The Poor Abuse the Rich (not the other way around)

[MusicalFreedom]

[sub]

Rational-

I would like to make a point about the word 'rational'. There seems to be a lot of confusion about what this means. In the context of economics, 'rational' only refers to action and volition. It has nothing to do with intelligence or whether the means you employ actually achieves desired ends. A 'rational actor' in economic terms is not one who is particularly bright, but one who possesses rational agency. In this sense, all humans are rational actors. Human intelligence is completely irrelevant to a purely economic discussion. When I say all humans are rational in this context, I am not saying all humans are smart.

It's just a matter of conflating definitions, and its a very easy mistake to make when you have homonyms representing related concepts.

so you have to narrow the definition of a word down to an incredibly specific usage just so that it defends your argument? you have to throw out the big picture out and look at one area?

[/sub]

No, he's saying that in the science of economics and in the context in which I am using it then rational has a narrow and specific meaning. He is explaining that my usage of the word rational is rational. He is not throwing out the "big picture" because I am not talking about "the big picture" I am solely discussing the rationality of humans in the narrow sense of the term.

I was about to type up a bunch of shit but I really can't be bothered and I hate talking about politics and economics and the free market so I'm just going to shit and run. other people can handle this better than I can

 

[PiCroft]

Hahahahahaha

"Mises.org" is a collection of fools that make Ayn Rand look like Santa Clause.

 

[thiosk]

And let's not forget places where the market is exclusively cornered by one company. Take areas in America where only one cable/wireless/phone company is set up. This company is able to charge whatever they want because there's no competition. Do we value their products/services at the inflated value? No. Why do people still buy them? Because they have no choice, except to move to where it is less expensive, which is far from practical.

This post illustrates that you have absolutely no idea how the cable companies work. Its not some dark cabal of cable operators meeting in rooms and sacrifice goats to the Dark Lord of the Rates. To sell cable service in a particular area, the company must obtain franchise rights (for 3-5% of revenue) from the municipality. The local government is basically charging a protection fee, here. It can dictate the cost of basic cable service directly, but since its skimming off the top, why would it? Once it gets a deal it likes with a company it likes, what right-minded municipality is going to allow competition into the area?

It is the good intentions of the government regulators that have created this monopolistic situation, and this is a great example of how the heavy foot of government squeezes us all.

God save us from good intentions.

 

[Xvito]

Why can't Richard give the phone to Fred instead?

Well, it cost Richard to make the phone, however, it was a $10 total parts and labor to make it, but $100 to sell it. That's quite a mark-up.

Of course, but Fred would be really happy if Richard gave it to him.

Yes, but it would screw Richard. That is not the nature of business. Profit the nature of business. As it should be.

Capitalism is the best economic system. It has made this nation what it is. Anyone complaining about that should go live in a Third World nation for a year or so. Than come back and tell us if capitalism sucks or not.

Richard would get, in return, a "thank you" and a warm smile. That's all the payment he needs.

Also, why is it, do you think, that "third world"-countries exist?

 

[DeathWyrmNexus]

LOL... Hilarious.

The phone is purchased because it is wanted or needed. The value of it is whether or not it is in demand. Also, do you think a company sells the phone for what it was made? No. They are trying to make a profit like any intelligent producer of goods. They are selling it for 50 because it probably only took 25 or even less to make it. The utility costs are a fee for using the phone you bought. Yes they service the phone, kinda, but do you think those minutes actually cost the company anything? No but they will sure sell them to you. As for choices, you would be surprised how little choice is really involved.

As for abuse of the poor, go ahead and check out warehouse treatment of workers. The rich isn't necessarily abusing their consumers but the consumers aren't the only "poor" involved.

And that is just what comes off the top of my head.

 

[BiscuitTrouser]

In economics there are two common misconceptions about capitalism. First is that the richer get richer while the poor get poorer. Second is that the rich are free to abuse the poor.

First: the richer get richer at the expense of the poor. The root of this argument lies in the fact that people see a trade as a one way experiance. Fred the Poor Man pays £50 for a phone. Fred the Poor Man is now poorer by £50 and Richard Branson of Virgin Mobiles is now richer by the profits from the £50. Fred loses, Richard wins.

What these people fail to see is that the trade of £50 for the phone is a TWO way transaction. Fred pays £50 and gets a new phone. Now Fred is a rational human being able to make logical choices. At the time he bought the phone he valued it at more than £50. Otherwise he would not have bought it. If he valued the phone at less than £50 it would make no sense for him to buy it.

Therefore Fred pays £50 and recieves a phone he valued at more than the £50. The phone brings him more satisfaction (utility) than keeping the £50. Yes, Richard gets richer but in terms of utility (rather than monetary terms) Fred is richer as well. Fred is happier owning a new phone than he would be in keeping the £50. His own valuation of his net worth has increased. If he were not he would not have made the transaction.

This can apply to any situation. The consumer ALWAYS has a choice: to buy or not buy. In the case of neccessities this choice may be harder to make but it is always a choice. Judging wealth purely in terms of money in the bank account is stupid, the net worth of the person has to be taken into account.

Next is the argument that the rich abuse the poor. I say no, take our previous example. As the entreprenur Richard is worth several hundred million yet Fred controls what decisions Richard can and can't make. Richard is shut up to answering Fred's call for cheaper phones, better phones, changing tastes in phones, music players with phones, phones with internet, phones with touchscreens. Fred demands all these things and Richard has to answer. If he doesn't Fred will go to another firm that will listen to him. In other words the Consumer is King. Whether the consumer is rich, poor, black, white, fat, whatever he/she wields control over the Producers of products.

Without their support (in the form of monatary purchases) a Producer can do nothing, an entreprenur can do nothing, they are shut up to the whims and fancies of consumers.

So that's my argument against two common capitalist facilies. Do you agree? Am I right? Got a better argument?

EDIT: A lot of points mention that advertising confuses the masses into valuing products too highly. This does not nagate the fact that an indivdual human will always make a rational choice. In hindsight it might not seem to be rational but at the exact moment of purchase the product they buy is valued higher than the money they spend. Secondly I rather doubt that the vats masses are as stupid as you are protraying them to be in a rather unequal fashion i might add.

EDIT 2: Apologies for defending Wal Mart at one point. I'm British and wasn't fully aware that it was a government sustained monopoly. I admit to being wrong to hold it up as an example of free market competition.

EDIT 3: My thanks for the following:

Rational-

I would like to make a point about the word 'rational'. There seems to be a lot of confusion about what this means. In the context of economics, 'rational' only refers to action and volition. It has nothing to do with intelligence or whether the means you employ actually achieves desired ends. A 'rational actor' in economic terms is not one who is particularly bright, but one who possesses rational agency. In this sense, all humans are rational actors. When I say all humans are rational in this context, I am not saying all humans are smart.

It's just a matter of conflating definitions, and its a very easy mistake to make when you have homonyms representing related concepts.

First of all. yes. Yes to everything you just said. That was good. Second of all no. Some of the things you said are wrong. Let me explain why.

Now fred is your smart individual, he wants his phone to have a new and usefull tool that will help people like fred enjoy their phone, for instance he wants it too be able to send files to his computer wirelessly. But wait thats just fred. The rest of the masses just want a sleeker phone that looks flashy, no one gives a shit about freds good idea, they just want to make the phone sell more. Freds good idea is swept aside by the millions who are happy with nothing inventive, with nothing new and exciting, with the same thing repackaged again to look nicer. Fred would go to anoethr company but guess what? Its the same for all of them. they dont do what fred wants. They do what they need to to make sales, not what would make a rational man like fred happy. Fred lives in a world where the things he wants are in a market in which the majority of the consumers are irational, his rationality is irrelivant. He is part of the top 5% who actually want inginuity. However no one cares about fred, the company sure as hell dont, they would sell fred down the river in a heartbeat to make 3 more customers buy their phone.

Please note that i know freds wish is already true but ignore it, its the reasoning that matters. If you have to nitpick my arguement to the point where you poke holes in my metaphor then you are beneath my arguing terms.

However if you see a hole in my logic feel free to tell me, im all ears.

 

[Veylon]

I guess my main criticism is that "real" Capitalism tends towards a series of monopolies/cartels. See AT&T, for example, or DeBeers, or Standard Oil. It makes a lot of rational sense for industry leaders to cooperate in order to maximize profits, especially in large-scale industries where entry is incredibly difficult. In addition, business leaders can invest in politicians in order encourage the production of favorable laws and legal rulings pursuant to the establishment and maintenance of their monopolies. AKA bribery. The poor cannot bribe, depending on goodwill and pity for their protection. Your rational choice is of no value if a monopoly or cartel deprives you of it.

That the rich tend to get richer while the poor get poorer is also because the rich possess the means to invest. Lets say that a great opportunity comes by where you can pay $1000 to get $2000. If you're rich, you slap that money down and come out ahead. If you're poor, you either can't, or have to borrow, thus necessitating the payment of interest, reducing the value of the investment. The poor may not get poorer in an absolute sense, but given their general inability to take advantage of what opportunities exist vis-a-vis the rich, their overall wealth as a share of all wealth declines.

 

[Alex_P]

Hmmm, this is where the lax definition of capitalism doesn't help me. In my opinion the baking industry is not an example of capitalism (by which I mean free markets). Indeed the banking industry has a Central Bank that inteferes with it and seeks to control it. In fact i would say that the banking industry is one of the few remaining examples of a centrally planned industry. The reason for the current economic crisis and the power of the banking sector is due to the government granted special treatment of the industry through central bank institutions.

The presence or absence of a central bank regulating monetary policy is rather irrelevant to the side of banking I'm talking about. The Fed doesn't go around telling banks to bill you $7 a day if you can't keep at least $250 in your checking account. And government regulators didn't come up with the idea of sitting on deposits a day longer than withdrawals in order to try to catch more people with their "overdraft protection" trap.

I mean, jeez, look at how much of a boon deregulation has been for a related industry -- predatory lending.

The common libertarian/free-market argument here is that poor people could just make their own little system that won't abuse them because a free market gives them that hypothetical right, but the fact remains that, in the real world, many wealthy free-market-loving capitalists have, in fact, created a system that exploits people.

-- Alex

 

[PiCroft]

I'm still reeling from "Mises.org" being name-dropped.

There is a difference between capitalism, mixed economies and what basically amounts to market anarchism.

 

[Mozared]

What these people fail to see is that the trade of £50 for the phone is a TWO way transaction. Fred pays £50 and gets a new phone. Now Fred is a rational human being able to make logical choices. At the time he bought the phone he valued it at more than £50. Otherwise he would not have bought it. If he valued the phone at less than £50 it would make no sense for him to buy it.

Yes, it would. Fred hás to have a phone or he will be socially rejected and not keeping up with the latest technology which will lose him hapiness and money in all sorts of ways.

 

[Akai Shizuku]

Like most arguments around here, its idealic but completely wrong. You are missing so many factors i cant even begin to argue against you. Either way nice try, poor execution.

Please do, although a socialist calling me idealic causes me to chuckle. I'll admit it ain't perfect (nothing is) but it's a damn sight more perfect than any other economic theory.

Yup, because sitting in your mansion drinking champagne on your king size bed while children starve and die on the other side of the world is damn fine.

I say, you jumped to a rather hasty conclusion there.

Communism combined with human nature does not work.Capitalism has many problems, but at least it works to a significant degree.

How do you know human nature even exists?

 

[axia777]

Why can't Richard give the phone to Fred instead?

Well, it cost Richard to make the phone, however, it was a $10 total parts and labor to make it, but $100 to sell it. That's quite a mark-up.

Of course, but Fred would be really happy if Richard gave it to him.

Yes, but it would screw Richard. That is not the nature of business. Profit the nature of business. As it should be.

Capitalism is the best economic system. It has made this nation what it is. Anyone complaining about that should go live in a Third World nation for a year or so. Than come back and tell us if capitalism sucks or not.

Richard would get, in return, a "thank you" and a warm smile. That's all the payment he needs.

Also, why is it, do you think, that "third world"-countries exist?

Richard cannot buy food, cars, or anything else with smiles and hugs.

Also, Third World nations exist for to many reasons to discuss here. But it is certainly not Americas fault.

How do you know human nature even exists?

Because we have seen it happen in the USSR and every other communist country. The top 2-3% of the population always ends up on top of the rest. Human nature is greed. At least with lightly regulated capitalism money and wealth has the ability for move around in some fashion.

Psychology also proves it in some fashion.

 

[curlycrouton]

Like most arguments around here, its idealic but completely wrong. You are missing so many factors i cant even begin to argue against you. Either way nice try, poor execution.

Please do, although a socialist calling me idealic causes me to chuckle. I'll admit it ain't perfect (nothing is) but it's a damn sight more perfect than any other economic theory.

Yup, because sitting in your mansion drinking champagne on your king size bed while children starve and die on the other side of the world is damn fine.

I say, you jumped to a rather hasty conclusion there.

Communism combined with human nature does not work.Capitalism has many problems, but at least it works to a significant degree.

How do you know human nature even exists?

Are you being serious?

I've witnessed it. Countless times. On a daily basis.

In fact, there's a whole science based around it.

It's called Psychology.

 

[Akai Shizuku]

]

If you put a scale on a wooden fence, and you don't want the scale to fall over, the only way is to equally distribute weight on both platforms.

It is a myth that the harder you work, the better off you will be. I know this from experience. I've known some people who work ridiculously hard, but are still stuck in wage slavery. 14 hours a day, 7 days a week. No holidays, no breaks. 365 days a year. $14/hr. And this is in one of the wealthiest nations in the world: Canada. Don't tell me that he's free to quit, because that means his wife and four kids starve to death.

"When the rich wage a war, it's the poor who die." -Fort Minor

first of all Wealth is being created every day. It is true that there is a limited level of resources on the planet, but with new markets being created every day and economies grow, wealth is being grown.

Second, This story doesn't tell of the choices this man made in is life that placed him in this predicament. Is it the company's fault that he got married and had four kids when he knew he could not support them? Was it the company's fault he did not prepare for a decent paying job with his educational choices? What is he doing to improve his future?

Yes, wealth is created...and then things cost more. Fantastic.

The system does not work for everybody.

He was an immigrant. Regardless of his education regardless of whatever he tried to do, his English skills were poor so he wouldn't be able to get a "good job".

And no, it wasn't the company's fault, but see, there's something that good people have that's called empathy. You might have heard about it.

 

[Akai Shizuku]

Like most arguments around here, its idealic but completely wrong. You are missing so many factors i cant even begin to argue against you. Either way nice try, poor execution.

Please do, although a socialist calling me idealic causes me to chuckle. I'll admit it ain't perfect (nothing is) but it's a damn sight more perfect than any other economic theory.

Yup, because sitting in your mansion drinking champagne on your king size bed while children starve and die on the other side of the world is damn fine.

I say, you jumped to a rather hasty conclusion there.

Communism combined with human nature does not work.Capitalism has many problems, but at least it works to a significant degree.

How do you know human nature even exists?

Are you being serious?

I've witnessed it. Countless times. On a daily basis.

In fact, there's a whole science based around it.

It's called Psychology.

Psychology and human nature are not the same thing. Psychology is limited to an individual and is not collective.

 

[curlycrouton]

Like most arguments around here, its idealic but completely wrong. You are missing so many factors i cant even begin to argue against you. Either way nice try, poor execution.

Please do, although a socialist calling me idealic causes me to chuckle. I'll admit it ain't perfect (nothing is) but it's a damn sight more perfect than any other economic theory.

Yup, because sitting in your mansion drinking champagne on your king size bed while children starve and die on the other side of the world is damn fine.

I say, you jumped to a rather hasty conclusion there.

Communism combined with human nature does not work.Capitalism has many problems, but at least it works to a significant degree.

How do you know human nature even exists?

Are you being serious?

I've witnessed it. Countless times. On a daily basis.

In fact, there's a whole science based around it.

It's called Psychology.

Psychology and human nature are not the same thing. Psychology is limited to an individual and is not collective.

Sociology, then.

 

[Rooster Cogburn]

WHY ARE YOU PEOPLE DEFENDING BIG BUSINESS IN THE NAME OF FREE MARKETS!?

*cough*, I mean, here is some literature about big businesses profiting from the state structure of violence. It mentions Wal-Mart specifically, but it doesn't really get into the substance of why Wal-Mart is statist, anti-market bull crap.

Corporations versus the Market; or, Whip Conflation Now
http://www.cato-unbound.org/2008/11/10/roderick-long/corporations-versus-the-market-or-whip-conflation-now/

I'm not a big CATO fan, but this is a Roderick Long article- so it always goes down smooth.

 

[Akai Shizuku]

Like most arguments around here, its idealic but completely wrong. You are missing so many factors i cant even begin to argue against you. Either way nice try, poor execution.

Please do, although a socialist calling me idealic causes me to chuckle. I'll admit it ain't perfect (nothing is) but it's a damn sight more perfect than any other economic theory.

Yup, because sitting in your mansion drinking champagne on your king size bed while children starve and die on the other side of the world is damn fine.

I say, you jumped to a rather hasty conclusion there.

Communism combined with human nature does not work.Capitalism has many problems, but at least it works to a significant degree.

How do you know human nature even exists?

Are you being serious?

I've witnessed it. Countless times. On a daily basis.

In fact, there's a whole science based around it.

It's called Psychology.

Psychology and human nature are not the same thing. Psychology is limited to an individual and is not collective.

Sociology, then.

"Sociology
?noun
the science or study of the origin, development, organization, and functioning of human society; the science of the fundamental laws of social relations, institutions, etc."
-www.dictionary.com

Not human nature. At all.