George_Washington
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The wages we give to people are based on our free market system. People are paid based on their value relative to how much their employer thinks they're worth. If you're in an academic field and think you should be making $20 million per year, move to a communist country where you might make more money. But here in America, we have our very efficient and moral free market system.
Ivan The Terrible said:His Excellently! George_Washington!
I agree with your statements. If people want more money they should get better paying jobs. Simply put.
Furthermore, I am sick of people always saying teachers and professors should make more money. I admire them greatly but I don't believe the government should ever step in and regulate wages.
1) We do not have a free market system. In fact, Adam Smith and David Ricardo would be shocked at how we run our economy, which bears little resemblance to either man's theory.
2) Why shouldn't government regulate wages? The only times in history they haven't been regulated have been some of the worst economic disasters on record.
3) Why would you or anybody say that wages are not currently regulated? I'm not talking about minimum wage--wages are regulated in a variety of indirect ways that have little to do with mandate.
ashurbanipal said:There are a number of aspects of your OP, some of which I agree with and some I do not, but I take particular issue with this bit:
I would like to make a couple points:
1) We do not have a free market system. In fact, Adam Smith and David Ricardo would be shocked at how we run our economy, which bears little resemblance to either man's theory.
2) Why shouldn't government regulate wages? The only times in history they haven't been regulated have been some of the worst economic disasters on record.
3) Why would you or anybody say that wages are not currently regulated? I'm not talking about minimum wage--wages are regulated in a variety of indirect ways that have little to do with mandate.
LaMidRighter said:Or better yet, use there free time to give speeches or other services for supplemental income, I know quite a few people who lend their talent to make what they desire. Great post by both of you. :clap: :agree
of course lets not forget a time when America was becoming rapidly developed and standards of living improved and that failed policies to "protect american industry" were implemented that led to the great depression, among other federal things, namely the reserve.
Government from the beginning brings problems to the table after a very short period of time. All government seems to always want to increase its regulations and excersise its influence on society. I guess it was just the fact that we didn't have wage standards that leads to economic problems instead.
I love when guys like Michael Moore and Noam Chomsky charge college campuses 5 figures for their speeches on the evils of capitalism. Or travel abroad to bash America, then come back home to the sweet life in their multi-million dollar homes.
ashurbanipal said:What are you talking about? Those failed policies were policies meant to deregulate wages and prices. The idea that standards of living were improving generally in the period 1865-1905 is more or less absurd. They improved for a few. Most people actually saw their standard of living drop.
Correct but you don't seem to understand why--it's not just government that is the problem. Any organized power structure falls in the same category. Religions become corrupt. So do (especially) corporations. Government is the only thing that can balance the abuses of these interests. If you disable government from regulating corporations, corporations will form their own governments and abuse the people under their power.
In any case, yes, the fact that we didn't have wage standards prior to 1933 (IIRC) was a major cause of the great depression. The depression was confusing to a lot of people at the time--we had plenty of resources and the means to take advantage of them. But people couldn't get work, businesses were failing, and poverty was growing. Why? Take a look at the net worth and income inequalities of the time. The problem was that all the wealth had flowed to the top of the pyramid after Coolidge did away with regional wage controls that had been established by the labor movement a few decades earlier. That period, in its time, was also a kind of depression (though not acknowledged as such because economic data weren't recorded regularly). Income inequalities in the period 1865-1905 were, again, just horrible and led to lots of ill consequences. There was a brief period of wealth being redistributed, but the backlash led to deregulation and income inequality once again.
The great depression was a result of not enough people possessing enough money to buy things. Rich people were a small minority, and they didn't need to buy anything, so they left their money in the bank. Roosevelt had to threaten to devalue the dollar to get them spending it. We were on our way out of the great depression by 1938 as a result of wage standards and incentives to get rich people redistributing their wealth downward. It's more or less that simple.
Contrary to popular belief, the cause of the initial stock market crash in 1929 was basically the same cause of the bursting of the recent bubbles in the stock market, that being the loose money policies of the Fed. During the 1920s, as Murray N. Rothbard documented in his classic America’s Great Depression, the Fed--led by Benjamin Strong (the Alan Greenspan of his day), chairman of the New York Federal Reserve Bank (which basically set Fed policy at that time)--suppressed interest rates and aggressively pursued open market operations to vastly increase bank reserves.
Following the 1929 crash, the Fed at first reacted by loosening credit to "provide liquidity" to the system, something which Rothbard authoritatively explains in his book. Bank failures occurred, not so much because the Fed refused to stop bank runs, but rather because banks had overextended themselves during the unsustainable boom of the late 1920s.
Even had they propped up banks in the manner that Friedman says they should have, the U.S. economy still would have been foundering in a serious downturn as the malinvested capital created and sustained by the boom had to be liquidated. Friedman, ironically, is correct in stating that the Fed played a major role in causing the Great Depression, but he fails to point out the real damage caused by the central bank.
128shot said:http://www.mises.org/story/1008
Contrary to popular belief, the cause of the initial stock market crash in 1929 was basically the same cause of the bursting of the recent bubbles in the stock market, that being the loose money policies of the Fed. During the 1920s, as Murray N. Rothbard documented in his classic America’s Great Depression, the Fed--led by Benjamin Strong (the Alan Greenspan of his day), chairman of the New York Federal Reserve Bank (which basically set Fed policy at that time)--suppressed interest rates and aggressively pursued open market operations to vastly increase bank reserves.
Following the 1929 crash, the Fed at first reacted by loosening credit to "provide liquidity" to the system, something which Rothbard authoritatively explains in his book. Bank failures occurred, not so much because the Fed refused to stop bank runs, but rather because banks had overextended themselves during the unsustainable boom of the late 1920s.
Even had they propped up banks in the manner that Friedman says they should have, the U.S. economy still would have been foundering in a serious downturn as the malinvested capital created and sustained by the boom had to be liquidated. Friedman, ironically, is correct in stating that the Fed played a major role in causing the Great Depression, but he fails to point out the real damage caused by the central bank.
As the article points out itself, your analysis doesn't fit with the model here. Even my own analysis was wrong though.
One of the enduring myths about government is the notion that successful governments are those entities that "provide prosperity" for those who are governed.
In a recent appearance before Congress, Alan Greenspan declared that the recent "scandals" in American business were the result of "infectious greed...
To understand, however, why the U.S. economy is quite vulnerable to a serious recession--or even a depression--we need to know why the Great Depression occurred and what the government should have done to prevent it, as opposed to what the government actually did. Furthermore, understanding real causes of the Great Depression also reveals that the political classes gained power from this economic calamity. If anyone believes that most intellectuals, politicians, and bureaucrats are not hoping and praying for a repeat of the 1930s, I have a bridge that connects Manhattan and Brooklyn I would like to sell you.
This one {i.e. that lower wages led to depression} should be laughable on its face...This is like saying an abundance of food causes hunger, a logical absurdity.
As is always the case during a boom, the standard of living for most Americans increased in that decade...
In the wake of the crash and the subsequent liquidity crisis that occurred soon afterward as margin calls escalated after the stock market downturn, Hoover urged business and labor leaders to keep wages and prices high and not let them fall, believing that a "high wage" strategy would win the day.
In 1932, the Hoover administration, alarmed that the federal budget deficit was growing, pushed through a huge series of tax increases. Top income tax rates were raised from 24 percent to near 70 percent, while taxes on other items were nearly doubled. Not surprisingly, the federal deficit grew even more after the passage of these punitive tax measures.
Rothbard also points out that Hoover attacked business leaders and the stock market, much in the same way that President George W. Bush and his amen corner in Congress and the media have been doing. Like the present media and political classes, Hoover sought to blame business leaders themselves for the economic downturn.Rothbard also points out that Hoover attacked business leaders and the stock market, much in the same way that President George W. Bush and his amen corner in Congress and the media have been doing. Like the present media and political classes, Hoover sought to blame business leaders themselves for the economic downturn.
Roosevelt’s New Deal, which Rothbard says was basically a continuation of the Hoover programs, had the opposite results from what his adoring press claims. When Roosevelt took office in March 1933, the nation’s rate of unemployment stood at 25 percent. After falling to about 15 percent by 1935, unemployment rose to nearly 20 percent in 1938--a depression within a depression--and stayed in double digits until near the end of 1941, when the United States entered World War II.
Roosevelt’s second New Deal centered on aiding labor unions in organizing the workplace, aggressive antitrust policies, raising taxes on higher-income Americans in order to further transfer wealth. The centerpieces of the second New Deal were the creation of Social Security and passage of the National Labor Relations Act in 1935. The first has created literally trillions of dollars of unfunded liability, while the second has led to untold increases in business costs and lost productivity.
On top of raising costs on businesses, the Roosevelt administration also was the source of white-hot anti-enterprise rhetoric. It is no wonder that private investment--and especially long-term investment--fell to extremely low levels during the 1930s, as business owners found themselves facing uncertain fates from a hostile government that was blaming them for the unemployment and the economic crisis.
Furthermore, much of the drop in the nation’s unemployment rate was due to the fact that millions of American men were conscripted into the armed forces. To put it mildly, while people had jobs and paychecks, they still were poor. War might have provided jobs, but it did not bring prosperity.
What makes the current situation so dicey is that, on top of all the other bad economic news, politicians of both political parties are leading a "race to the bottom" to see who can be the most outraged at business owners and executives. The Democrats have already announced that they are going to run their political platforms on anti-business themes, or at least on demands that businesses be regulated to death. Republicans, on the other hand, have touted their own "tough new laws" that are aimed at throwing as many executives in prison as the justice system can spare.
There is a way out of this current economic mess: Stop the government merry-go-round. As Rothbard writes in America’s Great Depression, once the economic bust has begun, the burdens of government must be lifted. Malinvested resources must be permitted to be liquidated, government spending must be cut back, and the central bank must not try to "reflate" the currency. Within a short time, business owners and managers will make the necessary adjustments, and the economy will recover.
Ivan The Terrible said:His Excellently! George_Washington!
I agree with your statements. If people want more money they should get better paying jobs. Simply put.
The Real McCoy said:I love when guys like Michael Moore and Noam Chomsky charge college campuses 5 figures for their speeches on the evils of capitalism. Or travel abroad to bash America, then come back home to the sweet life in their multi-million dollar homes.
Thank you Ivan, I knew you were a brillant man from the beginning
would suggest everyone read this book. If you're a bratty, marxist Ivy League Professor and you're mad cause Donald Trump makes more money in one day than you will make in your entire lifetime...tough. Cry me a bloody river. He's worked hard for it. He employees thousands of people and keeps the economy going. All you do is sit behind Ivory Towered walls and whine about the free market. Sucks to be you.
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