Lois & Clark Forums Forums General Discussion Off Topic Possible reason for Wall Street crisis

Roger, you argue from your theory. Basically you say, This is what our theory says, so, ergo, this is what reality is like.

As most of you know, I am an astronomy fan. So let me argue from an astronomical theory and and not from the best available observations of the cosmos. Let me introduce the Ptolemaic model of the solar system and the cosmos:



Ptolemy, who died in 165 AD, taught that the Earth was the center of the universe. According to Ptolemy, the other bodies in the solar system orbited the Earth. The body orbiting closest to the Earth was of course the Moon, and then followed Mercury, Venus, the Sun, Mars, Jupiter and Saturn. They all wandered in circles around the Earth, the center of the universe. Beyond the orbit of Saturn lay the celestial firmament and the fixed stars. These, too, slowly, majestically, wound around the Earth in their yearly cycle.

So don't tell me that the Sun is in the middle of our solar system or that the Earth orbits the Sun, Roger. Can't you see from the model that it is the other way round?

Let's talk about your economic theory. You say this:

Government produces nothing at all? That is an interesting statement. I fully agree that Communist states have never proved themselves really successful, but would you really say that during the circa seventy years that the Soviet Union existed, when the government at least in principle controlled every aspect of the economy, that country produced nothing at all?

So tell me, Roger. I am a teacher, and my job is paid for by tax money here in Sweden. Would you say, therefore, that because I get my pay through tax money, I produce nothing at all? But if I got myself a job at a private school, I would suddenly generate a lot of value, doing exactly the same thing as I do now?

Oh, wait, now I get it. I do the same thing as before, and my students get the same things out of it as before, but the definition of what GNP is says that I produce nothing when I work for tax money, but I do indeed produce something when I work for private money?

You argue from the model, Roger. You don't ask yourself if your model agrees with the real world.


The map said we should row this way!

What we see right now at Wall Street is how unregulated capitalism has destroyed incredibly huge assets. It has almost been like watching a magician perform: Look, here we have a trillion dollars! And look, poof, suddenly it is all gone! But for all of this amazing vanishing act, I suppose that only private interests can generate wealth, because that is what your model says.

I don't have the strength to look it up, but I believe that the Communist Soviet Union crumbled in around 1993 or thereabout, and gave way to capitalist Russia. I do remember what happened in Russia. Suddenly, a lot of people grew immensely richer, while the country as a whole sank into poverty. Alcoholism, which had been a bad problem in the Soviet Union, skyrocketed in the new Russia. Nativity plunged. Life expectancy plunged, from perhaps 75 years to 65, even though there was no new raging disease taking a measurable toll of the population. Everything was just down.

A few years later, I saw an interview with a former Communist official, whose job during the Communist time had been to oversee the production of something and to make sure that the products were distributed according to the orders of the government. When Communism fell, this woman had become a free entrepreneur, and thanks to her various contacts and general position she had become immensely rich. In the interview with her, she said this:

And while she was saying this, Russia was drowning in alcohol and despair.

When I was nineteen years old, a really long time ago, I took a university course which required me to study the basics of Marxism. I don't remember very much of the basic tenets of Marxism, except that it says that capitalists own production plants and use workers to generate wealth. But in order to maximize their own profit, the capitalists will pay the workers as little as possible and put as much money as possible in their own pockets. And according to Marxism, the only way for the workers to liberate themselves was to take control of the production plants themselves.

When I had just read that book on Marxism, I remember thinking that it sounded all very convincing. At the same time I knew that there must be a mistake somewhere, something that Marx hadn't foreseen or realized. What was it?

I couldn't ask anyone what was wrong about Marx' theory. I couldn't ask my parents, because they would be horrified that I believed that Marx could be right about anything whatsoever. And if Marx couldn't be right about anything at all, it was pointless to ask what he was wrong about, wasn't it?

I also couldn't ask the people I took that university course with, because they were all communists and would tell me that there was certainly nothing wrong at all with Marxism. This was in 1974, by the way, when the media and the universities were very left-leaning.

So I couldn't ask anyone and had to think about it myself. I thought long and hard, and finally I thought I knew what the problem was. Marxism seemed to argue for a solution where the workers took over the production plants. In the countries where Communism existed for real, it was not the workers who controlled the production plants, but it was the government. The government in a Communist country controlled all the economy. But it also controlled the law, the courts, and the prisons.

Who would stop the government in a Communist country from abusing their vast power? No one would, that was the answer. In a Communist country, the government was all-powerful, and therefore it could do as it pleased. And it could crush its opponents as it pleased. It could crush anyone it didn't like as it pleased.

And that was what was wrong with Communism. Because it put all its eggs in one basket. That way it gave all the power in the country to the government.

Well, Roger, it seems to me that you want to put all the eggs of the economy in the free market basket. But when the market drops its basket, we are all left with a rather disgusting mixture of raw eggs, pieces of egg shells, and dirt.



I believe in checks and balances. I don't believe in the totalitarianism of the government. I don't believe in the mad and unchecked reign of the free market. And, for the record, I don't believe in tax hikes for their own sake. I believe in tax hikes when the government can put that money to good use.

Ann