Is globalization behind the recession?

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What economies? In the third world they live on nuts and berries and barter crudely.

ruveyn

Monty, I never said that tobacco got it's due, and frankly, I was not aware that there were numbers showing how much tobacco got through lying or how much the public lost through tobacco's lies(not that you provided them either). I merely said that a proper legal system should allow for things like that.


I didn't focus much upon personal actions, I only brought light to the matter that really I don't think that unusual blame on one group is justifiable, as the case that business is being evil is then questionable if all other groups are similar.


I never said "exemplary", but an exchange is an exchange. I never said that transactions were perfect, but frankly a lot of them aren't terrible. Frankly, I am not sure how we can start to say what a rational person should decide.

Monty, once again, I had my earlier point, no group is better. I mean, you can complain about the "lacking virtues of markets" but frankly all other groups are about the same in terms of what they do, they just respond to their incentives. Not only that, but frankly, the market IS better than the people who create it, the reason why people in service positions put up with the customers who give them crap is because of markets, it is not because of personal virtue. The same holds for the generous returns policies that some companies have. So, really, I am not sure where all of this "vicious conning" is occurring, as it doesn't happen in the grocery store, it doesn't happen at the appliance store, etc. I mean, I know there are some bad apples, maybe even bad industries, but your own worldview seems too excessive based upon the facts. Frankly, the ethical framework that people today have are likely better than those of any past age, so to go on some rant about virtue just seems ridiculous today.

Here's the problem with saying that the invisible hand is like the flying spaghetti monster, we've all seen the invisible hand at work. If the invisible hand didn't work, there wouldn't be capitalism in the first place so to say that one doesn't exist is just stupidity as the question isn't whether it exists but how well it works and how to make it work better or what would work better.

Also, honestly, although perhaps the government and law can do some things, I would imagine that social institutions would have to be responsible for more of it, and I generally see many social institutions as effectively acting upon a charity market. After all, if they didn't then why do they advertise so much?

Oh, you have seen His Glorious Tentacles preparing a feast for us all?? Parmesan Cheese and Hallelujah, my friend!!



This is a classical circular argument along the lines of the religious tomfoolery: "if God didn't create us, we wouldn't be here, and since we are here, that is proof of God." Pass the Parmesan and praise the Pasta!!

Do you think that the invisible hand causes recessions and depressions, or merely fails to prevent them? These two possibilities are subtly but totally different - is God malevolent, or merely preoccupied and careless?




Aside from Smith sounding rather like pope Ratzinger, I don't think that we have widespread adherence to advanced moral concepts like honesty or avoiding misrepresentation. Is the invisible hand like the invisible leash that keeps husbands from straying?? Yeah, that doesn't exist either - either he is a total horndog, a partial horndog, or isn't.

At best, the 'invisible hand' is a metaphor for certain emergent behaviors that are sometimes predictable (but often not), and is not so different from applying a form of game theory to economic activity.



Oh, I must have misinterpreted it when you said: "But I imagine that the tobacco companies probably suffered in the long-run for their actions anyway given the loss of political favor that such actions can cause along with class action lawsuits..." Nope, on second thought, it really does sound like you said that the tobacco industry got its due. Now that you mention it, I think market fundamentalists are often peddling a cheap notion of karma ... truth is, there isn't always a good reckoning of accounts, at least not in this life. Sometimes the evil prosper, sometimes the righteous are predated.


No, I haven't presented any figures that estimate the damages you speak of - that was considered in the trial, but that is irrelevant now, as the lying murders bought their way out of the consequences, with the help of the Chamber of Commerce and useful idiots who parroted their 'freedom' mantras.




Gee, that's funny - you just posted something about how politicians, priests, and even scholars often can't be trusted, and now you are asking me why I don't trust businesses?

Well, I don't shop at Food Lion, so I don't see it in the grocery store. But appliance store? Sure - lots of financing contracts with small print, where the salesman doesn't quite reveal all the details, and the person doesn't catch the implications ... I would say that a level of dishonesty there is widespread. I don't shop at Sears because when I was in college, I financed a computer from them, and they lied to me about the way that payments were calculated. Is the fact that I no longer shop there a perfect remedy? No, absolutely not ... forget about freedom, they should be forced to provide an honest, understandable agreement or have their asses hauled off to jail. But of course, the system is set up so that that when a person tries to steal from a store, the police are called immediately to jail the suspect, but when a store steals from a customer, that customer has to hire a lawyer or represent themselves, and go through a drawn out process stacked against them. Payday loan companies? Parasites, not much better than the Soprano family. Mortgage companies? Their lying is probably the single biggest factor in the economic collapse - they were geniuses who conned both sides... the person taking out the mortgage, and the person buying the mortgage. The funeral industry? They are as bad as the car dealers, but they have the advantage that the survivors are usually stricken with grief, and once the process starts, they are unlikely to pick up the corpse and go elsewhere, so once you have got them, they are captives for manipulation. Credit card companies? They can re-impose whatever terms they like, when they like ... funny how a 'fixed rate for life' doesn't really mean fixed rate. Pharmaceutical companies? Infiltrated by liars and crooks, and the result is widespread manslaughter. Supplement manufacturers? Half of them are just as bad as the pharmaceutical companies, puffing up products way beyond what science knows (good thing for the pharmaceutical companies and supplement makers that not everyone is or can be scientifically literate). Who have I left out? Mining companies? Pesticide manufacturers? Television news? Talk Radio? Yeah, they are infiltrated by liars, crooks and lazy people who don't give a s**t. Doctors and hospitals? Yes, my brother had a rapid heartbeat (from one medicine the hospital gave him) and when they gave him a triple dose of another med (the first two doses did nothing), his heart stopped and he had to be resuscitated, with brain damage. The records conveniently did not mention their malpractice, and the dipshit nurse was oblivious to the well know relationship between the first med and rapid heart beats when I talked to her. I could go on for a while, but maybe you get my point.

In the end, the invisible hand is often thwarted by it's arch-nemesis, the prisoner's dilemma. Don't tell me you haven't 'seen' the dilemma at work, as well ... it predicts that in many situations where two people can either cooperate and maximize utility or screw the other person over and minimize self-harm, it is better for each to race to sell the other out. I guess every theology needs a devil.

Monty, my statement is pretty damn clear. If there were no invisible hand, there would be no capitalism and thus no recessions or depressions. That isn't a difficult point, because there is nothing else to the functioning of capitalism than "invisible hand". And the matter of recessions and depressions only just means that this hand isn't perfect.



Did we ever have a widespread adherence to those concepts? Did you actually think I was talking about some magical hand moving around? Of course the invisible hand refers to a set of emergent behaviors that basically follow the lines of game theory.


I didn't say that it did. I said I imagined that it did.


In a way, yes. Frankly because I mostly see your position as a bunch of left-wing wankery than some systematic position. Why? Because things generally work. Not always work perfectly, that is ridiculous, but certainly better than feudalism, certainly enough that consumers generally feel confident to purchase things.


You mostly rambled. I get your point, the issue is that it doesn't really get us anywhere. My point was mostly rhetorical to indicate that there are things that generally work. Perfectly? No, there are people involved. However, generally businesses do put some thought into keeping positive feedback going towards them, at least in businesses with more competition.

What field doesn't have the prisoner's dilemma? As far as I can tell, it is involved in most social interactions with people you wouldn't give a damn about.

Monty, I really don't get the point. I mean, I am willing to accept the idea that people suck, that reality sucks, etc. But the entire point of arguing one thing over another is to argue that there is a variation in suckitude. I just don't see why there would be, as it is not as if all of the saints decided to congregate in some special part of society where they can make things all better. Nor do I even think that the variation in moral character is really the thing that most people like to think it is either, as mostly it is just the posturing "I would have done better" that everyone does. As such, I don't think that things are really better in some ideal land, as even the Catholic church had people raped and covered it up, and the idea of a church is to exemplify morality. As such, I would think that even in this messed up world, choosing means something, as it is better than serfdom or what the USSR did.

No, it is darn clear that you are stuck in a circular argument. If not for the invisible hand, there would be no capitalism; there is capitalism; that proves the invisible hand! Such nonsense is disproved in several ways below.

People could trade with each other even without the invisible hand (drug dealers do it, and it isn't based on trust or invisible regulation of the markets - it is based on strength and paranoia). Pre-capitalist societies had markets and economic ups and downs related to fluctuations in the harvest, disease, or other sources of natural variation. That I can understand, and disciplines like agriculture and medicine offer real solutions for minimizing those cycles. But the business cycle? Economics offers little to explain or remedy it.



No, try again ... it involves two confederates - they could be thieves that barely know each other, or compatriots who are freedom fighters picked up on suspicion by the evil empire of subtle coercion .... it could go either way. The point is, it works the opposite to the invisible hand - and if a society exalts the amoral logic of self-interest to the highest good, this PD scenario will begin to trump the invisible hand more often than not.

If the people know each other, care for each other, or if they have ingrained values of respect, honesty, or community, then they are less likely to choose to sell each other out, more likely to maximize utility for all. To say that intrinsic ethical values are not needed, as the invisible hand will encourage people to act in a way that is beneficial to all is short-sighted, wrong and dangerous.



Well, by that logic, you must admit that feudalism and the former Soviet Union generally worked. Perfectly? No. But people ate, drank, reproduced, things were invented, progress was seen, music was made. And certainly, there was 'an invisible hand' to optimize these non-capitalist societies - if the serfs weren't given enough to eat, they couldn't produce, they got sick, they died off and their overlords had to ease up and give them more food to maximize the value of the human capital, right? And if people in Moscow started getting frostbite on their ears and they bitched loud enough, the politburo would allocate more resources for hat factories #17 and #18. I suppose even Tom Hanks was governed by the mysterious hand when he was shipwrecked on a tropical island with only a volleyball to talk to ... if he didn't gather enough protein rich foods, he got cravings for that, and would spend more time hunting for fish or shellfish or other foods with protein. So the invisible hand metaphor is not unique to capitalism - it basically is a synonym for feedback in a system. And it doesn't prove anything, except that all systems have some type of feedback.




But one reason it sucks to the degree it does is that people are willing to suspend normal rules of decency in pursuit of personal gain, corporate gain, national gain ... when the ends become more important than the means, then there is a shift to a dehumanizing system. It favors the prisoners dilemma solution over the invisible hand solution, it favors short term over long term, it favors the material over the cultural. Why produce something of value when you can rip someone off? It is a form of sociopathology.

Would you rather live in a community where many people practiced the golden rule, or in a community where few people did? Personally, I been to places in the world where people in business and professional and personal relationships consistently treated me the same way as they would want to be treated, the same way they would treat a relative, friend, or neighbor. Its kinda like the difference between living in a corrupt culture and an honest one. The invisible hand and capitalism won't get us there - if anything, it can move things in the opposite direction, as can your disdain for personal ethics.

Was reading about elk recently - on the level of individual competition between male elks, larger antlers are an advantage. Bigger antlers = reproductive success. So there is an 'arms race' among elk for bigger antlers. Only problem is that such antlers make it much much harder for elk to escape from wolves in the forest ... the hatracks create drag in brush that slows down the animal, and can even snag them.

Pure libertarian capitalism without regard for anything else is like seeing bigger antlers as the answer to every problem. Sure, we make more widgets, and sell them to each other for less and are more successful in one dimension. But is that all there is to life? The correlation between income and quality of life is pretty tight when one is close to poverty, but above that, more stuff is not always the same as a better life. Crime, for example, is generally lower when economic disparity is lower - and laissez fare systems generally increase inequality and crime. I anticipate your standard argument will be along the lines of "more freedom lets people decide" but you are deceiving yourself ... more freedom for who to decide? The big decisions are disproportionately made by a small group of people who have lots of money, and their intention is to shape society to benefit themselves.

There is "Recession" and "Depression". Recessions include the Asian Financial Crisis and the 1980's Australasian Stock Market Crash, and are short term (2 quarters of economic contraction). Depressions are longer term, with stronger contraction and chronic high unemployment.

This Depression, is certainly global, and globalization is why it has spread globally, even if the causes were not.

Thank you for the clarification. However, since I am optimistic, I hope you are wrong.

Ummm... no, it isn't circular. Here is the argument.
1) The invisible hand is the force that drives capitalism
2) Capitalism exists.
3) Ergo, the invisible hand exists.

If there was no invisible hand driving capitalism, then there wouldn't be capitalism.

Actually I consider black markets to still function through some variant of an invisible hand, including drug dealing. Drug dealing even tends to have somewhat of a corporate form to it(a finding in the popular book Freakonomics). A weaker invisible hand though? Sure, but they aren't coordinated by a central planner or just by tradition. Instead, profit making groups come together to exchange items with customers. Now the issue is that I did admit to variations in how strong people consider the invisible hand, but there is a difference between saying that a phenomenon is weaker and saying that it does not exist, and refusing to see this distinction is more along the lines of an error on your part, as there is no reason to suppose that an invisible hand is an "all-or-nothing" model of the functioning of the economy. I mean, the market efficiency hypothesis for stock markets has gradations as well.

Pre-capitalist societies didn't have markets as central or structure their workings as much around markets. What you did was based upon what your father did and so on, so their society wasn't so much organized by an invisible hand as convention, and perhaps some regulation given that the Catholic church held to a fair price doctrine.

Business cycles are complex phenomena involving many individuals and various complicated issues to sort through. It is not a disease where people usually see that something is coming down and where we've had a significant amount of time, resources and luck in breaking down what the cause is as with a number of diseases, but rather failure to even predict a recession is rather typical as is a delayed reaction to the matter. In any case, there have even been theories that the business cycle is basically built-in to the system, which can be seen with real business cycle theories, and Minsky's financial instability hypothesis, both of which only offering us perhaps some ability to ameliorate the problem, but basically making the cycle insoluble.


Monty, you are providing a claim without evidence, the reason being that invisible hand relations are maintained through mutual self-interest due to long-run games. It is found in game theory that a tit-for-tat strategy is better in long-term games, and this means that a stable positive equilibrium can exist in a prisoner's dilemma situation. Only in short-term games is your interpretation of the prisoner's dilemma inevitable.


Umm... there is no reason to consider such a view short-sighted, wrong, or dangerous given how often credibility is used as a sales mechanism, a means for competitors to distinguish themselves. If the invisible hand is trustable for straight up quality of products (which is increasing) then I don't see a problem with positive relations. Now, I won't deny that positive relations issues might be still a problem due to the more complex information problems going on and principle agent issues, etc. However, I tend to doubt that such complex problems have easy solutions no matter where you look.


The soviet union did work, until it failed. It just worked worse than capitalism. However, if I had to choose between the USSR and being a serf, then excluding the mass killings, I very well might choose the USSR and attack people who attacked socialism, because by the knowledge of the fictitious situation, it was the best solution unless somebody had something better.

Well, you could actually argue that there was an invisible hand for those processes, however, then you would be moving past Adam Smith's metaphor which only worked for market processes. Yes, the invisible hand is just a metaphor for feedback. Frankly Adam Smith's insight is basically trivial by this point in time and I really don't care for Adam Smith in general either as he is over-promoted. It is just that people generally know what is meant by the invisible hand.


Monty, unless you pretend to be a cultural prophet, your point is BS. Not only that, but unless you have some evidence that we have reached some unusually corrupt age, it is just nonsense. Not only that, but the prisoner's dilemma metaphor is basically a failed interpretation of game theory given that long-run prisoner's dilemmas don't have the problems of short-run games. So, drawing a distinction from that is just nonsense. Not only that, but the relation between trust and economic freedom(Heritage style definition) doesn't seem well established.
http://www.nationmaster.com/graph/lif_t ... ust-people As the US is in the dead center, despite having one of the most pro-market ideologies out there.

As for the matter of culture, Monty, there is no sign that we have less culture now then we had before. Heck, industry has manufactured most of our culture with loads of book retailers, movies, and TV shows, and no other society has had this level of cultural wealth. Certainly not this much available to the average person. The US, which has a pro-market ideology, is also generally considered a major cultural capital given the prominence of our movie industry.


I'd rather avoid people. Also, I think you must have visited some homogeneous community, and such a thing seems quite artificial to me. I also don't want to be treated like someone's relative, friend, or neighbor. Unless "neighbor" means that they leave you the heck alone like I do with my neighbors.


I don't see how this is deception. I mean, I don't really see some universal "big decision" where I really can draw some line and say "that's a big decision", as the only things that come up are governmental actions, as those typically involve tax-payer money and controlling lives of people who otherwise would have no association to such a body.

Not only that, but honestly, I don't see how a governmental action will avoid favoring a small group of people who wish to shape society to their whim. Nor do I see people as generally rational enough to select actions that wouldn't be generally corruptible.

In addition, I also don't see much reason to think that economic disparity is the actual source of crime. There are a few reasons.
1) The inequality of happiness is generally the same in all 1st world nations. This means that a happiness based explanation is questionable. http://www.nationmaster.com/graph/lif_l ... inequality
2) A large number of crimes do not have significant financial pay-off. This includes drug-dealing, as most drug dealers make less than minimum wage(a finding popularized in Freakonomics).
3) There is a significant correlation between poverty and other negative personal factors, which can explain some of the crime rate differences. http://econlog.econlib.org/archives/200 ... _poor.html
4) There is also likely a strong genetic relationship for crime as there is for most other actions.

Perhaps you disagree, however, the problem is then why this crime is caused by financial factors despite the fact that these financial factors are not visible in measurements of happiness. The way I can see your argument progressing is that you argue for a cultural factor that correlates with income inequality, the issue I can see with that is that conscious cultural manipulation is usually considered questionable for a free society. In fact, it is something that I am personally very uncomfortable with, and you might say "well, the elites will then call the shots" and perhaps to some extent they will, but with elites, there is more ability to defy them, because there is not a single elite person, and the different individuals can disagree. Which is the basis of a Hayek quote: "It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we as individuals can decide what to do with ourselves."

Back in the 1970's America was the biggest manufacturing country in the world. The biggest oil producer in the world and the biggest lending nation.

Fast forward to now. The jobs have all gone to China and Mexico because globalization is a "good thing".

Americans (and Australians and Englishmen) used to drive locally made cars, wear locally made clothing and look at locally made tv sets.

But now the jobs have gone. So how are you supposed to earn a living, buy a house and support a family?

You can't! So tell me again how great globalization is?

Ok, try this one on:

1) Conflict between Brahma, Vishnu and Shiva is what creates the universe.
2) The universe exists.
3) Ergo, Brahma, Vishnu and Shiva do exist.

And ... You couldn't have the universe if Hinduism wasn't true!


All hopelessly circular because the first premise is assumed to be true, and that (coincidentally) is what one is trying to prove! It's a huge fallacy.

Pretty Great!! Oil production peaked in the US due to limited supply and rapid consumption. If not for international trade (aka globalization), supply would have dropped dramatically, price would have risen dramatically, and the recessions of the 1970s/1980s would have been depressions.

Monty, <removed by ed>. You've already pointed out that "the invisible hand" is just the name of the feedback processes that exist in the market to promote it's functioning, and I don't think you would accept the premise that a working system can exist without such feedback processes. Am I neglecting premises? Yes. But only because I consider my point ridiculously obvious.

Here, a better one.

1) The invisible hand is a name for feedback processes promoting the ongoing function of capitalism
2) Working systems demand feedback processes that promote their ongoing function
3) Capitalism is a working system.
4) Therefore the invisible hand exists.

You can't do that with Vishnu, Brahma, and Shiva because their existence isn't a matter of definitions, but rather they are more than "universe providing forces". If "the conflict between Vishnu, Brahma, and Shiva" meant the same thing as "universal constants that regulate reality" then your own argument would actually be one I would consider relatively valid. The problem is that it isn't.

Brahma is the force of creation; Vishnu of preservation; Shiva of destruction. They permeate all transient things. But even though this metaphoric approach to the Trimurti has a certain appeal, it cannot be proved by circular arguments.

http://en.wikipedia.org/wiki/Trimurti

And the invisible hand is not a universal constant - at best, it is a pattern that sometimes occurs, but often doesn't.

Actually the existence of anything can be proven if you define the terms correctly, the issue is that you aren't really proving anything new, but rather showing what others should already know, as the matter is tautological. Frankly, I believe you should already know that the invisible hand exists to some extent and I think you are just being obnoxious in arguing against this for some rhetorical point rather than something else. If instead of invisible hand, somebody said "feedback mechanisms existent in the capitalist system promoting it's functioning" then the point becomes almost ridiculously obvious.


The invisible hand, as I already stated, refers to the feedback mechanisms in a capitalist system that promote it's functioning. In any case, Monty, there is no evidence that capitalism literally doesn't function, and plenty of evidence that capitalism does function, you've even joked about the growth in the production of widgets. Even if you want to deny that there is evidence that capitalism functions, there are GDP growth rates going back for decades and even centuries showing that capitalism works, life satisfaction and happiness studies that favor people who are in relatively capitalistic systems http://www.nationmaster.com/graph/lif_l ... tisfaction http://www.nationmaster.com/graph/lif_h ... piness-net , there is the significant comparative failure of the major non-capitalistic systems such as that in the USSR and feudalism, and generally an invisible hand kind of operation is upheld by just about all economists with even the New Keynesian attempt at a microeconomics involving stickiness being rejected due to a lack of good evidence. As well, in business studies, the same view of the economy is taught. In addition, firms enter and exit, and there are changes in what is offered, prices will increase and decrease, employees are hired and fired, etc. The issue with this is that unless you are going to posit that the Illuminati are doing all of this, you either have to say that all of these actions are completely random, or that local decision makers are acting upon their local incentives towards some form of end that according to many theories, supports the common good.

In any case, you aren't saying anything. You are whining, complaining, only trying to see every flaw and wrong, and just mumbling "there is no invisible hand" despite the mounds of evidence that something is apparently working somewhere. Perhaps you have some form of Veblenian view of the economy, where the entire thing is just a matter of social classes, but if so, then why did efforts at economic planning after WW2 century generally fail? This means the USSR, China, India, etc. Why then did China start improving after it's economic model changed but not much beyond that? I mean, I'll be honest, the idea that "no invisible hand exists" or even that it barely exists, seems to lack support.

I saw a documentary ("The End of Suburbia") on this, and it states that the '70s US oil production peak was simply the point in time, when the most oil that could possibly be extracted at one time was being extracted from the ground, and price per barrel would always tend towards rising from then on, due to falling rates of extraction meaning a shrinking supply.

When you said "Oil production" did you mean "Oil Price"?

Nope. Because we didn't have a crocodile filled moat ringed with an inpenetrable force-field around the country - when we could no longer increase domestic production, we bought more from other countries. So the price was buffered by other countries that still could increase production. US demand did increase the world price for oil, but not outrageously.

Any single country can run out of oil and it is a moderate to minor issue; when global peak oil is hit, then the price will tend to rise everywhere.