Two weeks into Occupy Wall Street protests, movement is at a crossroads

@mysteryman,

mysteryman wrote:

Quote:
I don't think DrewDad denies that---or Adam Smith for that matter. But just because you can buy or sell something on a free market, that doesn't mean you created the value it has. For just one obvious counterexample, stolen goods have been purchased and sold for centuries as well, at prices determined by a free market. But I think even you would agree that the thieves didn't create the value of those goods. Your argument doesn't refute what DrewDad said.

I have to disagree.
Nothing has any type of monetary value until someone wants to buy it.
That is the market creating the value.
If a piece of swampland just sits, its not worth anything.
However, if a farmer buys that land, and uses it to plant corn, that land has become valuable.

It becomes valuable b/c someone does actual work to plant corn on that property - not because it was bought for that purpose. In this case, a different actor (the laborer) is the one adding value to the property. Of course, in a small operation, the owner and labor might very well be one and the same.

Quote:

Manhattan was bought from the Indians for $39, would you still say that is was only worth that?
Or, would you say that it was now worth much more, because of the value placed on it by people?

Sure - people who actually built or did things on it, not just someone who claimed ownership of it. That's the entire point of the Smith piece.

Cycloptichorn

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@mysteryman,

mysteryman wrote:

Nothing has any type of monetary value until someone wants to buy it.
That is the market creating the value.

By the same token, does the air you breathe have no value to you because nobody's charging you for it and you don't need to buy it? That would be like saying that the fishes you catch have no weight unless you take a scale and weigh them. Markets measure value; they don't create value.

mysteryman wrote:

If a piece of swampland just sits, its not worth anything.

Conservationists would disagree.

mysteryman wrote:

Manhattan was bought from the Indians for $39, would you still say that is was only worth that? Or, would you say that it was now worth much more, because of the value placed on it by people?

In Adam Smith's calculus, the raw land is still worth $39 (plus 350 years worth of compound interest, which is considerable). The reason the improved land is worth much more today is that millions of people have invested billions worth of labor and capital in it. There's plenty of Manhattan-sized islands along the East Coast. Among them, only Manhattan is worth as much as it is---because only Manhattan's land has been mixed with that much labor and capital.

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@mysteryman,

mysteryman wrote:

You ignored the rest of my statement.
WHY?

Because I have no duty to respond to everything you say.

mysteryman wrote:

Are you saying that there are no wealthy people in Sweden?

There are wealthy people in Sweden. But a much smaller percentage of Swedes is as rich as IKEA's Ingmar Kamprad, and a much higher percentage of Swedes is above the US's poverty level.

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I just found 15,000 jobs available.
I wonder if any of the OWS people that are complaining about jobs will take one of them.

Of course, they have to move to North Dakota to get the job, but if they really want to work, that shouldnt be a problem at all.

http://finance.yahoo.com/blogs/daniel-gross/north-dakota-spurred-energy-ag-boom-3-2-122815061.html

http://money.cnn.com/2011/08/25/news/economy/halliburton_north_dakota_jobs/index.htm

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@mysteryman,

mysteryman wrote:

Nothing has any type of monetary value until someone wants to buy it.
That is the market creating the value.

Markets don't create value. They may help determine value, but they don't create it.

mysteryman wrote:

If a piece of swampland just sits, its not worth anything.
However, if a farmer buys that land, and uses it to plant corn, that land has become valuable.

In this case, the land owner is also the laborer, so it does not act as a counter example.

No one is saying that land does not have value.

Smith's point is that just owning a piece of land does not add any value to the products produced on the land.

mysteryman wrote:

Manhattan was bought from the Indians for $39, would you still say that is was only worth that?
Or, would you say that it was now worth much more, because of the value placed on it by people?

Again, Smith's point wasn't about whether land has value.

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Here's an interesting article about the side effects of the OWS protesters in NYC.
Apparently they are hurting some of the 99% they claim to represent.

http://www.foxnews.com/us/2011/11/01/owner-occupy-wall-street-cost-restaurant-21-jobs-and-counting/?test=latestnews

Quote:

A New York City cafe cut its staff by nearly 25 percent last week because of lost business due to the ongoing Occupy Wall Street protests, the cafe's owner told FoxNews.com

REad the rest of the article.

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@mysteryman,

Yeah - you're right, the OWSers should be ashamed of those dozens of job losses - why, they're almost as bad as the millions of job losses caused by the system they are asking to be changed.

Straws. You and Fox grasp for them.

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PS on the Adam-Smith thing: Because Smith is an author who weighs arguments from all side before he draws his conclusions, his writing is susceptible to quote-mining. It's usually a good idea to mistrust second-hand quotes from publications with an ax to grind, and to double-check with the original. With that in mind, I thought I'd post a link to Smith's (1776) chapter

On The Rent of Land.

As far as I can see, The Daily Kos's summary is okay in this case.

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@hingehead,

Oh, fer chrissake Hinge . . . what do you expect . . . a sense of proportion?

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@Thomas,

PPS: Since I was in a cross-checking mode, I cross-checked the Daily Kos's claims about neoclassical economists and their conspiracy to hush up any talk of economic rent.

Here their claims turn out to be bogus. Neoclassical economists never dropped discussions about economic rent from their textbooks. Alfred Marshall, the founder of neoclassical economics, discusses it in the context of land rent and monopoly. So does Alfred Pigou, Marshall's student and successor in Cambridge. While he doesn't use the word "economic rent", he does discuss the concept in the context of monopolies, and of externalties like pollutions. Modern neoclassical textbooks, from Paul Krugman on the left to Gregory Mankiw on the right, all discuss rent-seeking. Even David Friedman, an anarcho-capitalist who gradually wants to privatize all government functions, does discuss it in his textbook on Price Theory. Where the Daily Kos gets its conspiracy story from is beyond me.

The problem with US governments cuddling rent-seeking bankers doesn't lie with neoclassical economists. It lies within a political class that has lost touch with all rational economic theory, left or right.

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@Thomas,

Thomas wrote:

georgeob1 wrote:
No. For the past few centuries at least the land has been purchased and sold - and at values determined by a free market.

I don't think DrewDad denies that---or Adam Smith for that matter. But just because you can buy or sell valuables on a free market, that doesn't mean you created their value. For just one obvious counterexample, stolen goods have been purchased and sold for centuries as well, at prices that correctly reflected their value and that were set by free markets. But I think even you would agree that the thieves didn't create the value of those goods. Hence, your argument doesn't refute what DrewDad said.

One who owns real property of any kind - land, precious or commercially useful metals, grain or any such material is merely storing the gains associated with earlier value added economic activity in another form. Rents, whether for real property the use of which is transferred to others; or even capital gains associated with changes in money value of things; or even interest paid on money temporarily made available to others, merely reflects a portion of the opportunity cost/benefit associated with the use of the property or money - or ultimately the value created earlier to make up the original purchase price. I'm no devotee of economic theory, but do recognize that such "rents" are, and have always been, an inescapable consequence of the ownership of anything. Moreover they are also a consequencve of the value added economic activity that created the ownership in the first place.

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@georgeob1,

georgeob1 wrote:

I'm no devotee of economic theory, but do recognize that such "rents" are, and have always been, an inescapable consequence of the ownership of anything.

No it's not, but I think I see where you're coming from. One common problem with economists is that they often use everyday words in exotic ways. Consequently, when non-devotees of economic theory read what an economist writes, they often think they know what the economist is talking about---but don't.

The word "rent" is one example of that. "Rent" in the plain-English sense, the rent that landlords charge tenants for using their apartments, does not equal economic rent. On the other hand, when monopolies extract surcharges from their customers because the customers cannot go anywhere else, that's economic rent but usually not rent in the plain-English sense. And to confuse things completely, both usages just happen to coincide in Adam Smith's discussion.

Perhaps we're better off not reintroducing such a murky term into general usage.

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@Thomas,

Well, we should definitely not resurrect the term "rentier." It's almost always misused, as, for example, in the Daily Kos post that generated this discussion. A rentier is not someone who collects rents -- that's a landlord. Instead, a rentier is someone who lives off the income of rentes -- i.e. government bonds. Oddly, the Daily Kos article cites a Paul Krugman blog post that actually uses the term "rentier" correctly, but then ignores it and goes on using the term incorrectly to mean "landlord."

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@georgeob1,

You need to be careful in how you define rent; the value added to most items of value are determined by the seller and buyer. Without this exchange, there really is no value.

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@Thomas,

Thomas wrote:

The problem with US governments cuddling rent-seeking bankers doesn't lie with neoclassical economists. It lies within a political class that has lost touch with all rational economic theory, left or right.

I'll agree with your general proposition that our (and Europe's) political class has lost touch with important aspects of rational economic thought. However, I suspect we may have slightly different concepts of just where their errors lie.

Both Europe (much of it anyway) and the U.S. have governments that have become dependent on borrowed money for the pursuit of their political aims. As a result these government become dependcent on the expected behavior of the potential buyers of their bonds - a market dominated by the same bankers - and for that reason (and others) seek to protect (bail out) these agents of continued government borrowing and political leverage. In turn the bankers themselves take this predictable government behavior into their calculations of future outcomes.

Politicians are generally very adept at blaming others for the bad consequences of their own behavior, and this area is no exception. We have a government that is knowingly deceiving the public about the magnitude of its debts and continued borrowing, and the remedies needed for this growing problem. (The same is true in Europe, but to an even greater degree.) We also have a political opposition that acknowledges the problem, but is itself selective about acknowledging the totality of the remedies required (taxes). Our government actively fosters the delusion that the unhappy results of all this are the sole responsibility of others ( i.e. Wall street, or "the rich").

The problem is greater and even more urgent in Europe where an accelerating demographic collapse and slightly higher levels of public debt exacerbate the current intensity of the problem and shrink the time available to solve it.

The truth is everyone is involved. The greed of politicians for power based on giveaways to voters with borrowed money; or of their public beneficiaries seeking a "fair share" of the property of others; or of profit seeking investors or workers are all very similar. There is no moral or practical difference among them.

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@thack45,

By the way Set, thanks for that post. I always enjoy the various history nuggets you've added to the forums.

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@thack45,

You're welcome, Boss. The history of European colonization in the 15th, 16th and 17th centuries was almost entirely corporate. So, for example, when Cortés or Pizzaro or someone like them set out to conquer and claim land for the King, they took along a royal accountant, to make sure the king got his 20%. They took along a friar or a priest, to spread the true word of god--and to collect the church's 20%. The leader of the expedition got 20%, his officers got 20% and the remaining 20% was split between the soldiers.

The Portuguese sent out expeditions which were told to bring back gold, ivory or slaves, or all three if possible. When Vasco da Gama finally reached the east African city of Malindi and set out across the Indian Ocean, landing in Goa, he was already " in trouble" in terms of the condition of his ships and crew. He returned with a single ship and the surviving crew packed in there--sitting on top of a fortune in silk, spice and gems. Having lost three of four ships, and about 80% of his crew, when all the costs were paid off and the surviving crew were paid off, the expedition paid off about 50 to 1 on the original investment. That was in 1498. This only served to fuel the lust and greed of other Europeans.

The English tended to think in terms of chartered monopolies. There were the Virginia Company and the Massachusetts Bay Compnay which i have already mentioned, and there was also the Levant Company (basically, trading for valuable eastern products through what we think of as Palestine and the Lebanon), the Muscovy Company and other, lesser chartered companies. Those companies were granted monopolies on the trade and the sale of the goodies they brought back. The granddaddy of them all was the Company of Gentleman Adventurers Trading into Hudson's Bay--the Hudson's Bay Company. King Charles I got his head cut off in 1649, and his son wandered Europe in debt for more than eleven years after that. When he got back to England as King Charles II in 1660, he owed a lot of people a lot of money, and he owed a lot of favors to people who had supported his father in the civil wars.

So, since he and his brother owed 15,000 pounds sterling to Admiral Penn, who died before they repaid him, Charles gave a huge swathe of North America to the Admiral's son, William Penn--Pennsylvania. The Carolinas were handed out in parcels to claimants who were mostly owed favors. About half of Virginia, then the richest and most populous colony was handed over to Lord Fairfax.

But the HBC was the granddaddy of them all. In May, 1670, he paid back the one's who really mattered to him. Prince Rupert, his cousin who had commanded armies in his father's name during the civil wars; George Monck, who had marched slowly south from Coldsteam in Scotland with the Parliamentary Guard (the origin of the Coldstream Guards), and who had decided to put Charles back on the English throne; John Churchill, whose father had sold almost everything and bankrupted himself and who had been stripped of his land by Parliament, and who would one day himself be a famous military man as the Duke of Marlborough--these and several other carefully selected men were given a charter which made them virtually independent monarchs. The charter of the HBC gave them the right to levy war on their enemies, to treat with foreign potentates, to colonize or refuse to colonize their lands (which represented about half of North America--certainly the colder half, but by far the richer half in 1670) . . . their powers were almost unlimited. Canada west of what is now Ontario was known as Rupert's Land, and belonged, lock, stock and barrel to the HBC. The Bay, as the chain of department stores is now known, is still a financially viable concern, even after the crown stripped all of Rupert's Land from them. The price of this was that at any such time that Charles or his heirs visited the lands of the HBC, he was to be presented with one black elk and a breeding pair of beavers (the most valuable animal in the world at the time). Well, none of them showed up until Lizzie visited in 1971. The Director of the HBC promptly held a ceremony during which he presented to her one black elk, and a breeding pair of beavers. The beavers proceeded to prove that they were indeed a breeding pair, right there in front of Lizzie, God and everybody else.

The English brought the plauge of overweening corporate power to us. We should get 'em for it.

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It is my thinking that the wall street protest came about after the debt ceiling debate this past summer when it seemed as though law makers were willing to sacrifice everybody and their grandmother to keep the one percent happy.

A Slight Crack in the Anti-tax Bill

Quote:

As the so-called super-committee continues to sputter, the problem is a familiar one: to achieve a debt-reduction deal, Democrats are willing to make concessions on entitlement “reforms,” if Republicans are willing to make concessions on tax increases on the wealthy. GOP officials, meanwhile, aren’t willing to make any concessions, no matter what Dems offer.

There are two sides to the balance sheet: revenue (money coming into the treasury from taxes) and expenditures (money the government spends). Democrats want a “balanced” approach between the two; Republicans insist the revenue side of the balance sheet be ignored altogether.

Well, most Republicans, anyway. There appear to be some slight cracks emerging in the anti-tax wall.

A group of 40 House Republicans for the first time Wednesday encouraged Congress’s deficit reduction committee to explore new revenue as part of a broad deal that would make a major dent in the nation’s debt, joining 60 Democrats in a rare bipartisan effort to urge the “supercommittee” to reach a big deal that could also include entitlement cuts.

The letter they sent represents a rare cross-party effort for the rancorous House, and its organizers said they hoped it would help nudge the 12-member panel to reach a deal that would far exceed the committee’s $1.5 trillion mandate.

Among those who signed were several dozen Republicans who had previously signed a pledge promising they would not support a net tax increase. Among the Democratic signers were some of the House’s most liberal members who have opposed entitlement cuts.

This group of 100 members didn’t go into too many details, other than to say $4 trillion in debt reduction is a worthwhile goal, and that “all options for mandatory and discretionary spending and revenues must be on the table.”

It’s worth emphasizing that the Republican signatories did not explicitly endorse any tax increases on anyone, only going so far as to say they’re open to additional “revenue.” Presumably, some of the 40 GOP lawmakers are only eyeing closing some tax loopholes and scrapping some tax expenditures, and might very well oppose an agreement that called for even modest sacrifices from millionaires and billionaires.

That said, I’m still inclined to consider this progress — modest, incremental, barely-discernable progress. The fact that 40 House Republicans are willing to say publicly that both sides of the budget ledger “must be on the table” is, for all the caveats, a minor breakthrough.

In fact, I’ve been keeping a fairly close eye on this, and yesterday’s 100-member letter is a piece in a larger picture. Sen. Jeff Sessions (R-Ala.), for example, recently said “prepared to look at” the Buffett rule. Freshman Rep. Richard Hanna (R-N.Y.) told voters in September he’s willing to talk about higher tax rates for millionaires and billionaires. In August, four far-right House Republicans participated in a joint town-hall meeting in a very conservative area, and three of the four said they’re open to additional revenue, while one said he wouldn’t rule out tax increases on those earning over $700,000 a year.

A week later, Rep. Randy Hultgren (R-Ill.) was badgered by constituents at a town-hall meeting on the need to raise taxes on the wealthy and corporations, and reluctantly said he’s open to ending oil-company subsidies and closing tax loopholes. Rep. Fred Upton (R-Mich.), confronted by 200 angry constituents the same week, said the same thing.

Maybe this is the result of overwhelming public support for increased taxes on the rich; maybe it’s the result of a sincere desire to cut the debt; and maybe some members want to give Congress’ 9% approval rating a boost. Whatever the motivation, it’s probably a step in the right direction.

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@revelette,

Some new taxes will indeed be required to solve our combined high public debt and slow growth problem. Significant reforms of entitlement programs to reduce future obligations will also be required. In dollar terms the latter are much the larger.

It is merely unfortunate that our political class has played serving poilitical games with this issue, which, in a more advanced form, is already threatening the economic (and perhaps soon political) stability of Europe. The Republicans have resisted new taxes without the assurances that entitlement reform will accompany them. Some have gone as far as to resist them entirely - a cheap political tactic. The Obama administration has done worse, knowingly and deceptively playing a political game assuring the public that evil financiers have created our current problem, (when, in fact it is the result of the long term profligacy of our governments); and, as well in assuring the public that it can be corrected with new taxes on "the rich" and a new expanded regulatory regime (that will stifle the economic activity needed to pay the taxes). The real problem involves both excessive (and still growing) public debt and slow economic growth, and both must be addressed in any coherent solution.

The still unfolding political and economic spectacle in Europe is a good illustration of our near term future if we fail to come to grips with this perverse combination of challenges.

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@georgeob1,

November 2, 2011
There's many a gray head in Occupy Wall Street crowd
By Gianna Palmer and Kate Howard | McClatchy Newspapers

NEW YORK — Vince Taylor doesn't fit the stereotype of unkempt twentysomething protesters at the Occupy Wall Street site in Manhattan, which was clear from the homemade canvas sign he held there.

It read: "75 AND DISGUSTED."

Taylor, a retired economist with a doctorate from the Massachusetts Institute of Technology, flew across the country last Friday from his home in Mendocino, Calif., to join the Occupy Wall Street protest.

"I thought it's important that people recognize that there are a lot of very thoughtful people in this country that identify with the Occupy Wall Street people," Taylor said. Like many of his fellow protesters, Taylor said he was concerned with income inequality in America and corporate influence in Congress.

Though he was on the older end of the protesters, seniors and middle-aged adults are hardly uncommon at Zuccotti Park. A few feet from Taylor, a graying man and woman sat on steps at the park entrance singing "On the Road to Freedom." Other seniors and middle-aged people held signs and milled about.

Like the younger protesters, the older crowd at Zuccotti Park offers a variety of reasons for being there, but all fit under the broad umbrella of being fed up with the status quo.

"What do I want? In a word, Denmark. The standard of living of Denmark," said Robert Reiss, 55, who said he'd been bringing a different protest sign to the park every day for five weeks. "Clearly the mechanisms of normative change in America are broken."

Joseph Bear Soldier, who's also 55, sat a table covered with information about the American Indian Movement. "We're an American Indian group giving a voice to the people who can't be heard," he said.

Jerome Cirie, 66, said he was concerned with what he saw as excessive imports and not enough manufacturing jobs in America. "I'd pay more for my goods if my neighbor had a better job," he said.

Though many of the older people in Zuccotti Park spoke of their political activities in their younger days — tenement organizing, the March on Washington — others, such as Taylor, didn't identify as lifelong leftist activists.

"This is unusual for me to be out like this," Taylor said, noting that he'd participated in just one anti-war protest in the 1960s and hadn't even stopped by the Occupy Mendocino protests back home. "This is the one that really counts," he said, "because this is at the epicenter of the financial organizations that are dominating our world."

Mary Jane Timmerman, 57, a newly retired nurse, came to the Wall Street protest in her scrubs with a stethoscope around her neck.

"It's just the average working people that I'm here to represent," she said. She'd traveled by train from Charlottesville, Va., to protest on behalf of health care workers for several days. "I'm not a radical."

Like many older protesters, Timmerman said she wasn't sleeping at the park. Though she'd considered it, her husband had asked her not to. ""He thinks I'm too old to camp out anymore," she said with a laugh

The general consensus was that noticeably older protesters added an air of import and legitimacy to the protest that their younger counterparts at times have struggled to secure.

"I think they have the gravitas of their age," Bill Livsey, 47, said of his older peers. "They've lived through the changing of the rules on Wall Street."

Livsey lives in New York's Chelsea neighborhood, but he's slept at Zuccotti Park "on and off" to show support, coming by between shifts at his two jobs to help with chores around the park. "Just because I'm older, I shouldn't leave it to the young people," he said.

Other signs of growing support for Occupy Wall Street continued Wednesday, as veterans marched in uniform from Vietnam Veterans Plaza to Zuccotti Park, where they discussed why they back the protests.

In Washington, members of the Communications Workers of America union joined Occupy protesters in a march on the headquarters of the U.S. Chamber of Commerce to protest "corporate greed."

"The march that's marching today is focused on the police violence in Oakland" to clear Occupy protesters from a California public space, said Kevin Zeese, 56, a veteran liberal activist in Washington and one of the organizers of OccupyWashingtonDC.org. ".... We have good grievances, serious grievances, and we're assembling peacefully to create the more perfect union that the Constitution talks about."

"We have people from their teens to their 70s, and they all have the same economic grievances. ... The middle class is no longer dominant in the economy, and that's not a good sign for the United States and a lot of people are angry.

"We'll stay as long as it's tactically useful," Zeese said. "But the goal really is to affect the political dialogue and the direction of the country, and we'll use this as long as it's useful for that."

Another Washington protester, Charles Holsopple, 58, expressed his presence at Freedom Plaza since Oct. 6 in simpler terms:

"I've got two grown sons, they're both through with their college, and I've got nothing better to do other than try to save the planet in whatever way I can."

(Palmer is a McClatchy special correspondent. Howard reported from Washington.)

Read more: http://www.mcclatchydc.com/2011/11/02/129080/theres-many-a-gray-head-in-occupy.html#ixzz1cemv70zM

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Two weeks into Occupy Wall Street protests, movement is at a crossroads

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