Reply Tue 16 Apr, 2013 10:58 pm
Is crony capitalism productive?

I have reasoned myself to believe that there exist dual causality between number of lawyers and size of government. Furthermore, I have also reasoned that crony capitalism exists to rent-seek, it pursues regulatory capture.

And to put a technical view on it...

To my mind, competition is most often associated with capitalism (I hope you could agree on that Razz ) The idea is competition will drive costs of goods and services towards MC (Marginal Cost curve of producer) and this means providing low cost to satisfy needs. But obviously, competition has not driven out rent-seeking to zero. In this aspect, I have answered my own question, crony capitalism is rent-seeking and therefore, not productive. But I suspect there are (many) other reasons as to why it exists. Is crony capitalism productive?
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Type: Discussion • Score: 2 • Views: 2,631 • Replies: 28
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cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 12:56 pm
@jwjohnwong1,
All marketable products and services work on the economic fundamentals of supply and demand.
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Fil Albuquerque
 
  2  
Reply Wed 17 Apr, 2013 01:12 pm
@jwjohnwong1,
On the contrary it is because it is rent seeking that it is productive, as gain drives competition and competition puts gain in check...which in turn means it is the most efficient way of driving economy...now the problem today is that we don't have true competition we have Trusts killing new company's, Mega Corporations stopping innovation with tacit agreements in place regarding prices and durability of their products not to mention a chronic inability of the masses to understand the nuances of a complex economy in a complex world...Governments and Legal Systems failure to keep up and accompany the rhythm of change are perhaps the main reason Capitalism is failing...What we have is the failure of a Bureaucratic system 200 years old...
Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 01:46 pm
@Fil Albuquerque,
As space and time have become meaningless with globalization and the web and thus tacit agreements become natural and easy to do, what we need is global rules establishing a common ground for the economy...closing offshores, augmenting but uniforming taxes globally (with robots and AI everywhere we WILL need to raise taxation exponentially), in order to sustain a transition from industry to services and recreational jobs thus maintaining the back bone middle class wealth, demand ability, and innovative capacity...for the lower classes of society we need to establish a minimum standard to reduce drag and entropy...there is no place for deep class division in a world where space and time are Zero...terrorism is the proof !

And yes this is Capitalism, odd as it may seam, it just isn't stupid capitalism !
cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 02:23 pm
@Fil Albuquerque,
Those are good ideas, but the world's economies aren't ready for such dramatic change in how the increasing divide between and have's and have not's.
Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 02:31 pm
@cicerone imposter,
Pressure will make the change happen believe me...I don't believe anyone will pay the debt western country's contracted, do you ? the collapse of the current economy's, the big default will be one of the steps in that direction...Terrorism is also another symptom begging for big changes to happen !
cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 02:40 pm
@Fil Albuquerque,
I doubt it, because of the following reasons:
a) the economy at home has been on a slow but sure improvement
b) most have recouped their loss from 2008
c) the number of people enjoying entertainment, travel, and eating out at "good" restaurants are on the increase 1) people are paying premium prices for sports events, shows, and travel, 2) hotel occupancy rates are improving, and 3) I see more Americans spending $$$ on upscale travel (such as the recent AMA Waterways cruise in Portugal - where they are fully booked for this year)
d) more people are now buying homes and cars
e) more Americans have paid off their credit card debt
f) more Americans are increasing their savings for retirement
g) baby-boomers with money are now beginning to retire in larger numbers

Another PO: the past couple of days have been "rough" on the stock market, but all the indications are that the US economy will continue on a growth mode. Manufacturing is beginning to return "home," and that bodes well for the middle class.
Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 02:45 pm
@cicerone imposter,
yes all of those based on credit...the problem persists...
cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 03:18 pm
@Fil Albuquerque,
Fil, The US debt isn't as bad as most people think. Our debt to GDP is dropping; a good sign in any economy. Most of those with high debt ratio to their GDP can't do much to improve their ratios. Look at the UK's debt to GDP.

Look at what's been happening to the ratio since Obama took office. When one considers that this administration turned around the Great Recession within Q2 of his term, it's more than an amazing accomplishment.

Have faith; our economy is "improving" and getting stronger.

http://img.photobucket.com/albums/v97/imposter222/USdebtvgdp024.jpg
Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 04:01 pm
@cicerone imposter,
http://www.nationaldebtclocks.org/debtclock/unitedstates
cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 04:35 pm
@Fil Albuquerque,
What do you expect when the republicans ran up more debt than any democratic administration or congress, and Obama is being blamed for the accumulation of debt?

The republicans started two unfunded wars and the drug benefit that was never paid for. If not for the republican debt buildup, the per capita debt would be much lower and manageable in this economic times.

Think! What do you expect Obama to do with all that handicap?
Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 04:46 pm
@cicerone imposter,
Woow...this is not about Obama I respect Obama CI...this is a world wide problem rooted on false development by borrowing from the future as we have done in the past 15 years of artificial growth we indulged in...and of course a result of lack of control from our 200 year old bureaucratic system which is inefficient by today standards...guess what happens when the chickens go unchecked...yeah the red fox jumps in...
cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 05:07 pm
@Fil Albuquerque,
What's artificial about the current growth?
Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 05:18 pm
@cicerone imposter,
Its based on credit borrowing from the future and in speculation rather then real assets...its a bubble growth and if you stop the train the train dies...Obama can't do **** about it no matter how good he is...(pardon my language)
cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 06:11 pm
@Fil Albuquerque,
but, but, but.......the overall deficit is being reduced under Obama as our GDP grows! What "speculation and bubble" are you talking about? I can be dense sometimes, and I must be missing something. Please explain.
Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 06:35 pm
@cicerone imposter,
I am talking value is volatile and no longer based on real assets but rather on faith on fashion on trends and tendency's on speculation, I am talking economy being in the hands of the financial system...I am talking people keep contracting debt to keep up and to sustain demand in order for the all system to not collapse...I am talking a vision of economy based on infinite growth an impossible aberration on the long run...and I certainly don't believe short term growth means anything...the math is simple if you have a debt and want to grow you have to produce twice as much or more and sell it to someone, but just who is buying ?...having some short term optimism can reanimate the markets and demand for a while but just where is a solution to the problem if the system keeps exactly doing the same thing ? By the way one of the short term solutions is precisely resting upon generating some degree of confidence in peoples minds..."go on buy stuff the crisis is over..."
It isn't over it hasn't even started...Again after a strong contraction of demand it is quite natural to see some growth but don't get fooled...peoples debts won't get paid in a day, and the same goes for nations themselves...
Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 06:45 pm
@Fil Albuquerque,
cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 07:23 pm
@Fil Albuquerque,
It's an interesting video without much meat in it. They talk about the "bubble," but don't explain exactly what that is. That's what I call "fear mongering." It works with most people, because most people do not understand economics.

Today's world is much different from the past. Nobody can predict the future of the world's economy; NOBODY. How can they predict a bubble when nobody can predict the economy of the future? It can't be done. I't fear mongering.

Look at it another way. We all understand that wealth has been accumulating at the top. There are enough research to prove this point. If, as they say, 20% of the people owns 80% of the wealth, where is the bubble?

The wealthy folks aren't going to all of a sudden start spending their money on all manners of consumables. They don't need to - or care to.

That sort of takes care of inflation, because the 80% of people are going to spend their incomes to "live." That means mortgages, cars, and other consumables are being "demanded and bought" by the majority of consumers with limited income/assets. With this lower demand for goods and services, companies can't afford to keep raising prices.

The so-called debt that the US now has is small compared to what happened during WWII. Debt as a ratio to GDP was 120%. The US debt is now dropping in relation to GDP.

Current debt is now equal to GDP, but the fact that the ratio is dropping bodes well for our country. After all, the greatest portion of the debt was created by the GW Bush administration over four years ago, and carried through to Obama's administration with the carry-over of two unfunded wars and drug benefit.

I say, we're in pretty good shape when observed in macro-economic terms.

The two wars have been winding down, and our economy continues to grow - although slowly by past standards, but growth in a world in recession.

I say the cup is half full, and getting fuller.



Fil Albuquerque
 
  1  
Reply Wed 17 Apr, 2013 07:41 pm
@cicerone imposter,
The "wealthy folks" don't have liquid real money...it is invested, long is gone the time real wealth and assets controlled the economy, its a fairy tale now... What they have for "wealth" is "your" debts and everybody's else s debt which of course if we don't pay and we won't because we can't is worth nothing...the point being that their wealth is based on faith...as soon as people start to see the problem the value of their stocks plunges to zero...with all this anti religious fervor in favor of rationality ends up being a huge irony that faith never had a bigger grasp on peoples life's then now...want an advice ? Buy a farm with solar panels and a well...I will as soon as I can...
cicerone imposter
 
  1  
Reply Wed 17 Apr, 2013 07:45 pm
@Fil Albuquerque,
Invested money can be withdrawn. We have investments, and withdraw from them "regularly." It only takes a few days to get our money by wire transfer. Is that really news to you? LOL

The "smart money" says withdrawing 4% a year from your investments will retain your wealth. 4% of millions is quite a few pennies. Mr. Green
 

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