. • New Economy In summary, seven of these tools developped by Dr. Shlomo Maital are related to the costs, why is important to measure the costs? First to understand that a estartegia cost means the cost to invest in more efficient and do not sacrifice quality. To make more profitable the company and the importance of knowing what is to invest in strategies Costs, Prices and Value Added. Because one must know how to contain costs, maintain a sustainable value to our customers, and provide the appropriate price according to the value that we create. The rest is related to what is more important today, increasing our knowledge, since in the world in which we find ourselves facing a new concept of demand to a new economy, global competition and most importantly of all opening our minds to ease. 2 dias atrás Bernardo Bernardo J. • Dr. Maital Rules Cost - Value - price (yield) Hidden Costs Trade-offs Cost Functions Human Capital-Knowledge - Machinery Volume v / s Variety Learned experience curve Markets and Demand risk Compete and Cooperate 2 dias atrás Bernardo Bernardo J. • Ronaldo the entire USA Economy is based in its agricultural policies 2 dias atrás Adriano Adriano C. • Troy. Can´t you see that there is a market for any health service anyone can provide? And that, in free market, the resources goes to markets that can pay more? So, if you wouldnt pay public costs, the price of heath care would be as expensive in the long run, because, at the limit of personals needs and budgets, demand is almost inelastic ? draw the lines in a piece of paper and you will see this...There is a demand for a more wide and general health service, but workers just cant afford it, so resources that are limited, goes to better payers, as there is no substitute to heath.... 2 dias atrás Ronaldo Ronaldo C. • Bernardo - all countries over the world must subsidize agriculture - and they are doing as much as they can - I totally agree with Adriano "the cost of food is relatively low in face of strong subsidies and huge inequalities around the world" same for health care and education. Basic point is: Who always pay the bill? productive process pay everything through tax system. What I propose is cancel expensive resource flow through government. Troy - underlining your point - If the wage is insufficient to provide what they need they should provide a more valuable service - look: nutrition, health and education never fluctuate according market law and are not human decision and not cumulative goods and services. Big mistake of capitalism is consider biological needs as part of market laws. In other words - you only can afford food for your family depending on supply and demand - if it doesn´t allow, you must work with empty stomach!!!! Car need fuel to run 2 dias atrás Troy Troy H. • Adriano, I can't speak for Brazil but we have absolutely no shortage of general health services or subsides to pay for it. If you nationalize health care and take it away from market forces you get what Canada has. Canada has adequate care but with long waits for basic services and a true shortage of specialized services. Because there is a great deal of time and expense put into specialized health care the brain surgeons of the world leave Canada for greener pastures. If you take away the incentive for the best, the best will go else where. The world you want to create will just make a back market where anything over the average will be traded covertly and access will be much more limited. Ronaldo, hungry people work harder its the law of survival. There are certain countries where the environment, be it political or social ,have not allowed the people to progress, Ethiopia for example, these countries have to choose to join the modern world on their own. If we feed them they will have no incentive to improve. 2 dias atrás Ronaldo Ronaldo C. • Troy - idea is not nationalize health care - and not take away incentives for the best - idea is privatize everything and private companies pay the bill - it´ll gonna be a social cost introduced in companies budget instead pay for government - in other words - is a dream of US democrats using US republican means - private sector is much better than public one. Quoting you - hungry people work harder its the law of survival - this statement is against all findings and recommendations of HR practices. Certainly some countries due to political distortion don´t allow progress to their people. Sooner or later dictators will fall. The lack of concrete solutions for the aspirations and expectations of the people is totally discrediting politicians. Human production is an energy-transforming process. To make it occur, human energy based on nutrition, health and education must be managed a priori, and not as payment for the work performed. Just as a vehicle needs fuel to go, so does a human need nutrition, health and education to fulfill his god-given role in society. 2 dias atrás Benoit Benoit M. • Ronaldo, it will be nice to see companies paying the bill! But then a question comes to my mind: who's Company? Shareholders? Employees? Employers? who's going to really pay the bill? Companies are already paying medical aids, car allowances, scholarships, etc. as additional benefits for their employees in order to retain them and not to lose them to competitors. Is the new social cost you are talking about similar to these above? 2 dias atrás Benoit Benoit M. • Adriano, I don’t see why market forces will harm the health service industry. There are goods and services for different kind of revenue. I am not talking about pure substitute, I am talking about differentiation. We can eat the same food in different restaurants and pay different amount of money. Why can’t we allow health services to present itself in different ways to consumers? Of course, I would agree that some basic conditions should be stated by law. Will this be considered unethical? 2 dias atrás Adriano Adriano C. • @Benoit, My litle concept is that doctors are very important and expensive resources. In face of market forces, they go to best payers. So, the society as a whole, expends more and more in health care (see Brazil, US as example). If you keep diferentiation, what you have at the end? Very specialized resources at very high costs. If you analyse food demand and health care, the demand of health care is quite more inelastic. Why? Because your life is only one. You can choose mexican food, chinese, and so on, but if you need a surgeon, you need it and anything else. Just draw the curves in a piece of paper, and you will see that. 2 dias atrás Adriano Adriano C. • @Troy, If you say Canada`s public services are worst than American´s, what can I tell you. Many researchs says the opposite, and Canadian cities are considered very nice places to live. I admire how fierce are your principles, how I wish politicians are like you. We would be able to vote in the ones we most like, but they change when elected. 2 dias atrás Ronaldo Ronaldo C. • These two comments below were particularly felicitating for me, because they revealed a perfect attunement with my theses: • "Regarding its proposal for the health sector, that is all that US Democrats have been willing for decades -health for all- but the proposal you present is neither like the British model, where the State does everything, nor like the Canadian one, where the State pays to private initiative: your proposal follows a third model, Republican-style, directly by private initiative!" When you thus associate economic profit to the health of people, you will have a tremendously positive impact on the ecological balance of the planet; I´m not against doctor driving a porsche and I´m absolutely sure that everyone will leave for "greener pasture" (great Troy) Canada public services is much better than american ones!!! 1 dia atrás Ronaldo Ronaldo C. • Socialism fell down along with Berlin Wall in 1989 and the capitalism has its bases being ruined with this world crisis. We have to go back to Adam Smith’s topics and proposals at Scotland on the end of 18th Century and combine them with Karl Marx’s proposals of the end of 19th Century – in other words, to reach Marx’s ends using Smith’s means. Thus burring at last Bretton Woods monetary ideas – a historic mistake to make possible have government on economy – this theory only led to commitment solution between stagnation and inflation throughout its 68 years in use – an offense to human intelligence beside generating a terrible and growing social exclusion. It is a simple idea: if private productive process embrace social responsibilities of nutrition, health and education buying for free market price to all dependents, the sectors of agriculture, health and education will gain their own energy and wont need government support anymore – thus government can reduce taxes and make it possible this humanist system 1 dia atrás Ronaldo Ronaldo C. • Benoit - social cost includes payment to employees and dependent - in summary - all people envolved in goods and service production. In that way, companies will have 2 different types of cost - economic and social - and government reduce the correspondent tax - its a trade off Allow health services in different ways to consumers is absolutely unethical. Human being below to same categories - the best one - there is no first or second class 1 dia atrás Troy Troy H. • Adriano, researcher may say Canada's system is better but I have never seen an American go to Canada or England for health care but I sure have seen a lot of Canadian's and Brit's come to the U.S. to by pass the waiting line in there own countries. 1 dia atrás Troy Troy H. • Ronaldo, there are different classes of citizenry, the idea the society should provide the same care for all is ridiculous, because all don't provide the same value to society. Should a criminal be entitled to the same care as a professor at the cost of the collective of course not. If we are collectively paying the cost how do you prioritize. Benoit has stated exactly what would happen if we lessened subsidies and regulations for health care. The market would create competition, the services would be varied and you would be able to purchase what you were looking for. Its just like buy shoes, everyone needs shoes and can get what ever they want because the government lets the market control it. If I need shoes and have little means I can still purchase what I need because companies fill the nitch for low end goods and still profit, if I do ok for my self I can wear Ferragamos because companies have filled that nich. This could happen in health care if the bleeding hearts of the world would let it work its self out. 1 dia atrás Ronaldo Ronaldo C. • Troy - Definitely I only recognize 2 classes of citizenry all over the world: 1) Those who have had opportunities in life, that is, proper nourishment and health services since their childhood, coupled with access to the educational system; 2) the rest of people; When system allow equal opportunities for all, things change dramatically 1 dia atrás Troy Troy H. • Everyone started equal when we all climbed from the primordial ooze, since consciousness evolved all societies have been formed by the conscious decisions of their members. Those that have chosen to make modern comfortable societies have no obligation to those that haven't. If those that have created a nice environment for them selves decide to give to those that haven't it is benevolent and helps individuals but in the long term I very much doubt it helps the societies. 1 dia atrás Adriano Adriano C. • Troy, there are people that by pass waiting lines everywhere. I don´t think this is an issue to Canada´s government and even citizens. If you randomly ask 10 Canadians and 10 Americans, wich group of answer will be more positive? About value to society. I believe you think a hedge fund manager brings 100 times more value than a teacher. Am I correct? As he can buy better services than a teacher. I hope Lord takes notes for further checking. 1 dia atrás Troy Troy H. • There are about 6.2 million teachers and about 6000 hedge funds, I don't know how many managers but the law of supply and demand would dictate almost exactly the ratio you suggest. 1 dia atrás Ronaldo Ronaldo C. • Benoit - consumer will pay the bill, cause social cost will be part of final price - same as economic cost. 1 dia atrás Ronaldo Ronaldo C. • Troy – economic logic depends on supply and demand – and to operate or to generate demand people must be feeded, healthy and educated, otherwise it doesn´t work - it means the dependency of all mankind. I´m also not support the concept of philantrophy, cause in long term doesn´t help people. The French writer Victor Hugo said : "We will practice charity when we could not impose justice". Because it is not charity that we need. Justice reaches the causes of the problem; charity mitigates its effects. Monsignor Jacques Gaillot, also a Frenchman, with a serene look and pondered voice, dedicated his religious vocation to the defense of human rights, particularly those of the poor and of the prisoners of justice. He completed this reasoning: "I do not say that one must deny a plate of soup or a warm shelter to someone living in the streets. There are urgencies". "I will do this, but my conscience will not be at peace, because I think that we must struggle against the structural causes that bond these people to injustice." The saddest thing for me is that people get accustomed to injustice. For this reason I say: "Wake up! This is shameful! Let us show our indignation towards injustice!". 13 horas atrás

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