U.S. Government shuts down.

[FireIceTalon]

Only in the imaginary math world where 2.65 million (2010 exec branch workers) is less than 2.63 million (2002 executive branch workers).

A) We were comparing with 1980. Where did 2002 come from?

B) The absolute number is almost entirely stagnant through time. Yearly variation is irrelevant.

C) Any way you slice it, more resources are being distributed, and more people are being serviced, by fewer workers *per capita*.

-Jester

---

You are right. When I googled the first chart it gave me labor share and a bunch of other stuff compared to corporate profits for whatever reason. Mind you, I am not an economist so I had to find out what "labor share" meant exactly. However, this one does:

Labour share matters. It just doesn't matter for the unemployment rate - at least not directly. I'm sure labour share is generally higher in times of lower unemployment, all else equal.

However, the graph no longer shows what you want it to show. The entire 1990s and most of the 2000s have the two variables moving against each other in a way backwards to (what I assume is) your hypothesis.

-Jester

Yea, but the fact unemployment is high right now, with corporate profits at record highs is enough to disprove the notion that the owners of capital are the "job creators", yes? Even without a chart, it just doesn't make sense, because the so-called 'cult of the entrepreneur' is still nothing without labor power. Every idea, no matter how innovative it is, needs labor to make it real (much in the same way that matter must exist before consciousness can exist in material, tangible way). This is kind of the whole basis of Idealism vs. Materialism, but in an economic context instead of a philosophical one - with the "job creator" myth being a form of economic idealism, but labor power being the driving force in the creation of all social value being economic materialism.

Its the same deal with Marx's thought on the falling rate of profits - he thought falling rates of profit always led to higher unemployment, but he was wrong about this. The last 3 years have seen both higher total profits AND higher rates of profit, yet unemployment is still quite high. I think falling rates of profit have tend to lead to higher unemployment rates but the last 3 years have shown this isn't always the case. The more important question of course, is why.

Oh, and I figured I'd share this:

Neoclassical economics debunked in less than 20 minutes

[DeeBye]

Every time I watch news coverage of the U.S. shutdown, I wonder about the elephant in the room. They talk about "entitlement" spending like Medicare/Medicaid and Social Security, but when I look at U.S. federal spending, there is a huge piece of the pie that always goes unaddressed.

The elephant in the room is defense spending. Am I the only one seeing this?

[Jester]

Yea, but the fact unemployment is high right now, with corporate profits at record highs is enough to disprove the notion that the owners of capital are the "job creators", yes?

I don't think we really need anything at all to disprove this. There are no "job creators". There is no "job creation" in the way that there is "car creation". Labour and capital are two inputs into a complex system of production and distribution. "Jobs" are not a product - although search costs make labour contracts sticky, since it's costly to fire someone and hire a new worker, or to quit and find a new job. But in the end, are labour markets, and they function well or badly. There is bargaining power, and it is distributed in different ways.

Even without a chart, it just doesn't make sense, because the so-called 'cult of the entrepreneur' is still nothing without labor power. Every idea, no matter how innovative it is, needs labor to make it real (much in the same way that matter must exist before consciousness can exist in material, tangible way).

Just because labour is essential, doesn't mean it should be valuable. The same necessary quality is true of water. Air. Gravity. Lots of things. The question is about marginal scarcity - what's important is how much it costs to buy the *next* unit of something. If you buy the next unit of labour for cheap, then labour returns will be low. If you can buy the next unit of capital for cheap, then capital returns will be low.

We knew this by the time after Jevons, but not by the time of Marx, though he did intuit something like this for labour markets with the reserve army of the unemployed.

This means that the easiest way to make money is artificial scarcity, also known as market power. Modern corporations have gotten very good at this, through a variety of means: branded products, political lobbying, regulatory arbitrage, and oligopoly. And labour's equivalent weapons, unions and guilds, have suffered from the changing context of globalization, where states can still pass laws to stop inter-firm competition, but are largely powerless to stop inter-labour competition across borders. And so, labour becomes cheaper, and labour share goes down.

-Jester

(Watched the video. Dr. Nicholas doesn't seem to have a message, other than "Marx was right, the rest is rubbish," with no more specifics than that. He fluffs himself up at every opportunity. He tells stories that have no content. But I don't actually know what he's saying - about Marx, about prices, about anything. He seems to think being clear about this is boring. When he finally gets to explaining anything in the last 5 minutes, he seems to have a pre-Jevons, pre-Walras concept of price based on inputs, which seems to contain no greater insight than "firms will not produce goods that cost them more to make than they get from selling them." This is economics for five-year-olds.)

[FireIceTalon]

Labor HAS to be valuable. Without labor, nothing gets produced. Nothing. This is the problem with marginal utility theory - that Marx critiqued in the first chapter of Capital by differentiating between 'use value' and 'exchange value'. A Bentley has more value than water, but only because of the exchange values assigned to them under a capitalist system. Supply and demand seems nonsensical also, since there is a greater demand for water than there is Bentleys (since we need the former to survive), yet the latter is higher priced cause of its higher exchange value. Then of course, you have commodity fetishism, which is the natural result of this paradox: that people believe the commodities they buy have some inherent power to them but completely ignore the labor it took to produce them. Diamonds are a good example of this, people view them as being this special entity because the social forces of exchange value have created a culture where people view it that way, instead of for what it really is: a rock with a particular set of properties that make it what it is, and nothing more. Between this and market fanaticism, capitalism has become the new predominant religion of the world. But like with traditional religions, I'm an atheist here.

My problems with neoclassical economics are numerous, but primarily, it is an incomplete theory that only looks at economics on a surface level, while completely ignoring the social forces that exist in the real world and replacing them with abstract, subjective artificial concepts like marginal utility, supply and demand, etc. And that is because its framework is driven more by ideology and less by scientific inquiry. You are right. Neoclassical economics is indeed economics for 5-year olds.

Guess at the end of the day though, this guy sums it up well:

http://rdwolff.com/content/i-often-hear-...ry-value-r

This has been an interesting discussion, thanks comrade Jester. Although, I am afraid that it has only further confirmed for me just how irrational, illogical, and invalid of a system that capitalism really is.

[Jester]

Labor HAS to be valuable.

Who would claim labour has no value? Nobody. Certainly not neoclassical economists.

Without labor, nothing gets produced. Nothing.

Only if you define production in such a way as to include human labour by definition, which is then just a tautology.

To give a useful example: There is a gigantic ball of hydrogen fusion about six light seconds away from the earth. We call this the sun. It emits photons, which are absorbed by oxygen and glucose producing solar panels on earth. We call these plants. You, the consumer, are currently consuming the product (breathable oxygen) of this production process. At no point did it require any human to input any labour, unless you're counting breathing.

This is the problem with marginal utility theory - that Marx critiqued in the first chapter of Capital by differentiating between 'use value' and 'exchange value'. A Bentley has more value than water, but only because of the exchange values assigned to them under a capitalist system. Supply and demand seems nonsensical also, since there is a greater demand for water than there is Bentleys (since we need the former to survive), yet the latter is higher priced cause of its higher exchange value.

This is a hash. Things trade at their exchange value, and since the overwhelming majority of what we produce is to trade with other people, exchange value rules the roost. Your critique is no critique. What does marginalism predict? That the product whose *next* unit is costly, is costly, and the product whose next unit is cheap, is cheap. Lo and behold: producing another Bentley would be costly, and so, Bentleys are costly. Producing another unit (a gallon, say) of human-usable water is very, very cheap. And so, it is cheap.

Supply and demand is about the *intersection* of the two forces. People demand a lot of water, but they supply even more than that, and are willing to keep supplying the next unit of it, if people wanted to consume more.

Do you have an actual critique of this theory of value? Because the guy you linked doesn't. He says: "However, in my view the theories are different ways of thinking about economics. Neither is right and the other wrong." And then seems to suggest that it's just a matter of culture which you believe. Which appears to be the opposite of your point.

I am afraid that it has only further confirmed for me just how irrational, illogical, and invalid of a system that capitalism really is.

Surprise.

-Jester

[FireIceTalon]

This is a hash. Things trade at their exchange value, and since the overwhelming majority of what we produce is to trade with other people, exchange value rules the roost. Your critique is no critique. What does marginalism predict? That the product whose *next* unit is costly, is costly, and the product whose next unit is cheap, is cheap. Lo and behold: producing another Bentley would be costly, and so, Bentleys are costly. Producing another unit (a gallon, say) of human-usable water is very, very cheap. And so, it is cheap.

Supply and demand is about the *intersection* of the two forces. People demand a lot of water, but they supply even more than that, and are willing to keep supplying the next unit of it, if people wanted to consume more.

Do you have an actual critique of this theory of value? Because the guy you linked doesn't. He says: "However, in my view the theories are different ways of thinking about economics. Neither is right and the other wrong." And then seems to suggest that it's just a matter of culture which you believe. Which appears to be the opposite of your point.

Sure its a critique, because exchange value is reliant on the undeniable fact capitalism is a profit driven system - which is why we produce so much shit (mainly luxury commodities) we don't need (and who probably half of us can't afford anyway), yet half the world is starving. So much for supply and demand. Labor and resources are wasted on producing things like Bentley's or iPads (whom the people who produce them don't own them anyway) instead things we actually need or that serve a humanitarian purpose. The concepts of marginal utility, supply and demand, and even the welfare state are based on deterministic and limited models that make too many assumptions (many of which in themselves are not true, in particular with regard to behavioral economics)....such as that people are inherently greedy, that we are all materialists, and that there are no social forces in the real world. And moreover, it has been unable to explain why capitalism is prone to crisis (and framing the issue as government vs. markets is not a sufficient explanation since the purpose of the state is to protect markets). It would be more aptly named 'Neo-Zombie Economics'.

The point is this: The points you make are legitimate within only the Neoclassical framework. But the framework itself is built upon a flawed premise, and not only because of the reasons above, but because it is completely ideological, and thus it has an agenda (no matter how much it tries to hide it). Therefore it cannot offer an scientific critique of itself because then it would be discredited and the theory would have to be abandoned. This is why it goes at great lengths to either try to disprove or ignore the Marxian framework, which does offer a real-world, scientific critique of political economy.

Neoclassical economics is ultimately deterministic pseudoscience, almost as much as creationism is, with the Austrian School being its church. Both are completely driven by normative ideology to self-justify their agendas, and in the case of neoclassical economics, masked by subjective and flawed models such as 'supply and demand', 'marginal utility', 'inputs/outputs' to conceal its hidden agenda, which is of course, reinforcement of the status quo. Most people do not realize this because of the way it presents itself, but I see right through it.

[Jester]

(Edit: Frustration is not helpful for communication.)

We must distinguish positive from normative statements. A theory in answer to the question "what determines value" is a statement of what is, not a statement of what should be. Thus, any serious criticism must demonstrate that it is inaccurate, not that it leads to conclusions we dislike, or has ideological implications that we reject.

Value being determined by the equation of marginal utilities at equilibrium is not a conclusion reached by reasoning from an ideology. Rather, the ideology has built itself around the theory. Any critique of the ideology must, therefore, undermine the validity of the theory of value on which it is based. You cannot undermine the validity of the theory by rejecting the ideology that emerges from it. This would be precisely as fallacious as saying that the labour theory of value is wrong, because it is Marxist, and Marxism is a horrible doctrine.

-Jester

[FireIceTalon]

I had a reply typed out and ready for this, but I decided against it at the last minute because we would just end up at square one I think, and we have strayed far from the original topic, to which I will now return.

After giving it some thought, the class structure in the public sector has some additional difficulties. It is my belief that government employees (and perhaps federal workers in general) are in a rather unique situation with this whole ordeal compared to workers in the private sectors who go on strike to protest the corporations. US laws prohibit federal workers going on strike (whether they are unionized or not) even if they technically should do it. Going back to my earlier question of why haven't they done so yet, I pretty much answered my own question: class consciousness is low, and therefore worker solidarity is in complete shambles right now. But there is a greater hostility in general towards federal workers to begin with, than there is towards workers in the private sector - federal employees are seen as the servants of 'big government' and part of an over bloated bureaucratic quagmire due to cultural propaganda machine that demonizes them. As a result this makes it far more difficult for the public to get behind them should they be able to organize than it does employees in the private sector, and it makes solidarity and strikes much more difficult. It isn't so much that federal workers are a unique caste within the working class, but that in general, their wages tend to be a little higher than those who work in the private sector, due to the fact discrimination laws that were designed to protect minorities, or women were implemented in the public sector first. This has lead to a mentality that public sector workers are somehow "privileged" or "entitled", and thus the scorn we often see towards them in American society, though the class relationships are quite similar in both sectors. The shutdown, make no mistake about it, is having and going to have very significant negative effects on public workers. Just some thoughts, no idea if they are right or wrong.

[kandrathe]

This means that the easiest way to make money is artificial scarcity, also known as market power. Modern corporations have gotten very good at this, through a variety of means: branded products, political lobbying, regulatory arbitrage, and oligopoly.

I would reflect that the consumer also is coerced into artificial demand, and one method is by making credit easy. It is not a new thing though. The original colonists to the US came over on the installment plan. British merchants financed the New World expedition with the colonists agreeing to work without profit for seven years. General Motors Acceptance Corporation began as a way to sell more cars, and also thereby employ more workers. A theoretical win, win, win. The consumer gets the car they want, GM gets a profit, and labour gets employment. It all works until credit is over-extended and the consumer owes more than they can repay. Our current credit crunch, and market fearfulness results in less consumerism, less employment, and a declining GDP. At least getting sucked into over spending is something the informed consumer can avoid, unlike our prior discussion of spending done on our behalf. I'm still convinced that left unchecked, the government will continue to take all they can from those without lobbyists or PAC's. Which makes an entity like AARP in essence a de facto union.

And labour's equivalent weapons, unions and guilds, have suffered from the changing context of globalization, where states can still pass laws to stop inter-firm competition, but are largely powerless to stop inter-labour competition across borders. And so, labour becomes cheaper, and labour share goes down.

On the labor side, we also have artificial scarcity, by creating government, or industry controlled licensure barriers.

I would add in considering globalization, also that labour has "suffered" from the additional costs of regulation, where in those places that are unregulated, less unionized and do not incur these costs, creating attraction for those seeking to drive down the cost of making things, at the expense of workers and consumer safety, and the environment. In that regard, US and European labour is priced out of the global market, since it needs to comply with regulations that do not apply to workers in many parts of South America, SE Asia, or Africa.

Harsh working conditions, unsafe products, and pollution are not things anyone consciously supports. For most of us, the cruelty involved in cocoa, coffee, computer salvage, or clothing manufacture are a third world away. I don't have any easy answers on this either. Now, and for centuries, trade and tariffs are used as a weapon wielded for political purposes. Suffice it to say that if we are to escape the simple formula where industry motivations regarding people are either as consumers, or workers, then if there is consciousness needing to be raised it is that we are industry, and we have a conscience. At least, through our consent of regulation, we show we do care about these things, but through our consumer choices we bow to convenient economic, and societal pressures. And, at times, I fear there is something more sinister underlaying this manipulativeness.

And for DeeBye's elephant in the room;



Yes, I think we might overdo it a bit. Here is another good visual...


source

[DeeBye]

And for DeeBye's elephant in the room;



Yes, I think we might overdo it a bit. Here is another good visual...


source

Almost 20% of spending is defense. It's close to $700B/year now. I personally think that's outrageous.

[FireIceTalon]

Well, that is what happens when the accumulation of capital needs new world markets to delve into. The number may seem outrageous, because it is. But the U.S. is still the epicenter of capitalism, with the largest economy, so it shouldn't be a surprise that it spends the most on military.

China of course is second...a very distant second, though.

http://en.wikipedia.org/wiki/List_of_cou...penditures

[kandrathe]

Almost 20% of spending is defense. It's close to $700B/year now. I personally think that's outrageous.

In national terms it is outrageously expensive for the US. The Gross World Product is $85 trillion. If we are the world's police, it's < 1%. But, we'd need to add up all the other military spending too. Which is closer to $2 trillion.



My concern is that the US police forces are not wanted where they are deployed, somewhat thuggish, and generally coercive trying to manipulate things OUR way.

[FireIceTalon]

My concern is that the US police forces are not wanted where they are deployed, somewhat thuggish, and generally coercive trying to manipulate things OUR way.

For once, we agree on something.

This is why I think it is wrong to support IGO's like NATO, the UN, and such in the intervention in the Arab Spring for instance. It is nothing less than Western imperialism. Of course by the same token, I don't support the regimes either, as all of them are inherently authoritarian. I am always on the side of the revolutionaries (well, almost - in the case of Syria I don't think they are any better than Assad really).

[kandrathe]

The drama ends... for 3 months. Then we can do this brinksmanship exercise once again. I don't think anyone won anything, and certainly Mr. Cruz has lost -- at least this round of the game of "hold my breath until Obamacare goes away". Boehner proved he was willing to do whatever it takes to retain his leadership position, but outside of Washington - Boehner and Reid are despised more than ever.

The next round will be worse, and bloodier, since January 15th is the date when the next (deepest) round of sequester cuts dig into entitlements, and the Pentagon.


I'd be more for figuring out how to flatten that line out to cap spending under 4 trillion.

These are the games played here that disgust me the most. The shut down was arbitrarily made painful in order to "win" political points. The economic issues and impacts are the bigger concern for me.

[Jester]

I'd be more for figuring out how to flatten that line out to cap spending under 4 trillion.

What, 4 trillion forever? Always nominal, no inflation adjustment? Not population adjusted, not GDP adjusted? No adjustment for demographics? Perpetually shrinking government sector as a % of the economy?

-Jester

[kandrathe]

I'd be more for figuring out how to flatten that line out to cap spending under 4 trillion.

What, 4 trillion forever? Always nominal, no inflation adjustment? Not population adjusted, not GDP adjusted? No adjustment for demographics? Perpetually shrinking government sector as a % of the economy?

-Jester

Inflation, yes. Demographics, not much. Most of the fed should be scalable. For example, EPA, or National Parks... The environment needing protection is a constant, and we're not adding hectares of national park land. The number of farms/farmers is shrinking. Scale to GDP? Whatever for? It's more likely contrary to GDP. The better the people are doing "wealth" wise, the less need for government means tested programs. Governments *real* objective should be to make itself smaller, by crafting systems whereby people are more self sufficient and less reliant on federal programs. To really do this, we'd need to change the status quo whereby taxes were assessed against the wealthy (high net worth, not just high wage earners), and lowered for those with below average net worth.

[DeeBye]

I don't think anyone won anything, and certainly Mr. Cruz has lost -- at least this round of the game of "hold my breath until Obamacare goes away".

I'm mostly a dummy when it comes to American politics (but they entertain me so much ), but would it possible for the Democrats to use the same tactics in the next round just to prove a point?

What I am imagining is the Democrats writing up a giant list of demands that Republicans would hate (gun control, funding Planned Parenthood, etc), and then vote on a shut down unless the Republicans capitulate.

[Archon_Wing]

The problem is the collateral damage incurred in this seasaw of power. They don't feel the brunt of these games, but the citizens do when they are shut out of government services.

That's why regardless of ideology; these charades are dirty.

Eventually, people will get pissed, though let's see if their memory sticks.

[FireIceTalon]

Eventually, people will get pissed, though let's see if their memory sticks.

I'm not sure what to think of this honestly. I think about this all the time, but half of me is very pessimistic.

In general, people are tired of all the political games, and I think many of them are tired of all the wars, poverty, and social problems that make the world such a fucked up place to live in. But on the other hand....

I do not have much hope for things to get better anytime soon. Too many people do not realize that this is a class struggle, because the class struggle has been so far removed from political discourse (and probably deliberately so), and it needs to be put back on the table - and not in bullshit context like "the middle class" vs. "Wall Street" nonsense (this is partly why the Occupy Movement was not sufficient). Identity politics, the national debt, military spending vs social programs, nationalism and American exceptionalism - all these things are a facade or distraction from the core issue of why politics exists to begin with. If these things are going to be discussed, they need to be done so in the context of the class struggle, because at the end of the day, that is all that matters. But both parties are very far to the right, with one party being basically fascist, and they do not want this type of discourse because it is inconvenient to the cultural norms, values, subjective morality and otherwise prevailing ideologies that plagues this nation - a nation built on lies, on the backs of African slaves and Native Americans, anti-intellectualism, demonization of the poor, and historical revisionism. I think most people here are trapped in a bubble of Stockholm Syndrome, so I have little doubt they will forget about this quickly enough.

[Nystul]

I'm mostly a dummy when it comes to American politics (but they entertain me so much ), but would it possible for the Democrats to use the same tactics in the next round just to prove a point?

What I am imagining is the Democrats writing up a giant list of demands that Republicans would hate (gun control, funding Planned Parenthood, etc), and then vote on a shut down unless the Republicans capitulate.

It takes two to tango. But in some ways the so called shut down must seem more of a menace to Democrats than Republicans. For one thing, it is simply a matter of who is in power where. Right now the Democrats have control of the executive branch, so logically they would want funding to be approved. Ideologically, the idea of stripping government to "essential" services would be more appealing to the Republican base voters (until it affects them personally in some way of course).