The U.S. Economy: Stand by for more worse news

[Billy T]

... People are accountable for their government. Government is the agent of the people and is accountable to the people it governs. That is the way it works in the West. ...

Yes and a very good system IFF the people are well educated, especially in economics, like in Scandinavia, but when they are not it is the main reason why the per capita debt keeps growing, as Alexis de Tocqueville learned /observed in his tour of America back in 1831 and described in his book: Democracy in America and that was before fiat money made the problem much worse.

The problem, which US greatly suffers from now, is that voters ignorant of economics tend to elect representative who promise the most goodies now with the bill for them sent to later generation. Now with fiat money there is no constraint on how much the current generation can vote to spend without paying for their pleasures. Back in Alexs' day if the government did not have enough gold and silver with which to buy and then deliver the promised "goodies," the people soon learned some badly needed now economics, summarized by "When dance ends, the piper must be paid."

Fiat money lets the day of reckoning be post-phoned, while some one will lend the government money, what history shows is that in the end, your currency becomes nearly worthless, saving are destroyed, the economy collapses, etc. not what you claim. You and many US voters assume that the per capita debt can increase for ever. Many Greeks did that too, but are now learning: That it ain't true.

 

[joepistole]

Yes and a very good system IFF the people are well educated, especially in economics, like in Scandinavia, but when they are not it is the main reason why the per capita debt keeps growing, as Alexis de Tocqueville learned /observed in his tour of America back in 1831 and described in his book: Democracy in America and that was before fiat money made the problem much worse.

The problem, which US greatly suffers from now, is that voters ignorant of economics tend to elect representative who promise the most goodies now with the bill for them sent to later generation. Now with fiat money there is no constraint on how much the current generation can vote to spend without paying for their pleasures. Back in Alexs' day if the government did not have enough gold and silver with which to buy and then deliver the promised "goodies," the people soon learned some badly needed now economics, summarized by "When dance ends, the piper must be paid."

Fiat money lets the day of reckoning be post-phoned, while some one will lend the government money, what history shows is that in the end, your currency becomes nearly worthless, saving are destroyed, the economy collapses, etc. not what you claim. You and many US voters assume that the per capita debt can increase for ever. Many Greeks did that too, but are now learning: That it ain't true.

I agree with you on this, well informed voters are critical to a successful democracy. But as one who has a business degree and a life time of business experience, I would include you in those who are ignorant of economics. And that isn't a dig against you. I am sure you are well intended and have an expertise, but it isn't economics. Unfortunately, there are a lot of demagogues out there and there is a lot of misinformation. And being human, we are fundamentally driven by our emotions. Our brain works in some pretty crazy ways which makes us prone to making bad decisions in the age of information. While our brains worked well in the jungles when life was more fundamental. Our brains are challenged in the age of information. And that is why it is so critical we develop new institutions and processes, to help ensure we make good decisions. Insulating monetary policy from political whims was a masterstroke.

 

[iceaura]

Which is something which has happened in this particular case, but in general not very probable.

It's very common, just not usually that dramatic - commodity backed money, usually gold, is traditionally vulnerable to fluctuating supplies and prices of the commodity. Happens a lot.

And that is in addition to the ordinary problems of printing too much money, counterfeiting, and so forth - which commodity backing does not prevent, as history shows.

Yes. But this promise does not include that there will be no inflation caused by excessive money printing.

It often does - although that is foolish, because deflation is far worse for an economy, so in the real world where perfection is impossible the money printing should stay a shade on the inflation side.

Wrong, the prices for computers decrease, this is a constant effect of technological progress, which is consistent over many years.

What's that got to do with deflation of a currency?

This is not about a return to barter.

Yes, it is. What you described to replace money was bartering.

I have given my paper out for the fixed amount of gold, I have taken it back for the same amount of gold, some transaction fee I have taken for the exchange, and I have had some credit in gold for some time without paying rent. What is the problem?

The problem is that you have a vault full of paper no longer backed by gold, because other people have the gold. So something is going to give - probably, you are going to have to admit the whole operation was fiat money in the first place, which is true but bothers the magical thinkers (they are numerous). Your alternative is to trade back some of your paper for gold at the market price, which is going to be painful.

Gold backed currencies have always had sophisticated State run financial oversight and defense, to prevent that situation from developing - it often developed anyway. It's not easy to manage a currency.

 

[iceaura]

he problem, which US greatly suffers from now, is that voters ignorant of economics tend to elect representative who promise the most goodies now with the bill for them sent to later generation.

That is not what happened in the US. Not even close. That entire depiction of greedy and shortsighted voters being disciplined by a gold standard in the past is fantasy.

The per capita debt started its current runup in about 1980, with the rise to power of representatives who promised to cut back on the "goodies", and in fact did so to some extent.

The runup in the US debt was a consequence of reducing the taxes on rich people, spending lots of money on military gear and ventures, and setting up a rapid rise in medical care costs. It had nothing to do with "goodies", unless you are talking about the tax breaks for the rich.

 

[Billy T]

... That entire depiction of greedy and shortsighted voters being disciplined by a gold standard in the past is fantasy.

I did not suggest non-fiat currency would curb "greedy and shortsighted" voters. Only better education / understanding of economics plus some concern for the wealfare of their children will do that. It was the government, not the voters, that was "disciplined" by lack of silver and gold to buy and give the voters every thing they might want at the expense of large debts placed upon their children.

Also, I started my post by noting that fiat money is a good idea, more flexible than gold, BUT only if the voters are well educated in economics. Keynesian economics works but is only "half applied" in the US - IE the government is quite willing to deficit spend when the economy slows too much, but not willing to run surpluses during boom times, at least not since GWB was POTUS.

The per capita debt started its current runup in about 1980, with the rise to power of representatives who promised to cut back on the "goodies", and in fact did so to some extent.
The runup in the US debt was a consequence of reducing the taxes on rich people, spending lots of money on military gear and ventures, and setting up a rapid rise in medical care costs. It had nothing to do with "goodies", unless you are talking about the tax breaks for the rich.

I agree completely with this and note that the rich and corporations have the funds for TV ads, etc. to strongly influence the way an ignorant population votes.
Yes, most of the government's "goodies" now go to the rich and powerful, not those on welfare. The "wealth gap" is already large and accelerating!

I have often asked people to call the coming depression, "GWB's depression." Clinton often ran a budget surplus, GWB changed that, big time, not only by large tax reductions on the most wealthy, but also with needless wars, feeding his friends* in the "industrial military complex" Ike warned us about; plus creating the silly corn to alcohol program etc. to win votes in critical mid-western states.

I mentioned Scandinavia in my post to show that fiat money with a well educated population is a good thing. Let me get more specific; Both Norway and Alaska have huge oil and/or gas reserves generating large per capita incomes.

Norway views this wealth as belonging to all Norwegians, especially those not yet born, so almost all of the income is invested via their "Sovern Wealth Fund" - by far the largest in the world, for the era when these natural resources are gone. It is NOT being used by the current generation to reduce their taxes, which are among the world's highest, in part because high quality education, even thru a Ph.D. level, is free to all as is very high quality heath care, which gives Norwegian, about three years greater life expectancy than Americans have.

Alaskans have a quite different, and typically American view about how the wealth bonanza should be used - IE all for the benefit of the current generation. So they pay "negative taxes" - IE, every Alaskan, except those who have recently moved there, gets an annual check for $1900 from the government! More details at: http://time.com/money/3398996/alaska-resident-1900-dollars-permanent-fund-oil-money/ Or other Google searches on how Alaska is using "oil bonanza" funds.

You might ask: Why is the typical Americana so badly educated, especially in economics? The answer, which I have often posted, is pre-college education in the US is locally funded, not nationally as in Scandinavia. Teaching in a school in a poor neighborhood is dangerous, especially for an attractive woman. Also the salaries the poor neighborhood can afford are much less than paid in wealthy neighborhoods, where there are books in the library, instead of rats. It is little wonder why many students drop out - the school is not able to provide them with the education needed for a good job. - They can earn much more via crime or by becoming some rich person's maid or yard man. Of course they will vote for the politician who promises them "goodies" now, with lower taxes.


* Including King Saudi, who bought a small oil company and gave it George. It was not easy back then to bankrupt an oil company, but George did that - sort of practicing up for later bankrupting the US, but few realize, now, that GWB did that too. That fact will only become obvious when no one but the Fed will buy US Treasury bonds. (Fed is already the main buyer, with about three trillion on its books.)

 

[Schmelzer]

Now with fiat money there is no constraint on how much the current generation can vote to spend without paying for their pleasures.

No, there is no way we can take something without paying. In particular, there is no way to make the next generation to pay.

Whatever we use now has to be produced now. Thus, it will be taken from somebody, and taken now. Maybe somebody gives you something now, believing some lies you tell him - but he gives it now. People living now can cheat each other, but not a whole generation future generations.

So, "taking from future generations" is meaningful only in a single way - not investing into anything which can be used by them, depletion and overexploitation of ressources. But not in form of making debts or so. Making debts are a way of redistribution today.

 

[Michael]

No, there is no way we can take something without paying. In particular, there is no way to make the next generation to pay.

Whatever we use now has to be produced now. Thus, it will be taken from somebody, and taken now. Maybe somebody gives you something now, believing some lies you tell him - but he gives it now. People living now can cheat each other, but not a whole generation future generations.

So, "taking from future generations" is meaningful only in a single way - not investing into anything which can be used by them, depletion and overexploitation of ressources. But not in form of making debts or so. Making debts are a way of redistribution today.

This is an interesting point. But, I think what BillyT means is the debts are being paid by people who didn't get use of the goods or services. So, even though the stadium is built and used today, and the money is only used to reallocate resources that presently exist, in the future, future money will reallocate future resources away from some who had no use of the goods or service long since gone. In that way the current generation can steal from the future generation by selling debts in money that will be used in the future to take goods and resources away from future generations - assuming everyone plays by the same financial rules. It seems, towards the end, most money is used just to maintain the rules (see: United Police States of America).

If X takes out a loan from Y and leaves X's children with the bill. While the loan was only able to reallocate goods and services in the present, in the future Y will take money from X's children and it will be Y enjoying goods and services at the cost to X's children.

So, I don't see the disagreement.

 

[iceaura]

It was the government, not the voters, that was "disciplined" by lack of silver and gold to buy and give the voters every thing they might want at the expense of large debts placed upon their children.

Again with the "voters". Leave them out of it.

Goodies for voters had almost nothing to do with the US debt. The rich that received the goodies that ballooned the debt are not numerous enough to be classed as "voters". And commodity backing of its currency has never prevented a government from handing goodies to the rich at the expense of the future generations of the poor.

 

[Dr_Toad]

Without comment:

http://www.nytimes.com/interactive/2016/us/elections/top-presidential-donors-campaign-money.html

 

[Billy T]

... I think what BillyT means is the debts are being paid by people who didn't get use of the goods or services. So, even though the stadium is built and used today, and the money is only used to reallocate resources that presently exist, in the future, future money will reallocate future resources away from some who had no use of the goods or service long since gone. In that way the current generation can steal from the future generation by selling debts in money that will be used in the future to take goods and resources away from future generations ...

Thanks. That is exactly what I mean.
Schmelzer is very mistaken to think that the only way the current generation can steal from future generations, is by burning up the petroleum resources they will need as chemical feed stocks, etc. Norwegians understand is well. They do NOT use the oil and gas revenues to reduce their taxes, like Alaskans do.

Each Alaskan, not very recently immigrated there, get a "negative tax" of $1900 each year (every man woman and child)! Norwegians believe their natural resources belong to ALL Norwegians, especially to those not yet born, who can not make their wishes known via the ballot box. Thus they put almost all the income bonanza into their Sovereign Wealth Fund, SWF, which is by far the world's largest. The Arabs and others have by comparison only "pocket change" in their SWFs, if they even have one.

IE Norwegians plan to use income from their SWF to make the lives of the not yet born Norwegians even better than the current generation's.
Alaskans, and Americans in general of the current generation, plan to take what benefits they can now ("goodies") and send the bill to the not yet born - and can as they don't vote. Young American on average will be much worse off than their parents were. In my generation, women worked in the home, not offices or factories, etc. but now two incomes are required to pay the rent and put food on the table, etc. with totally inadequate amount remaining to retire on when old.

If you are a young American, you must be very dumb to not know you have been screwed by your parent's generation.
IE on the day you were born your share of just the federal debt, totaled more than $50,000!

PS to understand better Michael's reference to stadiums, go here: http://www.nytimes.com/2010/09/08/sports/08stadium.html
Read there:
" New Jerseyans are hardly alone in paying for stadiums that no longer exist. Residents of Seattle’s King County owe more than $80 million for the Kingdome, which was razed in 2000. The story has been similar in Indianapolis and Philadelphia. In Houston, Kansas City, Mo., Memphis and Pittsburgh, residents are paying for stadiums and arenas that were abandoned by the teams they were built for.

Giants Stadium is the granddaddy of phantom facilities. Taxpayers in New Jersey, already under pressure from declining local government revenues, this year* will pay $35.8 million in principal and interest on the $266 million in remaining bonds for the Meadowlands Sports Complex, which opened in 1976 and includes the Izod Center and a horse racing track. Those bonds will not be paid until 2025. ..."

A few specific examples of how one generation's desire for "goodies now" screwed generation not yet of voting age, etc.

* 2010 when article was written.

 

[Michael]

Yes and a very good system IFF the people are well educated, especially in economics, like in Scandinavia, but when they are not it is the main reason why the per capita debt keeps growing, as Alexis de Tocqueville learned /observed in his tour of America back in 1831 and described in his book: Democracy in America and that was before fiat money made the problem much worse.

I was thinking about this again today. I've known quite a few Swedes, Dutch and Germans (not many Finnish) and I don't think they really understand the price-mechanism and better than Americans. Plus, there's Japan. The general voter there is completely ignorant of the importance of price. It's why communism collapsed - thus, I think it's safe say, billions of people don't understand the price-mechanism. A price tag has unimaginable and unknownable amounts of information. Potentially everything from a farmers squabble with his wife (thus she refused to help pick coffee beans) to a ship that sunk late last year - even the traffic problems in Chinese cities. Each step of the way, the price of a good or service is impacted. That's powerful. And to best reflect all of these happenstances, we need sound money (which we lack) and a free market (free people) with laws that protect property and contract.

I really don't think Scandinavians understand this - and I'm positive Japanese don't.

Which is why I think the Finnish SWF is actually a product of culture. According to CIA fact check Finnland is 90% Finnish and when you add in Swedes, Russians, Estonians and English - it's about 95% finish.

Maybe, the correlation is that Finnish culturally understand that saving and investing provides goods and resources that will better the next generation? But, Japanese think like this as well. Yet, it isn't exactly working out for them. As one said the other day (there's too many old people here). So, sitting atop an oil reserve and not having a massive aged population really makes a difference too.

I'd also note this: The Finnish are not 'sharing' their wealth with the other Nation States of Europe. Yet, no one seems to think this is a really bad thing. They don't refer to Finland as Capitalists - but as Socialists. Okay, what's the difference between Finland and say the top richest banking families in New York City? At the end of the day, they'll each look after their own first and foremost.

So, I don't think either 'economic' literacy OR 'social responsibility' explains Finland. While I don't know the answer, I think perhaps hard-nosed Capitalism and Finnish family culture together with population sitting atop an oil bonanza best explains Finland. That they invest in education seems likely to be more akin to family culture - I mean, they're not paying for Swedish children to get a good education. Perhaps also a bit of commonsense too? And willingness to do what works for kids, not what works for teachers.

 

[Billy T]

Michael in your post 1111, you speak of Finland and I did not. Yes many things modulate price, but so what?

In posts 1105 & 1110, I noted the huge difference between Norwegians and Alaskans (or Americans in general) when it comes to protecting the not yet born from excessive debts they can not pay. I spoke of the Americans voting for representatives that promise the most "goodies" now, with the bill sent to later generations. Just as Alexis de Tocqueville did more than 180 years ago in Democracy in America.

I put this problem down mainly to the poor quality of pre-college education most American kids get (in contrast to the education in Scandinavia). My first wife was a Norwegian elementary teacher and I have been there at least a dozen times so do know of the one, zero cost difference that makes Norwegians both beter educated and better citizens, concerned for future generations of Norwegians and the health & education of all:

In Norway (and most if not all of Scandinavia) when students finish the first grade, both they and the same teacher move up together for the next grade. Etc. thru graduation from elementary school. This simple no cost difference from US schools has an enormous benefit.

First, there is no passing a problem child on to the next grade teacher as you are the next grade teacher too. If Johnny can't read or do math, there is no passing him on to the next teacher. All know who is responsible - no ducking / hiding responsibilities, as in US schools.

Secondly, at the start of every grade after the first the teacher on day one, knows her students well. She knows, for example John is two grades ahead in math but having trouble with his foreign language (All will be fluent in three, two not Norwegian, languages by eight grade). But Jane, who already has mastered three by fourth grade is a half a grade behind in math. So teacher can on some days have them helping each other in the back of the class room during say knitting class (even the boys take that).

Thirdly, thus educating the class is a mutual group project and responsibility - all learn at an earlier age to help each other - take responsibility for the welfare of others. Later in life, they still think it completely proper, correct and DESIRABLE to pay ~50% of their income in taxes so ALL have good education and health opportunities.

That "zero cost" better path is not taken* in the US and that has made all the difference! Why Norwegians would never spend their oil and gas wealth income on only the current generation, not even to lower their current taxes (Alaskans have negative tax - each man, woman and child gets $1900 from the government, with none set aside for generations not yet born.)

* American egos are too swollen to lean from others. Same reason why per capita medical services cost more than twice as much as in Scandinavia, yet they have three years greater life expectancy. Same reason why US on a per capital bases has about 25 times more citizens in jail, at per capita cost greater than Ivy League university tuition! etc.

Almost all of the US's major problems (including shrinking middle class and extreme wealth concentration), fundamentally stem from poor education that does not socialize its population to make them good citizens, concerned more with the future and less with how to get more "goodies now" without current tax increases.

 

[Michael]

Yes, I meant the Norwegian SWF.

Speaking of which, would you characterize the Norwegians as 'Socialist' or 'Capitalists'? I mean, from a certain POV they appear 'Socialistic' - in that, IF you live in Norway, you get pretty decent social services. However, from another POV they appear more like hard-nosed Capitalists. They didn't join the Euro for example. They don't seem to use their vast wealth to subsidize the social programs of even the other Scandinavian countries, let alone the rest of Europe. They're probably thanking the Norse Gods they didn't join now that Greece, Portugal, Italy and France are all collapsing under the weight of their social welfare States.

Here's a thought experiment:
Imagine if the rest of Europe (or even the rest of Scandinavian) could 'Vote' to 'redistribute' the Norwegian SWF to the 'poorer' people's of Europe, you know, for the "Good of Society" because "Norwegians use the Roads": Would they? How long before a politician from, say, Sweden or England, starts making the argument that the Norwegians are greedy rich misers that need to "Pay their fair share"?

Isn't THAT exactly what we do when we vote to 'tax the rich'? Isn't the Norwegian SWF 'stealing' from the rest of Europe? I mean, I'm sure they OWN a lot of assets located all across the rest of Europe. Probably picking up some good deals. So? From one POV they're benevolent socialists, from another, they're hard-nosed Capitalists looking out for their own interests and only their interests.

Which is it?

Almost all of the US's major problems (including shrinking middle class and extreme wealth concentration), fundamentally stem from poor education that does not socialize its population to make them good citizens, concerned more with the future and less with how to get more "goodies now" without current tax increases.

Yes, I don't disagree that education helps. But, I've also seen a lot of highly educated idiots. While I'm not sure how to test this theory, I would argue normality bias and culture play a much stronger role than education and probably influence even the most 'objective' astute 'voter'. Next I'd suggest a strong (if not even more influential) role of biology: DNA and epigenetics and how these ultimately determine the patterned development of nervous structures such as the left amygdaloid body and it's connections with the frontal lobe. While speculative now, I expect much more data to come out in support of the biology of political choice in the coming decade. Perhaps even a positive feedback via epigenetics to favor the development of particular types of brains?

Oh, and of course I totally agree with your sentiment regarding the unsound structure of modern day pedagogy in the USA. That's why I'm such a strong advocate for Charter schools. It's not fair that only the wealthiest can afford to opt out and attend Private schools and the poor should also be given a choice of pedagogy.

 

[Billy T]

Yes, I meant the Norwegian SWF.
Speaking of which, would you characterize the Norwegians as 'Socialist' or 'Capitalists'? ...

Neither. If forced to apply a label, I say: "Humanist." And not just wrt meeting the needs of other, less fortunate Norwegians, but globally - far more than any other nation on a per capita basis:

Norway is the biggest contributor to conflict resolution, the optimistic name given to efforts to get warring parties to talk to each other. A high point here came in 1993, when Norwegian diplomats and researchers cajoled Israelis and Palestinians to negotiate face to face. The resulting Oslo accords were signed in Washington by politicians from America, Russia, Israel and Palestine. Norway was more than happy for them to take the credit for its initiative.

Since then Norway has sought to involve itself in many other conflicts—the less tractable the better. It has tried to repeat its Arab-Israeli success (as it seemed at the time) in Colombia, Haiti, Cyprus, the Philippines, Burma, Indonesia and, most recently, Sri Lanka. ... a consistent principle runs through these efforts: that it is better to sit down with all parties, even those considered pariahs, than to exclude anyone from peace talks. Norway is a generous funder of a huge number of good causes:

It has, for instance, given more to alleviate hunger in the Horn of Africa this year than France or Germany. It has set up a mechanism to pay Brazil not to chop down the Amazon. And it shovels money into the United Nations. ...
This makes Norway sound like a place that models its foreign policy on the banners held up at Woodstock, but that is not the case. It is a member of NATO and is playing an outsized role in the campaign in Libya. It has repeatedly shown a willingness to put its soldiers in harm's way. The foreign ministry estimates that 120,000 Norwegians served as peacekeepers between 1947 and 2008, and Norwegians wearing the UN's blue berets can today be found in Sudan, Congo and Afghanistan.

I add: as the Economist forgot to mention that tiny Norway paid 100% of the cost of the UN's General Assemble furnishings and equipment. Again this is due to their elementary education system - They are taught that they are "Their brothers keeper." but realist enough to not be idealist thinking they can re-make an evil and corrupt world. They are a force for the betterment of mankind, far greater than any other on a per capita basis.

Isn't the Norwegian SWF 'stealing' from the rest of Europe? I mean, I'm sure they OWN a lot of assets located all across the rest of Europe. Probably picking up some good deals. So? From one POV they're benevolent socialists, from another, they're hard-nosed Capitalists ... Which is it?

Again: They are humanists, but realistic ones - try to make profitable use of their SWF, but probably none of it has ever been invested in companies making cigarettes, etc.

When I spoke of "education" my focus was on making desirable global citizens, not math and physics, etc. although well represemed amoung the world's greatest here too. See 14 of the most importat ones here: http://www.ranker.com/list/famous-mathematicians-from-norway/reference

 

[iceaura]

Speaking of which, would you characterize the Norwegians as 'Socialist' or 'Capitalists'? I mean, from a certain POV they appear 'Socialistic' - in that, IF you live in Norway, you get pretty decent social services.

The following are socialized in Norway - the means of production or provision are owned by people based on their membership in a community, rather than by their having exchanged capital for ownership: A controlling share of the oil industry / the hospitals, most of the clinics, and the medical insurance industry / most of the schools / the roads and ports and most of the rail system/ the police and fire response and emergency response infrastructure/ the water and sewer systems/ the central bank/ and so forth.

However, from another POV they appear more like hard-nosed Capitalists. They didn't join the Euro for example.

The Euro was created by hard nosed capitalists, the bankers of Europe, and Norway did not join it in part because the State-owned socialized central bank wished to insulate the Norwegian currency and socialist institutions from these European bankers and other capitalists. Norwegian banking, for example, is carefully regulated, and the division between commercial banking and retail savings and loans is strictly enforced - European banking is not as carefully overseen, in general.

Of course, that was a hard nosed capital informed decision. And Norway has plenty of capitalist corporate industry, capitalist home ownership and consumer good marketing, a stock market, a private banking and financial industry, and all that kind of stuff. As with any reasonably run economy.

 

[Michael]

Neither. If forced to apply a label, I say: "Humanist." And not just wrt meeting the needs of other, less fortunate Norwegians, but globally - far more than any other nation on a per capita basis: I add: as the Economist forgot to mention that tiny Norway paid 100% of the cost of the UN's General Assemble furnishings and equipment. Again this is due to their elementary education system - They are taught that they are "Their brothers keeper." but realist enough to not be idealist thinking they can re-make an evil and corrupt world. They are a force for the betterment of mankind, far greater than any other on a per capita basis.Again: They are humanists, but realistic ones - try to make profitable use of their SWF, but probably none of it has ever been invested in companies making cigarettes, etc.

I see. But they are Capitalists right? Isn't that the whole point in having a SWF? Capital investments that pay capital returns?

Sure, if you're born Norwegian you get use of the social services that arise out of these investments - but that's not very fair if you're a Greek now is it? What do you suppose would happen if the Greeks were allowed to pull the magic voting lever and 'redistribute' the Norwegian SWF - you know, for the Good of "Europe"? Do you think Greeks would soon come to feel 'entitled' to some of that money - if they had the opportunity to redistribute it??? You know, they're all "Europeans" after all.

Isn't THAT more democratic?
Isn't THAT more humanistic?

I bet that if Norwegians were forced to 'redistribute' their wealth - they'd be a lot less generous. The best thing the Norwegians did was NOT being part of the Euro. A similar conclusion some American States may come to one day in regards to the USD.

When I spoke of "education" my focus was on making desirable global citizens, not math and physics, etc. although well represemed amoung the world's greatest here too. See 14 of the most importat ones here: http://www.ranker.com/list/famous-mathematicians-from-norway/reference

IMO you'll never create a bureaucracy that will 'educate' children into desirable anything. I think you're putting the horse before the cart, Norwegians themselves raise wonderful children. Their educational system is a reflection of the Norwegian family culture, not the other way around.

And American Government schools are a reflection of our culture and given the Government's monopoly on pedagogy, don't expect too much change happening anytime too soon. We still take summers off to plow the fields for Christ's sake.

 

[iceaura]

I bet that if Norwegians were forced to 'redistribute' their wealth - they'd be a lot less generous. The best thing the Norwegians did was NOT being part of the Euro. A similar conclusion some American States may come to one day in regards to the USD.

This is the kind of nonsense you fall into when you deny the role of government in establishing currencies and maintaining markets and all the rest of the work of setting up a modern industrial economy.

Norwegians are forced to pay very high taxes, and the wealthy pay higher taxes than the poor. That is part of the reason they are so prosperous and well educated and so forth.

I see. But they are Capitalists right? Isn't that the whole point in having a SWF? Capital investments that pay capital returns?

An SWF is a socialized investment fund - the Norwegian one is managed by its State owned central bank, whose officers are appointed by the head of the government, so it's not only government owned but government run.

And American Government schools are a reflection of our culture and given the Government's monopoly on pedagogy

I live in a region of America in which many schools reflect Norwegian culture. The Federal government does not monopolize the pedagogy of the schools near me (it doesn't even control the curriculum, or grade divisions, or teacher certification, or instruction methods). And so forth.

 

[Billy T]

... What do you suppose would happen if the Greeks were allowed to pull the magic voting lever and 'redistribute' the Norwegian SWF - you know, for the Good of "Europe"? ...

Hard to tell if you are suggesting how ownership /property rights / should be abolished or not. It seems you prefer a larger (one global?) government that would redistribute wealth so all share and share alike; without consideration of how, who, and why the wealth was produced.

This is an extreme socialistic POV, and we have many historical examples (including Brazil's currently failing economy)* of what always results. In the end it is misery that is equally shared as without incentive, production ceases.

* During her first presidential term Dilma, did many things to make herself popular that were basically transfer of wealth the rich to the lower middle class and the poor. For example, the Brazilian government is the controlling share holder in the oil company Petrobrass, and she forced them to sell gasoline at less than production cost for five years. Likewise she unilaterally tore up some contracts with electric companies, forcing them to lower residential electric rates. etc. The investment which developing county Brazil needs terminated in this environment as did the price of stock share (about 80% down from it peak for Pertrobrass, as I recall.) Unemployment soared, as did fundamental interest rates (14.25% now). Capital fled the country. Now the harsh economic realities of her "vote buying" have come home to roost. Diluma's approval is about 15% and serious drives are starting to kick her out of office. Rating agencies have Brazil on negative watch, and the next down grade will terminate its "investment grade" rating, greatly increasing borrowing cost.

IN SUMMARY, to more directly answer your question, Greeks would see little and only temporary benefit as the world's economy collapses (assuming the larger /world government treated all productive groups like you suggest the Norwegians would be treated - share and share alike.)

 

[Michael]

This is the kind of nonsense you fall into when you deny the role of government in establishing currencies and maintaining markets and all the rest of the work of setting up a modern industrial economy.

This is just gibberish. The Government's role is LIMITED to ensure the Law is upheld. That's all that's required of a Government in order to set up a 'modern industrial economy'. Sound money can be derived naturally - and IS. Freedom FROM government will allow for the innovation of a modern economy. You do understand the second industrial revolution occurred during a time BEFORE a Central Bank?

I know, it's next to impossible to imagine we ever got along without Central Banking bubbles / Economic Cycles. But, we did.

Oh, I'm sure you believe that the State is required to set up a 'modern' industrial economy - but that's all you have, is your belief. Two hundred years ago other people 'believed' Slavery was required to set up a 'modern' economy. Four hundred years ago other people 'believed' Kings were required to set up a 'modern' economy. A thousand years ago one of your direct ancestors worshiped a Sky Daddy and believed Christianity was required to set up a 'modern' economy.

A hundred years ago some idiot Progressives gave us the Central Bank because 'the role of government in establishing currencies and maintaining markets and all the rest of the work of setting up a modern industrial economy' and a short time thereafter that same Central Bank ushered in The Great Depression, and that same Government prolonged it - culminating in World War II and the nuking of innocent women in children in Japan.

But don't worry, we're getting more Government - not less, more. And we'll lose more Civil Rights, including the right to privacy, the right to walk freely without carrying ID papers, the right to GASP cut hair or arrange flowers for sale. It's going to get much much MUCH more Progressive before things get any better. That much you can take to your Government regulated banking monopoly.

You think Government is so good at setting up an economy: Explain the utter failure of Communism.

 

[Michael]

Norwegians are forced to pay very high taxes, and the wealthy pay higher taxes than the poor. That is part of the reason they are so prosperous and well educated and so forth.

More babble.

Norwegians sit atop a massive oil supply. Each Norwegian is a millionaire. The reason they have a high tax rate is to influence behavior. That's what tax is used for. You do understand their government can print any amount of currency needed? But it would have ZERO idea of where or how to spend it. So it uses tax as a means to enact change in behavior instead because this is more efficient. That's it.

Explain low tax (no minimum wage) Singapore and Hong Kong.
Explain Japan.
Explain China.