11:24, 5/12/12

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John Ward has perhaps gone sane.

Let me try to provide answers to his questions.
http://hat4uk.wordpress.com/2012/05/12/saturday-essay-a-world-terrified-by-impotent-ghosts-from-the-past/

.  .  .  "To get to bold solutions we need to start asking brave questions and attacking shibboleths. I ask questions like those below all the time. They usually evoke helpless laughter from the Preservatives, but they have a validity that is inflating with every year. Perhaps from here on in, the Masters of the Universe should think of the whole as an exam paper:

3rd GRADE ECONOMIC REALITY, MODULE ONE.

Answer ALL Questions. Answers without workings-out shown will be scored zero.

1. The production/mass demand circle is looking increasingly vicious – what other criteria for success should we use to replace it?

Let us reconsider the dependency that structures this circle.

The wealthy do not provide enough demand to drive production supporting

the entire group.  Producers are being forced out of the economy.

A successful economy supports all who wish to participate.

2. When is a siege-economy (boo-term) just self-sufficiency (hooray-term) by another name?

A siege-economy is a top down system that temporarily exists within a closed and defended perimeter. It is not voluntary or self sufficient.  It will end when supplies run out or closure ends.

Self sufficiency is voluntary and open ended.  There is no enforced perimeter.
They are very different, both in scale and concept.

3. If investment banking largely moves indigenous jobs offshore, starves the entrepreneurial sector, and creates unrepayable sovereign debt, why are all these heavily-bonused, tax-avoiding jerks necessary?

These heavily-bonused, tax-avoiding jerks like it.

I can argue the details and the assumptions.  We do need experts in capital formation.  We do not need a conspiracy of thieves. 
4. Should every G20 member have a large mutual-trust bank that encourages cutting-edge new business sectors and low-cost social housing? If not, why not?

Cutting-edge new businesses are very destructive of established businesses.

Such businesses are always high risk.

Low-cost social housing is a trap for the housed. It cannot remain low cost without extensive and intrusive regulation.  It is either unlivable or a "free good".

"Rent seeking" will quickly kill any such banking enterprise.   

No.
5. ‘Enlightened self-interest is an oxymoron in today’s Western culture’. Discuss with examples.

Enlightenment has been allowed to perish to the plaudits of the financial industry and the religious faithful.  "Greed is good!"

Self interest remains.   We can blame the RAND Corp. and the Eisenhower administration.
6. ‘The health of society is more important than the wealth of shareholders’. True or false?
True.   The shareholders have a board of directors to look after them.
7. ‘Those who dislike Milt Friedman’s ideas are closet Communists’. Discuss with the use of your left brain hemisphere.

Communism is a near extinct religion.  

Milton Friedman was a follower of Ayn Rand from his early college years. Rand was a refugee from the Soviet Union.

She was virulently opposed to socialism in any form. 

She did finally take Medicaid as an alternative to death by bankruptcy.

Paul Krugman has pointed out that there are two destructive fantasies for young adult readers; Atlas Shrugged and the other involves Orcs.
8. ‘Sustained growth, near-full employment, and social stability of the kind seen in the mixed economies of the West between 1952 and 1965 has never been equalled’ (CIA website). To what extent is this past judgement relevant to the future, if at all?
It appears to offer the possibility of a stable economic system.
9. ‘The purpose of capitalism is to maximise the healthy employment of society’s law-abiding citizens and thus reduce the cost of government’. Would you agree with that? Give reasons and quantify why they are relevant.

I would not agree.

The purpose of capitalism is to concentrate wealth at minimal administrative cost.  

Unregulated, it is excessively successful. 

The concentration of wealth leads directly to demand failure and depression.
10. List FIVE positive benefits for society as a whole deriving from obligation and derivative leveraging. (NB none of them should include your salary or options growth)."
Impossible.



http://krugman.blogs.nytimes.com/2012/05/12/the-economics-of-marginalization-and-hopelessness/

May 12, 2012, 2:50 pm

The Economics of Marginalization and Hopelessness

That’s one of the subject headings in this recent survey paper (pdf) on teen births, which are much higher in America than in other advanced countries. The authors find evidence suggesting that inequality and lack of mobility are central, another sign that Wilkinson-type views about the corrosive effects of inequality are going seriously mainstream.
Here’s the money graph:

I was wondering how this would look if we got down to individual states. Here’s the scatterplot, with inequality from the Census and teen births from KFF:

I find this interesting, both for the apparent relationship between inequality and teen births and for the somewhat surprising social health of the Northeast Corridor; how do the states of Acelaland manage to have relatively few teenage births despite high inequality? Is it the nature of the inequality? Is it more liberal contraception policies?
No answers today. But interesting stuff — and more evidence that we are gradually poisoning our society with inequity."

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