Capitalism or Socialism: Which is better?

[New Hampshyre]

Do you understand that saving and investment is important to the economy?

Do you understand that computers are important to the economy?

Yet, we won't need to FORCE people to make them! The same is true for saving an investment, we don't need to force people to do things that are for their own benefit.

The free market makes it profitable to save and invest in efficient amounts. In the government politicians have incentives to use DEFICIT SPENDING constantly! The governments all around the planet have a terrible record when it comes to "saving", they're all doing the exact opposite. Same thing with investment. The government shuffles money off to the most absolutely retarded places you can imagine because it doesn't cot a politician or bureaucrat a penny to do so. In fact, they actually BENEFIT from that mal-investment because they're much more likely to get votes from the people the spent money on.

The market has incentives to efficiently allocate resources, the government "planners" have incentives to invest our resources poorly! It's not even a close contest.

[Neu Leonstein]

Are you talking about the american media? I dont watch the american media wery often since i dont live in the united states.

Any media. Doesn't seem to correspond with countries.

He doesn't even no basic economics. His logic is contradictory.

So if it is, then address that. Telling someone they don't know economics is not a valid argument. Especially when, and I'm purely guessing here and don't mean to offend, you presumably don't hold a decent economics degree yourself.

There are 4 ways of spending money:
1)Spending your own money on yourself. In this case you will spend it carefully because every penny spent is 1 less you have to spend and you will make sure to buy the best things possible for your money because you're the one who is going to be receiving it.

2) Spending someone elses money on yourself. In this case you'll not be careful to not spend too much because spending a penny of someone else's money presumably costs you nothing, but you will make sure to buy the best thing possible since you're receiving it.

The source of money is irrelevant when spending it. Once you have it, you maximise your utility subject to the budget constraint. Whether that constraint is the result of you having worked, you having won the lottery or you having received a blank cheque from someone doesn't matter. You say as much in the last sentence.

3) Spending your own money on someone else. You'll make sure to spend as little as possible because every penny spent is 1 less you have to spend, but you won't be able to buy the best thing possible because you don't know the preferences of the person you're buying for as well as they do.

That's conjecture. It depends on the circumstance - I might know quite well what my wife of 64 years would like. And I might get a lot of happiness out of spending money on her, if that makes her happy. Again, I see no difference between this way of spending money and the first two. I still maximise the benefit subject to a budget constraint.

4) Spending someone elses money on someone else. You'll not make sure to spend as little as possible because spending the money costs you nothing, and you'll also not buy the best thing possible because you don't know the preferences of the person you're buying it for as well as they do themselves. This is the WORST way to spend money and that is how money is spent in a planned economy.

There are difference between the scenario you paint and a planned economy. There are much better reasons to be sceptical of economic planning than this one. Again, a government's spending costs it something, namely the opportunity cost. It won't necessarily spend more than it needs to, it will only do so if it doesn't have the appropriate cost-benefit analysis tools in place.

The point on not knowing agents' preferences is valid though.

[New Hampshyre]

What? You say that the free market is the best economic model because consumers will buy the best products, but that ignores the other aspects of an economy like saving and investment. And than you say that there are taxes in a planned economy what the fuck?

Dude... In the free market people have incentives to invest in the companies that are best able to return high profits. If a company is making high profits its because they are providing a service that society needs more of. This system automatically sends societies resources to the places where they are most needed.

And individuals and private institutions have FAR higher saving rates than governments.

[Arilando]

Planning does not kill competition, the planning entity could still set up to people to make the best product, and the winning product is than sold to the producers.

Competition is a constant, it doesn't just end with a single winner like that. Also, "best' according to whose judgement? Some consumers like safer, more expensive cars, others like cheaper less safe ones. Some like flashy cars, others prioritize gas mileage. In a private market ALL of these concerns are automatically accounted for, not so in a planned economy.

It would also be accounted for in a planned econmoy if the planners are good. And i dont think people should be driving in unsafe cars.

The profit motive and the free market are excellent at accurately allocating resources, governments have a TERRIBLE track record at trying to plan economies. They do NOT have the incentive or the correct tools to correctly allocate resources. Politician's highest priorities is always to get re-elected and to maximize their own power, NOT to maximize efficient allocation of resources. They have the incentive, instead, to buy votes with their power in order to secure future re-elections.

lol this is the stupid assumption that people cant be altruistic.

The market participants have the incentive to correctly allocate resources because they are spending their OWN money and so it is in their best interest to make sure their investments made in the most promising businesses, that they buy from the most efficient producers, ect.

This does not take into account that there is most likely misinformation and disinformation in a market.

There are 4 ways of spending money:
1)Spending your own money on yourself. In this case you will spend it carefully because every penny spent is 1 less you have to spend and you will make sure to buy the best things possible for your money because you're the one who is going to be receiving it.

2) Spending someone elses money on yourself. In this case you'll not be careful to not spend too much because spending a penny of someone else's money presumably costs you nothing, but you will make sure to buy the best thing possible since you're receiving it.

3) Spending your own money on someone else. You'll make sure to spend as little as possible because every penny spent is 1 less you have to spend, but you won't be able to buy the best thing possible because you don't know the preferences of the person you're buying for as well as they do.

4) Spending someone elses money on someone else. You'll not make sure to spend as little as possible because spending the money costs you nothing, and you'll also not buy the best thing possible because you don't know the preferences of the person you're buying it for as well as they do themselves. This is the WORST way to spend money and that is how money is spent in a planned economy.

You're 100% wrong Arilando.

Not if you ask what the consumers want, by making a poll.

i'm a consequentialist, so i dont care if you think it is tyrannical.

Allowing the government to be tyrannical has some pretty serious consequences Arilando![/quote]
Tyrannical by your definition, not my definition.

[Mercator Terra]

There is no such thing as altruism. Everything you do you get something out of it. I pick of my hand I did it because I wanted to. I risk my life to save a kid out of a burning building I do that because of the good feeling I get. Everything you do you get satisfaction out of. Or you perceive that the action you are about to do you will get satisfaction.

[Arilando]

It could have two teams competing about making the best product and than sell the best product to the consumers. So yes.

First who decides what is the best. Second forcing the consumers to buy that one product is the "tax". Its just has a different nature.

The best is what will serve consumers the best. And no it's not a tax, just like slavery or time in prison is not a tax. Not that living in a planned economy is like a prison or slavery, i could just not find another example.

[Mercator Terra]

First who decides what is the best. Second forcing the consumers to buy that one product is the "tax". Its just has a different nature.

The best is what will serve consumers the best. And no it's not a tax, just like slavery or time in prison is not a tax. Not that living in a planned economy is like a prison or slavery, i could just not find another example.

Its the same as a tax. The gov forcefully takes the money and gives you something in return. Except this you have no other choice so its basically forcing you. Who decides how it serves the consumers best. There is no objective best. For example. I like vanilla ice cream. I think its the best. You might like chocolate ice cream. Now which one is the best?

[Arilando]

What? You say that the free market is the best economic model because consumers will buy the best products, but that ignores the other aspects of an economy like saving and investment. And than you say that there are taxes in a planned economy what the fuck?

Dude... In the free market people have incentives to invest in the companies that are best able to return high profits. If a company is making high profits its because they are providing a service that society needs more of. This system automatically sends societies resources to the places where they are most needed.

And individuals and private institutions have FAR higher saving rates than governments.

No the free market does not reward the companies that are making a contrubtion to society, they reward the company that treats it's workers the worst, has the best commercials, pollute the enviroment the most, and has the cheapest but worst products. And you do know that a government can influence saving rates?

[Neu Leonstein]

And individuals and private institutions have FAR higher saving rates than governments.

Really?



In the US this has often been the case (though Americans are hardly model savers). But that's not due to anything innate to government, but rather a fairly dysfunctional political system in the States, as the graph above (for Australia) illustrates.

[Arilando]

The best is what will serve consumers the best. And no it's not a tax, just like slavery or time in prison is not a tax. Not that living in a planned economy is like a prison or slavery, i could just not find another example.

Its the same as a tax. The gov forcefully takes the money and gives you something in return. Except this you have no other choice so its basically forcing you. Who decides how it serves the consumers best. There is no objective best. For example. I like vanilla ice cream. I think its the best. You might like chocolate ice cream. Now which one is the best?

It is not a tax under the correct definition of a tax.

[Mercator Terra]

Yeah the gov are real good savers. Thats why we're 14trillion dollars in debt.

[Mercator Terra]

Its the same as a tax. The gov forcefully takes the money and gives you something in return. Except this you have no other choice so its basically forcing you. Who decides how it serves the consumers best. There is no objective best. For example. I like vanilla ice cream. I think its the best. You might like chocolate ice cream. Now which one is the best?

It is not a tax under the correct definition of a tax.

There is not correct definition. And still you haven't answered my question. Which one is best?

[Neu Leonstein]

Yeah the gov are real good savers. Thats why we're 14trillion dollars in debt.

1. You're talking about the US. Not the be-all and end-all of good economic policy. Think China - their government seems to manage quite a bit of saving.

2. American consumers are shit at saving. Hence why you're in a big recession now.

3. In many countries, Singapore for example, the government has successfully made people save. Not the kind of policy I like, but it seems to have been fairly successful there, not least due to good management.

[Arilando]

Yeah the gov are real good savers. Thats why we're 14trillion dollars in debt.

I dont care about the us government, there are other government that are not in debt. You should become more international

[Arilando]

It is not a tax under the correct definition of a tax.

There is not correct definition. And still you haven't answered my question. Which one is best?

There is a correct definition.

[Mercator Terra]

Yeah the gov are real good savers. Thats why we're 14trillion dollars in debt.

1. You're talking about the US. Not the be-all and end-all of good economic policy. Think China - their government seems to manage quite a bit of saving.

2. American consumers are shit at saving. Hence why you're in a big recession now.

3. In many countries, Singapore for example, the government has successfully made people save. Not the kind of policy I like, but it seems to have been fairly successful there, not least due to good management.

We're in recession due to alot of bubbles created by the federal bank. I would go into detail but atm im done with explaining things. I can recommend book articles etc but im tired and freezing my ass off.

[Mercator Terra]

Yeah the gov are real good savers. Thats why we're 14trillion dollars in debt.

I dont care about the us government, there are other government that are not in debt. You should become more international

Like?

[Mercator Terra]

There is not correct definition. And still you haven't answered my question. Which one is best?

There is a correct definition.

Which one is best?

[Arilando]

I dont care about the us government, there are other government that are not in debt. You should become more international

Like?

Luxembourg.

[Arilando]

There is a correct definition.

Which one is best?

None of them, so both would be avaviable in a rational planned economy.

[Quailtopia]

The government would need taxes to be able to function in a planned economy. We're are they getting their money to run all this from?

From the products the people buy obviously

You're bad at communism.

He's advocating a weird mix of ill-informed National Bolshevism and Marxism, methinks.

[Neu Leonstein]

We're in recession due to alot of bubbles created by the federal bank. I would go into detail but atm im done with explaining things. I can recommend book articles etc but im tired and freezing my ass off.

Don't bother, I've read them all. And I do think the Fed kept rates too low for too long. But it's hardly the only, or even the main reason. The hilarious thing about the Austrians is that they emphasise the nature of the economy as an almost biological organism, unfathomably complex and driven by interactions between private individuals subject to non-mechanical or -linear relationships that we from the outside can't reliably measure or predict.

And then they say the government is at fault for everything. Am I the only one who sees the contradiction?

[Mercator Terra]

Which one is best?

None of them, so both would be avaviable in a rational planned economy.

Thats why best is subjective... Well I through with you. Your ideas are inefficient and just plain stupid and im freezing. I think im going to go sleep.

[New Hampshyre]

The source of money is irrelevant when spending it. Once you have it, you maximise your utility subject to the budget constraint.

No dude, it is entirely relevant. Government has access to as much of the American tax payers money as they want to take from both today's citizens and from future citizens through deficit spending. And when they are spending out money and not their own, then obviously they are going to be a lot less careful with their spending. My home town just built a light rail system, in the process of doing so it ended up costing over a hundred million MORE dollars in cost-over runs then it was supposed to cost and hundreds of thousands of dollars are LOST! They've simply VANISHED!

And just look at the high prevalence of fraud in Medicare and Medicaid. Hundreds of millions of dollars are sent to non-existent clinics writing false claims. This happens because it doesn't cost Medicare and Medicaid anything. They don't lose profits, they don't lost customers to competitors, and they aren't spending their own money in the first place so it simply doesn't hurt them.

Whether that constraint is the result of you having worked, you having won the lottery or you having received a blank cheque from someone doesn't matter. You say as much in the last sentence.

But what if you have a BOOK of blank cheques? You can keep on just taking more and more. You're not careful with the spending because it doesn't cost you anything to buy stuff. And its different from winning the lottery of just having a lank cheque because you could just put that money in your bank account and then it is YOUR money and you'll have incentives to spend it wisely. But with the government, the politicians and bureaucrats can't spend the money on themselves (at least not directly) but they sure as hell have every incentive to spend it on the special interest groups that help them get elected.

That's conjecture. It depends on the circumstance - I might know quite well what my wife of 64 years would like.

Ohh get real. We're talking about politicians spending money on people that live hundreds or thousands of miles away that they'll never meet in their life. Even in your example, there are still SOME things you don't know about your wife, you don't read her mind after all.

There are difference between the scenario you paint and a planned economy.

Not that you bothered to explain what that is...

There are much better reasons to be sceptical of economic planning than this one.

So? Am I limited to only using 1 argument?

a government's spending costs it something, namely the opportunity cost.

The opportunity cost of spending someone else's money is a WHOLE LOT LESS than that of spending your own money! If the government doesn't spend my money the government just LOSES IT. It has every incentive to use as much of my money as it can get away with.

It won't necessarily spend more than it needs to

Need? Does a politician NEED to spend money on his district to buy votes? Because they certainly WILL do that. Do they NEED to spend money on special interest groups that help them stay in office? Because they'll always do that too. And, they'll spend as much money as they can because if the lose essentially nothing by spending it.

Let's say I'm a congressman for my state. I have the opportunity to spend 150 million federal tax dollars on the people of my state through ear marks i can attach to spending bills. If I do this I'll get a big boost in local support for my next election and I'll be able to pay back favors to the special interest groups that helped me get elected. If I DON'T spend this money then I lose those positive things and I get nothing in return. Some OTHER politician will just have more to spend in THEIR district. And if I some how magically get no one to spend it, how has that really benefited me? My constituents will get back 1/2 a penny each on average, completely unnoticeable.

Politicians have incentives to mis-allocate resources while private parties have incentives to efficiently allocate them. Case closed.

Also, public spending is equivalent to theft and is completely inexcusable in the first place.

[Genivar]

Aw fuck it, lets just abolish money!