Bill Harrison


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Money doesn't exist, not really.

Money doesn't really exist. Money is just a claim check upon the capital resources of the real economy. It's just a virtual artifice built upon real output.

Therefore, I agree with TEDster Malcolm Gladwell in believing it is socially justified to raise the top marginal tax rate to something like 90%, so no one can make more than ~2 million per year, and also to raise the estate tax, capital gains taxes, and the effective corporate tax rate.

First, because speculators, bankers, and hedge fund managers are not socially productive at all, let alone enough to justify making what they make.

Second, because every human being is entitled to food, water, clothing, and education, because there is more than enough to go around - just because you work on Wall Street doesn't mean you can squander the (finite, but growing) capital production of society on luxury goods while people starve.

"Those who create phantom wealth, and those who are the beneficiaries of mutual funds or retirement funds invested in phantom wealth, may never realize that they are giving its holder a claim on the real wealth produced by others, and that phantom-wealth dollars created out of nothing dilute the claims of everyone else to the available stock of real wealth. They may also fail to realize that Wall Street and its international counterparts have created phantom-wealth claims far in excess of the value of all the world's real wealth, creating expectations of future security and comforts that can never be fulfilled."

David Korten

Money doesn't really exist, but people do...think about it.

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    Oct 1 2011: Hi Bill, Your topic reminded me that I was wondering the other day about derivatives. While I was taking my MBA and studying all that was happening in our economy, I remember thinking about the emperor who had no clothes. Derivatives are just like this to me. If the world is on the brink of collapse because someone sold something that was virtually pretend, why couldn't we as the population of the world just all agree to 'rewind' and decide that they did not exist. The only people who would lose would be the jerks that perpetrated the fraud. It is not like we do not have the computerized records of the transactions somewhere (where are Misha Glenny's hackers when we need them?) We can track terrorist, why not these people who collaborated to destroy our economy more efficientlyand profoundly than Al Qaeda did? Society is a social construct. If all the billions of us decided to agree that today is yesterday we could do it. If we decide that the only people who should suffer in the meltdown are the perpetrators of it, we could do that too. While we are at it lets give Greece back their to their countrymen!

    Simplistic? Simplistic as hell but all of society is actually a social construct and if we only knew it, we can change the reality on this planet at this moment by simply having enough people agree. After all most laws leave someone out so why not just target it this time at those who created the problem?
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      Oct 1 2011: . I always feel much of the problems stems from people having more education in how to function in the current economy rather than learning that the economy is a social construct subject to change. Hopefully one good thing that will come from the Internet is more and more of this information is getting out
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        Oct 1 2011: This is a little known Canadian banker who tried to fight Greenspan every step of the way only to be dismissed. This article is from Der Spiegel (translated),1518,635051,00.html
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          Oct 2 2011: Yes its amazing that Greenspan is this likeable figure who everyone reverse, yet he derived most of his ideas from Ayn Rand, (although I guess he tempered them a bit) who most people regard as fanatical. If only the %1 - %5 who are still needy would actually go Galt.

          Thanks for the link
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        Oct 11 2011: KISS -Keep It Simple Stupid!
        Do not waste energy on revenge or blaming. Concentrate on what needs to be done.

        Who said ".. We met the enemy and found the enemy is us'? People stuffed up because we were not watching them.
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      Oct 2 2011: Hi Debra, I'm out of up-votes for you for this week, so here is a virtual thumbs-up *thumbs up* :) - because you hit the nail on the head with the emperor's new clothes metaphor, which is very apt. That is exactly what I'm trying to accomplish with this topic.

      You may already have seen this great talk by Steven Pinker about "mutual knowledge," in which he says that revolutions succeed when the oppressed masses achieve the mutual knowledge that they all hate the tyrants together, and that is why freedom of assembly is so important:
      (At 7:40, though the whole thing is great)

      He goes on about the emperor's new clothes story - the kid who tells the truth doesn't say anything that the people don't already know, but when he blurts out the truth, mutual knowledge is achieved. The collective fiction instantly dissolves, and with it the power relationship.

      Pointing out that the Wall Street rich are rich, not because of their "marginal productivity" or value to society or worth as human beings, but because they own the claim checks and are sitting atop the money pipes, is something everyone already knows. It is not because of any inherent intelligence/social productivity/virtue/work ethic advantage, and pointing this out naturally scares the Wall Street parasites, who will call the rest of humanity worthless, lazy, stupid, low status, etc.

      They will desperately try to preserve that relationship, but the fiction keeping them in power will already be gone. The emperors lack clothing, indeed.

      "During times of universal deceit, telling the truth becomes a revolutionary act." - George Orwell
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        Oct 2 2011: Hear! Hear! for direct speech. Hear! Hear! for the transition to mutual knowledge!
        (Pinker and I are both Canadian and about the same age so I'd like to think that it might just be because "The Emperor Had No Clothes" was a dominant metaphor and story of our childhoods but- I realize now that i have seen this talk and adored it when I did!)

        I think that is what I try to do on TED- to speak truth as I see it as clearly and as directly as I can. If our financial system is going to collapse I don't want it to be because the people did not know what was going on and because no dissenting voices were heard. There are social times when it serves the common good to pretend something unpleasant or even obscene is not happening or does not exist (a couple making out at a party, a bad smell in a room, the boss helping himself to the cash drawer) but in this case our politeness or our collusion toward silence as these societal bullies and manipulators take down our system is going to lead to such suffering if there is a financial collapse! Through my job I studied Canadian planning for the advent of a pandemic and in the analysis of the social disruption of even a few days where food and or water could not reach a population of millions, the outcome is very scary. A financial collapse would do the same and we would be back to the survival- not of the fittest- but of the most violent, most rapacious and most cruel pretty quickly. Surely human beings can choose a better way. Maybe this is the stage for humanity when the cocoon cracks of our old ways crack and a butterfly struggles and wretches itself forward into a better life?
        • Oct 26 2011: I am trying to reply to Kristian Pinter below re:

          "it requires a lot of skill and talent to make more money out of less money"

          and LUCK!! why is is that the free market fundamentalist faithful downplay the luck factor?
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          Oct 26 2011: paula, surely, luck is a huge factor. but you don't get too far with luck alone. luck averages at zero in the long run. and we don't know how to stimulate it (hint: it is not possible).
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        Oct 11 2011: People get rich because that is what can be done with money! Get rid of it.
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          Oct 11 2011: i would try it. i would like to see what you can do with a million dollars. after 5 years, how much would you still have of it?

          being an entrepreneur is not easy. nobody says that making shoes is easy, you just put the parts together. nobody says that painting is easy, you just apply colors. but strangely, everyone thinks that money makes more money on its own. no it is not. it requires a lot of skill and talent to make more money out of less money.
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      Oct 11 2011: "It is not like we do not have the computerized records of the transactions somewhere (where are Misha Glenny's hackers when we need them?)" This statement is gold. Now if we could just get the government to act in the interest of of the people instead of the corporations and use this resource.
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    Oct 1 2011: Robert Reich explains the economy in under 2 minutes and 15 seconds, including how the economy has doubled in size since the 1980's, while real wages have remained stagnant, because all the gains have gone to the wealthiest 1%:
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      Oct 10 2011: reiteration of what is visible on the surface, but nothing about the fundamentals
    • Oct 26 2011: This video link you gave is a wonderfully short and truthful explanation of what has happened in the last 30 years. I think we should stop debating with Mr Pinter, he seems not to have realised that when private central banks finance government spend, it is the public who pay for that debt short and long term. Nothing similar happens in the flour and bread baking analogy, so his core argument that money is MERELY another commodity like flour, is simplistic, silly and misleading. They key to understanding is by whom and how money is created and released into the system, and whether or not public debt is created.
  • Oct 26 2011: I think you have to be careful when you limit people's earnings. I agree that it makes no sense for someone to earn > $2m a year but it's a difficult rule to apply. The problem is because the job market is not really a free market - the top positions are not entirely decided freely. For example, why in most countries do women get paid less than men?

    I think the first step to make is to implement a 100% inheritance tax. It seems to me to be a valid argument to say that a person should earn the rewards he deserves (what the correct rewards are is a different subject) but why should his/her children enjoy those same rewards? What right does Rich Man's children have to his parents rewards when he hasn't done a thing for society? It's already too much that he enjoys a privileged childhood.

    It seems a radical idea: "It's my money, I should decide who it goes to!" but it's not really. Rich Man earned his money not only by his own efforts but mostly on the back of others: Newton, Einstein, Gutenburg, the guy/girl who invented the wheel, etc. Rich Man only added a tiny bit of value on top.

    The benefit. Put the money back into society - focus on education, equal opportunity and social well-being. Everybody, even Rich Man will be better off in the long run.

    If you're wondering: Yes, I'm in the position that I will bequeath my inheritance to my children. I would prefer to give it to society but not unilaterally. In any case by the time we die our children (now > 80 years old) are children should have already found their place in society. I don't want my children to become spongers even if I were rich enough to support it.

    Implementation: start off with an acceptable figure: say 30% this year, 31% next year, ... until we reach 100%.
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      Oct 26 2011: what is the difference between the following statements?:

      1. this money is mine, i have earned it. so i can buy a big space rocket, and spend a week on the moon.

      2. this money is mine, i have earned it. so i give it to my son.
      • Oct 27 2011: 1 Is generally good for society spending money creates jobs, circulates money, even in you extreme example. 2 Creates and perpetuates an unfairly privileged and elite rich.
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          Oct 27 2011: 1. if you think it is good for the economy if a single person goes to the moon for one week, why don't we send random people to the moon every month? please try to think about it before you answer. this is an interesting problem, and most people gets it wrong (even if it was solved 150 years ago).

          2. what to you think the heir will do the money? won't circulate it? if if circulation is so wanted, why we allow people to buy gold? isn't it takes money out of circulation? again, i don't want quick answers, but i try to induce thinking. you don't even have to answer, it is enough for me if you don't dismiss such questions, but think about them.
      • Oct 27 2011: Yes of course a person taking a ride to the moon is 'mostly' wasteful. But let's try and be realistic. Not many people have that kind of money today and even less would have it if there were no inheritance. The reality would be quite different. People would not hoard money, which is bad for society, but either use it or return it to the pool for the benefit of others after a relatively short time when they die.

        What do heir's do with the money? They do circulate it a bit but not much. Take a look at countries that have an rich elite - England, America, Switzerland, ... The wealth is perpetuated for generations and the rich/poor divide does not breakdown except in extreme cases - e.g. a revolution. This is not good for society as a whole.

        Sorry but in many societies people are not allowed to buy gold for good reason.

        Can you let me know what the 150 year old solution is? And what problem it is solving?
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          Oct 27 2011: let me correct this, and say that this is mostly wasteful for other people. certainly not wasteful for the millionaire himself. and it is true for all consumption. all consumption is beneficial for the consumer himself. but after all, that is the very goal of the economy. if we don't want to consume, we don't have to work and trade.

          money hoarding is not at all bad. again, it is relatively easy to understand, if you bother to think about it. if you just accept catchphrases thrown at you, well, that's a different story.

          heirs not circulate money? why not? why would they circulate money any less than their ancestors did? in fact, if we are talking about the typical hollywood movie kind of heirs, they circulate money at a faster pace than their father did. the wealth can exists through generations only if the heir continues to shepherd it well, invests in good businesses, does not waste it on luxury, and so on. because wealth melts in no time in the wrong hands. yet again: think before accepting catchy half truths or lies. what would you do with a million dollars? do you personally know any kind of investment form that guarantees a return?

          and we digress. the original question was in fact an ethical one. if a person has the right to use his money as he pleases, why can't he just give it to someone? giving to someone is not a use?

          i recommend you to read about the broken window fallacy, think about it until you are sure you have a deep understanding of it. then you might want to look up frédéric bastiat, a 19th century thinker, who made great observations on the matter. in short: consumption does not drive the economy. rather, production does. and you cannot increase production by wasting goods.
      • Oct 28 2011: Rich families don't hoard wealth. Are you kidding me? The talk, to which this conversation is attached is all about the wealthy elite vs the poor - it's called social mobility.

        You claim to be qualified to talk about this subject and you claim that I am not worthy to comment because "I don't think before I talk/write" and haven't read some book or another. I'm sorry but that's just obnoxious. You cant even be bothered to either read my post or answer my question about the 150 year solution. So you are not worth conversing with further.
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          Oct 28 2011: listen to this extract of our conversation:

          me: "money hoarding is not at all bad."

          you: "Rich families don't hoard wealth. Are you kidding me?"

          how i'm supposed to answer to that? it seems that TED forum goes through some sort of distorting field before it gets to you, because later you "quote" me saying "don't think before I talk/write", while i was not saying that. then later you say i didn't answer the 150 year thing, while i did, it was the broken window fallacy, which you apparently have not followed up on.

          my efforts are in vain. you cannot understand the economy reading newspaper articles. it is easy to pick a side, and echo things. but it is not enough to actually understand what's going on. you need to study the basics, division of labor, capital, prices, supply and demand, profit and loss, the role of the entrepreneur, theory of money. this is not hard, but not trivial either. there is a lot to learn here. i did study these things, i spent 10 months on that. and i recommend you to do the same.

          ps: i pretend not to notice the "you are not worth" part. i consider it a massive series of typos.
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    Oct 15 2011: @Kristian It isn't that honest politicians can be bought, it is that honest politicians usually do not get elected, because the deck is stacked heavily in favor of dishonest politicians who pander to the wealthy, because money is a necessary condition for being elected. The OWS movement is trying to correct that.

    I don't consider people who are paid a fair wage to be "wage slaves," but many people who work jobs for minimum wage, whose brains are malnourished, who cannot afford healthcare they need, and whose labor other people live lavishly upon, I consider them wage slaves.

    If you have worked for your money and you have been socially productive and you have deferred consumption, more power to you. But there is a highly imperfect correlation between how much money you have, how socially productive you are, and how much consumption you are "entitled to." Some people can admit that, others can't.

    I don't know what that means practically to not trust politicians with tasks like distributing money. What about public goods, like roads and other infrastructure?

    What you seem to be suggesting, either a smaller, less powerful government or getting rid of government altogether, is essentially the policy that the US has been trying for the past 10 years - "trickle down" economics, giving more money to the wealthy while depleting the coffers.

    Like Hayek, I am usually opposed to "central planning," because I don't think politicians are smart enough to directly manage the economy. However, I also recognize that "the free market" can and does fail massively, and when it does, the government can and should correct those failures, like it did during the Depression. The government has a place in correcting market failures - when it comes to monopolies, when it comes to public goods like infrastructure, and when it comes to the rising inequality over the past decade.

    I'm still not entirely sure what you're advocating, other than that "government is bad."
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      Oct 16 2011: you like big words it seems. instead of uneducated or less educated, you say "malnourished brain": you say people live "lavishly" "upon" other people's work. you say "the deck is stacked in favor". this is nothing else, but a coverup for the absolute lack of details or arguments on how such things would happen. of course, they don't. that is my first problem.

      the second problem is that you ask, with a straight face, questions that are asked and answered. there is zero need to debate questions that are already debated, using the same arguments over and over again. it might please the many who do not want to hear anything new. but it should only upset those who like to ask questions. for one, the "who will build roads" and the very term "public good" is nothing else than boring. simply put, there is no such thing as public good. it is a century old fallacy that is not supported by anything but claiming it "obvious". it is also obvious that the earth stands still, and the sun goes around it. obvious, yet false. being obvious is not good enough.

      actually "government is bad" is not the core of what i advocate. the core is "coercion is bad". and government is a way the majority coerces its world views and beliefs on the entire society. alas, often these beliefs are misconceptions.
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        Oct 17 2011: "Malnourished brain" more spoke to me of a condition from not being able to afford to eat properly.

        "government is a way the majority coerces its world views and beliefs on the entire society."

        I don't think this have ever been the case. Even Athens, which sported a direct democracy (the people themselves took turns in parliament), only granted this privilege to a very small percentage of the population. Women weren't allowed to participate, nor were slaves (1 person in every 3 was a slave). Of the men, not only was it required they'd been born in Athens, but both of their parents must have been too.

        So maybe you meant "democracy" and not government, but I don't think we've had a direct democracy since Athens.
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          Oct 17 2011: believe me, i did mean government. from the context, it is quite clear that we are talking about today's democracies.
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    Oct 6 2011: The Free Market is indeed free. It's free of responsibility, accountability and liability.

    When we can simply print more money which in turn supports the destruction of the environmental web without any accounting for that destruction until the notion of restoration comes forth, then money undermines it's fundamental basis.

    Until we understand that our economies are a subset of the environment and not the other way around with full accounting of all externalizations and unintended consequences our wealth will undermine every aspect of sustainability that has ever been identified.

    The earth can no longer afford the rich. Or as Gandhi said, "there is enough for every man's need but not for every man's greed".
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      Oct 6 2011: market is a concept, not a human being. it definitely can not have responsibility. only people can have responsibility.

      printing money is not happening on the market. it is long since monopolized by government.

      the best thing to do is to understand that economy is a subset of inter-personal relations. not all inter-personal relations are economic, but all economic actions are human actions.

      the earth with modern technology can service the rich and the masses. there are unlimited possibilities in the future.
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    Sep 29 2011: money does exist, and it is easy to check. go into a shop, and buy something.

    whether money exists or not, it is still not just to take something from another person by force. taxation can be a necessity (i don't think it is), but it is not justified. and especially not justified to take more from one person than another.

    the financial sector is immensely important. they manage the most important resource, our savings. except the US does not have savings. and the government manipulates money, grants special privileges, creates crazy regulations, so the financial sector can't fulfill its function, and instead, became a place where powerful politicians can get their money. the problem is not the intricate network of financial institutions. the problem is that they can't function.

    nobody is entitled to anything except their own body, time and justly acquired property. you are entitled to buy food if you have something to offer in return and you find someone to trade with. or you are entitled to use your own land to grow your own food. you are not entitled to get food from another person against his will.

    i understand the anger. but i don't accept smashing the first thing you see. one needs to learn and understand the reasons. how the system works, and why the system does not work. hatred not, but only reason can get us out of trouble.
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    Sep 29 2011: Furthermore, (and this is a point to which conservative economists are oblivious) many economic institutions are driven by waste, not efficiency, because waste is a "fitness display," and thus it is sexually selected for. You can only afford to waste huge amounts of resources if you are really really wealthy - so think of peacock's tails, bling, and MTV's cribs.

    Knowing this, a rational society only allows so much of it:
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    Oct 17 2011: @Krisztian Yes, money today is pumped into the system literally out of thin air. And while money itself may be a hard item we use to facilitate exchange, this fact illustrates that the nature of currency goes much deeper than these (real or representative) commodities. Money itself is a representation of the way we value goods and services. Consider your computer. How much is it worth? It has a monetary value. Maybe "money" in this conversation is a bit ambiguous, as the word itself can be associated with coins or slips of paper. So in this context, really you're right to say that money is a commodity (even representative-money). But I don't think either of us are looking to debate semantics. Maybe when discussing a world with no money, it would be more appropriate to discuss a world with no monetary value.
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      Oct 17 2011: the fact that money is monopolized and ruined by government does not make it any deeper. as i've said, new money creation affects the economy greatly, and governments are very much reckless in that regard. this is a shame. but roads also can be destroyed by stupid actions, and that does not make roads any deeper than they actually are: hardened surfaces that allows traveling by cars.

      the term "money" is indeed ambiguous, in large part because there are crazy laws around it. should money be free of government influence, it would be much simpler and less confuse. just as it was before.
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        Oct 18 2011: Well I don't think there's enough gold and silver in the world to go back to the way things were before. Thin air is the new cool thing. The people that have that... dare I say power?... aren't about to give it up. Getting rid of the central banks is about as lofty a dream as getting rid of money all together.

        If privatized central banks is what you want, we almost have that today here in the US. The FOMC is a largely private board and even with some publicly (presidentially) appointed members it remains largely free of any government ratifications. If decentralized, unregulated banks is what you want, the US tried that also in the 1800's and I don't think any one bank lived longer than five years. As long as you have banks, especially as long as you have a fractional reserve banking system, you're going to have corruption. That is, as long as you have money being loaned that *technically* doesn't exist until you loan it, you're going to be delegating unnatural, incredible power to a small handful of people.

        Nation states hardly interest us anymore. We're into economic empires. How exactly are we supposed to introduce any significant change to our banking infrastructure?
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          Oct 18 2011: i didn't imply silver and gold, i implied free market money without government monopoly. for centuries, gold and silver were the choice of the people. but that does not necessarily mean we don't have something better now. but gold is a possibility nevertheless, and its quantity does not matter. we don't need actual gold coins, gold backed papers are fine.

          privatized central bank is an oxymoron in itself. the free market never established such an institution, and never will. you need the coercive power of the state for that. we don't need that institution.

          how to change? i see no other way than raising awareness. learning and teaching.
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    Oct 16 2011: @Krisztian Money has nothing to do with poverty? One big point I've brought up repeatedly is that lack of money often translates into lack of power and security. You're unable to purchase food without money, maybe unable to secure a place to sleep: security. You're unable to invest in causes that can benefit society or yourself: power. While you're right that it's the goods and services themselves that provide comfort and security, we live in a world where they often aren't accessible unless you have a chunk of cash to hand over. Thus money is an enabler: it grants us power and security.

    To bring us round circle, your point was exactly my point when I first posted that a moneyless world is theoretically possible. Most of our points in this debate are things we both agree on, you're just accusing me of making it too complicated and I quite honestly think you're making it too simple. Now I'm not quite sure where this is going- you asked me to explain how a moneyless world is possible and I did: by switching gears from competition to collaboration. Whether or not this will ever happen is another debate... and I don't think I can make a case for it.

    The one thing we've really disagreed on is money being a simple commodity. I think it's a whole different animal. Money is how we value things. Maybe central bank loan slips are a commodity, because that's kind of what's become of currency these days. But I've made my case and I don't really see it going anywhere.
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      Oct 16 2011: how rich is the person with a load of money on an island?

      how poor is the person who has no money, but has whatever he wants, whenever he wants?

      it does not take a university degree to see through money, and see that neither money itself, nor the lack of it is the source of these problems. if you lack money, you actually lack food, clothing, shelter, heating, medicine, tools, books and so on. and you don't have these because you can't provide enough value, for any reason. thus money is nothing else but a commodity that is used to facilitate exchange. i'm positively getting bored, so that was the last time i say that.
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        Oct 17 2011: Now who's making it complicated? :P You might as well ask what it means to be rich or poor.

        I've come across an interesting article on commodity money and how it differs from representative money. Like I've been saying, money today has no naturally inherent value. It's instead the way we value things. A person who has anything he wants, but no representative funny-money is still wealthy, even if he doesn't liquidate his assets.

        So relating this back to the main discussion, eradicating money from the world would entail eradicating a standardized value system, otherwise wealth and poverty will still exist, which is what I think you've been trying to say. We'd have to rewire the way we think about trade and competition.
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          Oct 17 2011: sorry for being confusing.

          commodity money is a term used to denote stuff that is also used for something else than facilitator of exchange.

          when i say money is just another commodity, i mean that non-commodity moneys are also function as commodities. in the sense that they are things that can be bought and sold on the market, and has some use for people. that use is buying stuff.

          in detail, this means that money behaves almost like everything else on the market. it has a demand, it has a supply, and the "price of money", that is, the amount of stuff money can buy is determined by the usual supply-demand curves. the only difference between money and flour is that you can't bake bread out of money.

          attributing any more importance to money is just false. it is a mystification.

          there are two major differences between money and flour. one is that the amount of money does not matter, while the amount of flour does. it is irrelevant whether we have 1 trillion or 100 trillion units of money in an economy. note that the rate of change does matter though. i'm talking about stable amount. and the second is it is possible today to create new money with virtually no cost. that is not the case with any real commodities.

          but apart of these specialities, money is just another stuff on the market that can be bought and sold.
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    Oct 14 2011: @Krisztian: Well, you make a lot of assumptions, and then you jump from an "is" to an "ought." I wholeheartedly reject the idea that it is fair for shareholders to live lavishly on their capital gains while their wage slaves are barely paid enough to survive. They should switch places for a few days so they can learn to have a bit of empathy.

    These people, who live off of capital gains, understand the inequity/inefficiency/injustice in the system:

    Second, I agree that money is an intermediary of exchange, but that it is also a claim check upon consumer goods doesn't disconfirm that money is a claim check upon capital and/or capital output. The distinction between the two is often just conceptual. If you refuse to see because you don't want to see, that money can be multiple things, including a claim check upon capital and/or capital output, then I guess I can't help you.

    "money can not be used to purchase political power, unless we have corrupt politicians. hence my proposal: get rid of corrupt politicians. logic!"

    This seems extremely naive, while trivializing the problem. How do you propose to get rid of corrupt politicians, when the politicians who receive the most money have the most to spend on their campaigns? Are you opposed to the idea of publicly financed elections? Are you opposed to higher capital gains taxes and/or higher top marginal tax rates?

    Your analysis seems to end at, "if the people are too stupid to elect honest politicians, then it is their own fault that they are poor."

    But the system is heavily stacked toward those who pander to the wealthy, who own the broadcast spectrum and the media, etc. The OWS movements are trying to correct that problem, with publicly financed elections, higher capital gains taxes, and so forth. When the banks can write rules allowing themselves to make a killing while crashing the financial system, that becomes my problem.
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    Oct 10 2011: With a 2 million cap, most major corporations couldn't exist. There would be no iPods, no Boeing airplanes, no Mercedes...

    There's a tremendous amount of animosity towards the rich. I understand, I'm dirt fucking poor. But my beef isn't with the people winning the game. My beef isn't even with the cheaters...

    My beef is with the game.

    There's a small handful of people laughing evilly somewhere in the world right now. It isn't the illuminati. It isn't any government. It isn't Wall Street. Where does money come from? That's the question to ask.
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    Oct 2 2011: Loser CEO's still make extraordinarily high compensation, because CEO's sit on each others' boards of directors, and thus claim to be "independent directors" while voting each other ridiculous compensation packages.

    These people are not socially productive enough to justify even half the compensation they make. This should be blindingly obvious to even the most deluded laissez-faire economists.
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      Oct 2 2011: CEO is an employee of the owner. if the owners decide or approve to give CEO-s high bonuses while making no profits, it is their own problem. as their assets disappear, soon they won't make economic decisions anymore.
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        Oct 2 2011: Krisztian, I think this response is bordering on naivete.We have to come out of the theoretical and into the realities of the situations in order to make any headway. This is exactly what I am respectfully trying to communicate with you in my long investment of communication with you.
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          Oct 2 2011: i'm trying to get you out of your theoretical frameworks to the sunshine of the reality for a long time, but to no effect. and once more, you didn't even attempt to address any of my points. you are so sure you are right, you don't even need to argue. you just try to fix me. this is a great disappointment for me.
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        Oct 2 2011: OK, I will take a shot at this. "The CEO is an employee of the owner." In real terms, who is the owner? The owners are shareholders. Who are among the shareholders? The CEO and all his cronies.

        The CEO and his cronies control and present all data to shareholders aka the owners. The art of spin here is king. Creative accounting and deferring of crucial spending can make the documents that the shareholders count on to make their decisions very interesting.

        The basic types of accounts are:
        'Assets:' items of value that the company owns or has right to. Examples include: cash, real estate, equipment, money or services that others owe you, and even intangible items such as patents and copyrights. The CEO can sell off or acquire these at his discretion.

        'Liabilities:' obligations that are owed to other parties. Examples include: wages payable, taxes due, and borrowed money (also called debt). He can structure it to make bad decisions come to light years later.

        'Equity:' the ownership value of a company. Examples include: common stock and retained earnings. HIghly influence here too.

        'Revenues:' the mechanisms where income enters the company (note that revenue and income are not the same thing--they are used here to describe each other in basic terms only).

        'Expenses:' the costs of doing business. Examples include: salary expense, rent, utilities expense, and interest on borrowed money. Note that in all but his own, he basically authorizes the pay levels and by doing so influences what his own compensation is.

        'Income:' in U.S. business and financial accounting, the term 'income' is also synonymous with revenue; however, many people use it as shorthand for net income, which is the amount of money that a company earns after covering all of its costs. Net income can be influenced by timing.

        Shareholders as individuals have almost no influence. It was only when pension funds became shareholders that CEOs began to be held accountable.
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          Oct 2 2011: so you want to sell me that some people out there bought stocks of a company based on information given by the CEO? then who is the idiot?

          you present these things as some secret knowledge. you make it look like these practices are largely unknown. but come on! you are no stock broker, and you do know! anyone planning to buy a stock should know.

          and all this debate is NOT AT ALL important, because whatever the CEO does, he still CAN NOT SPEND a dime but the owners' money, which is not a concern to me, a non-owner.

          let me tell you an example of how the state and how the free market regulates such things. the state recognizes for example that you can cheat with repos. you can still make a repo transaction with a company, and get rid of worthless assets for a day or two, the time of revision. so the state orders companies to, in case of repo, account the real asset, and not the cash they got for it. what is the definition of a repo transaction? the state DEFINES it as sell-and-repurchase with 98-104% repurchase price. that is the state solution. so what lehman brothers didn? they made repo transactions at 105%. you don't need to be a genius to come up with such a solution.

          what is the free market solution? CDS. i buy a CDS against the stock or bond. for a small extra price, i enjoy safety, as i like. the issuer of the CDS will take financial responsibility, so they will look into the books very thoroughly, and i can assure you, they will not overlook a 105% repurchase obligation, because it does not qualify as a repo. they won't look for excuses why they don't have to do their job. their own money is at stake.

          as always, the free market can solve the problem neat and clean. the state is cumbersome, slow and dumb.
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        Oct 2 2011: Krisztian, I really like you. I really try to understand you. I feel like you are on one side of the Grand Canyon and I am on the other. Our voices do not reach across the gorge. I think we both want a better world. It seems you think I focus on the wrong things and that is pretty much the way I feel about what you consider great evidence. Let me try to tell you what makes me human and forms my perspective.

        What I fear most deeply of your perspective is that it sounds just like absolute lawlessness and chaos to me. I have no trust in how far the greed of one unchecked human being can take us. I see slavery. I see exploitation of workers where ever there are no laws to restrict it. Your premises seem so naive to me- and that is the wonder and confusion of it to me. I am sure that you are knowledgeable about history and have seen what man has done to man. I cannot help but wonder if perhaps your heart is so pure or if you have experienced so little pain that you cannot conceive of evil.
        I, on the other hand, have seen and have experienced what I wish I had not. You might not find this meaningful or relevant but as a woman even as a child, I learned exactly what can happen when you are weak and smaller than someone who wants something from you when you are defenseless. In a GM factory in Canada first to take a skilled trade, I know what they did to me. I know what happened to people who were not the dominant or the entitled group. I have looked into the eyes of people who barely acknowledged me as human and would never have given me a chance to lick their boots let alone work beside them. I cannot imagine turning the world over to people like that- those who start so far above the others in purchasing power and influence that no one else has a real chance. I will probably surrender my last breathe fighting to prevent it.
        If you get a chance please go to Lindsay's new question. Please read the article and see if you still hold the same position about hording food.
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          Oct 2 2011: Debra money is no more than a symbol. With the power of a symbol. Money comes from the very old form of a goddes Juno Moneta and was a sacrificial symbol. Today is the same but in a modern shape. Same content new package. Exist only if you believe in their existence
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          Oct 2 2011: what i propose sounds like chaos to many. but this feeling does not stem from deep thinking, but sudden emotional reaction. that's why we have states in the first place.

          there is nothing the state can do, that people can't do on their own. no achievement requires the state. there is no theoretical reasoning, nor historical data that would support it. all the evils you want the state against, exists and/or existed under states as well. some evils we have successfully have thrown away required decades or centuries of effort and education. effort and education, together with economic progress, eradicates those evil things.

          take child labor for example. it is a popular belief that labor unions and states abolished child labor. in fact, progress did. when the level of technology is such low that it can not spare the labor of the children, no matter how good and strong the state is, child labor can not be ended. as soon as the technology allows it, people slowly but surely pull their children out of factories, and send them to schools. but of course, the state is always there to claim victory when it finally "succeeds". the state is also takes a crapton of money to "fight" certain evils, with little or no results.
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        Oct 3 2011: One final attempt at demonstrating my point is all I have left in me. After all of extended history on this planet women have never until the last 80 years or so had any semblance of rights (except perhaps the property rights conferred by Muhammad where they inherit exactly half of what their brothers get- and I suspect that was more about the money for their husbands than rights for women or the fact that it was actually Muhammad's wives who bankrolled him). All of history and nothing changed in spite of women being just as intelligent for thousands of years. Women only gained any rights because of legislation that forced equal pay for equal work etc.

        I really believe that your ideas have no chance of working in the real world and if we could over come our fears long enough to try the experiment we would never get the chance to get back on course. The fears come from the reality that every person has encountered the bullies when they were vulnerable and they realize that it is only through rule of law that we are not ruled by some thug who declares himself king and turns us into slaves for it is the violent that trump the kind because the kind are not willing to use the weapons of violence.
        IN my opinion your ideas only have the slightest of chance to work based on there being a stable government already in place.

        PS as to child labour- as long as there is another country that is in more desperate straits companies will seek to lower their labour costs and move to where child labour is 'necessary' to help a family survive. As long as there is a cost to safety a company will move on to exploit the next place with no safety regulations. This is the real world and the real evil of corporate mindsets.
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          Oct 4 2011: it is the same fallacy as with child labor. changes in culture resulted in improvement. states only claim that for themselves.

          if i'm vulnerable, i want someone i choose to defend me. i don't want to state to defend me, the state can not even deliver the mail. look at any example. war on poverty stopped the contraction of poverty. so you think that rampant bullying would happen in a private school system? even national defense does not work, see 9/11. the state is incapable to solve any problems.

          and about desperate countries: those countries experience a level of life the US and europe experienced 500 years ago. with back breaking child labor, malnutrition, no healthcare, no sanitation and all. no magic wand can help them out, but the same economic progress that elevated the west out of poverty. we can accelerate it with our accumulated knowledge and capital. what is the major obstacle for capital to flow? western states.

          your visions on corporations are marxian views, and obsolete for a hundred years. the labor market is just another market with demand and supply. the price (wage) is determined by these simple rules. as long as there is a free labor market, we can assume continued growth in wages and improvement of working conditions.
      • Oct 4 2011: Kristian,
        Do you believe that the United States (or any other current nation-state) operates under a pure form of laissez-faire capitalism?

        I do agree with your assessment of child labor laws so long as the implementation of the technology is cost-beneficial compared with the status quo. However, it seems to me that such a benefit typically arrives only when the state urges it along through labor regulation. The market, like all dynamic objects, suffers from the inertia of infrastructure, and sometimes needs an outside impetus for change.

        Also, could we decide which of us will begin a discussion titled "there is nothing the state can do, that people can't do on their own" I believe you have a right to originate it, as you have first introduced the concept here, but either way it deserves its own conversation.

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          Oct 4 2011: far from it. the US economy is an unhealthy mix of corporatism, interventionism, protectionism, socialism and capitalism.

          inertia is a naturally occurring problem, and needs work and effort to overcome. it comes at a cost. the market can decide when and how to fix it, when the benefit becomes greater than the cost. the state can enforce a faster action, resulting in higher cost, thus causing loss to the society. but this cost is not visible. you don't see all the stuff that has not came to life because government taxation or regulation prevented it.
      • Oct 4 2011: Krisztian,

        "the US economy is an unhealthy mix of corporatism, interventionism, protectionism, socialism and capitalism."

        Correct. And it is this unhealthy mix that, IMO, makes this diagnosis irrelevant -

        "CEO is an employee of the owner. if the owners decide or approve to give CEO-s high bonuses while making no profits, it is their own problem. as their assets disappear, soon they won't make economic decisions anymore."

        You see, if we were functioning within a pure capitalist system, you would be correct. But you even concede that we do not. Thus, you are not correct. In reality, the CEO and shareholders use every accounting and lobbying trick in the book to stall what is an inevitable collapse. And by the time the collapse happens, they have already incorporated elsewhere and rehired their fellow swindlers. Or they simply use funds from the Treasury to shore up their accounts. Either way, they are completely insulated as an individual from suffering from the market conditions you explain. And though it may not be a problem to you, it is a major problem for employees who have worked in a given corporation for years and who has their retirement tied up in corporate stock. It is not fair to the employee, who is forced to hold up the charade with his retirement contributions.

        "you don't see all the stuff that has not came to life because government taxation or regulation prevented it."

        Nor have we suffered the anguish of disasters such regulation prevented. Not to say I agree with all government regulation, but you never seem to acknowledge the benefits derived from them - and there are some.
        Moreover, I think we can all agree to forgo the products which 'come to life' through the practice of child labor. Right?

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          Oct 4 2011: let's not lose focus on our topic. the original poster claimed that money does not exists, and it is somehow related to the fact that CEOs make huge money even if their company loses.

          the fact that some corporations receive large sums of money from the central budget does not changed the situation. those sums appear on the revenue side, or otherwise prop up the company. so at the end, they are actually making huge profits. so the CEOs, from the point of the owners, made a good job. everyone benefited, except the taxpayer. but it is not the CEO's fault, nor it is the owners'. it is the government's fault.

          regulations are notorious in failing to prevent anything. the US economy is heavily regulated, especially the banking and financial sector, and we still had the meltdown. fukushima happened despite of ridiculously complex regulations. in hungary, red mud, an alkaline toxic waste, flooded a village. the authorities don't even know who should have been supervising the operation.

          no, we don't agree to forgo the fruits of child labor. child labor is dependent on the level of the economy. if the GDP per capita reaches a certain level, child labor tends to disappear. but below that level, the contribution of children is simply a necessity for survival. this was the case, not too long ago, in europe as well. you can of course fight child labor with supporting poor countries. it is advisable and humane to do.
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        Oct 4 2011: Hi Krisztian, I really did not expect you to be so reductionist. I am no Marxist. (But even if I were this is not the McCarthy era in the USA where that is some sort of equivalent to rapist or murderer.) In fact, I am a pretty run of the mill Canadian who believes in capitalism with the oversight of 'we the people" and universal health care. Sorry you would find it hard to label me, even as you have pointed out, a pure socialist.

        My opinions of corporations are formed by my experience with corporations, with unions, with police forces, and most especially out of my MBA education that was designed to make into a conforming corporate resource. Instead it made me realize the tactics, the propaganda, the excesses, the crimes against humanity that many successful companies are perpetrating. IN an MBA program these things are tacitly acknowledged. Do a paper on the pharmaceutical industry and include a financial analysis that has to account for the fines paid for heinous, obvious, criminal acts that are slightly addressed in the year end statements. Ooops! we experimented on African kids with no ethics or parental approval- we'll pay the fine. OOPs we polluted the entire area around the factory with carcinogenic substances- we will pay the fine but please allow us to pay if over the next 20 years so that any compensation to victims will come after they are dead. Line item: PR consult for spinning the asbestosis our workers contracted for working with the stuff after the effects were known.

        For once to provide a bit of evidence that child labour is not changed by the actions of unions or of governments or that safety standards are voluntarily introduced without legislation or union action. You go against everything that my own education by the MBA, Human resource and universities of my experience have ever taught me. If even these groups are willing to accept that this is why they changed to offer such protections what evidence do you have to the contrary?
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          Oct 5 2011: i'm sorry if you can't see the difference between "you are a marxist" and "your views on corporations are marxian".

          there is a big problem with marxian views. they are wrong. they were proven wrong in 1910's 20's. i have no idea how could these doctrines survive their refutation with a hundred years.

          the root of the error is that you don't dig deep enough. you spot the first unwanted phenomenon, and stop there. this is also a confirmation bias. you didn't check whether the said strategies are indeed the root cause, and indeed unique to corporations. turns out that neither of these. behind all the evildoing of companies, you find government policies, and general evilness (recklessness, selfishness) of the people.

          it is much easier to bash companies though. they are not persons, and not as scary as the government. so they serve as an ideal scape goat.

          strange that you refer to your education (which is a failure, seeing the state of the economy as of now), and you want proof from my side. why don't you ask for proof from your teachers? just because they wear funny hats or they are numerous, they still can be wrong.

          one last advice: instead of holding on to your beliefs, why don't you actually learn the other side? it might be quite a challenge for an average fella, but since you have a background, you could pick up the basics of austrian economics pretty easily. you simply don't have any good excuse why you are not doing it.
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    Oct 1 2011: "A new recession isn’t simply a statistical event. It’s a vicious cycle that, once started, must run its course. Under certain circumstances, a drop in sales, for instance, lowers production, which results in declining employment and income, which in turn weakens sales further, all the while spreading like wildfire from industry to industry, region to region, and indicator to indicator. That’s what a recession is all about."

    Y'know, it's almost as though businesses are going under because people don't have money for the things they need, despite being willing and able to work.

    There are diminishing marginal returns to wellbeing from money - the 1,001st dollar you have make is worth much, much more necessary to your survival than your 1,000,001st dollar. Therefore, in the REAL world, in which we're speaking about life, health, social wellbeing, etc. society as a whole is made much better off by redistributing virtual capital from those who don't need the money to those who do.

    We can help the economy by helping the poor, or we can allow the whole system to go to shit as the hungry and chronically unemployed start taking down the system that is not looking out for their best the Declaration fo Independence says they are justified in doing.

    The rationale for separation of powers was that the Founding Fathers didn't trust power concentrated in too few hands. There should be a corresponding check upon the power of concentrated wealth.

    When the wealthiest 1/5th own 84% of the wealth, while the bottom 2/5ths own 0.3%, any pretense of equality of opportunity flies out the window. We value equal opportunity for a reason - so the people who rise to the top through nepotism rather than intelligence don't run things. Nepotism, not merit, gave us George W. Bush.
    • Oct 16 2011: "Therefore, in the REAL world, in which we're speaking about life, health, social wellbeing, etc. society as a whole is made much better off by redistributing virtual capital from those who don't need the money to those who do."

      Let's try to evaluate the statement.

      When does the economy grows? When people do some more work that is needed by someone else. Why do people do the work? The greatest majority of work is done for money. What will happen if poor people will be given money for doing no work? The greatest majority of poor people will do no work and will stay poor forever. So the economy will be able to rise only if middle class will work much more.

      So the statement seems to be false.
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    Sep 29 2011: Nobel economist Joseph Stiglitz recently tore the "marginal productivity" theory of earnings to shreds: "Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin."

    Furthermore, suppose even that a billionaire was soooo socially productive that he "earned" his billions, as it were. Does that entail that he or she has a right to consume 1 billion dollars worth of luxury goods, while people are starving?

    There are diminishing marginal returns to wellbeing from money - the 1,001st dollar you have make is worth much, much more to your survival than your 1,000,001st dollar.

    Therefore, in the REAL world, in which we're speaking about life, health, social wellbeing, etc. society as a whole is made much better off by redistributing virtual capital from those who don't need the money to those who do.

    The vast, vast majority of super-wealthy people are wealthy far in disproportion to their contribution to society - thus whole point about "phantom wealth."

    Moreover, in an age in which all digital content can be recreated virtually infinitely for everyone at zero marginal cost, a random person with Internet access can potentially be hugely socially productive.

    And it just so happens that Jesus (mythical or not) was right, that giving money to the poor is a pretty good fix for poverty:

    Zero marginal cost changes everything, as I've argued here:

    And here:
  • Oct 28 2011: Here's a guy who stood on the UW campus in Seattle with the sign:

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    Oct 28 2011: The base premise is quite accurate. I worked in banking and quit it after refusing promotions etc. I tried working for a large American bank and then moved to a smaller European one. But the basic structure and the mechanism of financial markets is so grossly corrupted that its near impossible to find any meaningful purpose to working in a bank. Not only that, the lifestyle of bankers themselves can be very correctly described as unhealthy. No question that they have failed in their basic deliverable which is to deploy resources where available to where most efficiently used. banking no longer does that and bleeds money to the economy. Raising the tax to 90%, i am not sure about, I do think its fine to reward someone for adding genuine value and for everyone to have whatever motivates them to excel. I don't see why an apple or google, or someone else should not be able to make any sum of money if they produce genuine value. Carrot is important.
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      Oct 28 2011: while i agree with you, i would like to underline that it is not a problem with money. money does not cause the absurdities that are going on in the financial sector. rather, these corrupt entities, in cooperation with governments, are destroying money, which is essential to a functioning economy.
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        Oct 28 2011: think we said the same thing.
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    Oct 27 2011: This is a chicken or egg debate, is the demand created or followed (how do you explain an underlying demand for a product that didn't exist before like a personal computer, mobile phone, internet, television, automobile?) of which you are buying the Keynesian trope. I can assure you Robert Reich or N.Y. times are not the place to look for workable information on this subject. Either way without the investment in start up companies the jobs will not be created. Here is a more accurate article on this subject that is the opposite of your N.Y. Times article.
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    Oct 27 2011: I think there are 2 abuses of money.Money is a token for production so as to facilitate commerce as opposed to the barter system. The artifice part comes about when the capitalist squeezes a buck real hard and makes 2 out of them with no real exchange. But this is very different from the capitalist who creates real exchange who's products and services raise the standard of living of his customers. On the other end of the spectrum is the welfare state where an individual produces no exchange, truthfully this is the unkindest cut of all.

    Regarding taxes whether they are right or wrong investment is what creates jobs, right or wrong investment capital goes where it is treated best, increasing taxes drives investment offshore. Ideological discussions are a moot point.
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    Oct 27 2011: There have been people power demonstrations before and most of them have gained new administrations which turned out to be no less corrupt and oppressive than those that were ousted. This is inevitable as long we adhere to a money system. Without money there can be no corruption. It is by using money that some accumulate power. Money and corruption are inseparable. Money is an un-natural substance. It does not exist but is all pervasive. It can accumulate hugely, and it is completely transferable. This means that people can steal or embezzle it and no can claim it unless they record the numbers.
  • Oct 27 2011: Here's a short story to understand: Once there was a man who wanted to repair his ship. He tried hiring many people to do the job but they were unable to repair it. Finally came a man, who brought a hammer with him and with just one swift movement, he fixed the problem. When it was time to pay the fee, he charged the owner $1000. The owner was shocked and demanded an explanation for such a hefty fee. The repairman replied:

    $1: For using the hammer.
    $999: For knowing where and how to use it.

    And this is how some people earn more than others. They may have the same knowledge but the key is the strategy in using that knowledge at the right time and right place. Such people are simply called, "Intellectual."

    An intellectual is a person who uses intelligence (thought and reason) and critical or analytical reasoning in either a professional or a personal capacity. That's why some people take an extra step to even patent their intellectual properties and earn great amount of money. And it justifies their earning for the mental exertion.
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      Oct 27 2011: The goal is not profit - money doesn't really exist, and can be "earned" through monopoly, artificial scarcity, etc. The goal is social productivity.

      A teacher, a man who taught other people how to use the hammer in your example, would earn less money than a person who profits from the artificial scarcity of knowledge.

      The marginal productivity theory of labor is also completely bunk.
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    Oct 18 2011: @Krisztian Have you heard of bitcoin? If you haven't, I think it would really interest you. It's a digital currency generated by CPU power, and offers an encrypted, decentralized way of sending money.

    So I don't discredit what you say- it is happening. But even if it catches on, it stands in the way of our entire economic infrastructure. Power across the world is delegated economically, often with loans. As long as you have banks, you have economic authorities, whether or not we choose to call them governments or corporations. Even if we scrap the whole system and start from scratch (which would realistically only happen in the event of a complete economic collapse) this would only pave the way for a one-world central bank, granting loans in a one-world currency, similar to what the EU has today with the ECB. Plainly put, we could implement a better system, but the powerful just aren't going to allow it.

    So about raising awareness... we might as well go pitch a tent on Wall Street. I give it a month before we freeze to death.
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      Oct 26 2011: hm, this post somehow avoided my attention. sure i've heard about it, even studied its math background. it is still in its infancy, and i have some fundamental problems with it. but i believe if money was free, something similar would win the competition.

      banks are not a problem as long as they compete. the problems of today's money systems are their imposed, monopolistic nature. we don't necessarily need fundamentally better money. we just need free competition. in competitive environment, people can simply abandon the money that is tampered with or badly managed.
  • Oct 16 2011: There are a few obstacles:
    1. many government programs and the way government allocates revenue is extremely wasteful.
    2. the programs that government chooses to spend our taxes may not coincide with what we consider important.
    3. Government must account for the loss in investment. Many scientists, engineers and entrepreneurs rely upon individual funding.
    4. Re-examine the incentive structure. Would this decrease the motivation to earn money?

    Indeed Malcom does outline various valid arguments. However, I think that if government expands, it also must be more accountable, democratic, transparent, and efficient.

    I think this topic is very closely related:
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      Oct 16 2011: 1. We are the government. Although there is waste in government spending, the maligning of the government by the corporate media propaganda machine is partly overblown and partly a self-fulfilling prophecy. You wouldn't hire someone who disagreed with your company's mission, because they would ruin everything yet blame it on the company. Yet, Americans have elected conservatives who believe that government is inherently inefficient, and then act surprised when the conservatives run the government into the ground.

      I believe in infrastructure, public goods, and straight up wealth re-distribution, which runs around Hayek's problem of central planning:

      2. I hate paying taxes for wars I disagree with, but one of the points of government is to correct for externalities in people's actions. It doesn't matter if you agree with infrastructure spending, the fact is that you benefit from the road when it is built, so you should help pay for it. I like the idea of taking a small percentage of that allocation and making it discretionary, though.

      3. The Internet was invented by DARPA, AKA the government. The idea that taxing the private sector creates deadweight loss is hogwash propagated by idiot conservative economists, who should all be fired and/or shot.

      4. The goal is not to earn money - money is a collective fiction. The goal is not profit - profit can be made through artificial scarcity, monopoly, etc. The goal is social productivity.

      People will still work and be socially productive, even if they are not paid exorbitant sums. Partly because social status gets you laid, and partly because beyond a certain point, money is virtually irrelevant to your wellbeing, yet for those people still work and are socially productive.
      • Oct 16 2011: Thanks for the rather colorful refutation.
        ' social status gets you laid' - haha nice!
        There may be truth to what you say. Obviously you don't agree with conservatism (as do i for the most part), but if you expect to impact change, you have to acknowledge that both sides have valid points. Instead of shooting down your idea, I was trying to build upon it. Sorry if you thought otherwise.

        However, my point is we don't know exactly how people act/react.
        1. You are right about media often obscuring the truth. However, I don't think we can distinctly say which way the truth is obscured. I think that the best way is transparency- to have unbiased media. Although 'we are the government' how are we to elect the right people if we don't have deep insight into what they are truly doing?
        2. Granted many inventions can be attributed to government help. However, you must acknowledge that most research is privately funded. For this plan to take effect, government would need to compensate for this if the system is implemented.
        3. I know a number of people who think otherwise .Ultimately incentive structure is about the psychology of the individual. The truth is that our very culture is embedded with the mentality of money money money (just listen to what many popular songs, tv shows, and movies are all about).
      • Oct 26 2011: Re: "...idiot conservative economists, who should all be fired and/or shot."

        PLEASE BE CAREFUL WITH THESE KINDS OF COMMENTS!! Even if you are joking.

        Humanity has too much bloody ideological history to joke about this kind of stuff.
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    Oct 16 2011: The OWS movement has changed the talking points of the Mainstream Media, such that both Fox News and the NYT are actually talking about social inequality, publicly financed elections, and the systemic injustices in our political/economic systems:
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    Oct 15 2011: Seeing that money doesn't exist forces us to examine how we related to one another and how we cooperate to create the kinds of societies we want to live in:
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    Oct 14 2011: @Bill Harrison

    i make assumptions? you talk about "wage slavery" which is an oxymoron in itself, since slaves don't receive wages. plus nobody is forced to work for a wage, but most people actually love to do so, as it is low risk. so i'm kinda happy to be a wage slave, and i'm not alone with it. where your empathy went? you can't empathize the millions who happily work for a fixed monthly salary, and are happy with that? those, who prefer safety and stability over risk, stress, fierce competition? you live in an imaginary world.

    my money is a "claim check" over stuff i already worked for. i could have got those things for long, but i deferred my consumption. money just indicates the amount i'm entitled for. my earlier work grants me those things, nothing else.

    how do i get rid of politicians? what the heck i'm talking about for months?? simply by not trusting politicians with tasks like distributing money, regulating the economy, and things like that. if they don't get this power, they can't use it wrong.

    your analysis of my analysis is rather poor. honest politicians can be bought by money? it seems that our concept of honest differ greatly.
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    Oct 14 2011: Saying money does not exist is a good way to generate initial shock value and drive in a new idea, though I think you would be better off communicating "Money is merely the physical manifestation of an internalized phenomena."

    Essentially, money is a tool. It's an incredibly powerful and socially reinforced tool that we have all been conditioned to accept. In this sense, money is almost the IDEAL tool. How else could people be organized, resources allocated, and timelines coordinated in order to build or construct anything of value? A 10,000,000 dollar office building is essentially worth that much because the complexity of it's design. Complex designs generally tend to cost more, and this makes sense as they are harder to create. Money in this sense in an excellent tool in creating complex designs.

    The issue you are truly addressing here is that some humans take this immensely powerful tool and use it for selfish ends.

    Here I raise the question:

    Is the problem with the tool, or with the conscious body whom is using that tool to createl?

    Essentially, the issue lays in the fact that this tool is being used to create things that are subservient only to a single individual at the great expense of others. This is a twisted perception of the Godmind in all men and women, and a misuse of the limitless potential that lays within us all. The only corrective measure lays in addressed how humanity uses it's internal creative power.

    For essentially, there is a tool even greater than Money, and this is the Human Mind. In the wealth of thought and creativity we are all infinitely rich. The problem lies in people's belief in this reality. Money is simply being used as a tool for some Egos within our world to convince us that they are more deserving, more elite, more valuable or more enlightened in ideas. This is the blatant lie! We are all Living Expressions of Divine and infinite potential, the truth of the matter being that we all have the power to change reality.
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    Oct 14 2011: What people have realized is that the "government" and "private sector" are part of one system of "claim check distribution," which doesn't reward social productivity on a pro-rata basis, nor does it create fair, just, or equitable, or even efficient outcomes. Drastically raising taxes on the wealthy would correct for some of these inequities.

    '"By reinvigorating the myth of free markets, the financial and political architects of our economy over the past three plus decades — both Republicans and Democrats — were able to disguise massive redistribution toward the richest by claiming they were simply “deregulating” when all along they were actually reregulating to the benefit of their largest campaign donors.

    This ideological fog blinded the American people to the pervasive regulatory mechanisms that are necessary to organize a colossal late-modern economy and that necessarily distribute wealth throughout society — and in this country, that quietly redistributed massive amounts of wealth to the richest 1 percent. Many of the voices at Occupy Wall Street accuse political ideology on both sides, on the side of free markets but also on the side of big government, for serving the few at the expense of the other 99 percent — for paving the way to an entrenched permissive regulatory system that “privatizes gains and socializes losses.”'
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      Oct 14 2011: so you say that walmart or mcdonald's are part of a system called "claim check distribution"? can you elaborate how this system works, in detail? for example how mcdonald's distributes claim checks, and what they actually are?

      my second question is this. so the author realizes the difference between deregulation and "deregulation". but then he uses arguments against "deregulation" to condemn deregulation. nobody sees that it is not right that way? you can not use the failure (actually, success) of "deregulation" as an argument against the free market.

      third question. since today the mainstream view is that big business controls the world, and not the elected leaders, exactly what is that fog you are talking about? exactly how can you call the large scale looting quiet if it is so heavily discussed all over the world?
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        Oct 14 2011: 1. People with McJobs receive a wage below their marginal productivity, while all of their surplus productivity ultimately goes to the distributed capital owners, whose contribution to the enterprise is their ownership of capital. That they receive claim checks upon the capital production on the rest of society has to do with their status as capital owners, not with their social productivity.

        Private property, the rule of law, and money are all collective fictions officially enforced by "the government," but mostly by the fact that people have been so immersed in a particular social reality that they are habituated to seeing the world so as to take those things for granted.

        By calling money what it actually functions as, a claim check upon the capital production of society, I'm trying to wake people up to actually see what happens instead of what conservative economists tell us must happen according to the free market. This makes certain inefficiencies/injustices/inequalities like hunger in the face of plenty more apparent.

        2. In a picture, here is the failure of "deregulation" -

        With their increasing size, the banks can purchase political power to write the rules even more heavily in their favor.

        3. Money can be used to purchase influence with elected leaders, who depend upon campaign contributions in order to be elected. This is why one of the main demands of the growing protests is publicly financed elections, so that serving the interests of the wealthy is no longer a necessary condition for being elected.

        You are looking at the immediate picture, but over the past several decades, the media has not been covering the fact that "de-regulation" really means "regulations that favor the wealthy over the poor."

        Business and politics are both part of the same system, which is why there needs to be a pragmatic check on economic power, just as we place checks upon formal political power.
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          Oct 14 2011: they receive wage below their marginal productivity? really? that's bad. but wait! everyone else does! because otherwise there would be no capital accumulation inside the company, there would be no profit, there would be no safety margin. it is how it supposed to be.

          whose contribution to the enterprise is their ownership of capital? no, not at all. their contribution is decision making. owners decide *which* enterprises receive capital, and which are not. capital does not automatically produce more capital. it can produce less. it is a job someone needs to do.

          money is not "claim check upon capital production". for one, i can buy consumer goods with money, not only capital. money is an intermediate of exchange. i give something, i receive something. it is easy.

          banks write rules? their rules are of no concern to me, i will not follow them. wait, there is the state to enforce those rules. bad luck. i have no problem with regulations. i have problem with the state that enforces them with police and courts. banks can't regulate anything on their own.

          money can not be used to purchase political power, unless we have corrupt politicians. hence my proposal: get rid of corrupt politicians. logic!

          media not been covering. in the era of the internet. i couldn't care less. if you watch fox news, you are to blame, not the wall street.

          no, business and politics are not the same system. as they say, if you get a mail from walmart, you will open it with curiosity. if you get a mail from the state, you will open it in fear. that pretty much sums up the difference. because economic power never extends over a person's own property. state power by its nature does.
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        Oct 14 2011: Also, just out of curiosity, what are your views on monopoly generally? How do the concepts of monopoly and/or oligopoly fit in with your worldview?
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          Oct 14 2011: easy. monopoly is rare on the free market, and even if exists occasionally, it is not harmful. state granted monopolies, however ...
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    Oct 13 2011: Stuff? How about the ability to hire labor, obtain licenses, lobby politicians, attend a university... is that not power? The means to eat, travel, rent property and support a family... is that not security?

    Some people kill for money. Many people do if you take into consideration armies. How much did Gaddafi spend on mercenaries this year? Money is hardly a commodity to be passed around like table salt.
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      Oct 13 2011: wait a second! hire labor is the same as buying a chocolate bar, so it is not an issue.

      but lobby politicians ... that is a good one. and that is a one i try to explain for a long time on these forums, to no success so far. it is not money that grants you special rights. it is corrupt politicians who grant you those. to me, this distinction seems to be so simple and clear, yet, i'm unable to communicate this. why is that?

      yes, money is a simple commodity. it can buy you chocolate, and it can buy you guns. and then you can use the guns to shoot people. money is no more responsible than the gun, the bullet or the car the shooter drives. the shooter is responsible.
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        Oct 13 2011: I guess you can argue that it's corrupt politicians that give money political power, just like anyone can argue that it's us that are willing to accept money and grant goods and services. But why do we accept it so willingly? Why do we spend the majority of our life working and doing things that we'd rather not do?

        I think you misunderstood me earlier when I asked "Have you ever tried to buy anything with no money?" Lack of money often translates not only into lack of power but lack of security. We don't seek money simply to seek power, but because we need it to survive. Money holds it's sway over us because it easily facilitates trade of literally anything that can be traded- it allows us to acquire not only the things we desire, but the things we need.

        "Making money" is often referred to "making a living". So while you can define it as a "simple commodity" without qualitative difference, it's really the blood of our infrastructure. We sell our bodies on the street, in the workplace and in congress in exchange for power and security.

        Most commodities have real, inherent applications that make them valuable. Flour can be used for baking. Silicon can be used to make microchips. Oil can be used as fuel. Money on the other hand is simply just value.
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          Oct 13 2011: sigh.

          money is just an intermediate here. actually stuff make you safe, make you comfortable and healthy. you work to create stuff. we don't work for ourselves anymore. we live in a complex economy, in which we divide labor. you get money for your work, you get stuff for your money. this is ALL. there is no other aspect to it. money does not do anything more than that.

          when someone kills for money, he kills for stuff. when someone wants money, he wants stuff. when someone is working for money, he works for stuff.

          it has NOTHING to do with inequality, corruption, poverty, pollution, etc. all of these things can and would exist in a money-less world too.
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    Oct 12 2011: A good point to make is that some of our infrastructures today fall behind in quality due to money fueled behavior. Look at the food industry. This morning I ate a bowl of artificially colored corn starch with a glass of high fructose corn syrup.
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    Oct 12 2011: How for which statement? :P Money is nothing but power and security. It gives us an incentive to work, to give things away, to spend our time doing things we'd rather not be doing. But money isn't labor and it isn't technology. "In theory" resources can be mined and processed, things can be manufactured and distributed, food can be grown, land can be shared all without money changing hands. The challenge is just developing an infrastructure that can handle it.

    In the past competition has always driven progress. But in the recent decades we've seen the emergence of progress driven by collaboration - the open source movement. In fact a good handful of the software many of us use took off when the company abandoned the project and released the source code (if you're using firefox, you're kind of using the deceased and revived netscape navigator). Chances are most of the websites you visit are hosted on linux servers. The concept of open source has been waging a somewhat ideological warfare against companies like Microsoft, which has been known to invest in foreign governments utilizing open source and switch them over to proprietary solutions.

    So while this is a far cry from a free world, it shows the power of collaboration. An emerging trend is to spread open source to other industires and applications - . Money itself has even gone open source -

    Free infrastructures for energy and communication are possible... Nikola Tesla, the main man behind alternating current and wireless energy transfer designed a tesla coil system to circulate and tap into energy in the ionosphere. He even got JP Morgan to commission the project for a little while after the abandonment of the Wycliff tower. Needless to say he pulled the plug.
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      Oct 12 2011: please people. it is not that difficult. money is just another commodity that has the purpose of facilitating exchange. it has a market value like every other commodity does. it does not give any incentive, it does not represent power, nor security. money is not any more difficult than flour. when we talk about flour, we understand that it is the white powder that comes from wheat and can be used to make bread and pastries and noodles. there is no need for big words like "flour represents the possibility of tomorrow" or "flour is concentrated sunshine". it is just ground wheat. stop complicating things.
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        Oct 12 2011: It doesn't represent power or security? Have you ever tried to buy something with no money? :P

        Have you ever had no money? Ever wake up on a sidewalk hungry?

        Sorry to use big words like "represent". Money is power. Money is security.
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          Oct 13 2011: well, it might surprise you, but i quite regularly buy stuff with money. it is rather common around here. in that regard, money more represents stuff than power. but actually, it does not represent any.

          but i'd like to call your attention to my actual description of money, which is carefully hidden in my comment. since it is hard to find, i repeat it:

          "money is just another commodity that has the purpose of facilitating exchange"
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    Oct 11 2011: I do not understand the attachment to money people have. I have no fixed ideas about it. If we could relegate it to gambling only and handle real business some other way, it would solve most of the problems. The beauty of extinguishing money is that it neutralizes all the powers of oppressors. Perhaps this is what people do not like - the idea of losing control. But this is the fundamental issue at the moment. Total freedom is impossible while there are any controls. Only when we can trust ourselves enough to leap off the cliff and fly will we know what life is all about.
    I wish I could live another 50 years to see how things pan out. I envy those who will witness the dramatic years ahead.
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    Oct 11 2011: Heartily agree! Why won't people accept the obvious? We have to get rid of money altogether. Of course it will be hard but it would solve all the problems described in this and other places. Try to imagine how it wold be.
    Suppose we simply boycott money. Don't accept it or use It. Everyone does whatever they do now, except without money. There is much more to be said but writing is difficult for me. How about some of you picking it up?
    What counts is what people DO!! Not what they HAVE!
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      Oct 11 2011: but i want to use money. can we do that in a way so i don't have to follow your ideas? maybe we could create a world in which everyone can decide whether they want to use money or not. you won't. i will.
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        Oct 13 2011: They are not my ideas Kris, many people have the same.
        The point is in order for things to wor5k in the future we have learn to co-operate and trust each other. Money generates mistrust and suspicion. Unless we can change that the future is dead.
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          Oct 13 2011: i don't exactly care how many people shares these ideas. first, validity of a statement does not depend on the number of people believing it. second, i would like to use money with those people who also want to use it. you and those other people are free to stop using it, if you can find out a way. just leave me out, okay?
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      Oct 11 2011: So, I'm not in favor of getting rid of money, because I think it's a brilliant method of resource a point. Are people who say, "get rid of money" proposing that we go back to the barter system? There are good reasons not to do that. I have a goat but need a bicycle, you need a book and have a bicycle. In order for the exchange to take place efficiently, we need a common medium of exchange. Conceptually it can be anything, but whatever we choose, we call it "money."

      However, there are huge inefficiencies with unchecked capitalism. People can use money to buy political power, with which they acquire more money, without being socially productive at all, for example. People can pass on political/financial power from one generation to the next with no guarantee that the next generation is not idiotic/psychopathic (George W. Bush, Rupert Murdoch). And people mistake money for virtue...but just because you're rich doesn't mean you're smart, awesome, or socially productive, and just because you're poor doesn't mean you're not.

      All of which is why, in the 1950's, we had a top marginal tax rate of 90%, so there was an upper limit on what people can do with the society's can only have so many "claim checks" per year, because beyond that, the diminishing returns to wellbeing dictate that it is not worth spending society's capital on your consumption, when other people's lives' and brains' could put it to better use. It is a mixture of the efficient components of both capitalism and socialism.

      What rich people seem not to understand is that the rule of law, property rights, and money are all collective fictions. We've been living in this socially constructed reality for so long, that most people can't even see the real suffering caused as a result of it. Put differently, our present socially constructed systems lead people to forget how interdependent we all are, and that is a big problem.
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        Oct 13 2011: How can you say it is good for resource allocation? What about all the cartels and monopolies. they only identify enough resources to match their production requirements. They prefer us to think everything is scarce so as to keep prices up.
        No,no barter, no exchange, everyone gets what they need, and everyone gives what they are comfortable with. Sure this is ideal but what is the point of designing anything less?
        Rich people are not that different. All are limited by the thinking patterns that have been infused into them. There are different laws for the rich, but they do not tell us that.
    • Oct 26 2011: Hi Vernon just read the book (borrowed from our wonderful library): moneyless man (i think you might enjoy it!)
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    Oct 10 2011: I suppose one of the key argument a skeptic would have to accept is that there are, in fact, diminishing marginal returns to survival/wellbeing from money, so society as a whole is made better off by distributing claim checks from those who do not need them to those who do.

    Replace the word "money" with the word "water" or "food," and this should be self-evident. But then again, this is the age of the corporate propaganda machine, so the ability to see what is self-evident is much rarer than it ought to be.
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    Oct 10 2011: "The way to understand all of this is to realize that it’s part of a broader syndrome, in which wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is." - Paul Krugman
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    Oct 7 2011: It is difficult to create policies that can solve the problem of wealth distribution. Also, there are always grey areas and some people will always find ways to game the system. The way to address the issue might be to increase awareness in the populace, since it seems many people do not understand the issues they are facing.

    A member on our site has written more about this problem here:
    Revamping Wealth Distribution in Society
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      Oct 7 2011: what is the "problem of wealth distribution"?
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        Oct 7 2011: That's explained a bit more in the article mentioned above.
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        Oct 7 2011: What is it that you don't understand after reading the article?
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          Oct 7 2011: i haven't read it. i'd like to understand your take on what is the problem of wealth distribution. if i find it interesting, i will read the article.
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        Oct 7 2011: Oh, I see. My take on what is the problem of wealth distribution is that as human beings, each one of us has much to contribute to the Earth. However, if some people hog and take up a large percentage of the world's resources in the form of money, then other people will find it harder to spend money on what they need to help to improve the world.
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        Oct 7 2011: hog means to acquire, keep, or use a much greater share of a certain resource compared to most other people
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          Oct 7 2011: if the article is about that, i'm not going to read it. since when it is a problem that one person justly acquires more than another? since when we are about to "fix" that?
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    Oct 6 2011: I should probably mention this companion conversation, in which I argue that social productivity and profit are often inversely correlated:
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    Oct 6 2011: Modern conservative economists should be fired and/or shot for propagating nonsense.

    "The interests of individual animals were often profoundly in conflict with the broader interests of their own species or larger subgroups within it. The failures he identified resulted not from too little competition but from the very logic of the competitive process itself. Many of the most cherished beliefs held by libertarians, while perfectly plausible within Smith’s framework, don’t survive in Darwin’s.

    Darwin’s central premise was that natural selection favored variants of traits and behaviors insofar as they enhanced the reproductive fitness of the individual animals that bore them. If a trait made the individual better able to survive and reproduce, it would proliferate. Otherwise, it would eventually vanish. In many cases, Darwin recognized, the same variant that served the individual’s interest would also serve the interests of larger groups within its species. But he also saw that many traits promoted individual interest to the detriment of larger groups.


    Although each mutation along this path enhanced individual fitness, the cumulative effect of the mutations was to make life more miserable for bull elk as a group. Large antlers compromise mobility in densely wooded areas, for example, making bulls more likely to be killed and eaten by wolves. A bull with smaller antlers would be better able to escape predators, but because he’d be handicapped in his battles with other bulls, he would be unlikely to pass those smaller antlers into the next generation."

    So the idea that every individual, blindly pursuing his or her own individual interest to the exclusion of everything else, in a competitive system will produce optimal outcomes for society as a whole, is wildly inaccurate. Ayn Randroids sometimes conflate selfishness with "enlightened self-interest," but they are clearly F.O.S.
  • Oct 4 2011: Bill,
    The older I get the more I realize the rarity of someone being completely right or completely wrong - most of the time I feel they are right here, wrong there, misguided elsewhere, and sometimes just confused. Such is my take when reading the prompt to your statement.

    To say that money does not really exist not only seems silly,but ludicrous. Saying it in earnest only makes the claim more suspicious. Perhaps you mean to say that our current accounting methods bear no resemblance to real asset holdings or transfers - in that case we would agree. But to say that 'money' itself - the economic medium of exchange - does not exist is akin to claiming that the economy does not exist. For what is wealth, but both the fuel and emissions of the engine that is an economy?

    Now, to address you first point - concerning hedge funds, speculators, etc. - I think that anyone who buys gasoline might attest to the social benefits of speculators holding short positions on crude oil.

    To your second point - I was under the notion that we have scarce resources, i.e. not enough to go around. Why do you suppose this is not the case? (data)

    Also, if you are assuming you have the legislative ability to raise the tax rate to 90%, why don't you propose some legislation which actually cuts to the heart of the problem (monetary inflation)?

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      Oct 4 2011: You're conveniently ignoring the next two ideas - that money is a claim check upon real capital, and it's a virtual artifice built on real output.

      This American Life did a great show in January talking about how money is fiction -

      Money exists in the same way that Harry Potter exists - it is a collective fiction that we all understand in roughly the same way - it is a concept that guides people's behavior. But does Harry Potter exist outside of people's heads? The answer is "no".

      Understanding money as a collective fiction helps us look at what actually happens, it let's us see what real social productivity is, and it makes it a little bit clearer when people are being swindled.

      "The problem" is that we have a sluggish economy because the poor and middle class don't have enough mental fiction available to them to support the aggregate demand necessary to engage in mutually beneficial exchanges of value. The problem is that the wealthy own so many claim checks that there is nothing to stop them from buying government officials to give them more claim checks.

      The problem is that the wealthiest 1% own more fictional claim checks than the bottom 90% combined. All that value derives from real capital - having a million cash dollars in caveman times wouldn't mean a damn thing. But when money, the collective fiction that is also the lifeblood of the economy, isn't going to where it's needed, and so REAL capital (including human capital) isn't being utilized, so we're stuck in a depression/recession, then we have a big problem. This is not the way a healthy society operates.

      Robert Reich explains the economy in 2 minutes:
      • Oct 4 2011: Bill,
        I believe I did address the points mentioned, and even offered that I somewhat agreed with part of them. However, you must understand that 'money' is a 'claim check' which works both ways and that it is a reality which has existed prior to our current debt-fueled, credit-based fiat economy and that to argue that 'money' itself does not exist not only defies common day experience but is also at odds with historical evidence.

        You say that money is derived from 'real capital' but in our current model that is not the case. To extend on your caveman analogy, our 'money' is an evolution of the prehistoric economic obligation or 'I owe you.' Money can also be an extension of increased value - perhaps the applied specialization of labor. Either way, it is a real thing.

        Now, as I have said, certain accounting methods that are utilized in corporations and governments have the effect of creating money out of nowhere - and that 'money' does not technically 'exist.' But 'money' as a historical concept and practice does exist.

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    Oct 2 2011: The rationale for separation of powers in government was that the Founding Fathers did not trust human nature to not be tyrannical when it has a concentration of power. There should be a corresponding check on the power of concentrated wealth.

    Thomas Jefferson agreed with me, apparently.

    The quote is, "If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree..."

    And in 2011, an age in which we realize that money is just a virtual, collective fiction, this is not only socially justified, it's doable, too.
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    Oct 2 2011: Debra please read this: Sorry I dont find the english translation.
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      Oct 5 2011: Thank you so much Luigi. I missed your post down here until now. I will read it and make an addendum in response. Thank you in advance.
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    Sep 29 2011: I think organisms/individuals/lobbies/Banks who control the economic world would never approve such measures. Even world's most perfect democracies can't deal with these organisms.
    Sadly, we've manged to convert our world into a "dog eat dog" world.
    I predict a global revolution about this unfair economic system in some decades (it'll have same level as recent revolutions against dictators in some Arab countries)
    The positive thing is I hear about this idea almost every day, so I'm glad people's awareness about this flawed and controlled system is increasing day by day.