Is Boulder Dam "capital"?
Ron Peterson
> For several months now I have been messing around
> with the definition of "capital". One reason for that was
> was to try and find out how other people defined the word
> and why they felt their definition to be valid. I have
> always attempted to distinguish "capital" as something that
> was owned by individuals. And I think that I still want
> to do that. But if everyone else insists that I am wrong
> then I am just wrong. That will mean that I must find a
> new word and define it in context all the time.
> So is Boulder Dam "capital" or infrastructure and
> I am also leaning on the idea that "infrastructure" is
> community owned.
Boulder Dam is capital, an asset, and part of the infrastructure and
it makes no difference if it is owned by federal, state, local government,
corporation, or an individual.
Ron
Mike Coburn
with the definition of "capital". One reason for that was
was to try and find out how other people defined the word
and why they felt their definition to be valid. I have
always attempted to distinguish "capital" as something that
was owned by individuals. And I think that I still want
to do that. But if everyone else insists that I am wrong
then I am just wrong. That will mean that I must find a
new word and define it in context all the time.
So is Boulder Dam "capital" or infrastructure and
I am also leaning on the idea that "infrastructure" is
community owned.
Are these distinctions correct or not?
--
Coburn ---
The opinions expressed herein above are mine. They are my property
so you can't have them. But use them. No rent or interest due.
Mark Patrick Witte
Ron Peterson <ro...@earth.execpc.com> wrote:
>Mike Coburn (michael....@gte.net) wrote:
>> For several months now I have been messing around
>> with the definition of "capital". One reason for that was
>> was to try and find out how other people defined the word
>> and why they felt their definition to be valid. I have
>> always attempted to distinguish "capital" as something that
>> was owned by individuals. And I think that I still want
>> to do that. But if everyone else insists that I am wrong
>> then I am just wrong. That will mean that I must find a
>> new word and define it in context all the time.
>
>> So is Boulder Dam "capital" or infrastructure and
>> I am also leaning on the idea that "infrastructure" is
>> community owned.
>
>it makes no difference if it is owned by federal, state, local government,
>corporation, or an individual.
Word! Capital is generally taken in economics to be a factor of
production that lasts over time, that is not used up in the act of producing
other goods. As such, a steel furnace would be capital, but the coal to
fire that furnace to make the steel would not be a capital good. Experience
and learning of workers are often treated as capital goods as well. The
owner ship of capital does not come in to the question of what is or is not
a capital good.
Infrastructure is generally treated in economics as a capital good
that has general applicability across productive activities, generally with
some public good aspect.
Robert Vienneau
(Mark Patrick Witte) wrote:
> Word! Capital is generally taken in economics to be a factor of
> production that lasts over time, that is not used up in the act of
> producing
> other goods. As such, a steel furnace would be capital, but the coal to
> fire that furnace to make the steel would not be a capital good.
The above is more a definition of "fixed capital." Many economists
would also count "circulating capital", such as goods in process
or in inventory, as capital. Since the coal would have to be
purchased beforehand, "the coal to fire that furnace" could,
indeed, be considered a capital good. In fact, a number of
approaches to capital theory are often first set out, for simplicity,
in terms of circulating capital goods alone.
Using the jargon "factor of production" to describe capital is also
debated. Marxists think of capital as a social relation, the
embodiment of the coercive power of the capitalist acting on
laborers. This coercive power is what compells the workforce to
produce more than enough to replace the capital goods used up in
production and the commodities on which they spend their wages.
This surplus is an immense accumulation of commodities. As such,
it matters whether capital goods are generally privately owned
or not. A government-owned dam probably should be regarded as
capital in a predominantly capitalist society.
Institutionalists following Veblen emphasize the general
know-how distributed across a community and embodied in
habits, customs, and organizations. Mark Patrick Witte mentions
the belated treatment of this aspect of capital among neoclassical
economists.
--
Try http://csf.colorado.edu/pkt/pktauthors/Vienneau.Robert/Bukharin.html
r c
v s a Whether strength of body or of mind, or wisdom, or
i m p virtue, are found in proportion to the power or wealth
e a e of a man is a question fit perhaps to be discussed by
n e . slaves in the hearing of their masters, but highly
@ r c m unbecoming to reasonable and free men in search of
d o the truth. -- Rousseau
Mike Coburn
I do appreciate your take on distiguishing "infrastructure" as general
purpose or mutipurpose "capital". I would certainly not disagree.
But why, in the writing above, is the word "good" attached
to the word "capital" in several instances? How could there by a
"capital" that was not a "good"?
Mike Coburn
> > with the definition of "capital". One reason for that was
> > was to try and find out how other people defined the word
> > and why they felt their definition to be valid. I have
> > always attempted to distinguish "capital" as something that
> > was owned by individuals. And I think that I still want
> > to do that. But if everyone else insists that I am wrong
> > then I am just wrong. That will mean that I must find a
> > new word and define it in context all the time.
>
> > So is Boulder Dam "capital" or infrastructure and
> > I am also leaning on the idea that "infrastructure" is
> > community owned.
>
> it makes no difference if it is owned by federal, state, local government,
> corporation, or an individual.
>
Thanx
Mike Coburn
>
> In article <90n3ci$7ma$1...@news.acns.nwu.edu>, mwi...@merle.acns.nwu.edu
> (Mark Patrick Witte) wrote:
>
> > production that lasts over time, that is not used up in the act of
> > producing
> > other goods. As such, a steel furnace would be capital, but the coal to
> > fire that furnace to make the steel would not be a capital good.
>
> would also count "circulating capital", such as goods in process
> or in inventory, as capital. Since the coal would have to be
> purchased beforehand, "the coal to fire that furnace" could,
> indeed, be considered a capital good. In fact, a number of
> approaches to capital theory are often first set out, for simplicity,
> in terms of circulating capital goods alone.
The economists that would create a phrase with the word "capital"
used to define "inventory" or "inputs" are simply destroying any
benefit to having such a word as "capital". i.e. the word simply
becomes useless. Economists that do not insist that "capital" only
describes that which is used in production and not "used up" but by
simply wearing out or being displaced by better technology are
totally missing the point of the word. And it is this lack of
appreciation for the word "capital" which necessitates my continuing
use of the word "real" as a modifier.
> Using the jargon "factor of production" to describe capital is also
> debated. Marxists think of capital as a social relation, the
> embodiment of the coercive power of the capitalist acting on
> laborers. This coercive power is what compells the workforce to
> produce more than enough to replace the capital goods used up in
> production and the commodities on which they spend their wages.
And that is how "capitalism" is painted as evil. The insistence
on "capital" being something that increases productivity is all
important in establishing "capitalism" to be _good_. Where "good"
is defined as that which in the mid to long term creates the most
benefit to man as a species.
> This surplus is an immense accumulation of commodities. As such,
> it matters whether capital goods are generally privately owned
> or not. A government-owned dam probably should be regarded as
> capital in a predominantly capitalist society.
The dam _IS_ infrastructure, which has now been defined as "capital"
that serves multiple owners and has multiple differing outputs
(I think that is what I've been seeing).
> Institutionalists following Veblen emphasize the general
> know-how distributed across a community and embodied in
> habits, customs, and organizations. Mark Patrick Witte mentions
> the belated treatment of this aspect of capital among neoclassical
> economists.
I do not see this as capital, but that is too long a discussion
and certainly not akin to inventory being called capital.
Jim Blair
> So is Boulder Dam "capital" or infrastructure and
>I am also leaning on the idea that "infrastructure" is
>community owned.
Hi,
Capital is goods that are used to make other goods, as opposed to
goods that are consumed directly.
Since Boulder (actually Hoover) Dam makes electricity and irrigation
it is capital. It took a major investment in labor and money, and
has been paying that back for 60 some years.
>
> Are these distinctions correct or not?
Some say capital can be privately owned (capitalism), some say
it should all be owned in common. Commumism.
Maybe "infrastructure" is the government owned capital in a capitalist
society?
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeb...@facstaff.wisc.edu) Madison Wisconsin
USA. This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good time
call: http://www.geocities.com/capitolhill/4834
Jim Blair
Robert Vienneau wrote:
>> The above is more a definition of "fixed capital." Many economists
>> would also count "circulating capital", such as goods in process
>> or in inventory, as capital. Since the coal would have to be
>> purchased beforehand, "the coal to fire that furnace" could,
>> indeed, be considered a capital good. In fact, a number of
>> approaches to capital theory are often first set out, for simplicity,
>> in terms of circulating capital goods alone.
Mike Coburn <michael....@gte.net> wrote:
>The economists that would create a phrase with the word "capital"
>used to define "inventory" or "inputs" are simply destroying any
>benefit to having such a word as "capital". i.e. the word simply
>becomes useless.
Hi,
While I seldom agree with Robert V, he has a point here. Sub-divisions
of capital that make meaningful distinctions serve the purpose of
clearer communication. This concept does.
>....Economists that do not insist that "capital" only
>describes that which is used in production and not "used up" but by
>simply wearing out or being displaced by better technology are
>totally missing the point of the word.
All capital is "worn out" or "used up". It is just that some (like
that coal) is used up on a rapid time frame, while Hoover dam will
be silted up in a century or so. Not a difference of kind but of
degree.
How about introducing the idea of "capital depreciation" ;-)
>....And it is this lack of
>appreciation for the word "capital" which necessitates my continuing
>use of the word "real" as a modifier.
Appreciation of capital depreciation? But I don't know what you
mean by "real" capital? As opposed to "virtual" capital?
David Lloyd-Jones
<ro...@telus.net> wrote
>
> This is a common confusion, aggregating the two entirely different
> factors of production that the classical economists called "capital"
> and "land." It would make as much sense for biologists to aggregate
> lungs and air.
> > Experience and learning of workers are often treated as capital goods as
well.
> worker's ability is called capital _goods_.
Roy,
It seems to me the original disaggregation was the bit that was right off
the rails.
Why should land-labor-capital be any more Holy than
organic-metallic-gaseous? This latter would lump workers naturally together
with wheat, cattle, and other lower beings, while ores in the ground would
be part of the same category with the industrial civilization to which they
so obviously give birth. The category gaseous would encompass both the
oxygen that we breath (and which makes Bessemer steel possible) and the wise
words of managers and owners who make the whole economy able to function as
smoothly as it does.
I say this my concoction is obvious nonsense -- though it is a frequent
experience of mine to have people believe in even my wildest japes. But
accepting that it is nonsense, how is it different from the pre-18th century
land-labor-capital triptych?
-dlj.
David Lloyd-Jones
"Mike Coburn" <michael....@gte.net> wrote
> Robert indicates what has been done to the word so as to destroy
> its meaning. Why am I not surprised that you would be supportive
> of such destruction. It allows you and others to totally ignore
> the difference between saving and investment.
Tell us, Oh Mike: what is the difference between saving and investment?
Storage vs. arehousing? Travel vs. movement? Or did you have in mind some
more subtle differentiation, like maybe sex vs. love?
> It allows you to
> totally ignore the difference between earned wealth and land.
This difference, Mike, being?
How does it compare with the difference between earned wealth and yachts?
Earned wealth and stock certificates? Earned wealth and healthy pigs (which
until quite recently were depreciable in Canada, even as they waxed several
percent a day)? Earned wealth and, say, a diver-friendly atoll full of
sunken Japanese ships in the Yaps? But this last, of course, is land.
Best,
-dlj.
SUSUPPLY
>Marxists think of capital as a social relation, the
>embodiment of the coercive power of the capitalist acting on
>laborers. This coercive power is what compells the workforce to
>produce more than enough to replace the capital goods used up in
>production and the commodities on which they spend their wages.
>This surplus is an immense accumulation of commodities.
Which reminds me of one of numerous unanswered questions. When Friday took
Crusoe's rowboat out to fish, and ended up losing the pole and cracking up the
boat on the rocky shoals, was he exploiting Capital when he then demanded to be
paid for his time?
Patrick
ro...@telus.net
<michael....@gte.net> wrote:
> So is Boulder Dam "capital" or infrastructure and
>I am also leaning on the idea that "infrastructure" is
>community owned.
Infrastructure can be private. Boulder Dam is capital.
-- Roy L
ro...@telus.net
Witte) wrote:
> Word! Capital is generally taken in economics to be a factor of
>production that lasts over time, that is not used up in the act of producing
>other goods.
This is a common confusion, aggregating the two entirely different
factors of production that the classical economists called "capital"
and "land." It would make as much sense for biologists to aggregate
lungs and air.
> Experience and learning of workers are often treated as capital goods as well.
You know you've left science behind when labor is called capital and a
worker's ability is called capital _goods_.
-- Roy L
Mike Coburn
>
> Robert Vienneau wrote:
>
> >> The above is more a definition of "fixed capital." Many economists
> >> would also count "circulating capital", such as goods in process
> >> or in inventory, as capital. Since the coal would have to be
> >> purchased beforehand, "the coal to fire that furnace" could,
> >> indeed, be considered a capital good. In fact, a number of
> >> approaches to capital theory are often first set out, for simplicity,
> >> in terms of circulating capital goods alone.
>
> Mike Coburn <michael....@gte.net> wrote:
>
> >The economists that would create a phrase with the word "capital"
> >used to define "inventory" or "inputs" are simply destroying any
> >benefit to having such a word as "capital". i.e. the word simply
> >becomes useless.
>
> Hi,
>
> While I seldom agree with Robert V, he has a point here. Sub-divisions
> of capital that make meaningful distinctions serve the purpose of
> clearer communication. This concept does.
Robert indicates what has been done to the word so as to destroy
its meaning. Why am I not surprised that you would be supportive
of such destruction. It allows you and others to totally ignore
the difference between saving and investment. It allows you to
totally ignore the difference between earned wealth and land.
It must be nice to be able to ignore everything that actually
matters so that your models work and all your tables of numbers
say whatever you want. Such horseshit does not describe reality.
But that, of course, is necessary to achieving a system that is
without any real basis and which is, therefore, totally political.
And its always: "See, the numbers support my thesis, so I must be
correct".
> >....Economists that do not insist that "capital" only
> >describes that which is used in production and not "used up" but by
> >simply wearing out or being displaced by better technology are
> >totally missing the point of the word.
>
> All capital is "worn out" or "used up". It is just that some (like
> that coal) is used up on a rapid time frame, while Hoover dam will
> be silted up in a century or so. Not a difference of kind but of
> degree.
So as I've said: The word serves no purpose other than a
symbol you will throw around along with your tables so that
you can claim t be a "capitalist" instead of a monopolistic,
plutocratic, monarchist.
> How about introducing the idea of "capital depreciation" ;-)
How about the idea of a word that can be used as a base
for the word "capitalism" that would make such a system
actually provide for maximizing long term general utility.
> >....And it is this lack of
> >appreciation for the word "capital" which necessitates my continuing
> >use of the word "real" as a modifier.
>
> Appreciation of capital depreciation? But I don't know what you
> mean by "real" capital? As opposed to "virtual" capital?
>
> ,,,,,,,
> _______________ooo___(_O O_)___ooo_______________
> (_)
> jim blair (jeb...@facstaff.wisc.edu) Madison Wisconsin
> USA. This message was brought to you using biodegradable
> binary bits, and 100% recycled bandwidth. For a good time
> call: http://www.geocities.com/capitolhill/4834
I already said what I mean: Capital is a tool or mechanism
or organization or enterprise that increases productivity to
the advantage of the the human species as a whole. As such,
boulder dam is certainly capital, and a lump of coal is not.
But because of the total destruction of the term "capital"
so as to allow the continuing obfuscation on the part of
economists, and Republicans such as yourself, I will continue
to put the word "real" in front of the word capital so that
you duffasses don't get confused.
Mike Coburn
>
> On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
> Witte) wrote:
>
> > Word! Capital is generally taken in economics to be a factor of
> >production that lasts over time, that is not used up in the act of producing
> >other goods.
>
> This is a common confusion, aggregating the two entirely different
> factors of production that the classical economists called "capital"
> and "land." It would make as much sense for biologists to aggregate
> lungs and air.
It is _MUCH_ worse than that. I had though two years ago that
this was the only problem. Jim Blair's declaration that coal is
capital is evidence of the total and absolute destruction of
the word such that it no longer has any meaning whatsoever.
> > Experience and learning of workers are often treated as capital goods as well.
>
> You know you've left science behind when labor is called capital and a
> worker's ability is called capital _goods_.
>
> -- Roy L
As I said: The politicians will use the word as an adornment
for whatever they wish. It has a certain symbolic relationship
with earning and investment though the word in current economic
discussion is, apparently, not so deserving. It is thus a word
that can be employed to paint whatever you profess in a way such
a way that would make it more acceptable. If you are called to
task for it, you can simply pull any definition you want out of
the current stack and say: "See!!!!!".
Mark Patrick Witte
>On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>> Word! Capital is generally taken in economics to be a factor of
>>production that lasts over time, that is not used up in the act of producing
>>other goods.
>
>This is a common confusion, aggregating the two entirely different
>factors of production that the classical economists called "capital"
>and "land." It would make as much sense for biologists to aggregate
>lungs and air.
No. Land is an example of a capital good.
>> Experience and learning of workers are often treated as capital goods as well.
>
>You know you've left science behind when labor is called capital and a
>worker's ability is called capital _goods_.
No, this is not about labor.
The worker's time is used up in producing something, yet the workers
experience and learning last on to be used again the next day in a way
similar to how the hammer the worker used one day will be there the next.
Jim Blair
>
>Well... earned wealth is like, earned. You know, like you
>actually produced something from your own effort. Land
>simply exists. It will exist whether you labor or not.
.......
>
>If it is land it is "unearned". That be the end of it.
Hi,
Are you talking here about Holland? All of that land that they built
on after they made dikes to hold back the North Sea?
Mark Patrick Witte
Mike Coburn <michael....@gte.net> wrote:
>> >Witte) wrote:
>> >
>> >> Word! Capital is generally taken in economics to be a factor of
>> >>production that lasts over time, that is not used up in the act of producing
>> >>other goods.
>> >
>> >This is a common confusion, aggregating the two entirely different
>> >factors of production that the classical economists called "capital"
>> >and "land." It would make as much sense for biologists to aggregate
>> >lungs and air.
>>
>
>and it is in the best interest of men to reward such creation.
A lot of things are created by man that are not capital. Capital
goods are generally factors of production that don't get extinguished in the
act of production. Barring the exception raised by Jim Blair, land is
generally treated as a non-produced capital good and for many of the
questions of interest in economics, it works just fine to lump it in with
normal capital goods.
>The
>more you can reward such creation the more capital you will see
>created. Land is not created by men and no matter how much you
>might try to reward the owner of land you will not gain any more
>land. You do, however, cause a distortion that leads to less capital
>creation.
How so? Given that any distortions in the price of land lead to
zero sum transfers between buyers and sellers, where is the social loss?
>> >> Experience and learning of workers are often treated as capital goods as well.
>> >
>> >You know you've left science behind when labor is called capital and a
>> >worker's ability is called capital _goods_.
>>
>> No, this is not about labor.
>>
>> The worker's time is used up in producing something, yet the workers
>> experience and learning last on to be used again the next day in a way
>> similar to how the hammer the worker used one day will be there the next.
>
> The defense for referring to human ability as capital
>is stronger because the reward to "know how", will encourage many to
>acquire it. Economics can play a part in the creation of "know how".
>But the distinction is that the hammer, like the dam, has utility
>without any specific human.
Just like arithmatic.
>All the folks that build the dam or
>made the hammer could be shot at dawn the day after the hammer or
>dam was created and the hammer or dam would still have utility.
And we could shoot all the math teachers and people would still have
a stock of math knowledge from those teachers.
>Human "know how" is a factor in wages.
Just like any capital good, since this effects the marginal product
of labor.
> Wages and capital are two totally different things.
How about if you take this up with the likes of Gary Becker and Paul
Romer?
>But I have far fewer reservations about
>"know how" as capital than I do about land being referred to as
>capital. Economic designs and manipulations can actually
>affect the amount of "know how". If you are allowed to include
>"know how" as capital and you were to design an economy that
>encouraged capital development you would still be maximizing general
>long term utility (a good thing to do). If, however, you design a
>system that encourages land ownership you will not have done anything
>that would be maximizing general long term utility. The rent from
>land ownership is a burden on the producers of the society which,
>when funneled into the hands of land owners, merely destroys aggregate
>wealth.
How is wealth destroyed by a transfer?
Factor payments to land, or to existing capital, encourage efficient
use of scarce resources.
David Lloyd-Jones
"Mike Coburn" <michael....@gte.net> wrote:
> David Lloyd-Jones wrote:
> > Tell us, Oh Mike: what is the difference between saving and investment?
> > Storage vs. arehousing? Travel vs. movement? Or did you have in mind
some
> > more subtle differentiation, like maybe sex vs. love?
>
> or velocity out of the economy and when you invest you are adding
> liquidity or velocity in to the economy.
Like duh, Mike. Surely you've answered your own question: the one goes up
and the other goes down.
Modulo the differences. You have quantity and quality of each, which makes
four.
-dlj.
David Lloyd-Jones
"Mark Patrick Witte" <mwi...@merle.acns.nwu.edu> wrote
> The worker's time is used up in producing something, yet the workers
> experience and learning last on to be used again the next day in a way
> similar to how the hammer the worker used one day will be there the next.
I believe that Walt Rostow used almost exactly this example in the early or
mid-sixties when I was breaking my back, with Guido and Guido's brother
Allenze, digging trenches for a drive-in movie's sound system in Eastern
Toronto.
It gave me greatest pleasure when, eight years later at Sans Souci, he
thought he had reservations and I *knew* I did -- having read his book at
night while I was grunting it. (No, jedescript, back off, back off, this is
not Whaztsisass in the rock pit...) Fortunately I was able to ask the
steward for four ballons of their house red while we waited, and my
carefully inflected French (which is utterly inadequate, but I steer around
my weak points) got us the banquette we had reserved.
* * *
Now, to return to the weakness in the Rostow proposition:
If you look at how the Dinka, an advanced inhumant "tribe," move through the
year, you will see that they had, until the external incursions, a well
developed civilization with an extremely well developed craftsmanship. In
the wet season, when the men and senior boys live on mats, by the cattle on
the high ground, mats of extreme regularity, durability, and tradesmanlike
skill are woven in hours.
On the lowlands, when all the men and cattle return in due course, the
houses and compounds are rebuilt -- with thatch and fencing which would make
the most skilled French or Walloon farmer think he had something to learn.
The Dinka are *not* a backward society.
They are/were non-literate, and they didn't use metals much. They were
insular, xenophobic (because they knew that they were "The People," and who
the hell was everybody else?), competent, self-confident. They're just like
us.
One possible difference: they learn like crazy. An awfully high percentage
of the advanced nations, it seems to me, are stoned out.
The Dinka today, even though being slaughtered like Australian rabbits or
Canadian seals on their own land, are now, somewhat reduced, all over the
world. On the day your spleen needs to be resected, and you find a tall,
thin, black surgeon concentrating on your gut, she is probably one of my
cousins -- and one of the escapees from the genocide.
* * *
An interlude, for an awfully funny story.
At one point one of my supervisors, when I was teaching US Constitutional
Law in Japan, told me that the richest man in China was going to come to
Tokyo, and he would like to meet the smartest people there. I was apparently
elected, one of the.
This Chinese clown took over a floor of a building just across the creek
from the school I taught at, Nichi-Bei Kaiwa Gakuin (Japan-America
Conversational Institute) to Kukusai Bunkyo Kaikyu (Center for International
Studies [slightly more advanced conversation...]).
I loved that creek. On both sides there were Police stations, and at each
side, plus at the actual site where you crawled under the barbed-wire, there
were signs saying "It Is Forbidden To Climb Here." It was, and is, one of
the most elegant climbing sites anywhere, with every degree of difficulty
obtainable just a few paces away. If you fall, you fall onto a bed of solid
gravel, so no sweat.
The guy climbing next to you -- one one-and-a-half meter Old Palace rock
away from you -- is likely to be one of the cops whose actual duty is
supposed to be stopping you from getting in there in the first place.
* * *
So anyway, the Chinese zillionnaire and I were introduced -- by his son, who
may or may not have been able to tie his shoe-laces without praeceptorial
assistance from his Hong Kong Headmaster.
Poor old fucker. He was casting about. I even spoke a fair stream of
Mandarin at the time, though of course Cantonese was their language.
The guy was on a huge blue carpet of excellent quality. He was at one end.
Sylphs were ready to deliver tea. (I had already chatted them up when I got
off the elevator.)
I took off my shoes at the door. Then I took off my slippers at the edge of
the huge carpet. What was I supposed to do next, bow down? Like gimme a
break. I spoke Japanese and they didn't; I had an operating business, and
they didn't; I knew the market, and they didn't have the first clue -- to
the point where Japanese were following me around asking me for advice about
Japan (a bit of flattery I don't take highly seriously.)
So I halted. A sort of "Uh?" moment.
The grand-old-fucker thought his son was a fool for ringing me in; I thought
the whole bunch of them were clueless thrashers.
I went across the bridge,saying "Hi," to the cops on both sides, drank seven
beers in one of my girl-friends' bars, then spent the afternoon in Nakano
with my mistress, Mie, then went home.
A good and normal afternoon -- but not a huge Leap Forward in NiWaBei,
Japanese-Chinese-American relations.
What the hell, live it.
-dlj.
David Lloyd-Jones
"Mike Coburn" <michael....@gte.net>
> It is not. "capital" is something that is created by men
> and it is in the best interest of men to reward such creation.
Mike,
There have been several studies in the last two years which show that the
returns to women are radically higher than the returns to men.
Men churn, or get churned. Women say "OK, That sounds great, I''ll throw you
my spare cash between April and June of next year."
* * *
Women buy and hold stuff.
Men thrash about at the "winners."
* * *
My guess is the difference between is only the brokerage.
-dlj.
Mike Coburn
Well, one of us is confused. But I'm not so sure that it is me. I fail
to see any benefit to the economy in stuffing money into a mattress.
Even an interest bearing mattress such as a government bond or a savings
account. Now if and when you want to return to the scenario where the
money that is placed in a bank is the money that is used to finance
loans then we _may_ be able to discuss the matter. We may defined at
least a tenuous link between savings as described here and some form of
investment. But even then, the "saved" accounting entries would not be
capital. Such an action (still savings) will inevitably take "money"
out of the economy. Real investments that trade liquidity for a share
in future earnings do not do that. These would be called "capital"
investments.
Mike Coburn
>
> Mike Coburn <michael....@gte.net> wrote:
>
> >
> >Well... earned wealth is like, earned. You know, like you
> >actually produced something from your own effort. Land
> >simply exists. It will exist whether you labor or not.
> .......
> >
> >If it is land it is "unearned". That be the end of it.
>
> Hi,
>
> Are you talking here about Holland? All of that land that they built
> on after they made dikes to hold back the North Sea?
>
Don't you ever tire of grabbing hold of the most insignificant trivial
shit you can find and waving it in the air like a banner?
Mike Coburn
>
> In article <3A300CC2...@gte.net>,
> Mike Coburn <michael....@gte.net> wrote:
> >Mark Patrick Witte wrote:
> >> In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
> >> >On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
> >> >Witte) wrote:
> >> >
> >> >> Word! Capital is generally taken in economics to be a factor of
> >> >>production that lasts over time, that is not used up in the act of producing
> >> >>other goods.
> >> >
> >> >This is a common confusion, aggregating the two entirely different
> >> >factors of production that the classical economists called "capital"
> >> >and "land." It would make as much sense for biologists to aggregate
> >> >lungs and air.
> >>
> >> No. Land is an example of a capital good.
> >
> > It is not. "capital" is something that is created by men
> >and it is in the best interest of men to reward such creation.
>
> A lot of things are created by man that are not capital.
But NONE of them are land.
Capital
> goods are generally factors of production that don't get extinguished in the
> act of production. Barring the exception raised by Jim Blair, land is
> generally treated as a non-produced capital good and for many of the
> questions of interest in economics, it works just fine to lump it in with
> normal capital goods.
Thank you for confirming what I have said and for using Mr. Blair as
your side kick. The inclusion of land as capital makes your models
seem to work and so, therefore, in the tradition of neo classical
econ, land must be capital. But a model that attempts to predict
capital creation will most certainly not be efficacious in regard
to land, while it will be so for buildings, and roads and dams and
factories. This would lead a normal, well adjusted human to the
conclusion that land must somehow not be capital in the same sense
as these other ingredients. That, in fact, it must be something
quite different. Like, maybe, it is just land.
> >The
> >more you can reward such creation the more capital you will see
> >created. Land is not created by men and no matter how much you
> >might try to reward the owner of land you will not gain any more
> >land. You do, however, cause a distortion that leads to less capital
> >creation.
>
> How so? Given that any distortions in the price of land lead to
> zero sum transfers between buyers and sellers, where is the social loss?
If I can use wealth appropriated from the non land owners
via income tax and sales taxes to finance the government
that enforces my land rights and to develop infrastructure
to increase the value of those rights to collect rent, then
they (the non owners) will have to work very hard indeed
to ever be able to become owners. And why, pray tell,
would I risk developing anything at all or ever changing
anything at all. Yes, the sum is zero but the nobility
gets more "noble" as the serfs get the wrench. Up there
in macro land the world may be a very nice place. But
down here in the trenches where the real stuff happens it
ain't so cut and dried.
> >> >> Experience and learning of workers are often treated as capital goods as well.
> >> >
> >> >You know you've left science behind when labor is called capital and a
> >> >worker's ability is called capital _goods_.
> >>
> >> No, this is not about labor.
> >>
> >> The worker's time is used up in producing something, yet the workers
> >> experience and learning last on to be used again the next day in a way
> >> similar to how the hammer the worker used one day will be there the next.
> >
> > The defense for referring to human ability as capital
> >is stronger because the reward to "know how", will encourage many to
> >acquire it. Economics can play a part in the creation of "know how".
> >But the distinction is that the hammer, like the dam, has utility
> >without any specific human.
>
> Just like arithmatic.
Yep.
> >All the folks that build the dam or
> >made the hammer could be shot at dawn the day after the hammer or
> >dam was created and the hammer or dam would still have utility.
>
> And we could shoot all the math teachers and people would still have
> a stock of math knowledge from those teachers.
A very poor analogy in that none of these humans are capital.
Hence, their inalienable capabilities are not capital either. You may
_take_ the hammer from the man and thus deprive him of it and have it
for yourself or assign some other man to employ it. But you can't
take the "know how" and "knowledge" from the man thus depriving him
of it and/or "give" it to another. And though presumptions to the
contrary may make your macro world run very smoothly indeed , such
a "world" is not a representation of reality.
> >Human "know how" is a factor in wages.
>
> Just like any capital good, since this effects the marginal product
> of labor.
So you want everything to be capital that isn't wages? I thought
there was another pigeon hole to put things in. Gee, if we could get it
down to one classification _I_ could do the models.
> > Wages and capital are two totally different things.
>
> How about if you take this up with the likes of Gary Becker and Paul
> Romer?
Who are these dude's?
> >But I have far fewer reservations about
> >"know how" as capital than I do about land being referred to as
> >capital. Economic designs and manipulations can actually
> >affect the amount of "know how". If you are allowed to include
> >"know how" as capital and you were to design an economy that
> >encouraged capital development you would still be maximizing general
> >long term utility (a good thing to do). If, however, you design a
> >system that encourages land ownership you will not have done anything
> >that would be maximizing general long term utility. The rent from
> >land ownership is a burden on the producers of the society which,
> >when funneled into the hands of land owners, merely destroys aggregate
> >wealth.
>
> How is wealth destroyed by a transfer?
It is destroyed by opulent displays of power and pretense;
the burning of resources as a sacrifice to the God Almighty GDP.
By stuffing a mattress with deeds and IOU's won in a game to
see who can build the biggest monuments to stupidity. The
houses so big that the owners need to hire crews to clean them
and automobiles that cost more than the average wage earner's
home.
> Factor payments to land, or to existing capital, encourage efficient
> use of scarce resources.
If land were assessed a fee that confiscated 90% of the rental
value of the raw land (no fee on any improvements) and the
proceeds were distributed to every voter in the sovereignty
equally (Bill Gates and Freddy the freeloader get the same
amount), the increase in _real_ capital development would blow
your socks off. And further, if assets were taxed directly
to fund the enforcement of ownership rights there would be no
cycle of boom and bust. Only a steady stream of continuing
_real_ capital creation. Capital"ism" would, in fact, be the
cornucopia it is supposed to be.
ro...@telus.net
Witte) wrote:
>In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>>On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>> Word! Capital is generally taken in economics to be a factor of
>>>production that lasts over time, that is not used up in the act of producing
>>>other goods.
>>
>>This is a common confusion, aggregating the two entirely different
>>factors of production that the classical economists called "capital"
>>and "land." It would make as much sense for biologists to aggregate
>>lungs and air.
>
> No. Land is an example of a capital good.
No. It is not. Capital goods _are_, precisely, gradually used up in
the act of producing other goods. This is called "depreciation." 200
years ago, economists understood this. Today they do not.
>>> Experience and learning of workers are often treated as capital goods as well.
>>
>>You know you've left science behind when labor is called capital and a
>>worker's ability is called capital _goods_.
>
> No, this is not about labor.
You're right. It's about trying to conceal critical facts of
economics by deliberately falsifying the terminology.
> The worker's time is used up in producing something, yet the workers
>experience and learning last on to be used again the next day in a way
>similar to how the hammer the worker used one day will be there the next.
It is not similar. The hammer wears out with use. The worker gets
more skillful with experience. Furthermore, the hammer is a good. It
can be bought and sold. The worker's skill is not a good, because it
can only be put to use _by_him_.
So you are just flat wrong. Period.
-- Roy L
ro...@telus.net
Witte) wrote:
>In article <3A300CC2...@gte.net>,
>Mike Coburn <michael....@gte.net> wrote:
>>Mark Patrick Witte wrote:
>>
>>> No. Land is an example of a capital good.
>>
>> It is not. "capital" is something that is created by men
>>and it is in the best interest of men to reward such creation.
>
> A lot of things are created by man that are not capital.
Good example of a kindergarten-level logical fallacy used as a
diversionary tactic.
See if you can figure out where you went wrong when I restate the
exchange in abstract terms:
Coburn: All A is B.
Witte: A lot of B is non-A.
Does that make it clear enough?
>Capital
>goods are generally factors of production that don't get extinguished in the
>act of production.
Wrong. Capital goods depreciate with use. They wear out, decay with
age, or become obsolete.
>Barring the exception raised by Jim Blair, land is
>generally treated as a non-produced capital good and for many of the
>questions of interest in economics, it works just fine to lump it in with
>normal capital goods.
No. It doesn't. Unless you want to get certain particular answers to
those questions, that is....
>>The
>>more you can reward such creation the more capital you will see
>>created. Land is not created by men and no matter how much you
>>might try to reward the owner of land you will not gain any more
>>land. You do, however, cause a distortion that leads to less capital
>>creation.
>
> How so? Given that any distortions in the price of land lead to
>zero sum transfers between buyers and sellers, where is the social loss?
Where is the social loss in zero-sum transfers between buyers and
sellers of tulip bulbs, hmmmmm? Time to stop typing and start
thinking, pal.
Do you know how much money real estate agents rake off those
"zero-sum" transfers? How much allocative inefficiency results from
those transaction costs (e.g., people being reluctant to move closer
to their jobs, because they will drop $10K on the real estate agent)?
How much production is lost because ownership of land is so
extravagantly rewarded that large landowners do no productive work?
How much is lost because income tax is used to subsidize landowners,
reducing the incentive to work, attenuating labor price signals,
impeding division of labor, increasing variable production costs,
etc., etc., etc.? The fact that you are prepared to ignore all of
this -- or have never even thought of it -- speaks volumes.
>>Human "know how" is a factor in wages.
>
> Just like any capital good, since this effects the marginal product
>of labor.
Wrong. Capital goods can be bought and sold. Know how can only be
put to use or not.
>> Wages and capital are two totally different things.
>
> How about if you take this up with the likes of Gary Becker and Paul
>Romer?
Why? Are they as devoted to misleading terminology as you?
>> If, however, you design a
>>system that encourages land ownership you will not have done anything
>>that would be maximizing general long term utility. The rent from
>>land ownership is a burden on the producers of the society which,
>>when funneled into the hands of land owners, merely destroys aggregate
>>wealth.
>
> How is wealth destroyed by a transfer?
???? Let me try to make this as simple as possible.
Suppose you and I are working, each producing as much wealth as we
consume. Government comes along, and transfers the wealth I produce
to you. Where, now, is my motive to produce more wealth? Where is
yours?
_Get it_?
> Factor payments to land, or to existing capital, encourage efficient
>use of scarce resources.
No. Accurate factor payments _for_ land (i.e., land rents) encourage
efficient use of scarce resources. But those payments will be made in
any case, whoever ultimately collects them. Devoting those land rents
to the public expenditures that create the rents internalizes an
externality, encouraging more efficient use of resources than just
giving them to private landowners would.
-- Roy L
ro...@telus.net
wrote:
>Mike Coburn <michael....@gte.net> wrote:
>
>>If it is land it is "unearned". That be the end of it.
>
>Are you talking here about Holland? All of that land that they built
>on after they made dikes to hold back the North Sea?
Right. The land is unearned. The dryness -- which is called
"improvement" -- is earned. But not, typically, by the people who get
most of the benefit of it. Like land improvements anywhere.
-- Roy L
ro...@telus.net
<ico...@netcom.ca> wrote:
>"Mike Coburn" <michael....@gte.net> wrote
>
>> Robert indicates what has been done to the word so as to destroy
>> its meaning. Why am I not surprised that you would be supportive
>> of such destruction. It allows you and others to totally ignore
>> the difference between saving and investment.
>
>Tell us, Oh Mike: what is the difference between saving and investment?
Investment is spending on capital or other expenditures that increase
the capacity or efficiency of production. Saving is income in excess
of consumption and investment.
>> It allows you to
>> totally ignore the difference between earned wealth and land.
>
>This difference, Mike, being?
Wealth is earned by production. Land is not produced.
-- Roy L
Robert Vienneau
> Capital
> goods are generally factors of production that don't get extinguished in
> the
> act of production.
1.0 THE MODEL
Consider a simple economy in a stationary state whose output consists
entirely of wood. A worker plants trees at the start of the process of
production, which lasts for t years. No labor is required for the trees
to grow or to harvest the quantity of wood, q(t), available at the end
of t years. Assume that lengthening this process increases the harvest,
that is, q'(t) > 0. Also assume that each additional increment of
time increases the output less than the previous increment, that is,
q''(t) < 0. (This is stronger than needed; the absolute marginal
product of time can be increasing as long as the proportional marginal
product of time is decreasing.)
Wages are paid immediately to workers. Competitive firms take the
wage, w, and the interest rate, r, as given. Suppose the wage was above
the present value of output q(t). The firm could either deposit w
in a bank at the interest rate or produce wood. No profit-maximizing
firm would do the latter. Thus, the equilibrium wage cannot exceed the
present value of output. But if the wage was below the present value
of output, firms would expand production upon seeing an opportunity to
make pure economic profit. Thus, competition enforces an equality
between the wage and the present value of output.
What is the the present value of q(t)? The annual rate of interest
is 100 r%. Suppose the interest rate is compounded n times per year.
By definition, the per period interest rate is 100 (r/n) %. Table 1
shows the effects of compounding the wage.
TABLE 1: COMPOUNDING INTEREST
Number Of
Compounding
Periods Value
0 w
1 w ( 1 + n/r)
2 w ( 1 + n/r)^2
3 w ( 1 + n/r)^3
. .
. .
. .
t n w ( 1 + n/r)^(n t)
Since the wage is equal to the present value of output, Equation 1
holds:
q(t) = w ( 1 + n/r)^(n t) (1)
Or:
w = q(t) ( 1 + n/r)^(-n t) = q(t) ( 1 + gamma )^(-gamma r t) (2)
where gamma = n/r. Taking the limit as gamma increases without bound,
one obtains the wage for the case of continuous compounding:
w(t) = q(t) exp( -r t ) (3)
Consider a firm producing a steady state output of q(t). What will
the value of the firm's capital be at a point in time? The firm will
have goods in process at this point for producing output from this
point until t time units in the future. The value of these goods in
process is found by compounding the wages expended from -t time units
in the past until the current instant. That is, the value of capital
is the integral from -t to zero with respect to u of w(t) exp( -r u ).
Thus, the capital value is given by Equation 4:
k(t) = w(t) [ exp( r t ) - 1 ]/r (4)
Or:
k(t, r) = q(t) [ 1 - exp( -r t ) ]/r (5)
where the notation emphasizes the value of capital depends on the
production method and the interest rate. Notice this wage and value
of capital satisfy the accounting identity:
q(t) = w(t) + r k(t) (6)
2.0 THE OPTIMAL PROCESS LENGTH
The period between planting and harvesting of timber is a choice
variable in this model. From the construction of the so-called
factor price frontier, one knows that the optimal technique maximizes
the wage. Hence,
dw/dt = q'(t) exp( -r t ) - r q(t) exp( -r t) = 0 (7)
Thus, the length of the process used in production, t, is defined
implicitly by Equation 8:
r = q'(t)/q(t) (8)
3.0 WICKSELL EFFECTS
The above model shows how the value of output and capital depend
on the interest rate. In effect, I have traced out a parameteric
specification of a "smooth" aggregate neoclassical production
function q(k), where both output and capital are specified per
head. This production function can be differentiated:
dq/dk = ( dq/dr )/( dk/dr ) (9)
The numerator is easily found:
dq/dr = q'(t) dt/dr (10)
The denominator is more interesting. From the chain rule for
differentiation, one obtains:
dk(t, r)/dr = ( del k/del t) dt/dr + ( del k/ del r ) (11)
The first term on the right shows how the value of capital is altered
with the interest rate by a change in the optimal technique. This is
known as the real Wicksell effect. The second term shows how the
value of capital is altered with the interest rate, given the technique.
This is the price Wicksell effect.
The next step in the analysis is to determine the Wicksell effects.
The price Wicksell effect is easily found from Equation 5:
del k/del r = q(t) [ 1 - (1 - r t) exp( -r t) ]/r^2 (12)
For this simple model, (del k/del r) is always positive. The
determination of the real Wicksell effect requires one to calculate
the following derivative:
del k/del t = q'(t) [ 1 - exp( -r t) ]/r
+ q(t) r exp( -r t )/r (13)
Evaluating for the optimal process length, as given in Equation 8,
one obtains:
del k/del t = q'(t)/r (14)
Suppose price Wicksell effects were zero, which they are not. Then
one would have:
dq/dk = q'(t) dt/dr / [ ( q'(t)/r ) dt/dr ] = r (15)
But, since price Wicksell effects are positive, the denominator
in Equation 9 exceeds the real Wicksell effect. Consequently, the
marginal product of capital, dq/dk, is less than the equilibrium
interest rate in this model:
dq/dk < r (16)
Suppose one makes a regularity assumption that the real Wicksell
effect is always negative:
( del k/del t ) dt/dr < 0 (17)
That is, one considers the change in the optimal technique resulting
from a change in the interest rate. One assumes that the value of
the newly selected capital goods, evaluated at unchanged prices, is
such that a higher interest rate is associated with a lower capital
intensity. In general models of production, e.g. Austrian-Wicksell
flow-input flow-output models and a Sraffian analysis of the choice
of technique, this is an ad-hoc and arbitrary assumption. But if one
does make Burmeister's regularity assumption, Champernowne's chain
index for capital will be well-defined. This chain index is basically
found by adding up real Wicksell effects from an interest rate of
zero to the one in which one is interested. Using this measure and
a corresponding chain index for output, the equilibrium interest
rate is equal to the marginal product of capital. One should note
that the wage is no longer equal to the marginal product of labor
for these measures. Nor are they empirically observable. I don't
think this approach is all that interesting; its only purpose seems
to be to defend the failed aggregate Neoclassical model.
4.0 CONCLUSIONS
Notice that the above analysis uses a smooth aggregate production
function and that there initially seems to be no aggregation problems.
All firms are identical, and net output consists of a single
commodity. Thus, the inequality between the interest rate and the
marginal product of capital seems not to be the result of an aggregation
problem. It is also apparent it is not the affect of an assumption of
non-differentiable production functions. It is the result of non-zero
price Wicksell effects, as I have been saying for years, frequently
to incomprehension.
REFERENCES
Syed Ahmad, _Capital In Economic Theory: Neo-Classical, Cambridge,
and Chaos_, Edward Elgar, 1991.
Salvatore Baldone, "From Surrogate to Pseudo Production Functions,"
_Cambridge Journal of Economics_, V. 8, 1984, pp. 271-288.
Christian Bidard, "Wicksell and Douglas on Distribution and Marginal
Productivity," in _Critical Essays on Piero Sraffa's Legacy in
Economics_, (edited by H. D. Kurz), Cambridge University Press, 2000.
Edwin Burmeister, "Wicksell Effects," in _The New Palgrave: Capital
Theory_, (edited by J. Eatwell, M. Milgate, and P. Newman), Macmillan,
1990.
--
Try http://csf.colorado.edu/pkt/pktauthors/Vienneau.Robert/Bukharin.html
r c
v s a Whether strength of body or of mind, or wisdom, or
i m p virtue, are found in proportion to the power or wealth
e a e of a man is a question fit perhaps to be discussed by
n e . slaves in the hearing of their masters, but highly
@ r c m unbecoming to reasonable and free men in search of
d o the truth. -- Rousseau
Mike Coburn
in spite of Robert's insistence on planting them. A good many
trees sprout all on their own and it is irrelevant any way. Corn
nor barley nor pigs nor cows are capital either. The trees,
however can be considered to be land if they were not actually
planted. i.e,. if they arose naturally. We see that the trees
do not (in reality) depreciate as capital would so it might be
possible to call them land anyway but that might infer that corn
and barley is land and that is probably not correct either. The
value of the trees can and will be determined by men as the model
indicates. But all real value is measured in labor. Interest
paid to money itself or rent from land are "gifts" that government
awards to the current holder of privilege. I think the claim of
_inventory_ being capital is the absurdity that creates this rather
slippery slope. This claim is also incorrect if "capitalism" is
to actually deliver on its promise of maximizing general utility.
--
Coburn ---
The opinions expressed herein above are mine. They are my property
so you can't have them. But use them. No rent or interest due.
Steven Hales
"Mike Coburn" <michael....@gte.net> wrote in message
news:3A321BB0...@gte.net...
> The model is impressive. Unfortunately, trees are not capital
> in spite of Robert's insistence on planting them.
It is an abstract example you dope.
Mark Patrick Witte
>On 8 Dec 2000 04:04:36 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>>In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>>>On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>>Witte) wrote:
>>>
>>>> Word! Capital is generally taken in economics to be a factor of
>>>>production that lasts over time, that is not used up in the act of producing
>>>>other goods.
>>>
>>>This is a common confusion, aggregating the two entirely different
>>>factors of production that the classical economists called "capital"
>>>and "land." It would make as much sense for biologists to aggregate
>>>lungs and air.
>>
>> No. Land is an example of a capital good.
>
>No. It is not. Capital goods _are_, precisely, gradually used up in
>the act of producing other goods. This is called "depreciation." 200
>years ago, economists understood this. Today they do not.
Could you supply me with the definitive definition of capital? A
non-zero rate of depreciation is always required? I think not, and the case
of zero depreciation is often used in presenting simple cases of models
since the results are usually hand-computable. Further, if land were to
depreciate, as it is modelled to do in much environmental economics
literature, then land would count in your definition of a capital good?
>>>> Experience and learning of workers are often treated as capital goods as well.
>>>
>>>You know you've left science behind when labor is called capital and a
>>>worker's ability is called capital _goods_.
>>
>> No, this is not about labor.
>
>You're right. It's about trying to conceal critical facts of
>economics by deliberately falsifying the terminology.
As Will Rogers said of President Hoover, "It's not what he doesn't
know that bothers me, it's what he does know that just ain't so."
>> The worker's time is used up in producing something, yet the workers
>>experience and learning last on to be used again the next day in a way
>>similar to how the hammer the worker used one day will be there the next.
>
>It is not similar. The hammer wears out with use. The worker gets
>more skillful with experience. Furthermore, the hammer is a good. It
>can be bought and sold. The worker's skill is not a good, because it
>can only be put to use _by_him_.
>
>So you are just flat wrong. Period.
Yeah, me and Becker, Romer, Mincer, and all the others who do human
capital models.
>
>-- Roy L
Mark Patrick Witte
>On 8 Dec 2000 17:25:05 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>>In article <3A300CC2...@gte.net>,
>>Mike Coburn <michael....@gte.net> wrote:
>>>Mark Patrick Witte wrote:
>>>
>>>> No. Land is an example of a capital good.
>>>
>>> It is not. "capital" is something that is created by men
>>>and it is in the best interest of men to reward such creation.
>>
>> A lot of things are created by man that are not capital.
>
>Good example of a kindergarten-level logical fallacy used as a
>diversionary tactic.
>
>See if you can figure out where you went wrong when I restate the
>exchange in abstract terms:
>
>Coburn: All A is B.
>
>Witte: A lot of B is non-A.
>
>Does that make it clear enough?
It is clear that your knowledge of logic is on par with your
knowledge of economics. I was just pointing out that "man made" is not a
sufficient condition for being capital, nor I would add, would it need be a
necessary condition.
>>Capital
>>goods are generally factors of production that don't get extinguished in the
>>act of production.
>
>Wrong. Capital goods depreciate with use. They wear out, decay with
>age, or become obsolete.
So non-zero depreciation is a necessary condition for being a
capital good? Why? Who says?
>>Barring the exception raised by Jim Blair, land is
>>generally treated as a non-produced capital good and for many of the
>>questions of interest in economics, it works just fine to lump it in with
>>normal capital goods.
>
>No. It doesn't. Unless you want to get certain particular answers to
>those questions, that is....
>
>>>The
>>>more you can reward such creation the more capital you will see
>>>created. Land is not created by men and no matter how much you
>>>might try to reward the owner of land you will not gain any more
>>>land. You do, however, cause a distortion that leads to less capital
>>>creation.
>>
>> How so? Given that any distortions in the price of land lead to
>>zero sum transfers between buyers and sellers, where is the social loss?
>
>Where is the social loss in zero-sum transfers between buyers and
>sellers of tulip bulbs, hmmmmm? Time to stop typing and start
>thinking, pal.
OK, take a deep breath and concentrate, this point is slightly
subtle so you may need to read it four or five times. It's common to treat
land as a non-reproducible good, it would be very strange to treat tulip
bulbs that way. As such, productive incentives matter little in the first
case, but a lot in the second. OK, stop and re-read. (However, some people
would wish to extend matters to a discussion of the capital value of the
genetic specifics of various types of tulips, but those people will have to
go unsatisfied here.)
>Do you know how much money real estate agents rake off those
>"zero-sum" transfers? How much allocative inefficiency results from
>those transaction costs (e.g., people being reluctant to move closer
>to their jobs, because they will drop $10K on the real estate agent)?
There is considerable literature on the effiencies or inefficiences
of "middlemen" in markets as transmitters of information and transactions
costs reducers. If a private agent prefers, she can sell property on her
own, incurring only government filing fees. However, most people find it
worthwhile to use an agent, and such agents can even be worthwhile in some
cases.
>How much production is lost because ownership of land is so
>extravagantly rewarded that large landowners do no productive work?
OK, I'm game, how much? I don't recall Ricardo or Mill coming up
with firm estimates here. What is the answer?
>How much is lost because income tax is used to subsidize landowners,
>reducing the incentive to work, attenuating labor price signals,
>impeding division of labor, increasing variable production costs,
>etc., etc., etc.? The fact that you are prepared to ignore all of
>this -- or have never even thought of it -- speaks volumes.
Problems with the income tax code are another issue entirely.
>>>Human "know how" is a factor in wages.
>>
>> Just like any capital good, since this effects the marginal product
>>of labor.
>
>Wrong. Capital goods can be bought and sold. Know how can only be
>put to use or not.
>
>>> Wages and capital are two totally different things.
>>
>> How about if you take this up with the likes of Gary Becker and Paul
>>Romer?
>
>Why? Are they as devoted to misleading terminology as you?
Yeah, we meet almost every week to try to confuse the public. My job
is to spam the internet, they fill up the top academic journals.
>>> If, however, you design a
>>>system that encourages land ownership you will not have done anything
>>>that would be maximizing general long term utility. The rent from
>>>land ownership is a burden on the producers of the society which,
>>>when funneled into the hands of land owners, merely destroys aggregate
>>>wealth.
>>
>> How is wealth destroyed by a transfer?
>
>???? Let me try to make this as simple as possible.
>
>Suppose you and I are working, each producing as much wealth as we
>consume. Government comes along, and transfers the wealth I produce
>to you. Where, now, is my motive to produce more wealth? Where is
>yours?
My incentive to create more wealth is that I would have even more
wealth! (Of course, the wealthiest nations have among the highest labor
force participation rates so this is not so surprising.) As for you, you'd
either have to learn to live without consumption or die.
More seriously, I'm no fan of Ricardian rents but the wealth
transfer from land rentals does not obviously destroy wealth. Perhaps you
could say that a land tax would be non-distortionary and thus would allow
for a reduction in other taxes for a Ramsey efficiency gain, but even that
turns out to be unclear given an initial system where land is not so tax and
thus this change affects asset values that included capitalized rentals.
>_Get it_?
>
>> Factor payments to land, or to existing capital, encourage efficient
>>use of scarce resources.
>
>No. Accurate factor payments _for_ land (i.e., land rents) encourage
>efficient use of scarce resources. But those payments will be made in
>any case, whoever ultimately collects them. Devoting those land rents
>to the public expenditures that create the rents internalizes an
>externality, encouraging more efficient use of resources than just
>giving them to private landowners would.
How about if you write out exactly what your defintion of what you
think capital has to be and then write out what your definition of an
externality is and then explain why there is an externality to land rental.
Are you making a "marginal land" entering production argument?
Mark Patrick Witte
Mike Coburn <michael....@gte.net> wrote:
>Mark Patrick Witte wrote:
>>
>> In article <3A300CC2...@gte.net>,
>> Mike Coburn <michael....@gte.net> wrote:
>> >Mark Patrick Witte wrote:
>> >> In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>> >> >On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>> >> >Witte) wrote:
>> >> >
>> >> >> Word! Capital is generally taken in economics to be a factor of
>> >> >>production that lasts over time, that is not used up in the act of producing
>> >> >>other goods.
>> >> >
>> >> >This is a common confusion, aggregating the two entirely different
>> >> >factors of production that the classical economists called "capital"
>> >> >and "land." It would make as much sense for biologists to aggregate
>> >> >lungs and air.
>> >>
>> >> No. Land is an example of a capital good.
>> >
>> > It is not. "capital" is something that is created by men
>> >and it is in the best interest of men to reward such creation.
>>
>> A lot of things are created by man that are not capital.
>
>But NONE of them are land.
So exactly what is your definition of capital? Must it exclude
land? Can land be damaged so that its value is reduced? If so, can man
create "negative land" by such actions?
> Capital
>> goods are generally factors of production that don't get extinguished in the
>> act of production. Barring the exception raised by Jim Blair, land is
>> generally treated as a non-produced capital good and for many of the
>> questions of interest in economics, it works just fine to lump it in with
>> normal capital goods.
>
>Thank you for confirming what I have said and for using Mr. Blair as
>your side kick.
So your response to his example of men creating land is...ad
hominem?
> The inclusion of land as capital makes your models
>seem to work and so, therefore, in the tradition of neo classical
>econ, land must be capital. But a model that attempts to predict
>capital creation will most certainly not be efficacious in regard
>to land, while it will be so for buildings, and roads and dams and
>factories. This would lead a normal, well adjusted human to the
>conclusion that land must somehow not be capital in the same sense
>as these other ingredients. That, in fact, it must be something
>quite different. Like, maybe, it is just land.
For many questions, land is best treated as capital, for other
questions, it is best treated differently. Different questions, different
models.
>> >The
>> >more you can reward such creation the more capital you will see
>> >created. Land is not created by men and no matter how much you
>> >might try to reward the owner of land you will not gain any more
>> >land. You do, however, cause a distortion that leads to less capital
>> >creation.
>>
>> How so? Given that any distortions in the price of land lead to
>> zero sum transfers between buyers and sellers, where is the social loss?
>
>If I can use wealth appropriated from the non land owners
>via income tax and sales taxes to finance the government
>that enforces my land rights and to develop infrastructure
>to increase the value of those rights to collect rent, then
>they (the non owners) will have to work very hard indeed
>to ever be able to become owners. And why, pray tell,
>would I risk developing anything at all or ever changing
>anything at all. Yes, the sum is zero but the nobility
>gets more "noble" as the serfs get the wrench. Up there
>in macro land the world may be a very nice place. But
>down here in the trenches where the real stuff happens it
>ain't so cut and dried.
Yeah, if only Bill Gates had become a land owner, he might have
become rich.
>
>> >> >> Experience and learning of workers are often treated as capital goods as well.
>> >> >
>> >> >You know you've left science behind when labor is called capital and a
>> >> >worker's ability is called capital _goods_.
>> >>
>> >> No, this is not about labor.
>> >>
>> >> The worker's time is used up in producing something, yet the workers
>> >> experience and learning last on to be used again the next day in a way
>> >> similar to how the hammer the worker used one day will be there the next.
>> >
>> > The defense for referring to human ability as capital
>> >is stronger because the reward to "know how", will encourage many to
>> >acquire it. Economics can play a part in the creation of "know how".
>> >But the distinction is that the hammer, like the dam, has utility
>> >without any specific human.
>>
>> Just like arithmatic.
>
> Yep.
>
>> >All the folks that build the dam or
>> >made the hammer could be shot at dawn the day after the hammer or
>> >dam was created and the hammer or dam would still have utility.
>>
>> And we could shoot all the math teachers and people would still have
>> a stock of math knowledge from those teachers.
>
> A very poor analogy in that none of these humans are capital.
Indeed, it's is their knowledge and experience that are often
modeled as capital.
>Hence, their inalienable capabilities are not capital either. You may
>_take_ the hammer from the man and thus deprive him of it and have it
>for yourself or assign some other man to employ it. But you can't
>take the "know how" and "knowledge" from the man thus depriving him
>of it and/or "give" it to another. And though presumptions to the
>contrary may make your macro world run very smoothly indeed , such
>a "world" is not a representation of reality.
>
>> >Human "know how" is a factor in wages.
>>
>> Just like any capital good, since this effects the marginal product
>> of labor.
>
> So you want everything to be capital that isn't wages? I thought
Not at all, but this is one strong commonality.
>there was another pigeon hole to put things in. Gee, if we could get it
>down to one classification _I_ could do the models.
Good luck, there are no barriers to entry.
>
>> > Wages and capital are two totally different things.
>>
>> How about if you take this up with the likes of Gary Becker and Paul
>> Romer?
>
>Who are these dude's?
Oh, drinking buddies of mine. We're all in on a scheme to confuse
the general public. (I think Becker is somehow funded by the Swedes....)
>
>> >But I have far fewer reservations about
>> >"know how" as capital than I do about land being referred to as
>> >capital. Economic designs and manipulations can actually
>> >affect the amount of "know how". If you are allowed to include
>> >"know how" as capital and you were to design an economy that
>> >encouraged capital development you would still be maximizing general
>> >long term utility (a good thing to do). If, however, you design a
>> >system that encourages land ownership you will not have done anything
>> >that would be maximizing general long term utility. The rent from
>> >land ownership is a burden on the producers of the society which,
>> >when funneled into the hands of land owners, merely destroys aggregate
>> >wealth.
>>
>> How is wealth destroyed by a transfer?
>
>It is destroyed by opulent displays of power and pretense;
Ah, gotcha! I hadn't thought of that; silly of me really since it's
so obvious.
David Lloyd-Jones
"Mark Patrick Witte" <mwi...@merle.acns.nwu.edu> wrote to Mike:
> Could you supply me with the definitive definition of capital? A
> non-zero rate of depreciation is always required?
Smallest possible quibble: capital assets don't depreciate, they wear out
(or not, as the case may be).
Bookkeeping entries depreciate.
-dlj.
Mark Patrick Witte
Well...depreciate generally means "to lower price or estimated
value", which is what happens to the prices or estimated values of things as
they wear out.
>
> -dlj.
>
>
>
>
>
>
David Lloyd-Jones
> >Smallest possible quibble: capital assets don't depreciate, they wear out
> >(or not, as the case may be).
> >Bookkeeping entries depreciate.
>
> Well...depreciate generally means "to lower price or estimated
> value", which is what happens to the prices or estimated values of things
as
> they wear out.
>
Exactly. Both prices and estimated values are bookkeeping entries. The map
is not the territory, etc....
-dlj.
ro...@telus.net
Witte) wrote:
>In article <3a31f678...@news.telus.net>, <ro...@telus.net> wrote:
>>On 8 Dec 2000 04:04:36 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>>In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>>>>On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>>>Witte) wrote:
>>>>
>>>>> Word! Capital is generally taken in economics to be a factor of
>>>>>production that lasts over time, that is not used up in the act of producing
>>>>>other goods.
>>>>
>>>>This is a common confusion, aggregating the two entirely different
>>>>factors of production that the classical economists called "capital"
>>>>and "land." It would make as much sense for biologists to aggregate
>>>>lungs and air.
>>>
>>> No. Land is an example of a capital good.
>>
>>No. It is not. Capital goods _are_, precisely, gradually used up in
>>the act of producing other goods. This is called "depreciation." 200
>>years ago, economists understood this. Today they do not.
>
> Could you supply me with the definitive definition of capital?
Goods that can be used in the production of goods and services. Goods
are man-made physical objects that can be bought and sold (the
physical substrate of a worker's skill may in some sense be a man-made
physical object, but as it cannot be bought and sold, it is not a
good).
>A non-zero rate of depreciation is always required? I think not, and the case
>of zero depreciation is often used in presenting simple cases of models
>since the results are usually hand-computable.
Modern physics tells us that no physical object is eternal. Some
capital goods may have depreciation rates so low that they can be
ignored -- i.e., useful lives that are long in comparison to a human
lifetime. It takes a long time to wear out something like a plumb
bob.
>Further, if land were to
>depreciate, as it is modelled to do in much environmental economics
>literature, then land would count in your definition of a capital good?
No. Land (meaning natural resources of all sorts) can lose value
through human action or inaction, but cannot be produced by labor, and
is therefore not a good, and not capital. Also, unlike capital,
"depreciated" land, if left alone, will gradually be restored to its
undepreciated state.
>>> No, this is not about labor.
>>
>>You're right. It's about trying to conceal critical facts of
>>economics by deliberately falsifying the terminology.
>
> As Will Rogers said of President Hoover, "It's not what he doesn't
>know that bothers me, it's what he does know that just ain't so."
Prof. Mason Gaffney of UC Riverside has written a paper detailing
(including quotes from their own writings) how the founders of
neo-classical economics, like J.B. Clark, set out to eliminate the
distinction between land and capital purely in order to deny Henry
George and the Single Taxers the logical tools they had been using to
prove they were right.
>>So you are just flat wrong. Period.
>
> Yeah, me and Becker, Romer, Mincer, and all the others who do human
>capital models.
Right.
-- Roy L
Mike Coburn
I appeciate your assistence in this matter. If not
for your astute observation I might still be at odds
with the proper definition of capital in support
of a beneficial capitalistic system.
Thank you very much,
asshole
Mike Coburn
My objective is to see the creation and use of economic models
that would predict actual capital creation based on taxation and
interest rate policies. And to define capital in such a way as
to employ economic policy that renders "capitalism" a beneficial
system that maximizes general utility. Realizing that the amount
of land (not even the amount of dry stuff under the feet)
will be altered to any significant degree by other than draconian
economic policies, I seek to define capital in such a way as to
preclude any claim or innuendo that would arise from economic
models or formula that would suggest that tax rates or interest
rates will alter the amount of land. That being the case it will
easily be seen that much higher taxes on the market value of land
can be employed to relieve the burden of taxation and interest on
the development of real capital.
"capital" is, therefore, wealth that is employed in improving
productivity so as to enrich the populous as a whole through the
creation of additional wealth.
"wealth" by itself is the ability to command or forego labor. But
wealth can therefore be attained through force or coercion. When
wealth is attained by such "enforcement" is is certainly not to
be confused with "capital", and any wealth so attained will have
detracted from the objective "to enrich the populous as a whole
through the creation of additional wealth".
The real objective is to design a system that encourages (or certainly
does not punish) the creation of wealth and which encourages the use
of accumulated wealth in the production of more wealth. Such a
system would be proper "capitalism". The key that separates
"capitalism" from "monarchy" or "despotism" or even "socialism"
is, in fact, this insistence on "creation" by the hands and minds
of the human beings involved in the system. i.e. the insistence that
wealth be "earned". And that is what makes true "capitalism" a much
more _productive_ system.
> > Capital
> >> goods are generally factors of production that don't get extinguished in the
> >> act of production. Barring the exception raised by Jim Blair, land is
> >> generally treated as a non-produced capital good and for many of the
> >> questions of interest in economics, it works just fine to lump it in with
> >> normal capital goods.
> >
> >Thank you for confirming what I have said and for using Mr. Blair as
> >your side kick.
>
> So your response to his example of men creating land is...ad
> hominem?
I'm not sure who is using the "ad homonym" because I seem to have
refused
to learn the intended meaning of the phrase. But any quip about Holland
or the extension of land masses by throwing garbage into the sea is
simply obfuscation. The amount of dry land has not been changed to
any significant degree in the last 500 years by any intent of man. And
when the dudes in Holland raised the level of the sea by some
microscopic
amount by displacing the water that once covered the land (which was
there all along BTW) they covered up some of the beach front in Florida
with the water so displaced. Two can obfuscate as easily as one.
> > The inclusion of land as capital makes your models
> >seem to work and so, therefore, in the tradition of neo classical
> >econ, land must be capital. But a model that attempts to predict
> >capital creation will most certainly not be efficacious in regard
> >to land, while it will be so for buildings, and roads and dams and
> >factories. This would lead a normal, well adjusted human to the
> >conclusion that land must somehow not be capital in the same sense
> >as these other ingredients. That, in fact, it must be something
> >quite different. Like, maybe, it is just land.
>
> For many questions, land is best treated as capital, for other
> questions, it is best treated differently. Different questions, different
> models.
With this I can most certainly agree. However, the seemingly
constant, malpractice is a real and significant problem. If this
malpractice were not the case we would see much higher taxes on
raw land and much lower taxes on all else.
> >> >The
> >> >more you can reward such creation the more capital you will see
> >> >created. Land is not created by men and no matter how much you
> >> >might try to reward the owner of land you will not gain any more
> >> >land. You do, however, cause a distortion that leads to less capital
> >> >creation.
> >>
> >> How so? Given that any distortions in the price of land lead to
> >> zero sum transfers between buyers and sellers, where is the social loss?
> >
> >If I can use wealth appropriated from the non land owners
> >via income tax and sales taxes to finance the government
> >that enforces my land rights and to develop infrastructure
> >to increase the value of those rights to collect rent, then
> >they (the non owners) will have to work very hard indeed
> >to ever be able to become owners. And why, pray tell,
> >would I risk developing anything at all or ever changing
> >anything at all. Yes, the sum is zero but the nobility
> >gets more "noble" as the serfs get the wrench. Up there
> >in macro land the world may be a very nice place. But
> >down here in the trenches where the real stuff happens it
> >ain't so cut and dried.
>
> Yeah, if only Bill Gates had become a land owner, he might have
> become rich.
Very good example of why the "Single Tax on Land" proposed by
Henry George is not totally just. However, it is difficult to
see why such a tax would have discouraged Mr. Gates in his
efforts. And though I do not have a lot of respect for Windows
(though the apps are actually pretty good), I must admit that such
software is capital and that such development should certainly not
be discouraged by the tax system. It will be noted that
the only way that Bill Gates can become rich is from the _willing_
use of his creation by others. I do not need Windows or the
fruits thereof to survive and am not forced to use it. Land,
however, is a necessity to life itself. It is not _created_ and
it is the birthright of every human being. And the abundance or
lack thereof will not be affected by taxation or interest rates.
> >
> >> >> >> Experience and learning of workers are often treated as capital goods as well.
> >> >> >
> >> >> >You know you've left science behind when labor is called capital and a
> >> >> >worker's ability is called capital _goods_.
> >> >>
> >> >> No, this is not about labor.
> >> >>
> >> >> The worker's time is used up in producing something, yet the workers
> >> >> experience and learning last on to be used again the next day in a way
> >> >> similar to how the hammer the worker used one day will be there the next.
> >> >
> >> > The defense for referring to human ability as capital
> >> >is stronger because the reward to "know how", will encourage many to
> >> >acquire it. Economics can play a part in the creation of "know how".
> >> >But the distinction is that the hammer, like the dam, has utility
> >> >without any specific human.
> >>
> >> Just like arithmatic.
> >
> > Yep.
> >
> >> >All the folks that build the dam or
> >> >made the hammer could be shot at dawn the day after the hammer or
> >> >dam was created and the hammer or dam would still have utility.
> >>
> >> And we could shoot all the math teachers and people would still have
> >> a stock of math knowledge from those teachers.
> >
> > A very poor analogy in that none of these humans are capital.
>
> Indeed, it's is their knowledge and experience that are often
> modeled as capital.
And in some cases it may even be rational to do so. And that is
why you see me waffling on it. The amount of "know how" and
"know why" can actually be affected by economic policy. I still
don't like these things being called "capital", but I fail to see
the harm unless and until you infer that the underlying asset should
be directly valued and taxed, or unless or until you would attempt
to use such individual ability as an excuse to tax income as opposed
to assets. Even then I don't see the harm (YET).
> >Hence, their inalienable capabilities are not capital either. You may
> >_take_ the hammer from the man and thus deprive him of it and have it
> >for yourself or assign some other man to employ it. But you can't
> >take the "know how" and "knowledge" from the man thus depriving him
> >of it and/or "give" it to another. And though presumptions to the
> >contrary may make your macro world run very smoothly indeed , such
> >a "world" is not a representation of reality.
> >
> >> >Human "know how" is a factor in wages.
> >>
> >> Just like any capital good, since this effects the marginal product
> >> of labor.
> >
> > So you want everything to be capital that isn't wages? I thought
>
> Not at all, but this is one strong commonality.
>
> >there was another pigeon hole to put things in. Gee, if we could get it
> >down to one classification _I_ could do the models.
>
> Good luck, there are no barriers to entry.
No thanx. I really don't think I could manage it. I am a computer
and network systems analyst. That is quite enough for me.
> >
> >> > Wages and capital are two totally different things.
> >>
> >> How about if you take this up with the likes of Gary Becker and Paul
> >> Romer?
> >
> >Who are these dude's?
>
> Oh, drinking buddies of mine. We're all in on a scheme to confuse
> the general public. (I think Becker is somehow funded by the Swedes....)
Good answer. You have exposed my lack of credentials in the
field of economics in a very tactful and open manner and I do
not resent it. But since systems analysis and performance design
are my stock and trade I am not compelled to feel insufficient
to the task of assisting in the separation of the wheat from the
chaff and in the design of a more performance oriented system.
> >
> >> >But I have far fewer reservations about
> >> >"know how" as capital than I do about land being referred to as
> >> >capital. Economic designs and manipulations can actually
> >> >affect the amount of "know how". If you are allowed to include
> >> >"know how" as capital and you were to design an economy that
> >> >encouraged capital development you would still be maximizing general
> >> >long term utility (a good thing to do). If, however, you design a
> >> >system that encourages land ownership you will not have done anything
> >> >that would be maximizing general long term utility. The rent from
> >> >land ownership is a burden on the producers of the society which,
> >> >when funneled into the hands of land owners, merely destroys aggregate
> >> >wealth.
> >>
> >> How is wealth destroyed by a transfer?
> >
> >It is destroyed by opulent displays of power and pretense;
>
> Ah, gotcha! I hadn't thought of that; silly of me really since it's
> so obvious.
I am quite serious about this point. At present, economic policies
do not seem to reflect any real consideration for well employed
accumulated wealth as opposed to that that which is just hoarded
and used to compel subservience. I am obviously of the opinion
that the proper definition of capital (most certainly as distinct
from land) is at the heart of this misuse of the word "capitalism".
> >the burning of resources as a sacrifice to the God Almighty GDP.
> >By stuffing a mattress with deeds and IOU's won in a game to
> >see who can build the biggest monuments to stupidity. The
> >houses so big that the owners need to hire crews to clean them
> >and automobiles that cost more than the average wage earner's
> >home.
> >
> >> Factor payments to land, or to existing capital, encourage efficient
> >> use of scarce resources.
> >
> >If land were assessed a fee that confiscated 90% of the rental
> >value of the raw land (no fee on any improvements) and the
> >proceeds were distributed to every voter in the sovereignty
> >equally (Bill Gates and Freddy the freeloader get the same
> >amount), the increase in _real_ capital development would blow
> >your socks off. And further, if assets were taxed directly
> >to fund the enforcement of ownership rights there would be no
> >cycle of boom and bust. Only a steady stream of continuing
> >_real_ capital creation. Capital"ism" would, in fact, be the
> >cornucopia it is supposed to be.
> >
> >--
> >
> >Coburn ---
> >The opinions expressed herein above are mine. They are my property
> >so you can't have them. But use them. No rent or interest due.
You will also find that my posts are very insistent on the
distinction between money and capital. I see a very real
similarity between "interest" on money and "rent" on land.
Both are examples of unearned income that is appropriated
by government enforcement of the right to collect rent
on that which has simply been hoarded. Such collection does
nothing to advance the living conditions or the prosperity
of the species called man.
ro...@telus.net
Witte) wrote:
>In article <3a31f927...@news.telus.net>, <ro...@telus.net> wrote:
>>On 8 Dec 2000 17:25:05 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>>In article <3A300CC2...@gte.net>,
>>>Mike Coburn <michael....@gte.net> wrote:
>>>>
>>>> It is not. "capital" is something that is created by men
>>>>and it is in the best interest of men to reward such creation.
>>>
>>> A lot of things are created by man that are not capital.
>>
>>Good example of a kindergarten-level logical fallacy used as a
>>diversionary tactic.
>>
>>See if you can figure out where you went wrong when I restate the
>>exchange in abstract terms:
>>
>>Coburn: All A is B.
>>
>>Witte: A lot of B is non-A.
>>
>>Does that make it clear enough?
>
> It is clear that your knowledge of logic is on par with your
>knowledge of economics.
Thank you. Same to you.
>I was just pointing out that "man made" is not a
>sufficient condition for being capital,
Now, why would you feel a need to point out something so completely
irrelevant to Coburn's statement, hmmm? Assuming it was not just a
deliberate red herring, that is. Coburn explicitly stated that
capital is "something" created by men, not "everything" created by
men.
>nor I would add, would it need be a
>necessary condition.
Oh, but that's where you are clearly wrong, and clearly at odds with
Coburn -- and just as clearly prefer to commit your obvious ignoratio
elenchi rather than address the issue.
>>>Capital
>>>goods are generally factors of production that don't get extinguished in the
>>>act of production.
>>
>>Wrong. Capital goods depreciate with use. They wear out, decay with
>>age, or become obsolete.
>
> So non-zero depreciation is a necessary condition for being a
>capital good? Why? Who says?
Capital goods are man-made objects, and none such is eternal.
>>> How so? Given that any distortions in the price of land lead to
>>>zero sum transfers between buyers and sellers, where is the social loss?
>>
>>Where is the social loss in zero-sum transfers between buyers and
>>sellers of tulip bulbs, hmmmmm? Time to stop typing and start
>>thinking, pal.
>
> OK, take a deep breath and concentrate, this point is slightly
>subtle so you may need to read it four or five times.
It's not subtle in the least. It's just irrelevant. Like the
ignoratio elenchi fallacy you committed above.
>It's common to treat
>land as a non-reproducible good, it would be very strange to treat tulip
>bulbs that way. As such, productive incentives matter little in the first
>case, but a lot in the second.
Now, _you_ take a deep breath. And concentrate.
Are you or are you not aware that a speculative frenzy in tulip bulbs
-- yes, the same kind of zero-sum transfers between buyers and sellers
that you claim cannot possibly lead to a social loss when they concern
land -- caused an economic crisis and sharp decline in GDP in the
Netherlands over 300 years ago? I thought every serious student of
economics had to be familiar with the case. But of course, since all
the highly respected models clearly show it could never have
happened...
>>Do you know how much money real estate agents rake off those
>>"zero-sum" transfers? How much allocative inefficiency results from
>>those transaction costs (e.g., people being reluctant to move closer
>>to their jobs, because they will drop $10K on the real estate agent)?
>
> There is considerable literature on the effiencies or inefficiences
>of "middlemen" in markets as transmitters of information and transactions
>costs reducers.
How much literature is there on their efficiency as transmitters of
_mis_information and transaction cost _increasers_?
>If a private agent prefers, she can sell property on her
>own, incurring only government filing fees. However, most people find it
>worthwhile to use an agent, and such agents can even be worthwhile in some
>cases.
??? People find it worthwhile to use agents because the inflated
value of land makes it too risky to sell below market.
>>How much production is lost because ownership of land is so
>>extravagantly rewarded that large landowners do no productive work?
>
> OK, I'm game, how much? I don't recall Ricardo or Mill coming up
>with firm estimates here. What is the answer?
Call it 2% of GDP. Compounded for 5,000 years...
>>How much is lost because income tax is used to subsidize landowners,
>>reducing the incentive to work, attenuating labor price signals,
>>impeding division of labor, increasing variable production costs,
>>etc., etc., etc.? The fact that you are prepared to ignore all of
>>this -- or have never even thought of it -- speaks volumes.
>
> Problems with the income tax code are another issue entirely.
That is where you are absolutely dead wrong. The income tax _code_ is
not the issue. Income tax (or any tax that falls on production) per
se is the issue, and the fact that its revenue comes primarily from
working people, while the spending primarily enures to the benefit of
landowners.
>>> How about if you take this up with the likes of Gary Becker and Paul
>>>Romer?
>>
>>Why? Are they as devoted to misleading terminology as you?
>
> Yeah, we meet almost every week to try to confuse the public. My job
>is to spam the internet, they fill up the top academic journals.
A dirty job, but someone's got to do it....
>>Suppose you and I are working, each producing as much wealth as we
>>consume. Government comes along, and transfers the wealth I produce
>>to you. Where, now, is my motive to produce more wealth? Where is
>>yours?
>
> My incentive to create more wealth is that I would have even more
>wealth!
Do you claim you would be as motivated to produce a second share if
you got the first for free? Isn't that the idea of saving up enough
to retire early on?
>(Of course, the wealthiest nations have among the highest labor
>force participation rates so this is not so surprising.)
This is purely an artifact of the greater division of labor. People
in poor countries do not just lounge around on street corners waiting
to starve to death, you know.
>As for you, you'd
>either have to learn to live without consumption or die.
Answer the question: what is my motive to produce, if what I produce
is taken from me and given to you?
> More seriously, I'm no fan of Ricardian rents
You could have fooled me.
>but the wealth
>transfer from land rentals does not obviously destroy wealth.
It's not obvious to _you_, maybe....
>Perhaps you
>could say that a land tax would be non-distortionary and thus would allow
>for a reduction in other taxes for a Ramsey efficiency gain, but even that
>turns out to be unclear given an initial system where land is not so tax and
>thus this change affects asset values that included capitalized rentals.
Given an initial system where government had long ago granted private
interests exclusive licenses to use the various chemical elements, we
would all be paying rents to the ninety-odd owners of those licenses,
depending on how much of each element we use. Most of the licenses
would produce little rent for their owners, of course; but a few, like
oxygen and carbon, would yield tremendous rents.
Would you claim it is "unclear" that recovering those rents through
taxation and devoting them to public purposes would yield an
efficiency gain, on the grounds that there would be a change in the
value of the licenses, which included capitalized rents?
>>No. Accurate factor payments _for_ land (i.e., land rents) encourage
>>efficient use of scarce resources. But those payments will be made in
>>any case, whoever ultimately collects them. Devoting those land rents
>>to the public expenditures that create the rents internalizes an
>>externality, encouraging more efficient use of resources than just
>>giving them to private landowners would.
>
> How about if you write out exactly what your defintion of what you
>think capital has to be
See my other post.
> and then write out what your definition of an
>externality is
A loss or benefit to a party not involved in a transaction.
>and then explain why there is an externality to land rental.
Government takes money from A and pays it to B for services that
increase C's land rent. Almost everything government does works this
way.
>Are you making a "marginal land" entering production argument?
No.
-- Roy L
Mark Patrick Witte
>On 10 Dec 2000 01:13:40 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>> Could you supply me with the definitive definition of capital?
>
>Goods that can be used in the production of goods and services. Goods
>are man-made physical objects that can be bought and sold (the
>physical substrate of a worker's skill may in some sense be a man-made
>physical object, but as it cannot be bought and sold, it is not a
>good).
And why should someone should think this is definitive?
How about the alternative that capital is an input into production
that is not used up in that production. Hence, it could contain all sorts
of produced capital, human knowledge, and land.
For various purposes, it may or may not be useful to disaggregate
capital measures into sub-measures.
>>A non-zero rate of depreciation is always required? I think not, and the case
>>of zero depreciation is often used in presenting simple cases of models
>>since the results are usually hand-computable.
>
>Modern physics tells us that no physical object is eternal. Some
>capital goods may have depreciation rates so low that they can be
>ignored -- i.e., useful lives that are long in comparison to a human
>lifetime. It takes a long time to wear out something like a plumb
>bob.
So...for something to be capital, need it have a non-zero
depreciation rate? And if we can make a hammer that does have a zero
depreciation rate, does that mean that this hammer is not capital?
>>Further, if land were to
>>depreciate, as it is modelled to do in much environmental economics
>>literature, then land would count in your definition of a capital good?
>
>No. Land (meaning natural resources of all sorts) can lose value
>through human action or inaction, but cannot be produced by labor, and
>is therefore not a good, and not capital. Also, unlike capital,
>"depreciated" land, if left alone, will gradually be restored to its
>undepreciated state.
This seems like a statement of faith on your part. Perhaps you
should wander into the Sahara desert and think about this for a while.
>>>> No, this is not about labor.
>>>
>>>You're right. It's about trying to conceal critical facts of
>>>economics by deliberately falsifying the terminology.
>>
>> As Will Rogers said of President Hoover, "It's not what he doesn't
>>know that bothers me, it's what he does know that just ain't so."
>
>Prof. Mason Gaffney of UC Riverside has written a paper detailing
>(including quotes from their own writings) how the founders of
>neo-classical economics, like J.B. Clark, set out to eliminate the
>distinction between land and capital purely in order to deny Henry
>George and the Single Taxers the logical tools they had been using to
>prove they were right.
Um...and Galton was a fan of eugenics, does that mean that genetics
and regression analysis are crap? We don't judge tools by why they were
made but instead by how useful they are to us today.
>>>So you are just flat wrong. Period.
>>
>> Yeah, me and Becker, Romer, Mincer, and all the others who do human
>>capital models.
>
>Right.
For fun, after a quick search, here are some references that use
this broad definition of capital:
Barro, Mankiw, and Sala-i-Martin (1992) NBER
Cohen and Sachs (1986) Euro Econ Review
Mankiw, Romer, and Weil (1992) QJE
Lucas (1988) JME
Azariadis and Drazen (1990) QJE
Becker, Murphy, and Tamura (1990) JPE
Rebelo (1991) JPE
Kremer and Thomson (1994) NBER
Mark Patrick Witte
>> >Thank you for confirming what I have said and for using Mr. Blair as
>> >your side kick.
>>
>> So your response to his example of men creating land is...ad
>> hominem?
>
>I'm not sure who is using the "ad homonym" because I seem to have
>refused
>to learn the intended meaning of the phrase.
Ad hominem is Latin that translates to "for the man", or as it is
usually taken, "against a specific man." "Ad homonym" I suppose would be
Latin for "against the word that has the same sound."
I'll leave off a discussion of the Dutch and the Romans and the
English and their efforts to create passible land.
>> For many questions, land is best treated as capital, for other
>> questions, it is best treated differently. Different questions, different
>> models.
>
>With this I can most certainly agree. However, the seemingly
>constant, malpractice is a real and significant problem. If this
>malpractice were not the case we would see much higher taxes on
>raw land and much lower taxes on all else.
Well, if you assume the conclusions you want....
>not resent it. But since systems analysis and performance design
>are my stock and trade I am not compelled to feel insufficient
>to the task of assisting in the separation of the wheat from the
>chaff and in the design of a more performance oriented system.
Hence the joy of libraries and bookstores.
Jim Blair
>> Land simply exists. It will exist whether you labor or not.
>> .......
>> If it is land it is "unearned". That be the end of it.
Jim Blair:
>> Are you talking here about Holland? All of that land that they built
>> on after they made dikes to hold back the North Sea?
MC:
>
>Don't you ever tire of grabbing hold of the most insignificant trivial
>shit you can find and waving it in the air like a banner?
Hi,
Holland is the most insignificant and trivial shit? Tell that to the
Dutch.
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeb...@facstaff.wisc.edu) Madison Wisconsin
USA. This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good time
call: http://www.geocities.com/capitolhill/4834
Jim Blair
>
>>Mike Coburn <michael....@gte.net> wrote:
>>
>>>If it is land it is "unearned". That be the end of it.
jim blair:
>>Are you talking here about Holland? All of that land that they built
>>on after they made dikes to hold back the North Sea?
ro...@telus.net wrote:
>Right. The land is unearned. The dryness -- which is called
>"improvement" -- is earned. But not, typically, by the people who get
>most of the benefit of it. Like land improvements anywhere.
>
>-- Roy L
Hi,
Two questions.
So just who built the dykes, and who gained from them?
And is building dykes to produce dryness fundamentally different from
building irrigation canals to produce wetness?
Robert Vienneau
(Mark Patrick Witte) wrote:
> In article <3a3491bc...@news.telus.net>, <ro...@telus.net> wrote:
> >On 10 Dec 2000 01:13:40 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
> >Witte) wrote:
> >> Could you supply me with the definitive definition of capital?
> >Goods that can be used in the production of goods and services. Goods
> >are man-made physical objects that can be bought and sold (the
> >physical substrate of a worker's skill may in some sense be a man-made
> >physical object, but as it cannot be bought and sold, it is not a
> >good).
> And why should someone should think this is definitive?
>
> How about the alternative that capital is an input into production
> that is not used up in that production. Hence, it could contain all
> sorts
> of produced capital, human knowledge, and land.
Why does Mark Witte rule out of bounds all the work done in capital
theory with point input-point output and flow input-point output
models? Ignorance, stubbornness and pride, or some darker motive?
One possible definition:
Produced means of production used in a society with an economy
organized around the production of commodities by means of
commodities. Commodities are produced for sale on the market;
they are intended by their original owners to be used by
Aristole's improper or secondary use (_Politics_).
Christopher Auld
>Mark Patrick Witte wrote:
>> Capital
>> goods are generally factors of production that don't get extinguished in
>> the
>> act of production.
Rob uses any ol' excuse to launch into a discussion of the CCC! Will
wonders never cease?
Now, Rob claims:
> Notice that the above analysis uses a smooth aggregate production
>function and that there initially seems to be no aggregation problems.
>All firms are identical, and net output consists of a single
>commodity. Thus, the inequality between the interest rate and the
>marginal product of capital seems not to be the result of an aggregation
>problem.
Which is rubbish. We have a model in which we:
> Consider a firm producing a steady state output of q(t). What will
>the value of the firm's capital be at a point in time? The firm will
>have goods in process at this point for producing output from this
>point until t time units in the future. The value of these goods in
>process is found by compounding the wages expended from -t time units
>in the past until the current instant. That is, the value of capital
>is the integral from -t to zero with respect to u of w(t) exp( -r u ).
>Thus, the capital value is given by Equation 4:
>
> k(t) = w(t) [ exp( r t ) - 1 ]/r (4)
There is not one capital good, there is in fact a continuum of capital
goods in existence at all times. The inequality between the rate of
interest and the value of "capital" occurs because the integral above
-- which defines "capital" as an index over the continuum of capital
goods -- itself depends on r.
> It is also apparent it is not the affect of an assumption of
>non-differentiable production functions. It is the result of non-zero
>price Wicksell effects, as I have been saying for years, frequently
>to incomprehension.
Rob, I put it to you that "for years" people have, with both small and
large degrees of gentleness, been trying to get you to grasp what the
simple models you like to talk about do and do not suggest. In both your
previous models and this one the issue is that there is no such thing
as one good "capital" which can be determined in physical units. If there
is such a good, and there's only one of them, and its sold in a competitive
market, firms will buy it until the value of its marginal product equals
the interest rate. The point you've brought up here and elsewhere (with
"incomprehension," yet again) is that there is no such good, there's all
sorts of different capital goods. It is true that such considerations
suggest that we should be careful of talking about "the marginal product
of capital," since there is no such thing as a good "capital." It is not
true that this consideration means we should never use the very useful
simplification 'homogeneous capital good' in models, much less that it
spells "the death of neoclassical economics" or similar hysterics.
At least this time you didn't evaluate derivatives at kink points.
--
Chris Auld (403)220-4098
Economics, University of Calgary <mailto:au...@acs.ucalgary.ca>
Calgary, Alberta, Canada <URL:http://jerry.ss.ucalgary.ca/>
Mark Patrick Witte
Robert Vienneau <rv...@see.sig.com> wrote:
>In article <9128rv$n0g$1...@news.acns.nwu.edu>, mwi...@merle.acns.nwu.edu
>(Mark Patrick Witte) wrote:
>
>> In article <3a3491bc...@news.telus.net>, <ro...@telus.net> wrote:
>> >On 10 Dec 2000 01:13:40 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>> >Witte) wrote:
>
>> >> Could you supply me with the definitive definition of capital?
>
>> >Goods that can be used in the production of goods and services. Goods
>> >are man-made physical objects that can be bought and sold (the
>> >physical substrate of a worker's skill may in some sense be a man-made
>> >physical object, but as it cannot be bought and sold, it is not a
>> >good).
>
>> And why should someone should think this is definitive?
>>
>> How about the alternative that capital is an input into production
>> that is not used up in that production. Hence, it could contain all
>> sorts of produced capital, human knowledge, and land.
>>
>> capital measures into sub-measures.
>
>theory with point input-point output and flow input-point output
>models? Ignorance, stubbornness and pride, or some darker motive?
"Ignorance, stubbornness and pride, or some darker motive?"
Might these be words that could describe someone who charactorizes
"For various purposes, it may or may not be useful to disaggregate
capital measures into sub-measures" as ruling out various models?
I'm not someone who judges models on their assumptions. Is a given
model useful? What does it explain relative to alternatives?
Mike Coburn
>
> In article <3A339CFF...@gte.net>,
> Mike Coburn <michael....@gte.net> wrote:
> >Mark Patrick Witte wrote:
>
> >> >Thank you for confirming what I have said and for using Mr. Blair as
> >> >your side kick.
> >>
> >> So your response to his example of men creating land is...ad
> >> hominem?
> >
> >I'm not sure who is using the "ad homonym" because I seem to have
> >refused
> >to learn the intended meaning of the phrase.
>
> Ad hominem is Latin that translates to "for the man", or as it is
> usually taken, "against a specific man." "Ad homonym" I suppose would be
> Latin for "against the word that has the same sound."
>
> I'll leave off a discussion of the Dutch and the Romans and the
> English and their efforts to create passible land.
enterprises will produce far less increase in wealth than
the same value expended in pursuit of capital creation. The
"improvement" of existing land and the use of better
techniques and equipment will _normally_ produce more wealth
than that which would be produced by extending the amount of
dry land. The exceptions to this (if there really are any)
are, as you note, pitifully few.
>
> >> For many questions, land is best treated as capital, for other
> >> questions, it is best treated differently. Different questions, different
> >> models.
> >
> >With this I can most certainly agree. However, the seemingly
> >constant, malpractice is a real and significant problem. If this
> >malpractice were not the case we would see much higher taxes on
> >raw land and much lower taxes on all else.
>
> Well, if you assume the conclusions you want....
That is the "political" part of the "Political Economy" or
"Political Economics".
"Which way do I go", asked Alice? And the Cat asked her
"Where
do you want to be"? Alice thought for as long as most
American
taxpayers and said "I don't know". With precision and
accuracy
the cat then advised her "Then it does not matter which way
you
go".
My answer to the cat is "Towards a system that promotes true
capital development". For real 'capital' as I have defined
it
is what makes possible the feeding of the current population
and what will make a better life possible for the future
population. Paying land rent to individual owners and
paying
interest on fiat money simply allows a continuing subsidy to
idle claims of wealth. When you legitimize this thievery by
referring to money or land as capital you do us all a grave
disservice.
> >not resent it. But since systems analysis and performance design
> >are my stock and trade I am not compelled to feel insufficient
> >to the task of assisting in the separation of the wheat from the
> >chaff and in the design of a more performance oriented system.
>
> Hence the joy of libraries and bookstores.
Yes. Fortunately there are popularization's, and rational
and logical dissertations on the subject. It is not
necessary
to submit to brainwashing or become a math wiz so as to get
the basics. It seems that the current profession is long on
trade terms and math a very short on logic and reason.
Robert Vienneau
(Mark Patrick Witte) wrote:
> In article <rvien-1F1C94....@news.dreamscape.com>,
> Robert Vienneau <rv...@see.sig.com> wrote:
> >In article <9128rv$n0g$1...@news.acns.nwu.edu>, mwi...@merle.acns.nwu.edu
> >(Mark Patrick Witte) wrote:
> >> How about the alternative that capital is an input into production
> >> that is not used up in that production. Hence, it could contain all
> >> sorts of produced capital, human knowledge, and land.
> >Why does Mark Witte rule out of bounds all the work done in capital
> >theory with point input-point output and flow input-point output
> >models? Ignorance, stubbornness and pride, or some darker motive?
> "Ignorance, stubbornness and pride, or some darker motive?"
> Might these be words that could describe someone who charactorizes
> "For various purposes, it may or may not be useful to disaggregate
> capital measures into sub-measures" as ruling out various models?
That's a non sequitur. If the definition of capital excludes
circulating capital, a measure of capital by that definition can
hardly be disaggregated into submeasures of fixed and circulating
capital.
Add "irrationalism" and "illogic" to the list.
> I'm not someone who judges models on their assumptions. Is a given
> model useful? What does it explain relative to alternatives?
So has Mark Witte suggested why it is useful to rule out of bounds a
good part of economists' discussions of capital theory for at least
a century? Of course not.
Robert Vienneau
(Christopher Auld) wrote:
> Robert Vienneau <rv...@see.sig.com> wrote:
> [ Silliness deleted. ]
> Now, Rob claims:
> > Notice that the above analysis uses a smooth aggregate production
> >function and that there initially seems to be no aggregation problems.
> >All firms are identical, and net output consists of a single
> >commodity. Thus, the inequality between the interest rate and the
> >marginal product of capital seems not to be the result of an aggregation
> >problem.
> Which is rubbish.
Chris is exhibiting his usual binary fanaticism and reading
difficulties. Does he dispute any of the following?
Notice that the above analysis uses a smooth aggregate production
function.
All firms are identical, and net output consists of a single
commodity.
I put "initially" and "seems" in the appropriate places on purpose.
> We have a model in which we:
> > Consider a firm producing a steady state output of q(t). What will
> >the value of the firm's capital be at a point in time? The firm will
> >have goods in process at this point for producing output from this
> >point until t time units in the future. The value of these goods in
> >process is found by compounding the wages expended from -t time units
> >in the past until the current instant. That is, the value of capital
> >is the integral from -t to zero with respect to u of w(t) exp( -r u ).
> >Thus, the capital value is given by Equation 4:
> >
> > k(t) = w(t) [ exp( r t ) - 1 ]/r (4)
> There is not one capital good, there is in fact a continuum of capital
> goods in existence at all times.
Above Chris actually makes an observation that might be relevant to
an argument.
> The inequality between the rate of
> interest and the value of "capital" occurs because the integral above
> -- which defines "capital" as an index over the continuum of capital
> goods -- itself depends on r.
Chris' statement about why the inequality arises is incomplete. The
value of capital, that is, its measurement in the same units as
net output, depends on the interest rate due to the effects of
a combination of real and price Wicksell effects. It is because of
price Wicksell effects alone that the inequality arises.
Price Wicksell effects always arise except in one-good models or
in the conditions in which a simple labor theory of value holds.
If output and capital are measured in a chain index, as described
by Champernowne and advocated by Burmeister, the inequality does
not arise. Yet THIS index depends on r.
That is to say, there is an integral - which defines 'capital'
as an index over the continuum of capital goods - dependent on r.
Yet the inequality does not arise for this other index. Thus,
Chris' "because" is misplaced.
> > It is also apparent it is not the affect of an assumption of
> >non-differentiable production functions. It is the result of non-zero
> >price Wicksell effects, as I have been saying for years, frequently
> >to incomprehension.
> Rob, I put it to you that "for years" people have, with both small and
> large degrees of gentleness, been trying to get you to grasp what the
> simple models you like to talk about do and do not suggest.
What I like is the years in which so many have exhibited so much
incomprehension over results that have long been established. See above,
where Chris neither agrees nor disagrees with my summary about
price Wicksell effects (after having made a statement that seems to
have missed the point).
Burmeister, a student of Samuelson's and a mainstream economist has
recently expressed the same frustration about how little these issues
are understood:
"...MIT was wrong and therefore neoclassical economics was wrong.
As a result there are some groups of economists who have abandoned
neoclassical economics for their own refinements of classical
economics. In the United States, on the other hand, mainstream
economics goes on as if the controversy had never occurred.
Macroeconomics textbooks discuss 'capital' as if it were a well-
defined concept - which it is not, except in a very special
one-capital-good world (or under other unrealistically restrictive
conditions.) The problems of heterogeneous capital goods have also
been ignored in the 'rational expectations revolution' and in
virtually all econometric work."
-- Edwin Burmeister, "The Capital Theory Controversy", _Critical
Essays on Piero Sraffa's Legacy in Economics_, (edited by
Heinz D. Kurz), Cambridge University Press, 2000.
> In both your
> previous models and this one the issue is that there is no such thing
> as one good "capital" which can be determined in physical units.
An important issue is the relationship between capital goods -
evaluated in heterogeneous physical units - and a money value of
the same collection of capital goods. After all, when people
save, in neoclassical theory, what they are after is a stream
of income.
Actually, in the previous model to which Chris refers, there is a
single capital good in use at the observed stationary state. Physical
units are available for its measurement, but they are not the same
as the natural units for measuring net output, which, in a stationary
state, consists simply of a single consumption good.
> If
> there
> is such a good, and there's only one of them, and its sold in a
> competitive
> market, firms will buy it until the value of its marginal product equals
> the interest rate.
Here's where Chris goes off the rails. In the previous model, the
interest rate was, as usual a pure number per unit time. Consider
a firm using the capital good and labor to produce the consumption
good. The value of the marginal product is in units of the quotient
of the units in which the consumption good is measured and the
units in which the capital good is measured, e.g. quarters corn
per ton steel. Thus, Chris' statement is senseless, not even
wrong.
What he should say:
The equilibrium rental price of a capital good is equal to the
value of the marginal product of its services.
There is also a dubious tale of adjustment or causality implicit
in Chris' misstatement.
> The point you've brought up here and elsewhere (with
> "incomprehension," yet again) is that there is no such good, there's all
> sorts of different capital goods. It is true that such considerations
> suggest that we should be careful of talking about "the marginal product
> of capital," since there is no such thing as a good "capital."
> At least this time you didn't evaluate derivatives at kink points.
There Chris goes off the rails again. One can formulate neoclassical
economics - indifferently at this level of abstraction - in terms
either of differentiable production functions or production functions
formed by linear combinations of production processes described by
Leontief functions. The latter formulation has the advantage of
emphasizing that production functions are not given technological
data, but formed themselves as the result of optimization.
Marginal products are generalized in this formulation to be
intervals with endpoints consisting of the right hand and left
hand derivatives of the constructed production functions.
In any case, the derivative of the 'factor price' curve for
a given technique is useful in understanding the implications of
price Wicksell effects - the whole point of the exercise. (The
so-called factor price frontier is the outer envelope curve of
the factor price curves for all the techniques arising out of
a given technology.)
That's the derivative I took in the previous model that Chris does
not comprehend. It exists, and there's a point to taking it.
I don't know why Chris doesn't read some literature ABOUT THIS
STUFF and learn the analysis. It would seem more productive than
repeating the same mistakes time and again. I would think it
would also be helpful for his reputation if when somebody, such
as John Weatherby last August, goes on with mistakes, Chris
could help him out.
Burmeister is more convincing when he says that this analysis
does not mean the death of neoclassical economics because:
(1) He understands the analysis.
(2) He understands the implications that certain aggregate
models, adjustment stories, and partial equilibrium
approaches, as a matter of logic, are shown to be dubious.
(3) He recognizes that some of those who have taken these
results to suggest the desirability of a revival of
classical economics are quite competent.
(4) He's willing to debate with those economists, instead
of pretending they don't exist or aren't discussing
"real economics".
It is quite reasonable to conclude that it is irresponsible to
make policy recommendations based on one-good models. It seems
reasonable to me to state that the widespread use of such
models by those without understanding of how little empirical -
see Fisher and Shaikh's results - and theoretical support
there is for such models reflects intellectally dishonest
norms.
The editor of the above reference, also a German, has a point
against Burmeister I think pretty good in the conclusion of his
New Palgrave article on "Capital Theory: Debates." Kurz says
this debate has uncovered fundamental weaknesses in supply and
demand theory.
Christopher Auld
>(Christopher Auld) wrote:
>> > Notice that the above analysis uses a smooth aggregate production
>> >function and that there initially seems to be no aggregation problems.
>> >All firms are identical, and net output consists of a single
>> >commodity. Thus, the inequality between the interest rate and the
>> >marginal product of capital seems not to be the result of an aggregation
>> >problem.
>I put "initially" and "seems" in the appropriate places on purpose.
So what Rob meant by the above was "I am about to show another example of
an aggregation problem."
[ Semantic stupidities deleted. ]
>Price Wicksell effects always arise except in one-good models or
>in the conditions in which a simple labor theory of value holds.
>> Rob, I put it to you that "for years" people have, with both small and
>> large degrees of gentleness, been trying to get you to grasp what the
>> simple models you like to talk about do and do not suggest.
>
>What I like is the years in which so many have exhibited so much
>incomprehension over results that have long been established. See above,
>where Chris neither agrees nor disagrees with my summary about
>price Wicksell effects (after having made a statement that seems to
>have missed the point).
What was the point again? That economics often suffers from aggregation
problems?
<yawn>
>Burmeister, a student of Samuelson's and a mainstream economist has
>recently expressed the same frustration about how little these issues
>are understood:
>
> "...MIT was wrong and therefore neoclassical economics was wrong.
> As a result there are some groups of economists who have abandoned
> neoclassical economics for their own refinements of classical
> economics. In the United States, on the other hand, mainstream
> economics goes on as if the controversy had never occurred.
> Macroeconomics textbooks discuss 'capital' as if it were a well-
> defined concept - which it is not, except in a very special
> one-capital-good world (or under other unrealistically restrictive
> conditions.) The problems of heterogeneous capital goods have also
> been ignored in the 'rational expectations revolution' and in
> virtually all econometric work."
> -- Edwin Burmeister, "The Capital Theory Controversy", _Critical
> Essays on Piero Sraffa's Legacy in Economics_, (edited by
> Heinz D. Kurz), Cambridge University Press, 2000.
Yup. Aggregation problems. And do you note, Rob, how explicit the
author makes it that the issue is _capital theory_, which is not
synonmous with _all of economic thought_?
<deep yawn>
>> In both your
>> previous models and this one the issue is that there is no such thing
>> as one good "capital" which can be determined in physical units.
>
>An important issue is the relationship between capital goods -
>evaluated in heterogeneous physical units - and a money value of
>the same collection of capital goods. After all, when people
>save, in neoclassical theory, what they are after is a stream
>of income.
"There are aggregation problems."
>> If
>> there
>> is such a good, and there's only one of them, and its sold in a
>> competitive
>> market, firms will buy it until the value of its marginal product equals
>> the interest rate.
>
>Here's where Chris goes off the rails. In the previous model, the
>interest rate was, as usual a pure number per unit time. Consider
>a firm using the capital good and labor to produce the consumption
>good. The value of the marginal product is in units of the quotient
>of the units in which the consumption good is measured and the
>units in which the capital good is measured, e.g. quarters corn
>per ton steel. Thus, Chris' statement is senseless, not even
>wrong.
>
>What he should say:
>
> The equilibrium rental price of a capital good is equal to the
> value of the marginal product of its services.
>
>There is also a dubious tale of adjustment or causality implicit
>in Chris' misstatement.
No, my statement refers to firms' equilibrium conditions. There is not
even a need to invoke the "equilibrium rental price of a capital good,"
the statement would still hold if that price were in disquilibrium, for
instance. Rob is yet again confused over the distinction between
equilibrium prices in the economy and a firm's optimal choices given
prices. He should say:
The firm will maximize profits when it hires capital up until the
point where the value of the marginal product of its services.
Rob's misstatement is the one, curiously, which imposes a dubious
causality.
As for the diatribe on the "senselessness" of the units, I was referring
to the condition that firms will continue to buy the capital good up
until the point that its return is equal to its opportunity cost, which
is the interest rate. Rob's misstatement requires more conditions to
hold.
>> The point you've brought up here and elsewhere (with
>> "incomprehension," yet again) is that there is no such good, there's all
>> sorts of different capital goods. It is true that such considerations
>> suggest that we should be careful of talking about "the marginal product
>> of capital," since there is no such thing as a good "capital."
>
>> At least this time you didn't evaluate derivatives at kink points.
>
>There Chris goes off the rails again. One can formulate neoclassical
>economics - indifferently at this level of abstraction - in terms
>either of differentiable production functions or production functions
>formed by linear combinations of production processes described by
>Leontief functions. The latter formulation has the advantage of
>emphasizing that production functions are not given technological
>data, but formed themselves as the result of optimization.
Rob has yet again demonstrated his failure to grasp these concepts
at an sophomore level. Smooth or not, production functions in economic
theory are technological relationships: given a vector of input x, the
production function gives the maximum output obtainable. Which vector
of inputs the firm will choose depends on prices. Holding output
constant moving along as isoquant, or jumping from kink point to kink
point in Rob's examples, is *not* changing production functions.
I suspect that the reason this literature uses these clumsy specifications
is that it's easier to demonstrate the possibility of anomolous results
in the presence of discontinuities. Which is a valid technique, although
presenting the more transparent, elegant, and empirically applicable smooth
case would also be desirable.
>Marginal products are generalized in this formulation to be
>intervals with endpoints consisting of the right hand and left
>hand derivatives of the constructed production functions.
In the example to which I referred, Rob blithely took a simple
derivative evaluated at a kink point. I don't see why his
proposed change above gets around the point that *of course* the
marginal product of capital won't generally be equal to the
interest rate in the absence of a C1 production function.
>I don't know why Chris doesn't read some literature ABOUT THIS
>STUFF and learn the analysis. It would seem more productive than
>repeating the same mistakes time and again.
Irony can be so ironic. This is Robert Vienneau, a guy who's spammed
the internet with the same intellectually dishonest essay several
hundred times over more than half a decade, telling someone else to
not "repeat the same mistakes time again."
I have explained to Rob before that, no, I probably won't be spending
much time reading "ABOUT THIS STUFF." THIS STUFF is not important
generally, and certainly has nothing to do with my research (which
is puzzle because Rob has repeatedly told me it annihilates all of
mainstream economics). One does not need to be overly familiar with
this largely archaic, politically charged, niche literature to poke
gaping holes in Rob's overblown rhetoric, one merely needs to understand
intermediate microeconomics.
>Burmeister is more convincing when he says that this analysis
>does not mean the death of neoclassical economics because:
>
> (1) He understands the analysis.
> (2) He understands the implications that certain aggregate
> models, adjustment stories, and partial equilibrium
> approaches, as a matter of logic, are shown to be dubious.
> (3) He recognizes that some of those who have taken these
> results to suggest the desirability of a revival of
> classical economics are quite competent.
> (4) He's willing to debate with those economists, instead
> of pretending they don't exist or aren't discussing
> "real economics".
Rob is not holding all else equal. Burmeister is responding to
academic literature. I am responding to some guy on usenet who
regularly refers to education as "brainwashing," merrily insists
that all mainstream economists are "intellectually dishonest" amongst
a host of other evils, and yet can't quite grasp what's meant by a
"demand curve." Rob, you're a bright guy: if you *ever* actually
start trying to "debate" honestly rather than blasting the newsgroup
day in and day out with what amounts to little more than extensive
_ad hominem_, I'd be happy to hold a discussion with you.
>It is quite reasonable to conclude that it is irresponsible to
>make policy recommendations based on one-good models. It seems
>reasonable to me to state that the widespread use of such
>models by those without understanding of how little empirical -
>see Fisher and Shaikh's results - and theoretical support
>there is for such models reflects intellectally dishonest
>norms.
Yeah, Rob, economists have "intellectually dishonest norms" because
they use models that make useful simplifications. Why doesn't it
ever occur to Rob that if he limits his reading to critical meta-
analysis of mainstream economics, he'll never get anything other
than a heavily distorted image of the methods and results in the
literature?
Rob then cites an awful thirty year old paper to back up this
claim. Rob, would you care to summarize for the newsgroup
developments in macroeconometric methods since 1971? Failing
that, how about an intellectually honest paraphrasing of Solow's
reply to Shaik? Perhaps you could follow up with telling us
about developments in mainstream capital theory since 1990, as
I've queried about many times? I was born in 1969, which seems to
be about the same time Rob thinks economic theory stopped
developing, such that one doesn't have to read THE STUFF
developed since then.
Mark Patrick Witte
If a model includes "circulating capital" and matches interesting
moments of the data better than other models, I'll cheer. It's not about
whining, it's about explaining.
SUSUPPLY
>>> >Why does Mark Witte rule out of bounds all the work done in capital
>>> >theory with point input-point output and flow input-point output
>>> >models? Ignorance, stubbornness and pride, or some darker motive?
Speaking of some questions being ruled out of bounds, when do you think you'll
find the time to discuss the commonplace occurence of labor exploiting capital?
Your favorite conspirator,
Patrick
Robert Vienneau
(Christopher Auld) wrote:
> Robert Vienneau <rv...@see.sig.com> wrote:
> >(Christopher Auld) wrote:
>
> >> > Notice that the above analysis uses a smooth aggregate production
> >> >function and that there initially seems to be no aggregation
> >> >problems.
> >> >All firms are identical, and net output consists of a single
> >> >commodity. Thus, the inequality between the interest rate and the
> >> >marginal product of capital seems not to be the result of an
> >> >aggregation
> >> >problem.
>
> >I put "initially" and "seems" in the appropriate places on purpose.
> So what Rob meant by the above was "I am about to show another example of
> an aggregation problem."
Nope. I left it open whether anybody wanting to respond seriously could
address the matter. Chris began, but seems afraid to pursue the
question.
"To put the matter another way, we may say that a change in the supply
of capital - arising, for example, from new voluntary savings - alters
the units in which all the previously existing capital is measured;
and it is therefore incorrect to say that the supply of capital as a
whole has increased by the amount of the voluntary saving. It is
important to emphasize that this problem of measuring the quantity
of capital is not an index-number problem. There are, to be sure,
numerous index-number problems of the greatest complexity in the
theory of capital. But the problem to which I now refer would exist
even in the simplest economy in which all output consisted of a single
type of consumer's good and firms were exactly alike."
-- L. A. Metzler, "The Rate of Interest and the Marginal Product of
Capital," _Journal of Political Economy_, Vol. 53, 1950, pp.
284-306.
The point is that the inequality between the marginal product of value
capital and the interest rate results from the dependence of the value
of capital goods, GIVEN THE TECHNIQUE, on the interest rate.
Chris doesn't seem to understand the proviso.
> >Price Wicksell effects always arise except in one-good models or
> >in the conditions in which a simple labor theory of value holds.
> >> Rob, I put it to you that "for years" people have, with both small and
> >> large degrees of gentleness, been trying to get you to grasp what the
> >> simple models you like to talk about do and do not suggest.
> >What I like is the years in which so many have exhibited so much
> >incomprehension over results that have long been established. See above,
> >where Chris neither agrees nor disagrees with my summary about
> >price Wicksell effects (after having made a statement that seems to
> >have missed the point).
> >Burmeister, a student of Samuelson's and a mainstream economist has
> >recently expressed the same frustration about how little these issues
> >are understood:
> > "...MIT was wrong and therefore neoclassical economics was wrong.
> > As a result there are some groups of economists who have abandoned
> > neoclassical economics for their own refinements of classical
> > economics. In the United States, on the other hand, mainstream
> > economics goes on as if the controversy had never occurred.
> > Macroeconomics textbooks discuss 'capital' as if it were a well-
> > defined concept - which it is not, except in a very special
> > one-capital-good world (or under other unrealistically restrictive
> > conditions.) The problems of heterogeneous capital goods have also
> > been ignored in the 'rational expectations revolution' and in
> > virtually all econometric work."
> > -- Edwin Burmeister, "The Capital Theory Controversy", _Critical
> > Essays on Piero Sraffa's Legacy in Economics_, (edited by
> > Heinz D. Kurz), Cambridge University Press, 2000.
> Yup. Aggregation problems. And do you note, Rob, how explicit the
> author makes it that the issue is _capital theory_, which is not
> synonmous with _all of economic thought_?
"It suggests that 'capital theory' is an APPLICATION of economic
theory, rather like the theory of finance, or the theory of the
firm. But capital theory is not a 'branch' of economics. It is
about the determination of prices in an economy in which some of
the means of production are reproducible...Certainly none of the
market economies with which economics as a discipline is
predominately concerned lacks reproducible means of production. So
capital theory is simply the price theory of the economies in
which we actually live."
-- John Eatwell, Murray Milgate, and Peter Newman, "Preface,"
_The New Palgrave: Capital Theory_, Macmillan, 1990.
(In conformity with his long established Orwellian silliness, Chris
will tell me that date is 1960.) I would think being able to
establish a coherent price theory is central to economic thought.
Interestingly enough, the central topic of capital theory is itself
a matter of dispute.
> >> In both your
> >> previous models and this one the issue is that there is no such thing
> >> as one good "capital" which can be determined in physical units.
> >An important issue is the relationship between capital goods -
> >evaluated in heterogeneous physical units - and a money value of
> >the same collection of capital goods. After all, when people
> >save, in neoclassical theory, what they are after is a stream
> >of income.
> "There are aggregation problems."
I forget. Why does Chris complain about charges of intellectual
dishonesty and brainwashing?
> >> If
> >> there
> >> is such a good, and there's only one of them, and its sold in a
> >> competitive
> >> market, firms will buy it until the value of its marginal product
> >> equals
> >> the interest rate.
> >Here's where Chris goes off the rails. In the previous model, the
> >interest rate was, as usual a pure number per unit time. Consider
> >a firm using the capital good and labor to produce the consumption
> >good. The value of the marginal product is in units of the quotient
> >of the units in which the consumption good is measured and the
> >units in which the capital good is measured, e.g. quarters corn
> >per ton steel. Thus, Chris' statement is senseless, not even
> >wrong.
> >What he should say:
> > The equilibrium rental price of a capital good is equal to the
> > value of the marginal product of its services.
> >There is also a dubious tale of adjustment or causality implicit
> >in Chris' misstatement.
> No, my statement refers to firms' equilibrium conditions. There is not
> even a need to invoke the "equilibrium rental price of a capital good,"
> the statement would still hold if that price were in disquilibrium, for
> instance...
> He should say:
>
> The firm will maximize profits when it hires capital up until the
> point where the value of the marginal product of its services.
That's not even grammatical. "Up until" specifies a dubious adjustment
process. Try:
The perfectly competitive firm in equilibrium will use capital
goods and other inputs such that the rental price of each capital
good is equal to the value of the marginal product of its services.
(See Debreu 1959 for a definition of the "equilibrium of a firm.")
> Rob's misstatement is the one, curiously, which imposes a dubious
> causality.
Nope. No causality is implied.
> As for the diatribe on the "senselessness" of the units,
What "diatribe"? It's a matter of elementary dimensional analysis.
> I was referring
> to the condition that firms will continue to buy the capital good up
> until the point that its return is equal to its opportunity cost, which
> is the interest rate.
Then why did Chris write something else? Anyway, the above seems to
presume a solution of the problem of the relationship between the
money value of capital goods and their physical composition.
Mayhaps Chris can begin, sometime or another, to consider the
(non-trivial) vertically integrated firm?
> Rob's misstatement requires more conditions to hold.
> >> The point you've brought up here and elsewhere (with
> >> "incomprehension," yet again) is that there is no such good, there's
> >> all
> >> sorts of different capital goods. It is true that such considerations
> >> suggest that we should be careful of talking about "the marginal
> >> product
> >> of capital," since there is no such thing as a good "capital."
> >
> >> At least this time you didn't evaluate derivatives at kink points.
> >There Chris goes off the rails again. One can formulate neoclassical
> >economics - indifferently at this level of abstraction - in terms
> >either of differentiable production functions or production functions
> >formed by linear combinations of production processes described by
> >Leontief functions. The latter formulation has the advantage of
> >emphasizing that production functions are not given technological
> >data, but formed themselves as the result of optimization.
> [Silliness deleted. ]
> Smooth or not, production functions in economic
> theory are technological relationships: given a vector of input x, the
> production function gives the maximum output obtainable.
See, the production process(es) chosen is a matter of optimization.
Construction of production functions from more basic data - i.e.,
a list of possible inputs and outputs - clarifies concepts.
> Which vector
> of inputs the firm will choose depends on prices. Holding output
> constant moving along as isoquant, or jumping from kink point to kink
> point in Rob's examples, is *not* changing production functions.
Only Chris' usual tortured readings would lead him to think he is
contradicting a claim that I am making.
> I suspect that the reason this literature uses these clumsy
> specifications
> is that it's easier to demonstrate the possibility of anomolous results
> in the presence of discontinuities.
Since I have shown that the point about price Wicksell effects can
be made with either specification, one can only wonder about Chris'
ignorance of the literature.
> Which is a valid technique, although
> presenting the more transparent, elegant, and empirically applicable
> smooth
> case would also be desirable.
As for transparency and empirical applicability, Chris prefers
proof by assertion.
> >Marginal products are generalized in this formulation to be
> >intervals with endpoints consisting of the right hand and left
> >hand derivatives of the constructed production functions.
> In the example to which I referred, Rob blithely took a simple
> derivative evaluated at a kink point.
Wrong.
> I don't see why his
> proposed change above gets around the point that *of course* the
> marginal product of capital won't generally be equal to the
> interest rate in the absence of a C1 production function.
See, Chris does not understand the use of taking the derivative
of the 'factor-price' curve for a given technology in making a
point about price Wicksell effects.
Anyways, the obvious claim of the neoclassical aggregate parable
is that:
df+/dk <= r <= df-/dk
> >I don't know why Chris doesn't read some literature ABOUT THIS
> >STUFF and learn the analysis. It would seem more productive than
> >repeating the same mistakes time and again.
> Irony can be so ironic. This is Robert Vienneau, a guy who's spammed
> the internet with the same intellectually dishonest essay several
> hundred times over more than half a decade, telling someone else to
> not "repeat the same mistakes time again."
It would be nice if Chris could respond without tortured reading
and mistaken arithmetic.
> I have explained to Rob before that, no, I probably won't be spending
> much time reading "ABOUT THIS STUFF." THIS STUFF is not important
> generally, and certainly has nothing to do with my research...
> One does not need to be overly familiar with
> this ... literature to poke ... holes in Rob's ... rhetoric, one merely
> needs to understand intermediate microeconomics.
[Editing was performed to remove wording lacking cognitive value.]
Chris understands what is taught in intermediate microeconomics (except
he doesn't understand the errors are errors). He doesn't understand
what I think should be taught, i.e. including some long-established
challenges.
> >Burmeister is more convincing when he says that this analysis
> >does not mean the death of neoclassical economics because:
> > (1) He understands the analysis.
> > (2) He understands the implications that certain aggregate
> > models, adjustment stories, and partial equilibrium
> > approaches, as a matter of logic, are shown to be dubious.
> > (3) He recognizes that some of those who have taken these
> > results to suggest the desirability of a revival of
> > classical economics are quite competent.
> > (4) He's willing to debate with those economists, instead
> > of pretending they don't exist or aren't discussing
> > "real economics".
> Rob is not holding all else equal. Burmeister is responding to
> academic literature. I am responding to some guy on usenet
I don't know what that has to do with the validity of an argument.
Perhaps Chris is a follower of some misunderstood postmodernism.
> who
> regularly refers to education as "brainwashing,"
The North American mainstream economists who regularly post here
in defense of their profession do not refute complaints about
how economists are educated. They illustrate them.
> merrily insists
> that all mainstream economists are "intellectually dishonest" amongst
> a host of other evils,
Lie. I just said nice things about Burmeister.
> and yet can't quite grasp what's meant by a
> "demand curve."
Attempt to distract the discussion with another lie noted.
> Rob, you're a bright guy: if you *ever* actually
> start trying to "debate" honestly rather than blasting the newsgroup
> day in and day out with what amounts to little more than extensive
> _ad hominem_, I'd be happy to hold a discussion with you.
A long time ago, I said something like:
The interest rate is not equal to the marginal product of capital.
This has been known by economists for decades.
There's no ad hominem there. This degenerated when certain posters
argued with this well known and theoretically well established
precept. I don't think the proposition is easily debated. And
I have been continually amazed at how many economists who have
posted here apparently don't know results that I think should be
common knowledge.
> >It is quite reasonable to conclude that it is irresponsible to
> >make policy recommendations based on one-good models. It seems
> >reasonable to me to state that the widespread use of such
> >models by those without understanding of how little empirical -
> >see Fisher and Shaikh's results - and theoretical support
> >there is for such models reflects intellectally dishonest
> >norms.
> Yeah, Rob, economists have "intellectually dishonest norms" because
> they use models that make useful simplifications.
That's silly. I did not object to useful simplications. I objected
to 'simplifications' being promulgated by economists who apparently
do not understand them and seem unwilling or unable to investigate
their impact. We've seen some examples here.
> Why doesn't it
> ever occur to Rob that if he limits his reading to critical meta-
> analysis of mainstream economics, he'll never get anything other
> than a heavily distorted image of the methods and results in the
> literature?
Why doesn't it ever occur to Chris that he just looks silly
characterizing literature he hasn't read? And his characterizations
are extremely tortured.
And, of course, Chris knows that some academics agree with me, or
vice versa. So much for his silly justification for violating
academic norms.
> Rob then cites an awful thirty year old paper
2000 - 1974 != 30
Calling a paper "awful" is not an argument.
> to back up this
> claim. Rob, would you care to summarize for the newsgroup
> developments in macroeconometric methods since 1971?
From some perspectives, the rational expectations revolution has
developed poor macroeconomics.
> Failing
> that, how about an intellectually honest paraphrasing of Solow's
> reply to Shaik?
Asked and answered. See in DejaNews the thread titled "Response to
Scott Moss" around 3/6/2000. You will there find me quite cheerfully
demonstrating that Shaikh and Solow agreed on substance, while
honestly describing Solow's disagreement with Shaikh's apparent
interpretation of the point of Solow's earlier work. You will also
find Chris Auld's usual tortured reading and apparently dishonest
editing.
> Perhaps you could follow up with telling us
> about developments in mainstream capital theory since 1990, as
> I've queried about many times?
> > -- Edwin Burmeister, "The Capital Theory Controversy", _Critical
> > Essays on Piero Sraffa's Legacy in Economics_, (edited by
> > Heinz D. Kurz), Cambridge University Press, 2000.
If Chris wants an advanced textbook treatment of how things stood
at the start of the decade, I've recommended as one perspective
many a time:
Syed Ahmad, _Capital in Economic Theory: Neo-classical, Cambridge,
and Chaos_, Edward-Elgar, 1991.
Well-established results can also be found in:
Heinz D. Kurz and Neri Salvadori, _Theory of Production: A Long
Period Analysis_, Cambridge University Press, 1995.
> I was born in 1969, which seems to
> be about the same time Rob thinks economic theory stopped
> developing, such that one doesn't have to read THE STUFF
> developed since then.
Chris cannot even get dates of references correct.
Robert Vienneau
(Mark Patrick Witte) wrote:
> >> I'm not someone who judges models on their assumptions. Is a given
> >> model useful? What does it explain relative to alternatives?
> >So has Mark Witte suggested why it is useful to rule out of bounds a
> >good part of economists' discussions of capital theory for at least
> >a century? Of course not.
> If a model includes "circulating capital" and matches interesting
> moments of the data better than other models, I'll cheer. It's not about
> whining, it's about explaining.
Non sequitur. Calculating the sort of correlation coefficients Mark
seems to want does not address whether or not economists have been
using the word "capital" to include "circulating capital".
Apparently Mark thinks explaining why firms install Just-In-Time
inventory systems is not an empirical question.
Mark Patrick Witte
Robert Vienneau <rv...@see.sig.com> wrote:
>In article <9167nk$flf$1...@news.acns.nwu.edu>, mwi...@merle.acns.nwu.edu
>(Mark Patrick Witte) wrote:
>
>> If a model includes "circulating capital" and matches interesting
>> moments of the data better than other models, I'll cheer. It's not about
>> whining, it's about explaining.
>
>Non sequitur. Calculating the sort of correlation coefficients Mark
Hmm, that what people who are utterly unfamiliar with empirical work
think empirical work is?
>seems to want does not address whether or not economists have been
>using the word "capital" to include "circulating capital".
>
>Apparently Mark thinks explaining why firms install Just-In-Time
>inventory systems is not an empirical question.
In the end, everything is an empirical question.
ro...@telus.net
wrote:
>>>Are you talking here about Holland? All of that land that they built
>>>on after they made dikes to hold back the North Sea?
>
>ro...@telus.net wrote:
>
>>Right. The land is unearned. The dryness -- which is called
>>"improvement" -- is earned. But not, typically, by the people who get
>>most of the benefit of it. Like land improvements anywhere.
>>
>Two questions.
>
>So just who built the dykes, and who gained from them?
Different ones were built under different conditions. Most were
built, in the final analysis, by the taxpayer. The landowners, of
course, get the benefit.
>And is building dykes to produce dryness fundamentally different from
>building irrigation canals to produce wetness?
They're both infrastructure improvements that increase land value.
-- Roy L
ro...@telus.net
Witte) wrote:
>In article <3a3491bc...@news.telus.net>, <ro...@telus.net> wrote:
>>On 10 Dec 2000 01:13:40 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>> Could you supply me with the definitive definition of capital?
>>
>>Goods that can be used in the production of goods and services. Goods
>>are man-made physical objects that can be bought and sold (the
>>physical substrate of a worker's skill may in some sense be a man-made
>>physical object, but as it cannot be bought and sold, it is not a
>>good).
>
> And why should someone should think this is definitive?
The purpose of a definition is to separate what is subsumed in a
concept from what is not.
> How about the alternative that capital is an input into production
>that is not used up in that production. Hence, it could contain all sorts
>of produced capital, human knowledge, and land.
All sorts of things. Exactly.
Get it?
> For various purposes, it may or may not be useful to disaggregate
>capital measures into sub-measures.
Useful for what purpose, I wonder?
> So...for something to be capital, need it have a non-zero
>depreciation rate? And if we can make a hammer that does have a zero
>depreciation rate, does that mean that this hammer is not capital?
See the definition above. The non-zero depreciation of capital is a
contingent fact.
>>>Further, if land were to
>>>depreciate, as it is modelled to do in much environmental economics
>>>literature, then land would count in your definition of a capital good?
>>
>>No. Land (meaning natural resources of all sorts) can lose value
>>through human action or inaction, but cannot be produced by labor, and
>>is therefore not a good, and not capital. Also, unlike capital,
>>"depreciated" land, if left alone, will gradually be restored to its
>>undepreciated state.
>
> This seems like a statement of faith on your part.
It's an observable fact.
>Perhaps you
>should wander into the Sahara desert and think about this for a while.
??? I doubt it. You seem to think there is something about the
Sahara Desert that might incline one to believe that it was once much
better land, has been depreciated through human action, and is not now
gradually returning to its undepreciated state even though left alone.
Perhaps _you_ should wander into some quiet place and _think_ for a
while yourself...
>>>>> No, this is not about labor.
>>>>
>>>>You're right. It's about trying to conceal critical facts of
>>>>economics by deliberately falsifying the terminology.
>>>
>>> As Will Rogers said of President Hoover, "It's not what he doesn't
>>>know that bothers me, it's what he does know that just ain't so."
>>
>>Prof. Mason Gaffney of UC Riverside has written a paper detailing
>>(including quotes from their own writings) how the founders of
>>neo-classical economics, like J.B. Clark, set out to eliminate the
>>distinction between land and capital purely in order to deny Henry
>>George and the Single Taxers the logical tools they had been using to
>>prove they were right.
>
> Um...and Galton was a fan of eugenics, does that mean that genetics
>and regression analysis are crap?
Is eugenics crap? It works with animals. The objections, it seems to
me, are moral, not scientific.
>We don't judge tools by why they were
>made but instead by how useful they are to us today.
Again: useful for _what_?
> For fun, after a quick search, here are some references that use
>this broad definition of capital:
>
>Barro, Mankiw, and Sala-i-Martin (1992) NBER
>Cohen and Sachs (1986) Euro Econ Review
>Mankiw, Romer, and Weil (1992) QJE
>Lucas (1988) JME
>Azariadis and Drazen (1990) QJE
>Becker, Murphy, and Tamura (1990) JPE
>Rebelo (1991) JPE
>Kremer and Thomson (1994) NBER
And what do they do when they are not trying to confuse themselves and
everyone else about capital?
-- Roy L
ro...@telus.net
Witte) wrote:
>I'm not someone who judges models on their assumptions. Is a given
>model useful? What does it explain relative to alternatives?
Even more important, what does it _justify_?
-- Roy L
ro...@telus.net
Witte) wrote:
> It's not about whining, it's about explaining.
No, it isn't. It's about redefining idle rentiers as deserving
_investors_.
-- Roy L
Christopher Auld
>(Christopher Auld) wrote:
>The point is that the inequality between the marginal product of value
>capital and the interest rate results from the dependence of the value
>of capital goods, GIVEN THE TECHNIQUE, on the interest rate.
>
>Chris doesn't seem to understand the proviso.
OK, Rob, let's boil this bickering down to the essentials. What exactly
is your point? As far as I can tell, all you're doing is pointing out a
well-known aggregation problem. Economics, like many other disciplines,
is rife with such problems.
>> Yup. Aggregation problems. And do you note, Rob, how explicit the
>> author makes it that the issue is _capital theory_, which is not
>> synonmous with _all of economic thought_?
>
> "It suggests that 'capital theory' is an APPLICATION of economic
> theory, rather like the theory of finance, or the theory of the
> firm. But capital theory is not a 'branch' of economics. It is
> about the determination of prices in an economy in which some of
> the means of production are reproducible...Certainly none of the
> market economies with which economics as a discipline is
> predominately concerned lacks reproducible means of production. So
> capital theory is simply the price theory of the economies in
> which we actually live."
> -- John Eatwell, Murray Milgate, and Peter Newman, "Preface,"
> _The New Palgrave: Capital Theory_, Macmillan, 1990.
>
>(In conformity with his long established Orwellian silliness, Chris
>will tell me that date is 1960.) I would think being able to
>establish a coherent price theory is central to economic thought.
Rob apparently forgets that general equilibrium analysis is not subject
to the technical problem he's so strangely obsessed with. In any case,
I don't agree with Eatwell et al. Economics is a diverse discipline, and
even within what might reasonably be considered its core, price theory,
there are innumerable issues which are at best only tangentially related
to aggregation problems in capital theory.
>> > The equilibrium rental price of a capital good is equal to the
>> > value of the marginal product of its services.
>> The firm will maximize profits when it hires capital up until the
>> point where the value of the marginal product of its services.
>
>That's not even grammatical. "Up until" specifies a dubious adjustment
>process. Try:
>
> The perfectly competitive firm in equilibrium will use capital
> goods and other inputs such that the rental price of each capital
> good is equal to the value of the marginal product of its services.
Rob, if you were to ever actually talk to economists, you'd find we often
use phrases like "up until" even when the "adjustment process" implicit
in the remark is dubious. Sometimes even in journal articles, commonly
in conversation. It helps to develop intuition about the agent's decision
process, and even suggests the second-order conditions must hold, whereas
Rob's statement of the necessary conditions does neither.
>> Rob's misstatement is the one, curiously, which imposes a dubious
>> causality.
>
>Nope. No causality is implied.
Well, it was a statement about the "equilibrium rental price of capital."
But you were "correcting" me on a statement about firm's optimal decisions,
taking prices as parametric. I think, Rob, that yet again you're confusing
equilibrium price vectors with equilibrium decisions, given prices.
> Anyway, the above seems to
>presume a solution of the problem of the relationship between the
>money value of capital goods and their physical composition.
We were talking about the single capital good case, remember?
>Mayhaps Chris can begin, sometime or another, to consider the
>(non-trivial) vertically integrated firm?
I have no idea why it should matter whether firms are vertically
integrated or not.
>> Smooth or not, production functions in economic
>> theory are technological relationships: given a vector of input x, the
>> production function gives the maximum output obtainable.
>
>See, the production process(es) chosen is a matter of optimization.
Yes, Rob, but not the production function itself, as you claimed. Notice
that it's fundamental to the canonical, neoclassical theory of the firm
that "the production process(es) chosen is a matter of optimization."
>> I suspect that the reason this literature uses these clumsy
>> specifications
>> is that it's easier to demonstrate the possibility of anomolous results
>> in the presence of discontinuities.
>Since I have shown that the point about price Wicksell effects can
>be made with either specification, one can only wonder about Chris'
>ignorance of the literature.
Let's try again. Rob, if you read very carefully, you'll note that
I didn't suggest that these results cannot obtain with smooth
technologies. I said, rather, that it's easier to demonstrate
anomolous results -- reswitching in particular -- with discontinuous
technologies. As I also said, using special cases which can produce
dramatic results is a fairly common technique.
>> Which is a valid technique, although
>> presenting the more transparent, elegant, and empirically applicable
>> smooth
>> case would also be desirable.
>
>As for transparency and empirical applicability, Chris prefers
>proof by assertion.
Whatever. Rob, if you want to disagree with -- I'd say "99%" or
something but let's be bold -- *every* economist on the planet
that the smooth case is, particular here, more elegant and empirically
applicable, be my guest. Just note that it is you making the "proof
by assertion," since you have not provided any counter-argument
whatsoever. Why you take the simple suggestion that the smooth case
is more tractable and amenable to empirical work than the discontinuous
case personally is a mystery.
>> I don't see why his
>> proposed change above gets around the point that *of course* the
>> marginal product of capital won't generally be equal to the
>> interest rate in the absence of a C1 production function.
>
>See, Chris does not understand the use of taking the derivative
>of the 'factor-price' curve for a given technology in making a
>point about price Wicksell effects.
This is related to my point how?
>Anyways, the obvious claim of the neoclassical aggregate parable
>is that:
>
> df+/dk <= r <= df-/dk
So, just so we've got this straight: "of course the marginal product
of capital won't generally be equal to the interest rate in the
absence of a C1 production function." Right Rob?
>> I have explained to Rob before that, no, I probably won't be spending
>> much time reading "ABOUT THIS STUFF." THIS STUFF is not important
>> generally, and certainly has nothing to do with my research...
>> One does not need to be overly familiar with
>> this ... literature to poke ... holes in Rob's ... rhetoric, one merely
>> needs to understand intermediate microeconomics.
>[Editing was performed to remove wording lacking cognitive value.]
Rob, please don't edit my sentences. I guess you think in some
way your relentless _ad hominem_ scores points or something, but
you cross the line with this sort of thing.
>Chris understands what is taught in intermediate microeconomics (except
>he doesn't understand the errors are errors).
What errors?
> He doesn't understand
>what I think should be taught, i.e. including some long-established
>challenges.
Rob, you're always welcome to get a PhD in economics, land an
academic job, and teach whatever you like. In the meantime, I
and several others have explained why we don't teach the material
you deem so important.
>> Rob is not holding all else equal. Burmeister is responding to
>> academic literature. I am responding to some guy on usenet
>
>I don't know what that has to do with the validity of an argument.
What argument? Rob was commenting on Burmeister's writing, which
is not an "argument" at all. My response that Usenet != academic
literature, and Rob's venomous "essays" != academic literature
more specifically, seems quite valid.
>> who
>> regularly refers to education as "brainwashing,"
>
>The North American mainstream economists who regularly post here
>in defense of their profession do not refute complaints about
>how economists are educated. They illustrate them.
And you, Rob, just nicely illustrated my point. And, as often as
you incorrectly accuse me of argument from authority, here's an
actual argument from authority: you aren't qualified to comment
on graduate education in economics. You have never set foot in
an economics classroom as student or instructor. You don't do
economic research. You are completely unfamiliar with the bulk
of the literature. Why should anyone take your criticisms of
content seriously?
And, again, you are way off-base in thinking North American
economists are somehow much different than their European colleages.
That may have been true forty years ago, but it isn't now.
>> merrily insists
>> that all mainstream economists are "intellectually dishonest" amongst
>> a host of other evils,
>
>Lie. I just said nice things about Burmeister.
In the same post as you accused all mainstream economists of having
"intellectually dishonest norms." And noting that Burmeister is
"willing to dialogue" with non-mainstream economists is not "a
nice thing," it's simply more evidence of your deep misunderstandings
over what economists do.
>> and yet can't quite grasp what's meant by a
>> "demand curve."
>
>Attempt to distract the discussion with another lie noted.
What lie? Rob, you're *infamous* for being confused as to what
a "demand curve" is. It's sci.econ's longest-running joke.
>> Rob, you're a bright guy: if you *ever* actually
>> start trying to "debate" honestly rather than blasting the newsgroup
>> day in and day out with what amounts to little more than extensive
>> _ad hominem_, I'd be happy to hold a discussion with you.
>
>A long time ago, I said something like:
>
> The interest rate is not equal to the marginal product of capital.
> This has been known by economists for decades.
>
>There's no ad hominem there.
No, Rob, there's not. You then proceeded with your rant by accusing
economists of "teaching exploded dogma" amongst numerous other silly
allegations and insinuations. That's _ad hominem_, as is much of your
output.
> This degenerated when certain posters
>argued with this well known and theoretically well established
>precept.
I think you're confusing criticism of the regular technical
gaffes you make in presenting this old literature, and more
importantly the wildly overblown conclusions you make from
this literature, with disagreement over the "well establshed
precept," Rob.
>> >It is quite reasonable to conclude that it is irresponsible to
>> >make policy recommendations based on one-good models. It seems
>> >reasonable to me to state that the widespread use of such
>> >models by those without understanding of how little empirical -
>> >see Fisher and Shaikh's results - and theoretical support
>> >there is for such models reflects intellectally dishonest
>> >norms.
>
>> Yeah, Rob, economists have "intellectually dishonest norms" because
>> they use models that make useful simplifications.
>
>That's silly. I did not object to useful simplications. I objected
>to 'simplifications' being promulgated by economists who apparently
>do not understand them and seem unwilling or unable to investigate
>their impact. We've seen some examples here.
Really? Do tell.
>> Why doesn't it
>> ever occur to Rob that if he limits his reading to critical meta-
>> analysis of mainstream economics, he'll never get anything other
>> than a heavily distorted image of the methods and results in the
>> literature?
>
>Why doesn't it ever occur to Chris that he just looks silly
>characterizing literature he hasn't read? And his characterizations
>are extremely tortured.
Uh huh. Rob, as far as I can tell from your lists of readings you
post quite often, you never read anything outside of an extremely
narrow literature, a large proportion of which I accurately
characterized above. Economics is a big discipline with many
interesting results and issues. You might find that if you started
reading some of it without the politically-colored lenses and
presumption of evil, you'd find some papers that would pique your
interest for reasons other than juicy quotes about the evils of
economists for posting to usenet.
>> Rob then cites an awful thirty year old paper
>
> 2000 - 1974 != 30
Oh, I'm sorry Rob, an awful paper published 26 years, probably
written 30 years ago given publication lag.
>Calling a paper "awful" is not an argument.
Rob knows full well I wrote very detailed notes about this paper,
which is simply horrible, on a discussion list.
>> to back up this
>> claim. Rob, would you care to summarize for the newsgroup
>> developments in macroeconometric methods since 1971?
>
>From some perspectives, the rational expectations revolution has
>developed poor macroeconomics.
Whoa, that doesn't exactly answer the question, does it Rob?
>> Failing
>> that, how about an intellectually honest paraphrasing of Solow's
>> reply to Shaik?
>
>Asked and answered. See in DejaNews the thread titled "Response to
>Scott Moss" around 3/6/2000. You will there find me quite cheerfully
>demonstrating that Shaikh and Solow agreed on substance, while
>honestly describing Solow's disagreement with Shaikh's apparent
>interpretation of the point of Solow's earlier work.
That's not an "intellectually honest" paraphrasing of Solow, Rob.
In fact, it betrays either massive misunderstanding of the issues
or massive dishonesty, or both. Solow did not "agree in substance"
with Shaikh's critique. Here's how Solow opens:
Mr. Shaikh's article is based on misconception, pure and simple.
The factor-share device of my 1957 article is in no sense a
_test_ of aggregate production functions or anything else. It
merely shows how one goes about interpreting a given time series
if one starts by _assuming_ that they were generated from a
production function....
He refers to the particular issue that Rob is claiming he (Solow)
"agrees in substance" with as "simply nonsense," and concludes with
"the humbug would seem to be on the other foot" after showing that
real-world data reveals strong partial correlations between measures
of inputs and output, where's Shaik's fanciful data does not.
And Rob has the nerve to cite Solow as "agreeing" with Shaikh and,
in the same post, accusing others of intellectual dishonesty.
>> Perhaps you could follow up with telling us
>> about developments in mainstream capital theory since 1990, as
>> I've queried about many times?
>
>> > -- Edwin Burmeister, "The Capital Theory Controversy", _Critical
>> > Essays on Piero Sraffa's Legacy in Economics_, (edited by
>> > Heinz D. Kurz), Cambridge University Press, 2000.
>
>If Chris wants an advanced textbook treatment of how things stood
>at the start of the decade, I've recommended as one perspective
>many a time:
So, obviously Rob has no idea what's been going on in capital theory
in the last decade. He mistakes books on history of thought for
current research, and he does not read current, mainstream literature.
But we all knew that already.
Mark Patrick Witte
Um...so if choose to keep my consumption below my income and use
that saving to buy land, I'm somehow more idle than if I'd have purchased
bonds or shares of QQQ?
Mark Patrick Witte
>On 11 Dec 2000 10:04:47 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>>In article <3a3491bc...@news.telus.net>, <ro...@telus.net> wrote:
>>>On 10 Dec 2000 01:13:40 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>>Witte) wrote:
>>>
>>>> Could you supply me with the definitive definition of capital?
>>>
>>>Goods that can be used in the production of goods and services. Goods
>>>are man-made physical objects that can be bought and sold (the
>>>physical substrate of a worker's skill may in some sense be a man-made
>>>physical object, but as it cannot be bought and sold, it is not a
>>>good).
>>
>> And why should someone should think this is definitive?
>
>The purpose of a definition is to separate what is subsumed in a
>concept from what is not.
My questions is not "What is a definition?" but "Why should anyone
think that this definition is prefered to alternatives?"
>> How about the alternative that capital is an input into production
>>that is not used up in that production. Hence, it could contain all sorts
>>of produced capital, human knowledge, and land.
>
>All sorts of things. Exactly.
>
>Get it?
No, all are factors of production that can be used in production and
yet live to produce another day. As such, their acquisition requires
intertemporal choice and holding.
>> For various purposes, it may or may not be useful to disaggregate
>>capital measures into sub-measures.
>
>Useful for what purpose, I wonder?
For explaining aspects of our observed world.
>> So...for something to be capital, need it have a non-zero
>>depreciation rate? And if we can make a hammer that does have a zero
>>depreciation rate, does that mean that this hammer is not capital?
>
>See the definition above. The non-zero depreciation of capital is a
>contingent fact.
Reference?
>>>>Further, if land were to
>>>>depreciate, as it is modelled to do in much environmental economics
>>>>literature, then land would count in your definition of a capital good?
>>>
>>>No. Land (meaning natural resources of all sorts) can lose value
>>>through human action or inaction, but cannot be produced by labor, and
>>>is therefore not a good, and not capital. Also, unlike capital,
>>>"depreciated" land, if left alone, will gradually be restored to its
>>>undepreciated state.
>>
>> This seems like a statement of faith on your part.
>
>It's an observable fact.
Reference?
>>Perhaps you
>>should wander into the Sahara desert and think about this for a while.
>
>??? I doubt it. You seem to think there is something about the
>Sahara Desert that might incline one to believe that it was once much
>better land, has been depreciated through human action, and is not now
>gradually returning to its undepreciated state even though left alone.
You read much into few words, and don't do so accurately. The
Sahara was once much better land yet is depreciating, at least for most of
the purposes humans would use it for, for a host of reasons.
>Perhaps _you_ should wander into some quiet place and _think_ for a
>while yourself...
>
>>>>>> No, this is not about labor.
>>>>>
>>>>>You're right. It's about trying to conceal critical facts of
>>>>>economics by deliberately falsifying the terminology.
>>>>
>>>> As Will Rogers said of President Hoover, "It's not what he doesn't
>>>>know that bothers me, it's what he does know that just ain't so."
>>>
>>>Prof. Mason Gaffney of UC Riverside has written a paper detailing
>>>(including quotes from their own writings) how the founders of
>>>neo-classical economics, like J.B. Clark, set out to eliminate the
>>>distinction between land and capital purely in order to deny Henry
>>>George and the Single Taxers the logical tools they had been using to
>>>prove they were right.
>>
>> Um...and Galton was a fan of eugenics, does that mean that genetics
>>and regression analysis are crap?
>
>Is eugenics crap? It works with animals. The objections, it seems to
>me, are moral, not scientific.
Um...you perhaps have problems with following sentences written in
English? Galton is tied to eugenics, a morally disturbing topic, so should
look with prejudice upon all his other work? (And as eugenics and animals,
a puzzle in that field is why race horses don't seem to be getting faster in
spite of stunning efforts toward that end.)
>
>>We don't judge tools by why they were
>>made but instead by how useful they are to us today.
>
>Again: useful for _what_?
For explaining the observed world.
>> For fun, after a quick search, here are some references that use
>>this broad definition of capital:
>>
>>Barro, Mankiw, and Sala-i-Martin (1992) NBER
>>Cohen and Sachs (1986) Euro Econ Review
>>Mankiw, Romer, and Weil (1992) QJE
>>Lucas (1988) JME
>>Azariadis and Drazen (1990) QJE
>>Becker, Murphy, and Tamura (1990) JPE
>>Rebelo (1991) JPE
>>Kremer and Thomson (1994) NBER
>
>And what do they do when they are not trying to confuse themselves and
>everyone else about capital?
Teach at the best universities in the world.
1more4perf...@my-deja.com
"PEOPLE For Perfect Economy...........
A World-Wide grass roots movement to establish
mathematically perfected economy. Proof of a
singular solution to world-wide economic demise".
http://www.perfecteconomy.com/
Sent via Deja.com
http://www.deja.com/
David Lloyd-Jones
"Mark Patrick Witte" <mwi...@merle.acns.nwu.edu> wrote
> Um...you perhaps have problems with following sentences written in
> English? Galton is tied to eugenics, a morally disturbing topic, so
should
> look with prejudice upon all his other work? (And as eugenics and
animals,
> a puzzle in that field is why race horses don't seem to be getting faster
in
> spite of stunning efforts toward that end.)
>
Racehorses probably aren't getting any faster because the definition of a
thoroughbred is so arbitrary that you essentially can't bring in any new
blood.
-dlj.
Robert Vienneau
> What exactly
> is your point?
In this thread, merely to remind the non-ignorant of one widely used
model in which all "capital" is circulating capital. This Austrian-
Wicksell point input-point output model suggests some places to
look for empirical evidence that economists do employ "capital"
to include circulating capital.
The exposition of this model that I have handy, my own, does happen
to use it for criticism of certain approaches. How was I to know
that would provoke Chris' usual wailing and gnashing of teeth?
Jim Blair
jim blair:
>>>>Are you talking here about Holland? All of that land that they built
>>>>on after they made dikes to hold back the North Sea?
>>
>>ro...@telus.net wrote:
>>
>>>Right. The land is unearned. The dryness -- which is called
>>>"improvement" -- is earned. But not, typically, by the people who get
>>>most of the benefit of it. Like land improvements anywhere.
>>>
>>Two questions.
>>
>>So just who built the dykes, and who gained from them?
>
>Different ones were built under different conditions. Most were
>built, in the final analysis, by the taxpayer. The landowners, of
>course, get the benefit.
Hi,
How meaningful is it to talk about the gain from the Zuyder Zee project
going to the "landowners" when there were no "landowners" before the
project? I mean when it was a body of water, no one owned it. Now that
it has become an expanse of land, it is used to grow crops and also
has housing. So you mean the farmers who grow food there are the ones
who benefited from the project? Why not the people who eat that food
as well?
You mean the people who now live there? But the people who live in
other parts of the region have also gained because there is less
competition for the land that was dry before the project.
>
>>And is building dykes to produce dryness fundamentally different from
>>building irrigation canals to produce wetness?
>
>They're both infrastructure improvements that increase land value.
>
>-- Roy L
But I see at least one difference. Someone owned the land before it was
irrigated.
PS I note that Michael Coburn wants a high property tax on undeveloped
land. Henry George didn't. He wanted the increase in land value due
to the actions of society as a whole to be taxed. Thus (if I am
understanding this) undeveloped desert land would have a low price and
pay little or no taxes.
But if it became the Las Vegas strip, then the value and the tax would
become large.
In Coburn's world, the Las Vegas strip would never have
happened. Who would own such land and pay the taxes on it before it
became valuable? But if no one owned and improved it, it would not
have become the strip.
SUSUPPLY
>au...@acs.ucalgary.ca (Christopher Auld) wrote:
>
>> What exactly
>> is your point?
>
>In this thread, merely to remind the non-ignorant of one widely used
>model in which all "capital" is circulating capital. This Austrian-
>Wicksell point input-point output model suggests some places to
>look for empirical evidence that economists do employ "capital"
>to include circulating capital.
>
>The exposition of this model that I have handy, my own, does happen
>to use it for criticism of certain approaches. How was I to know
>that would provoke Chris' usual wailing and gnashing of teeth?
Otherwise known as Auld Wrecking Ball Demolition Ltd. But I saw it coming, and
I'd be surprised if you were not the only one who didn't.
Christopher Auld
>> What exactly
>> is your point?
>In this thread, merely to remind the non-ignorant of one widely used
>model in which all "capital" is circulating capital. This Austrian-
>Wicksell point input-point output model suggests some places to
>look for empirical evidence that economists do employ "capital"
>to include circulating capital.
Oh. Semantics. Of course, the same semantics that got poor
Mark Witte accused of "irrationalism" and "ignorance" borne of
"dark motives." I suppose when one sees men in black behind
every bush, even the definitions of wordds can provoke paranoid,
hysterical responses.
>The exposition of this model that I have handy, my own, does happen
>to use it for criticism of certain approaches.
"Happen." Ha ha, good one Rob.
> How was I to know
>that would provoke Chris' usual wailing and gnashing of teeth?
I always get a kick out of Rob's remarks along these lines. He
seems to spend all his spare time writing lengthy diatribes on
the evils of mainstream economics, which he regularly posts to
international, public discussion groups. He then acts shocked
when anyone points out that, erm, he hasn't quite demonstrated
whatever grievous sin the profession stands accused of, and
wonders why the response to his sundry silly allegations is
critical and dismissive.
Ron Peterson
> PS I note that Michael Coburn wants a high property tax on undeveloped
> land. Henry George didn't. He wanted the increase in land value due
> to the actions of society as a whole to be taxed. Thus (if I am
> understanding this) undeveloped desert land would have a low price and
> pay little or no taxes.
The Henry George site: http://www.henrygeorge.org/ seems to indicate that
the main purpose of a land tax is to eliminate speculation in land.
> But if it became the Las Vegas strip, then the value and the tax would
> become large.
Land would have a lower price because of the tax, making development
more feasible.
> In Coburn's world, the Las Vegas strip would never have
> happened. Who would own such land and pay the taxes on it before it
> became valuable? But if no one owned and improved it, it would not
> have become the strip.
Yes it would have happened, and perhaps even more quickly because there
wouldn't be a tax on gambling revenues.
The land tax might not be sufficient to meet the needs of government
requiring other taxes to be levied.
Or, government revenue requirements may not be high enough to justify
a tax high enough to discourage land speculation.
Ron
Mike Coburn
>
> jim blair:
>
> >>>>Are you talking here about Holland? All of that land that they built
> >>>>on after they made dikes to hold back the North Sea?
> >>
> >>ro...@telus.net wrote:
> >>
> >>>Right. The land is unearned. The dryness -- which is called
> >>>"improvement" -- is earned. But not, typically, by the people who get
> >>>most of the benefit of it. Like land improvements anywhere.
> >>>
>
> >>Two questions.
> >>
> >>So just who built the dykes, and who gained from them?
>
> >
> >Different ones were built under different conditions. Most were
> >built, in the final analysis, by the taxpayer. The landowners, of
> >course, get the benefit.
>
> Hi,
>
> How meaningful is it to talk about the gain from the Zuyder Zee project
> going to the "landowners" when there were no "landowners" before the
> project? I mean when it was a body of water, no one owned it. Now that
> it has become an expanse of land, it is used to grow crops and also
> has housing. So you mean the farmers who grow food there are the ones
> who benefited from the project? Why not the people who eat that food
> as well?
It is obvious that all have benefited. It is not obvious as
to who paid, and it is not obvious as to who benefits the
most or the least. In a system where the raw land is taxed
at a very high rate all of those inequities simply disappear.
The farmer is not going to farm unless he receives enough
benefit from his produce to pay the tax and to also profit
from his efforts. All will benefit or there is no reason to
build the friggin dike. It is entirely possible to finance
the building of the dike and repay the loan from the land tax
proceeds. So it is difficult to understand what your problem
is on this deal.
> You mean the people who now live there? But the people who live in
> other parts of the region have also gained because there is less
> competition for the land that was dry before the project.
>
> >
> >>And is building dykes to produce dryness fundamentally different from
> >>building irrigation canals to produce wetness?
> >
> >They're both infrastructure improvements that increase land value.
> >
> >-- Roy L
>
> But I see at least one difference. Someone owned the land before it was
> irrigated.
This seems to be the standard JB irrelevancy or obfuscation.
> PS I note that Michael Coburn wants a high property tax on undeveloped
> land.
Yet another JB distortion. Michael Coburn wants a high and
unvarying tax on all land value that confiscates most of
the land rent.
Henry George didn't. He wanted the increase in land value due
> to the actions of society as a whole to be taxed. Thus (if I am
> understanding this) undeveloped desert land would have a low price and
> pay little or no taxes.
Well... So far you got it somewhat right: HG said that rent
most of the rent should be confiscated with a tax and the proceeds
used to obviate all other taxes.
> But if it became the Las Vegas strip, then the value and the tax would
> become large.
In the final analysis that is true.
> In Coburn's world, the Las Vegas strip would never have
> happened. Who would own such land and pay the taxes on it before it
> became valuable? But if no one owned and improved it, it would not
> have become the strip.
More erroneous JB presumptions:
1. Nobody needed to own the desert before it was purchased
from the government for development. In a system of high land
tax if there was no tax being paid then there was no
owner other than the government. As soon as someone wanted
to use the land then that someone would make a deal with
the government to do so. i.e. to buy the land and agree to pay
the taxes (always a percentage of the market value of the
land).
2. The Las Vegas strip needed an airport, water, highways,
electric power, and most certainly the assurance that gambling
would be permitted. This last entry is not a detail and
it would be the same for nuclear wastes, or a leper colony.
It takes special circumstances and government subsidies and
enforcements or non enforcements to create a Las Vegas strip.
The construction and maintenance of ALL of the infrastructure
that provides for the Las Vegas strip, and a certain amount
of bride money to the rest of the community to allow such
immoral behavior is not out of line at all. And all of it
is addressed quite nicely by a high tax on land value without
actually being concerned with the morality.
--
Coburn ---
The opinions expressed herein above are mine. They are my property
so you can't have them. But use them. No rent or interest due.
Mike Coburn
If you purchase shares of QQQ then from your perspective
the savings have probably been converted to capital. i.e. you
will only benefit if QQQ is profitable. Thus the savings are
not idle. If QQQ is not a financial institution or a real
estate holding company then the savings may have also been
converted to real capital in all respects and perspectives.
Mark Patrick Witte
Mike Coburn <michael....@gte.net> wrote:
>Mark Patrick Witte wrote:
>>
>> In article <3a38b1d7...@news.telus.net>, <ro...@telus.net> wrote:
>> >On 12 Dec 2000 22:09:56 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>> >Witte) wrote:
>> >
>> >> It's not about whining, it's about explaining.
>> >
>> >No, it isn't. It's about redefining idle rentiers as deserving
>> >_investors_.
>>
>> Um...so if choose to keep my consumption below my income and use
>> that saving to buy land, I'm somehow more idle than if I'd have purchased
>> bonds or shares of QQQ?
>
> If you purchase shares of QQQ then from your perspective
>the savings have probably been converted to capital. i.e. you
>will only benefit if QQQ is profitable. Thus the savings are
>not idle. If QQQ is not a financial institution or a real
>estate holding company then the savings may have also been
>converted to real capital in all respects and perspectives.
But since I purchased the bonds or shares from someone else,
there has been no net change in assets. So it's just a transfer, just as
with the sale of land. Further, shouldn't the risk adjusted rates of return
across all such assets, including land, be the same? Why am I any more
active if I choose to buy bonds or shares, than if I choose to buy land?
Robert Vienneau
> > the inequality between the interest rate and the
> > marginal product of capital...is the result of non-zero
> > price Wicksell effects.
> > The
> > value of capital, that is, its measurement in the same units as
> > net output, depends on the interest rate due to the effects of
> > a combination of real and price Wicksell effects. It is because of
> > price Wicksell effects alone that the inequality arises.
> > The point is that the inequality between the marginal product of value
> > capital and the interest rate results from the dependence of the value
> > of capital goods, GIVEN THE TECHNIQUE, on the interest rate.
Chris Auld:
> What exactly is your point? As far as I can tell, ... you're ...
> pointing out a[n] ... aggregation problem.
"A simplification or aggregation problem is faced by a research
worker whenever he finds that his data are too numerous or in too
much detail to be manageable and feels the need to reduce or
combine the detailed data in some manner."
-- Walter D. Fisher, "Aggregation of Economic Relations,"
_The New Palgrave_, 1987.
"[O]ne should emphasize the distinction between two types of
measurement. First, there was the one in which the statisticians were
mainly interested. Second, there was measurement in theory. The
statisticians' measures were only approximate and provided a suitable
field for work in solving index number problems. The theoretical
measures required absolute precision. Any imperfections in these
theoretical measures were not merely upsetting, but knocked down the
whole theoretical basis. One could measure capital in pounds or dollars
and introduce this into a production function. The definition in this
case must be absolutely water-tight, for with a given quantity of
capital one had a certain rate of interest so that the quantity of
capital was an essential part of the mechanism. One therefore had to
keep the definition of capital separate from the needs of statistical
measurement, which were quite diffent. The work of J. B. Clark,
Bohm-Bawerk and others was intended to produce pure definitions of
capital, as required by their theories, not as a guide to actual
measurement. If we found contradictions, then these pointed to
defects in the theory, and an inability to define measures of capital
accurately. It was on this - the chief failing of capital theory -
that we should concentrate rather than on problems of measurement."
-- Piero Sraffa, Interventions in the debate at the Corfu Conference
on the "Theory of Capital", 4-11 September 1958.
Aaron M. Renn
>> PS I note that Michael Coburn wants a high property tax on undeveloped
>> land. Henry George didn't. He wanted the increase in land value due
>> to the actions of society as a whole to be taxed. Thus (if I am
>> understanding this) undeveloped desert land would have a low price and
>> pay little or no taxes.
>
>The Henry George site: http://www.henrygeorge.org/ seems to indicate that
>the main purpose of a land tax is to eliminate speculation in land.
Eliminating land speculation was one of Henry George's goals. But
principally he wanted to prevent landowners from receiving a financial
benefit as a result of their land owernship, regardless of whether or
not the land was held for speculative purposes.
BTW: That web site does not do Henry George justice. He is an incredibly
easy to read author and if you want to understand his philosophy, I
recommend reading his own "Progress and Poverty". It shouldn't be treated
as a book on modern economics, but it is noteworthy for its early
opposition to the "wages fund" doctine and Mathusianism.
Henry George also wrote what I consider the definitive defense of free
trade in his book "Protection or Free Trade".
>> But if it became the Las Vegas strip, then the value and the tax would
>> become large.
>
>Land would have a lower price because of the tax, making development
>more feasible.
You could buy land more cheaply, but you would then have to pay the tax.
Ultimately, the price people would have to pay for access to land would
remain unchanged. The big difference is that the value of ground rents
would go to the government instead of a land owner. Additional land
held by speculators might be dumped onto the market as well.
>> In Coburn's world, the Las Vegas strip would never have
>> happened. Who would own such land and pay the taxes on it before it
>> became valuable? But if no one owned and improved it, it would not
>> have become the strip.
[ Note: reply to upthread author ]
Henry George would have taxed worthless land at zero. Only when land
became capable of generating ground rents would it be taxed. Also,
Henry George did not advocate land nationalization and land would have
private ownership as today.
George I think was a classic Enlightenment type thinker who believed
that if only we were able to devise the right social institutions, the
world would be turned into heaven on earth. His single tax proposal
is typical of "silver bullet" remedies for social ills and he vastly
oversold its probably effect. He also vastly underestimates the practical
difficulties of implementing it. Nevertheless, I am in agreement with
the Georgist position on land value taxes. I think taxation on the
return to nature is about as good a tax as one is likely to come up with.
But I don't think it is a cure for poverty, political corruption,
and other social ills like George did.
--
Aaron M. Renn (ar...@urbanophile.com) http://www.urbanophile.com/arenn/
Aaron M. Renn
>>Well... earned wealth is like, earned. You know, like you
>>actually produced something from your own effort. Land
>>simply exists. It will exist whether you labor or not.
>.......
>>
>>If it is land it is "unearned". That be the end of it.
>
>Are you talking here about Holland? All of that land that they built
>on after they made dikes to hold back the North Sea?
Obviously land in the classical economic sense refers to spatial locations
and the natural resources found there regardless of whether or not there
is dry earth or not. In the case of landfill, obviously the new dirt
represents an output of production, not a natural resource.
Christopher Auld
>Chris Auld:
Rob quotes me saying:
>> What exactly is your point? As far as I can tell, ... you're ...
>> pointing out a[n] ... aggregation problem.
Then provides, sans explanation of what he imagines the point is,
quotes from:
> _The New Palgrave_, 1987.
and
> -- Piero Sraffa, Interventions in the debate at the Corfu Conference
Shocked as I am at his choice of references, I cannot deduce why he
thinks he's overturning my comment. Does he understand "an aggregation
problem" is not synonomous with "a statistical measurement problem,"
but is rather a theoretical issue?
Mike Coburn
You seem to be very good at dancing around the real issue:
The bonds do not represent any real "interest" in the delivery
of goods and/or services to a _willing_ community. Shares of
ownership in real capital (shares of ownership in enterprises
that build or create goods, or enterprises that perform needed
or desired services) require that such enterprise actually
provide such desired commodities or the owner will not profit
from his ownership. The value of money itself is somewhat
irrelevant in the case of shares. In the case of bonds it
is paramount. All corporations have unissued stock and if
not they can arrange whatever will have been necessary to
provide a like function. Such additional shares are valued
as the current outstanding shares and the company can issue
these in trade for dollars which are then used to acquire
or create even more capital. If you bid up the price of
shares you are contributing to the wealth of the corporation.
All such shares will receive dividends or capital gains ONLY
if the corporation actually produces something of value,
only if the corporation creates real wealth. That is why
shares of stock are capital and bonds are not.
Mike Coburn
In the case of land, you will enjoy a return on the investment
based on the growth and movement of the population. There is
nothing that the land will do that would change anything and,
as with bonds, the value of the land is also highly dependent
on the value of money. The corporation must _perform_. The
land just sits there waiting for changes in population, changes
in interest rates on fiat money, and changes in tax rates or
methods. None of these (money, interest on money, or taxes)
will serve the production of wealth when they serve to profit
the landowner.
Mark Patrick Witte
Sorry, but you're wrong here. The return on the purchase of a unit
of land should be, risk adjusted, equivalent to the return on other assets.
Growth and movement of population, to the extent that they are anticipated,
should be built into the price I pay for land and thus not determine the
expected return.
Mark Patrick Witte
No, I ask a simple question. If I choose to take some of my income
and buy bonds, or stock, or land with it, why would I be any more or less
"idle?"
>The bonds do not represent any real "interest" in the delivery
>of goods and/or services to a _willing_ community. Shares of
>ownership in real capital (shares of ownership in enterprises
>that build or create goods, or enterprises that perform needed
>or desired services) require that such enterprise actually
>provide such desired commodities or the owner will not profit
>from his ownership. The value of money itself is somewhat
>irrelevant in the case of shares. In the case of bonds it
>is paramount. All corporations have unissued stock and if
>not they can arrange whatever will have been necessary to
>provide a like function. Such additional shares are valued
>as the current outstanding shares and the company can issue
>these in trade for dollars which are then used to acquire
>or create even more capital.
If so...why are second issues of stock so rare?
>If you bid up the price of
>shares you are contributing to the wealth of the corporation.
>All such shares will receive dividends or capital gains ONLY
>if the corporation actually produces something of value,
>only if the corporation creates real wealth. That is why
>shares of stock are capital and bonds are not.
Actually, neither are capital. Both are just financial instruments
indicating claim on capital.
Mike Coburn
Most of them happen when corporations buy other corporations. Corporations also
use their stock to reward their employees with stock options instead of higher
salaries. That the purchase of most shares of stock are accomplished in other
than a direct offering of the company is irrelevant as to the primary return from
the investment. That return manifests itself because the corporation delivered
goods and services to people who willingly purchased them. The return to bonds is
preset and does not require growth or profitability of the issuer, the stocks are
subordinated to the bonds. The bonds are sometimes redeemed through the issue of
stocks. No! A bond is a mattress that pays interest. It is "savings" as opposed
to investment and it is not capital.
>
> >If you bid up the price of
> >shares you are contributing to the wealth of the corporation.
> >All such shares will receive dividends or capital gains ONLY
> >if the corporation actually produces something of value,
> >only if the corporation creates real wealth. That is why
> >shares of stock are capital and bonds are not.
>
> Actually, neither are capital. Both are just financial instruments
> indicating claim on capital.
They are both financial instruments to be sure. But the share is a claim to the
ownership of capital that entitles the owner to a share of profits. No profits no
income. The bond is a pure financial instrument and is a claim to interest on
money only
which is to be paid regardless of profits. If that requires the sale of
underlying capital then so be it. Money is not capital.
Mark Patrick Witte
>> >> >> >No, it isn't. It's about redefining idle rentiers as deserving
>> >> >> >_investors_.
>> >> >>
>> >> >> Um...so if choose to keep my consumption below my income and use
>> >> >> that saving to buy land, I'm somehow more idle than if I'd have purchased
>> >> >> bonds or shares of QQQ?
>> >>
>> >> But since I purchased the bonds or shares from someone else,
>> >> there has been no net change in assets. So it's just a transfer, just as
>> >> with the sale of land. Further, shouldn't the risk adjusted rates of return
>> >> across all such assets, including land, be the same? Why am I any more
>> >> active if I choose to buy bonds or shares, than if I choose to buy land?
>> >
>> >You seem to be very good at dancing around the real issue:
>>
>> No, I ask a simple question. If I choose to take some of my income
>> and buy bonds, or stock, or land with it, why would I be any more or less
>> "idle?"
Hmm....
>> >The bonds do not represent any real "interest" in the delivery
>> >of goods and/or services to a _willing_ community. Shares of
>> >ownership in real capital (shares of ownership in enterprises
>> >that build or create goods, or enterprises that perform needed
>> >or desired services) require that such enterprise actually
>> >provide such desired commodities or the owner will not profit
>> >from his ownership. The value of money itself is somewhat
>> >irrelevant in the case of shares. In the case of bonds it
>> >is paramount. All corporations have unissued stock and if
>> >not they can arrange whatever will have been necessary to
>> >provide a like function. Such additional shares are valued
>> >as the current outstanding shares and the company can issue
>> >these in trade for dollars which are then used to acquire
>> >or create even more capital.
>>
>> If so...why are second issues of stock so rare?
>
>Most of them happen when corporations buy other corporations.
No, those are usually effective stock swaps.
>Corporations also
>use their stock to reward their employees with stock options instead of higher
>salaries.
One, this use fails to conform to the example you raise and two,
these generally are accompanied by matching stock repurchases.
> That the purchase of most shares of stock are accomplished in other
>than a direct offering of the company is irrelevant as to the primary return from
>the investment. That return manifests itself because the corporation delivered
>goods and services to people who willingly purchased them. The return to bonds is
>preset and does not require growth or profitability of the issuer, the stocks are
>subordinated to the bonds. The bonds are sometimes redeemed through the issue of
>stocks. No! A bond is a mattress that pays interest. It is "savings" as opposed
>to investment and it is not capital.
There's a paper by Modigliani and Miller that you should read if you
want to talk about these issues. American Economic Review, 1958.
>> >If you bid up the price of
>> >shares you are contributing to the wealth of the corporation.
>> >All such shares will receive dividends or capital gains ONLY
>> >if the corporation actually produces something of value,
>> >only if the corporation creates real wealth. That is why
>> >shares of stock are capital and bonds are not.
>>
>> Actually, neither are capital. Both are just financial instruments
>> indicating claim on capital.
>
>They are both financial instruments to be sure. But the share is a claim to the
>ownership of capital that entitles the owner to a share of profits. No profits no
>income. The bond is a pure financial instrument and is a claim to interest on
>money only
>which is to be paid regardless of profits. If that requires the sale of
>underlying capital then so be it. Money is not capital.
No, that is not what a bond is.
Mike Coburn
The problem is in the "should be":
The land was never produced by the labor of men. The economic rewards or
penalties to individuals that could be incorporated in an economic system will
have no effect on the creation of land itself. That, in fact, is the economic
definition of land. So, most importantly, economic adjustments that affect the
total economy such as taxes and interest rates will have no substantial effects on
the _amount_ of land. The amount of _real_ capital, on the other hand, will be
subject to the forces of supply and demand and can thus be encouraged or
discouraged by social order, taxes, interest rates, and politics/law. Land is not
defined as capital if we wish to design economic models that will encourage the
creation of real capital (i.e. technology, organization, plant, and equipment, and
infrastructure). Since land is not "created" then there is no reason to
"encourage" its creation and no reason to include it in the same word as those
things which can be increase or decreased in supply by economic policy.
As stated above, the definition of capital as distinct from land is necessary so
as to define economic policies that encourage (and, more importantly, do not
discourage) the creation and development of true capital. If a return to land
ownership is deemed to be a return to capital then policies will divert wealth
from the creation of _real_ capital into the simple hoarding of land. Observe
that (unlike real capital) land will not suddenly spring into existence because we
decrease the tax on it or because we reduce or raise interest payments on money
(such interest is actually a tax but I'll leave that for later digestion). Most
importantly, the delivery of economic rent to individual owners does nothing to
enhance productivity that would not better be accomplished through the
confiscation and egalitarian redistribution of such rent.
The trade price of land is based on the economic rent of land and this is the
return to land ownership. Such return is not based on the efforts of the land
owner but will vary according to taxes, interest rates (in our current economy,
just another tax), and population (most often that population in the immediate
proximity resulting from capital improvements (infrastructure) surrounding the
land in question). The development of capital improvements on the land (the
improvements created by the land owner) do not significantly affect the _land_
rent or the trade price of the land. The surrounding infrastructure (additional
capital improvements such as roads, bridges, airports, electric utilities, and
water delivery) and the aggregated improvements to adjacent land will increase the
trade price of a particular land parcel The capital improvements erected by a
land owner on his parcel of land do not significantly enhance the trade price of
the underlying land because any effects are distributed across all adjacent
land. if I build a nice house then the trade price of all the property in my
neighborhood will increase and if I build an eyesore the trade price of all the
surrounding land will deteriorate. The trade price (the capitalization of
anticipated rents) of my land is much more dependent on the combined effects of
what my neighbors do than it is on my own initiatives.
There may be reason to encourage the construction and maintenance of roads,
bridges, and utilities (such infrastructure being capital by most definitions) so
as to promote (or demand) further capital creation on the part of current land
owners. But this will always occur due to public need or desire and due to the
actions of the community. Such needs and desires are communal and social in
nature and will exist regardless of who owns a particular parcel of land. In most
cases the need for further capital improvements is compelled by the society and
are in many cases in conflict with the desires of a particular owner. By removing
land from the set of rational alternatives to be used as a store of wealth (it was
never really capital) the land can better be employed by the society and the
return to the creation of true capital will be enhanced. Restated: The use of
land should not be dependent on or subject to speculation.
A typical corporation that produces goods or provides goods or services is
dependent for its income and profit upon delivering something of value to a
_willing_ buyer. The owner of a share in such an enterprise can only profit if
_willing_ customers are buying the product of the corporation and that willingness
will be based in the initiatives of the mangers and employees of the enterprise
i.e. the profits are "earned". Land rent is simply a fee collected as a tax would
be collected. It is collected because there is no realistic or rational way to
_produce_ land that is suitable to enterprise or to the provision of sustenance.
The payer of rent has no real alternative and the rentier does not "earn" the
wealth that he receives in rent. The increase in such rent is also unearned
because it arises from community actions and government actions as opposed to the
initiative of the owner or the mangers or employees of an enterprise.
Land is not capital, and an investment in land is more akin to the purchase of
bonds than it is to any kind of "capital" investment. It is (in its best light) a
"savings" account. Land rent and interest paid to money are two peas in a pod.
ro...@telus.net
Witte) wrote:
>In article <3a38b1d7...@news.telus.net>, <ro...@telus.net> wrote:
>>On 12 Dec 2000 22:09:56 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>> It's not about whining, it's about explaining.
>>
>>No, it isn't. It's about redefining idle rentiers as deserving
>>_investors_.
>
> Um...so if choose to keep my consumption below my income and use
>that saving to buy land, I'm somehow more idle than if I'd have purchased
>bonds or shares of QQQ?
???? No. Didn't you read the definition of "capital"?
-- Roy L
ro...@telus.net
Witte) wrote:
>In article <3a38ad06...@news.telus.net>, <ro...@telus.net> wrote:
>>On 11 Dec 2000 10:04:47 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>>In article <3a3491bc...@news.telus.net>, <ro...@telus.net> wrote:
>>>>On 10 Dec 2000 01:13:40 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>>>Witte) wrote:
>>>>
>>>>> Could you supply me with the definitive definition of capital?
>>>>
>>>>Goods that can be used in the production of goods and services. Goods
>>>>are man-made physical objects that can be bought and sold (the
>>>>physical substrate of a worker's skill may in some sense be a man-made
>>>>physical object, but as it cannot be bought and sold, it is not a
>>>>good).
>>>
>>> And why should someone should think this is definitive?
>>
>>The purpose of a definition is to separate what is subsumed in a
>>concept from what is not.
>
> My questions is not "What is a definition?"
I know. But perhaps it should have been....
>but "Why should anyone
>think that this definition is prefered to alternatives?"
Hmmmm. I assumed that explaining what a definition is supposed to do
would help you understand why the definition I gave does it better
than the alternatives.
>>> How about the alternative that capital is an input into production
>>>that is not used up in that production. Hence, it could contain all sorts
>>>of produced capital, human knowledge, and land.
>>
>>All sorts of things. Exactly.
>>
>>Get it?
>
> No, all are factors of production that can be used in production and
>yet live to produce another day.
So a drill bit that lasts less than a day is not capital, but one that
lasts more than a day is? Interesting "definition" you have there...
>As such, their acquisition requires
>intertemporal choice and holding.
Ah. _Acquisition_. Not _production_. There's the rub.
By your definition, a license required to produce something is
capital. So government could indefinitely expand the stock of
"capital" by just requiring licenses to produce everything.
Come to think of it, that does have a familiar ring....
>>> For various purposes, it may or may not be useful to disaggregate
>>>capital measures into sub-measures.
>>
>>Useful for what purpose, I wonder?
>
> For explaining aspects of our observed world.
Ah. But not the _economic_ aspects....
>>> So...for something to be capital, need it have a non-zero
>>>depreciation rate? And if we can make a hammer that does have a zero
>>>depreciation rate, does that mean that this hammer is not capital?
>>
>>See the definition above. The non-zero depreciation of capital is a
>>contingent fact.
>
> Reference?
??? The above definition. The one I gave. The one you asked me for.
Or maybe you think that by requesting references that the sky is blue,
you can make yourself look (and feel) like a real scientist...?
>>>>Land (meaning natural resources of all sorts) can lose value
>>>>through human action or inaction, but cannot be produced by labor, and
>>>>is therefore not a good, and not capital. Also, unlike capital,
>>>>"depreciated" land, if left alone, will gradually be restored to its
>>>>undepreciated state.
>>>
>>> This seems like a statement of faith on your part.
>>
>>It's an observable fact.
>
> Reference?
While there are exceptions, such as extraction of non-renewable
resources, it is an observable fact that land left idle returns to its
natural state (the speed of the return depending on many factors).
>>>Perhaps you
>>>should wander into the Sahara desert and think about this for a while.
>>
>>??? I doubt it. You seem to think there is something about the
>>Sahara Desert that might incline one to believe that it was once much
>>better land, has been depreciated through human action, and is not now
>>gradually returning to its undepreciated state even though left alone.
>
> You read much into few words, and don't do so accurately.
Wrong. I'm reading _exactly_ what is in your words, liar. You're
just not used to it.
>The
>Sahara was once much better land yet is depreciating, at least for most of
>the purposes humans would use it for, for a host of reasons.
??? The number of people living on it has increaased markedly, and
the impact of their activities on the land's natural state has
increased even more.
Why don't you just admit that you tried a little debating trick, I
caught you out on it, refuted it, and humiliated you for it, and now
you're feeling a little chastened?
>>>>Prof. Mason Gaffney of UC Riverside has written a paper detailing
>>>>(including quotes from their own writings) how the founders of
>>>>neo-classical economics, like J.B. Clark, set out to eliminate the
>>>>distinction between land and capital purely in order to deny Henry
>>>>George and the Single Taxers the logical tools they had been using to
>>>>prove they were right.
>>>
>>> Um...and Galton was a fan of eugenics, does that mean that genetics
>>>and regression analysis are crap?
>>
>>Is eugenics crap? It works with animals. The objections, it seems to
>>me, are moral, not scientific.
>
> Um...you perhaps have problems with following sentences written in
>English?
No. _You_ just have a problem getting your fallacies, evasions,
rationalizations, equivocations and irrelevancies past me.
>Galton is tied to eugenics, a morally disturbing topic, so should
>look with prejudice upon all his other work?
For one thing, the redefinition of capital is not "other work." It is
the work in question. For another, you're dragging red herrings
again.
>(And as eugenics and animals,
>a puzzle in that field is why race horses don't seem to be getting faster in
>spite of stunning efforts toward that end.)
<yawn> Wrong. It's no puzzle. The gene pool is (artificially and
arbitrarily) kept too small.
You stand refuted.
Again.
>>>We don't judge tools by why they were
>>>made but instead by how useful they are to us today.
>>
>>Again: useful for _what_?
>
> For explaining the observed world.
Aggregation of unlikes is unlikely to explain anything better than
their disaggregation.
>>> For fun, after a quick search, here are some references that use
>>>this broad definition of capital:
>>>
>>>Barro, Mankiw, and Sala-i-Martin (1992) NBER
>>>Cohen and Sachs (1986) Euro Econ Review
>>>Mankiw, Romer, and Weil (1992) QJE
>>>Lucas (1988) JME
>>>Azariadis and Drazen (1990) QJE
>>>Becker, Murphy, and Tamura (1990) JPE
>>>Rebelo (1991) JPE
>>>Kremer and Thomson (1994) NBER
>>
>>And what do they do when they are not trying to confuse themselves and
>>everyone else about capital?
>
> Teach at the best universities in the world.
Ah. That must be why the products of their teaching have achieved
such stunning success applying those teachings in Russia for the last
decade.
-- Roy L
Mark Patrick Witte
Not as you explain it below. Given that I am going to buy some
asset, why am I more of an idle rentier for buying an existing acre of land
than I am for purchasing stock or bonds with claims on an existing factory,
or even for buying rights to a given patent? In any case, the current price
builds in the expected future returns.
>The land was never produced by the labor of men. The economic rewards or
Right, all land was perfectly ready for use and no land has ever
been dispoiled so no incentives matter for the supply of land. Or not.
Mark Patrick Witte
Please post it again with a credible reference.
>
>-- Roy L
Mark Patrick Witte
>On 14 Dec 2000 22:58:33 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>>Could you supply me with the definitive definition of capital?
>Goods that can be used in the production of goods and services. Goods
>are man-made physical objects that can be bought and sold (the
>physical substrate of a worker's skill may in some sense be a man-made
>physical object, but as it cannot be bought and sold, it is not a
>good).
Returning to the questions that's often been dodged, why should
anyone accept this definition as the only valid definition of capital? Is
a stone picked up from the ground and used as a grinder not capital if it's
not man-made? Cannot a unit of a trained worker's time be purchased, just
as one could rent the services of a shovel? As for land....
>>>> How about the alternative that capital is an input into production
>>>>that is not used up in that production. Hence, it could contain all sorts
>>>>of produced capital, human knowledge, and land.
>>>
>>>All sorts of things. Exactly.
>>>
>>>Get it?
>>
>> No, all are factors of production that can be used in production and
>>yet live to produce another day.
>
>So a drill bit that lasts less than a day is not capital, but one that
>lasts more than a day is? Interesting "definition" you have there...
Well, if it's got one hoss shay depreciation.... Substitute
"another time period" for "another day" if that makes your little brain rest
more comfortably in the tight confines of your cranium.
>>As such, their acquisition requires
>>intertemporal choice and holding.
>
>Ah. _Acquisition_. Not _production_. There's the rub.
>
>By your definition, a license required to produce something is
>capital. So government could indefinitely expand the stock of
>"capital" by just requiring licenses to produce everything.
A license can indeed be a capital asset.
>> For explaining aspects of our observed world.
>
>Ah. But not the _economic_ aspects....
The aspects of the observed world in which I live include "the
_economic_ aspects", but it seems that these things are quite disjoint in
the world where you live.
>> Reference?
>
>??? The above definition. The one I gave. The one you asked me for.
>
>Or maybe you think that by requesting references that the sky is blue,
>you can make yourself look (and feel) like a real scientist...?
I could look up the worlds "sky" and "blue" in a dictionary and then
check things (and I would find that the sky is quite apt to be colors other
than blue). However, in a technical discussion with planetologists or
meteorologists, there such broad terms may be nearly meaningless for the
purposes of serious analysis. However, for the definition you put forward
as the sole possible definition of a capital good, I am left to wonder,
where did it come from? Why should I accept it, other than you and Mr.
Coburn really, really want me to?
>>>>>Land (meaning natural resources of all sorts) can lose value
>>>>>through human action or inaction, but cannot be produced by labor, and
>>>>>is therefore not a good, and not capital. Also, unlike capital,
>>>>>"depreciated" land, if left alone, will gradually be restored to its
>>>>>undepreciated state.
>>>>
>>>> This seems like a statement of faith on your part.
>>>
>>>It's an observable fact.
>>
>> Reference?
>
>While there are exceptions, such as extraction of non-renewable
>resources, it is an observable fact that land left idle returns to its
>natural state (the speed of the return depending on many factors).
And the reference is...the library of your ass?
>>>>Perhaps you
>>>>should wander into the Sahara desert and think about this for a while.
>>>
>>>??? I doubt it. You seem to think there is something about the
>>>Sahara Desert that might incline one to believe that it was once much
>>>better land, has been depreciated through human action, and is not now
>>>gradually returning to its undepreciated state even though left alone.
>>
>> You read much into few words, and don't do so accurately.
>
>Wrong. I'm reading _exactly_ what is in your words, liar. You're
>just not used to it.
Charming lad. You seem a tad defensive and cranky. Are you
overtired? Up past your bedtime?
The Sahara is simply a common example of land that has become
desert and thus lost its ability to support the herders and farmers who once
called that territory home. As such, it is land that has depreciated.
>>The
>>Sahara was once much better land yet is depreciating, at least for most of
>>the purposes humans would use it for, for a host of reasons.
>
>??? The number of people living on it has increaased markedly, and
>the impact of their activities on the land's natural state has
>increased even more.
Reference? Dig deep....
>Why don't you just admit that you tried a little debating trick, I
>caught you out on it, refuted it, and humiliated you for it, and now
>you're feeling a little chastened?
I just raised a classic example from environmental studies.
>>>>>Prof. Mason Gaffney of UC Riverside has written a paper detailing
>>>>>(including quotes from their own writings) how the founders of
>>>>>neo-classical economics, like J.B. Clark, set out to eliminate the
>>>>>distinction between land and capital purely in order to deny Henry
>>>>>George and the Single Taxers the logical tools they had been using to
>>>>>prove they were right.
>>>>
>>>> Um...and Galton was a fan of eugenics, does that mean that genetics
>>>>and regression analysis are crap?
>>>
>>>Is eugenics crap? It works with animals. The objections, it seems to
>>>me, are moral, not scientific.
>>
>> Um...you perhaps have problems with following sentences written in
>>English?
>
>No. _You_ just have a problem getting your fallacies, evasions,
>rationalizations, equivocations and irrelevancies past me.
No, I'm just not buying into your use of the ad hominem fallacy.
>>Galton is tied to eugenics, a morally disturbing topic, so should
>>look with prejudice upon all his other work?
>
>For one thing, the redefinition of capital is not "other work." It is
>the work in question. For another, you're dragging red herrings
>again.
No, the question is not, "How must capital be defined?" The
questions are broader, and relate to whatever is the issue at hand that we
wish to understand. For many uses, a definition of capital that aggregates
factories with land and perhaps even human capital is just fine, for other
purposes, it may be inappropriate. You perhaps have an interest in
questions relating to income distribution between various groups with one of
them being land owners? If so, then some narrower definition of capital may
be preferred.
>>(And as eugenics and animals,
>>a puzzle in that field is why race horses don't seem to be getting faster in
>>spite of stunning efforts toward that end.)
>
><yawn>
Oh, you poor thing! Get right to bed!
>Wrong. It's no puzzle. The gene pool is (artificially and
>arbitrarily) kept too small.
Reference? (You do seem the sort who might have deep experience
with breeding with livestock.)
>>>>We don't judge tools by why they were
>>>>made but instead by how useful they are to us today.
>>>
>>>Again: useful for _what_?
>>
>> For explaining the observed world.
>
>Aggregation of unlikes is unlikely to explain anything better than
>their disaggregation.
There was quite a shout when it was realized that Darwin was
aggregating humans in with other animals, but was that such a mistake?
Newton and Kepler aggregated the behavior of all celestial bodies as though
they were the same with good results.
>>>> For fun, after a quick search, here are some references that use
>>>>this broad definition of capital:
>>>>
>>>>Barro, Mankiw, and Sala-i-Martin (1992) NBER
>>>>Cohen and Sachs (1986) Euro Econ Review
>>>>Mankiw, Romer, and Weil (1992) QJE
>>>>Lucas (1988) JME
>>>>Azariadis and Drazen (1990) QJE
>>>>Becker, Murphy, and Tamura (1990) JPE
>>>>Rebelo (1991) JPE
>>>>Kremer and Thomson (1994) NBER
>>>
>>>And what do they do when they are not trying to confuse themselves and
>>>everyone else about capital?
>>
>> Teach at the best universities in the world.
>
>Ah. That must be why the products of their teaching have achieved
>such stunning success applying those teachings in Russia for the last
>decade.
No, that would be Shliefer and Vishney....
So, you're unread in the work of anyone who does modern empirical
work in this area? Well, time for me to get busy with some intersting stuff
then. But if you'd like to explain how Russia's problems are somehow
related to how it aggregates capital, that would surely be a fine piece of
work.
Mike Coburn
From your own perspective (the holder of a financial instrument which could be a
deed) you are partially correct after the fact. In each case you have traded savings
for a financial instrument and after that fact you are, to a very large degree,
"idle". You, as a shareholder, do have some control over the outcome of your
investment, and the more shares you buy the more control you will have. But the
really _big_ difference lies in the fact that you will only realize a return from
share ownership if the enterprise is productive due to its own initiatives, only if
the enterprise produces something of value to the society. Your investment is not
guaranteed by government and any and all claims you may have are subordinated to bond
sales or other financial measures. Your savings have been foregone in an attempt to
develop real capital or in exchange for a share of actual production from _real_
capital That is an "investment". Not a form of "savings".
In the case of land your return from the trade is based on the actions of the
community and government. Your actual return is based on _preventing_ others from
using the land unless they pay you for the privilege (unless that pay land rent).
Your return from land rent will be essentially the same regardless of any capital
development or any production from such capital development. The safety of the
savings is assured and enforced by government and the returns are a result of
government enforcement and government or community actions. So long as you pay the
taxes you will receive the benefits of rent regardless of what may happen in the way
of capital improvements to the land. Any production that would occur from the
capital improvements to the land will be burdened by the rent regardless of any
effort or guidance by the you, land owner.
In the case of bonds your return is again based on preventing the use of the object
(in this case money) unless you are paid a fee for the privilege of said use. The
money, just like the land has been "rented" to the actual productive entity. Your
claim to the return of your initial savings and the interest (rent) takes precedence
over any claim by any capital developers or producers (stockholders (taxpayers) or
management (government) or employees). In the case of US government bonds there is
no risk whatsoever to the loss of the original savings. You are absolutely and truly
a totally passive participant with the force of law and government as your means to
achieve a return from your trade. While it is true that if the US government goes
belly up you will lose your savings, I can't imagine any place you could have stored
the savings that would have been more secure. Such an activity should _never_ be
confused with "investment" and certainly not confused with the development of
"capital".
Your return from bonds or from land ownership are not dependent upon any good or
service that might be delivered to the society as a whole by virtue of your
"investment". As a matter of fact, the returns to the owners of bonds and land are a
confiscation of wealth that has been produced by the labor of others. And that
confiscation is made possible by simply hoarding wealth (or land) and eschewing
actual "investments" in capital.
> >The land was never produced by the labor of men. The economic rewards or
>
> Right, all land was perfectly ready for use and no land has ever
> been dispoiled so no incentives matter for the supply of land. Or not.
The "readiness" of land may bring us to a discussion of capital improvements or to a
discussion of taxing "bads" or a discussion of controlling pollution and
environmental destruction through the use of community force. But yes, the land is
already there. No incentives are going to dramatically increase the supply of land.
Mike Coburn
In other words you will continue your little tap dance and cite more crap for us all
to wade through. If you have something to say let's see it.
>
> >> >If you bid up the price of
> >> >shares you are contributing to the wealth of the corporation.
> >> >All such shares will receive dividends or capital gains ONLY
> >> >if the corporation actually produces something of value,
> >> >only if the corporation creates real wealth. That is why
> >> >shares of stock are capital and bonds are not.
> >>
> >> Actually, neither are capital. Both are just financial instruments
> >> indicating claim on capital.
> >
> >They are both financial instruments to be sure. But the share is a claim to the
> >ownership of capital that entitles the owner to a share of profits. No profits no
> >income. The bond is a pure financial instrument and is a claim to interest on
> >money only
> >which is to be paid regardless of profits. If that requires the sale of
> >underlying capital then so be it. Money is not capital.
>
> No, that is not what a bond is.
I have defined what a bond in accord with the reality of the known universe. If you
wish to define it as something of substantial difference then, again, let's see it.
Right here.
If you wish to reference something else then that is fine too. But please quote the
specific text instead of continuing the tap dance.
Jim Blair
Jim Blair:
>> How meaningful is it to talk about the gain from the Zuyder Zee project
>> going to the "landowners" when there were no "landowners" before the
>> project? I mean when it was a body of water, no one owned it. Now that
>> it has become an expanse of land, it is used to grow crops and also
>> has housing. So you mean the farmers who grow food there are the ones
>> who benefited from the project? Why not the people who eat that food
>> as well?
Mike Coburn <michael....@gte.net> wrote:
>
>It is obvious that all have benefited. It is not obvious as
>to who paid, and it is not obvious as to who benefits the
>most or the least.
Hi,
My point exactly.
MC:
>...All will benefit or there is no reason to
>build the friggin dike. It is entirely possible to finance
>the building of the dike and repay the loan from the land tax
>proceeds. So it is difficult to understand what your problem
>is on this deal.
My problem is not with the "deal". (ie Zuyder Zee project). My "problem"
is with the ideological claim that the benefits of the project went only
to the "landowners".
MC:(>)
>...In a system where the raw land is taxed
>at a very high rate all of those inequities simply disappear....
I note that Michael Coburn wants a high property tax on undeveloped
land.
>
>Yet another JB distortion. Michael Coburn wants a high and
>unvarying tax on all land value that confiscates most of
>the land rent.
Is that what I said?
My question: what is "raw land"?
And note that
Henry George did not want a tax on undeveloped land, only on the
increase in land value due to society. That is, on the increase in
value beyond the improvements made by the owner.
Thus (if I am
understanding this) undeveloped desert land would have a low price and
pay little or no taxes.
>Well... So far you got it somewhat right: HG said that rent
>most of the rent should be confiscated with a tax and the proceeds
>used to obviate all other taxes.
>
But if it became the Las Vegas strip, then the value and the tax would
become large.
>
>In the final analysis that is true.
In Coburn's world, the Las Vegas strip would never have
happened. Who would own such land and pay the taxes on it before it
became valuable? But if no one owned and improved it, it would not
have become the strip.
>More erroneous JB presumptions:
>
>1. Nobody needed to own the desert before it was purchased
>from the government for development. In a system of high land
>tax if there was no tax being paid then there was no
>owner other than the government.
I am with you so far.
>...As soon as someone wanted
>to use the land then that someone would make a deal with
>the government to do so. i.e. to buy the land and agree to pay
>the taxes (always a percentage of the market value of the
>land).
????? "A percentage of the market value of the land"? Meaning that if
the land was of little value, there would be little tax. But isn't
the desert "raw land"?
But it were subject to your "raw land ... taxed at a very high rate", no
one would have built the casinos there in the first place.
>
>2. The Las Vegas strip needed an airport, water, highways,
>electric power, and most certainly the assurance that gambling
>would be permitted.
Well yes, it was the Nevada law permitting gambling that made the
desert attractive for Bugsy Siegel and friends.
>...This last entry is not a detail and
>it would be the same for nuclear wastes, or a leper colony.
??? Don't see the connection between gambling and a leper colony.
>It takes special circumstances and government subsidies and
>enforcements or non enforcements to create a Las Vegas strip.
>
>The construction and maintenance of ALL of the infrastructure
>that provides for the Las Vegas strip, and a certain amount
>of bride money to the rest of the community to allow such
>immoral behavior is not out of line at all. And all of it
>is addressed quite nicely by a high tax on land value without
>actually being concerned with the morality.
>
My question: do you want a high tax on land of low market value? Like
the Nevada desert was before it became the Vegas strip?
Or do you support the George view that only the increase in land
value beyond the improvements made by the owner should be taxed?
Jin Blair:
And is building dykes to produce dryness fundamentally different from
building irrigation canals to produce wetness?
>> >
>> >They're both infrastructure improvements that increase land value.
>> >
>> >-- Roy L
>>
But I see at least one difference. Someone owned the land before it was
irrigated.
MC:
>This seems to be the standard JB irrelevancy or obfuscation.
>
Is it "irrelevent" that the desert is owned by someone before it is
irrigated? And that if the owner pays for the irrigation, that is
different from the Zuyder Zee project where (unowned) sea bed is
turned into dry land by the government?
Mike Coburn
> Jim Blair:
>
> >> How meaningful is it to talk about the gain from the Zuyder Zee project
> >> going to the "landowners" when there were no "landowners" before the
> >> project? I mean when it was a body of water, no one owned it. Now that
> >> it has become an expanse of land, it is used to grow crops and also
> >> has housing. So you mean the farmers who grow food there are the ones
> >> who benefited from the project? Why not the people who eat that food
> >> as well?
>
> Mike Coburn <michael....@gte.net> wrote:
> >
> >It is obvious that all have benefited. It is not obvious as
> >to who paid, and it is not obvious as to who benefits the
> >most or the least.
>
> Hi,
>
> My point exactly.
>
> MC:
>
> >...All will benefit or there is no reason to
> >build the friggin dike. It is entirely possible to finance
> >the building of the dike and repay the loan from the land tax
> >proceeds. So it is difficult to understand what your problem
> >is on this deal.
>
> My problem is not with the "deal". (ie Zuyder Zee project). My "problem"
> is with the ideological claim that the benefits of the project went only
> to the "landowners".
Until the tax system is revamped in such a way as to recover the costs of the
creation of infrastructure _directly_ from those who benefit from that
infrastructure then the beneficiaries will be being _subsidized_ by the non
beneficiaries. I can understand your claim that the _new_ land owners were
not the only beneficiaries or the owners of all land or proximate land were
not the only beneficiaries. But, for me at least, that has never been the
real point in regard to taxation. The land "owners" should pay the direct
tax because only the land owners can make the land productive. From their
produce they will pay the tax. No produce, no income with which to pay the
tax. The land finds a productive owner. THAT, Mr. Blair, is what insures
that the benefits of the infrastructure creations actually do go to all
people instead of just the land owners.
>
> MC:(>)
>
> >...In a system where the raw land is taxed
> >at a very high rate all of those inequities simply disappear....
>
> I note that Michael Coburn wants a high property tax on undeveloped
> land.
>
> >
> >Yet another JB distortion. Michael Coburn wants a high and
> >unvarying tax on all land value that confiscates most of
> >the land rent.
>
> Is that what I said?
I interpreted your position to indicate that I wanted a tax _ONLY_ on
undeveloped land and I want to be dead certain that no one else is _EVER_
under that impression.
>
> My question: what is "raw land"?
That is the actual land as opposed to irrigation equipment and channels or
structures or fences or high rises or air.
>
> And note that
> Henry George did not want a tax on undeveloped land, only on the
> increase in land value due to society. That is, on the increase in
> value beyond the improvements made by the owner.
>
> Thus (if I am
> understanding this) undeveloped desert land would have a low price and
> pay little or no taxes.
>
> >Well... So far you got it somewhat right: HG said that rent
> >most of the rent should be confiscated with a tax and the proceeds
> >used to obviate all other taxes.
> >
>
> But if it became the Las Vegas strip, then the value and the tax would
> become large.
That is correct. And the land before Vegas was probably not taxed at all and
would have, therefore, been defacto government owned (no taxes being paid)
and, if populated at all, only populated by squatters.
> >
> >In the final analysis that is true.
>
> In Coburn's world, the Las Vegas strip would never have
> happened. Who would own such land and pay the taxes on it before it
> became valuable? But if no one owned and improved it, it would not
> have become the strip.
>
> >More erroneous JB presumptions:
> >
> >1. Nobody needed to own the desert before it was purchased
> >from the government for development. In a system of high land
> >tax if there was no tax being paid then there was no
> >owner other than the government.
>
> I am with you so far.
>
> >...As soon as someone wanted
> >to use the land then that someone would make a deal with
> >the government to do so. i.e. to buy the land and agree to pay
> >the taxes (always a percentage of the market value of the
> >land).
>
> ????? "A percentage of the market value of the land"? Meaning that if
> the land was of little value, there would be little tax. But isn't
> the desert "raw land"?
>
> But it were subject to your "raw land ... taxed at a very high rate", no
> one would have built the casinos there in the first place.
So: Where would the casinos been built? Answer: In some locality where
gambling would have been tolerated. Why do you or I care where they were
built? My best guess is that the casinos would still have been built in the
same place they currently exist. And if not then I would have lost nothing
in the bargain.
> >2. The Las Vegas strip needed an airport, water, highways,
> >electric power, and most certainly the assurance that gambling
> >would be permitted.
>
> Well yes, it was the Nevada law permitting gambling that made the
> desert attractive for Bugsy Siegel and friends.
Thank you.
>
> >...This last entry is not a detail and
> >it would be the same for nuclear wastes, or a leper colony.
>
> ??? Don't see the connection between gambling and a leper colony.
Of course you don't. (actually I don't see much, but watch while the people
of a region fight like rabid dogs to keep a gambling casino, race track, or
leper colony out of their neighborhood).
> >It takes special circumstances and government subsidies and
> >enforcements or non enforcements to create a Las Vegas strip.
> >
> >The construction and maintenance of ALL of the infrastructure
> >that provides for the Las Vegas strip, and a certain amount
> >of bride money to the rest of the community to allow such
> >immoral behavior is not out of line at all. And all of it
> >is addressed quite nicely by a high tax on land value without
> >actually being concerned with the morality.
> >
>
> My question: do you want a high tax on land of low market value? Like
> the Nevada desert was before it became the Vegas strip?
>
> Or do you support the George view that only the increase in land
> value beyond the improvements made by the owner should be taxed?
I fail to see any substantive difference between the two. The trade price of
the land which is the capitalized anticipated rent divided by the tax (and
interest) is affected by the tax itself. Land is either worth paying the
taxes or it isn't. There comes a point when the proceeds of the tax are so
minuscule as to outweigh the benefit of collection. In such a case there is
no real benefit to "ownership" as supported by a deed. Why pay?
> Jin Blair:
>
> And is building dykes to produce dryness fundamentally different from
> building irrigation canals to produce wetness?
>
> >> >
> >> >They're both infrastructure improvements that increase land value.
> >> >
> >> >-- Roy L
> >>
>
> But I see at least one difference. Someone owned the land before it was
> irrigated.
>
> MC:
> >This seems to be the standard JB irrelevancy or obfuscation.
> >
>
> Is it "irrelevent" that the desert is owned by someone before it is
> irrigated? And that if the owner pays for the irrigation, that is
> different from the Zuyder Zee project where (unowned) sea bed is
> turned into dry land by the government?
In a heavy land tax system it will make _no_ difference whatsoever. You seem
to be hung up on this idea that someone simply must "own" all the land.
People are not forced to "own" land, are not compelled to pay land taxes.
Land that cannot produce profits unless improved is not going to be
generating any tax revenue and it will, therefore, not be owned. It is not
relevant as to whether this unprofitable "land" is covered by sea or sun.
Jim Blair
>>
>> >...In a system where the raw land is taxed
>> >at a very high rate all of those inequities simply disappear..
Jim Blair:..
I note that Michael Coburn wants a high property tax on undeveloped
land.
>> >
>> >Yet another JB distortion. Michael Coburn wants a high and
>> >unvarying tax on all land value that confiscates most of
>> >the land rent.
Is that what I said?
>I interpreted your position to indicate that I wanted a tax _ONLY_ on
>undeveloped land and I want to be dead certain that no one else is _EVER_
>under that impression.
Hi,
Not ONLY on undeveloped land. Just ON undeveloped land.
>... And the land before Vegas was probably not taxed at all and
>would have, therefore, been defacto government owned (no taxes being paid)
>and, if populated at all, only populated by squatters.
Hi,
I think anyone could have bought land in the desert south of the little
town of Las Vegas back in the 1930's for very little money per acre, and
paid very little in annual taxes on the land. (And lots of people later
wished they had!!!)
Of course both the price of that land and the taxes on it have increased
a lot since then.
>> >...As soon as someone wanted
>> >to use the land then that someone would make a deal with
>> >the government to do so. i.e. to buy the land and agree to pay
>> >the taxes (always a percentage of the market value of the
>> >land).
????? "A percentage of the market value of the land"? Meaning that if
the land was of little value, there would be little tax. But isn't
the desert "raw land"?
But if were subject to your "raw land ... taxed at a very high rate", no
one would have built the casinos there in the first place.
>So: Where would the casinos been built?
It is not clear that except, for the cheap land in the Nevada desert,
they would have been built at all,
>.Answer: In some locality where
>gambling would have been tolerated. Why do you or I care where they were
>built? My best guess is that the casinos would still have been built in the
>same place they currently exist.
Why there and not somewhere else. Or at all.
>And if not then I would have lost nothing
>in the bargain.
Nothing, except the current Las Vegas.
Well yes, it was the Nevada law permitting gambling that made the
desert attractive for Bugsy Siegel and friends.
>Thank you.
Actually I would have expected "Las Vegas" (the concept, not the location)
to have been built in another Nevada county, one where both gambling
and prostitution is legal.
My question: do you want a high tax on land of low market value? Like
the Nevada desert was before it became the Vegas strip?
Or do you support the George view that only the increase in land
value beyond the improvements made by the owner should be taxed?
>I fail to see any substantive difference between the two.
I see a big difference. If the tax on the land applies BEFORE it
increases in value, it will likely not be developed in the first place.
It was the low price and the low taxes that attracted the investment
in the first place.
Is it "irrelevent" that the desert is owned by someone before it is
irrigated? And that if the owner pays for the irrigation, that is
different from the Zuyder Zee project where (unowned) sea bed is
turned into dry land by the government?
>In a heavy land tax system it will make _no_ difference whatsoever.
People are willing to take a chance on this kind of gamble if they
don't have to pay a lot up front. But if they are expected to pay
the taxes on a successful development before it IS a success, they
will be less likely to take the chance.
>....You seem
>to be hung up on this idea that someone simply must "own" all the land.
>People are not forced to "own" land, are not compelled to pay land taxes.
That is MY point. People won't buy land and risk investing in it if
they have to pay the high taxes on it up front and even if the investment
fails. Or even if ALL of the gain from the project is taxed away.
>Land that cannot produce profits unless improved is not going to be
>generating any tax revenue and it will, therefore, not be owned.
So who will take a chance on investing in it?
Mike Coburn
Time for a little example:
T = R / (i+r)
T (the trade price or capitalized value of a land parcel) is defined by R (the
anticipated yearly rent), divided by the sum of "i" (the interest rate that
could have been realized from simply placing money into bonds or mortgages) and
"r" the annual tax rate.
I'm going to assume a 6% interest rate and I am going to set the tax rate at 15%
(I could actually set it to 80% and it would all still work very well). The
anticipated annual ground rent is whatever some idiot speculator would pay for
the rights to trade the property in the future. We'll start bidding at $2 an
acre. The trade price of the land is, therefore, $23.81 per acre. But maybe
the tax authority tries to say the land is worth $30 an acre. If that was the
case than no speculators would attempt to "own" this piece of land and there
would be no tax revenue. The price "T" of the land will find its rightful place
because in the proposed system "T" is based on the _market_ price (the trade
price of similar land or what someone is willing to pay for the rights to
_speculate_ and/or to _use_ the land exclusively).
SO! You have the right to speculate all you will but the tax is the price you
will pay for the speculation. Just like now but for the increased price of
speculating. Whoever holds the deed will be compelled to pay the tax or the
land will be auctioned. If no one buys the land then the land is owned by the
government. (i.e. all of us) and it is all of us who will benefit from its
future sale or rent. There is no compelling need to remove anyone from the land
until such time as a willing buyer will have outbid the current occupant. In
many cases it is simply not worth the effort. Desert land would probably be a
good example.
> >> >...As soon as someone wanted
> >> >to use the land then that someone would make a deal with
> >> >the government to do so. i.e. to buy the land and agree to pay
> >> >the taxes (always a percentage of the market value of the
> >> >land).
>
> ????? "A percentage of the market value of the land"? Meaning that if
> the land was of little value, there would be little tax. But isn't
> the desert "raw land"?
Yes, it is. Any time you want to pay the tax on the land at the very high rate
then you can bid for ownership of the land in the open market just like you do
now.
> But if were subject to your "raw land ... taxed at a very high rate", no
> one would have built the casinos there in the first place.
Here's a quarter..... You know the rest.
> >So: Where would the casinos been built?
>
> It is not clear that except, for the cheap land in the Nevada desert,
> they would have been built at all,
And your point is?????
> >.Answer: In some locality where
> >gambling would have been tolerated. Why do you or I care where they were
> >built? My best guess is that the casinos would still have been built in the
> >same place they currently exist.
>
> Why there and not somewhere else. Or at all.
Because they were tolerated there.
> >And if not then I would have lost nothing
> >in the bargain.
>
> Nothing, except the current Las Vegas.
So....
> Well yes, it was the Nevada law permitting gambling that made the
> desert attractive for Bugsy Siegel and friends.
>
> >Thank you.
>
> Actually I would have expected "Las Vegas" (the concept, not the location)
> to have been built in another Nevada county, one where both gambling
> and prostitution is legal.
>
> My question: do you want a high tax on land of low market value? Like
> the Nevada desert was before it became the Vegas strip?
I want a high tax on the market value (trade price as described above). I do
not care what the land is used for or where it is or whether the market values
the land dearly or not at all. None if that _crap_ you keep trying to sling all
around makes any difference.
> Or do you support the George view that only the increase in land
> value beyond the improvements made by the owner should be taxed?
If what I have said seems to be in contradiction to your beliefs about Henry
George then that is as it is. I have made my position quite clear. Feel free
to babble about Henry all you want.
> >I fail to see any substantive difference between the two.
>
> I see a big difference. If the tax on the land applies BEFORE it
> increases in value, it will likely not be developed in the first place.
See the example above to find out why there is a lot of unimproved land that
would have no value if the _STANDARD _ AND_ _FLAT_ tax rate is very high. You
get to a place where the speculator is renting the right to speculate.
> It was the low price and the low taxes that attracted the investment
> in the first place.
It was the low price and the tolerance of the gambling. If the tax rate is the
same everywhere then the tax rate obviously has nothing to do with it.
> Is it "irrelevent" that the desert is owned by someone before it is
> irrigated? And that if the owner pays for the irrigation, that is
> different from the Zuyder Zee project where (unowned) sea bed is
> turned into dry land by the government?
Nope. In either case the owner of the land will be taxed on the market value of
the land _after_ the improvements are created. If the improvements will not pay
the tax and create a profit to the owner then the improvements will not occur.
There is absolutely _nothing_ wrong with that.
> >In a heavy land tax system it will make _no_ difference whatsoever.
>
> People are willing to take a chance on this kind of gamble if they
> don't have to pay a lot up front. But if they are expected to pay
> the taxes on a successful development before it IS a success, they
> will be less likely to take the chance.
This is total horseshit. If people cannot procure wealth from land speculation
and the collection of land rent then they will have to find some other outlet
for their speculative and creative pursuits. So I guess I have actually
modified my position. A system in which land is heavily taxed and the proceeds
of that tax are used in an egalitarian fashion will likely result in an increase
the development of real capital. What else ya gonna do with all that surplus?
> >....You seem
> >to be hung up on this idea that someone simply must "own" all the land.
> >People are not forced to "own" land, are not compelled to pay land taxes.
>
> That is MY point. People won't buy land and risk investing in it if
> they have to pay the high taxes on it up front and even if the investment
> fails. Or even if ALL of the gain from the project is taxed away.
A tax on value cannot _ever_ tax away the value. You are trying to sell us (and
yourself) a unicorn.
> >Land that cannot produce profits unless improved is not going to be
> >generating any tax revenue and it will, therefore, not be owned.
>
> So who will take a chance on investing in it?
Who cares? If you want to build a casino then _you_ will need to to figure it
all out and either build the casino or not. I will not build or buy a house
that is not in an area protected by zoning and in which I am quite sure there
will not be a landfill going in right next door. So long as I _know_ that the
tax rate is not going to change from one location to another and I am
reasonably certain as to the future _use_ of the surrounding land, then I am in
pretty good shape in regard to my planning and my capital improvements.
ro...@telus.net
Witte) wrote:
>In article <3a3d6d3b...@news.telus.net>, <ro...@telus.net> wrote:
>>On 14 Dec 2000 23:01:03 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>> Um...so if choose to keep my consumption below my income and use
>>>that saving to buy land, I'm somehow more idle than if I'd have purchased
>>>bonds or shares of QQQ?
>>
>>???? No. Didn't you read the definition of "capital"?
>
> Please post it again with a credible reference.
You can read it in another post in this thread. You asked me for the
definitive definition of capital. I gave it. Now you want
"references." Presumably, this is to substitute for thinking....
-- Roy L
ro...@telus.net
Witte) wrote:
>In article <3a3d6e38...@news.telus.net>, <ro...@telus.net> wrote:
>>On 14 Dec 2000 22:58:33 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>>Could you supply me with the definitive definition of capital?
>
>>Goods that can be used in the production of goods and services. Goods
>>are man-made physical objects that can be bought and sold (the
>>physical substrate of a worker's skill may in some sense be a man-made
>>physical object, but as it cannot be bought and sold, it is not a
>>good).
>
> Returning to the questions that's often been dodged,
Look in the mirror....
>why should
>anyone accept this definition as the only valid definition of capital?
Because it separates the particulars of interest by isolating the
essential qualities they have in common.
>Is
>a stone picked up from the ground and used as a grinder not capital if it's
>not man-made?
Until improved by labor it is just land.
>Cannot a unit of a trained worker's time be purchased, just
>as one could rent the services of a shovel?
So now you claim capital is anything that can be bought and used for
production? The persistence over time is no longer necessary?
>>So a drill bit that lasts less than a day is not capital, but one that
>>lasts more than a day is? Interesting "definition" you have there...
>
> Well, if it's got one hoss shay depreciation.... Substitute
>"another time period" for "another day" if that makes your little brain rest
>more comfortably in the tight confines of your cranium.
If any time period can be substituted, the persistence over time is no
longer a meaningful requirement, and capital can be anything used for
production. So the "three factors of production" are all capital.
How nice for the capitalists...
>>>As such, their acquisition requires
>>>intertemporal choice and holding.
>>
>>Ah. _Acquisition_. Not _production_. There's the rub.
>>
>>By your definition, a license required to produce something is
>>capital. So government could indefinitely expand the stock of
>>"capital" by just requiring licenses to produce everything.
>
> A license can indeed be a capital asset.
Blatant, outright equivocation. No wonder you understand nothing.
When capital increases, production becomes greater and/or more
efficient. When licenses increase, production becomes smaller and/or
less efficient.
>>> For explaining aspects of our observed world.
>>
>>Ah. But not the _economic_ aspects....
>
> The aspects of the observed world in which I live include "the
>_economic_ aspects", but it seems that these things are quite disjoint in
>the world where you live.
Another blatant logical fallacy. You've got a million of 'em....
>>Or maybe you think that by requesting references that the sky is blue,
>>you can make yourself look (and feel) like a real scientist...?
>
> I could look up the worlds "sky" and "blue" in a dictionary and then
>check things (and I would find that the sky is quite apt to be colors other
>than blue). However, in a technical discussion with planetologists or
>meteorologists, there such broad terms may be nearly meaningless for the
>purposes of serious analysis. However, for the definition you put forward
>as the sole possible definition of a capital good
Lots of misleading and dishonest definitions are "possible," and the
definition was for "capital," not "capital good."
>I am left to wonder,
>where did it come from?
Classical economics.
>Why should I accept it, other than you and Mr.
>Coburn really, really want me to?
It will help you understand economics. That's all we really, really
want, here, you know.
>>While there are exceptions, such as extraction of non-renewable
>>resources, it is an observable fact that land left idle returns to its
>>natural state (the speed of the return depending on many factors).
>
> And the reference is...the library of your ass?
Well, that would certainly be a more reliable source than the library
of your brain.
>>>>>Perhaps you
>>>>>should wander into the Sahara desert and think about this for a while.
>>>>
>>>>??? I doubt it. You seem to think there is something about the
>>>>Sahara Desert that might incline one to believe that it was once much
>>>>better land, has been depreciated through human action, and is not now
>>>>gradually returning to its undepreciated state even though left alone.
>>>
>>> You read much into few words, and don't do so accurately.
>>
>>Wrong. I'm reading _exactly_ what is in your words, liar. You're
>>just not used to it.
>
> Charming lad. You seem a tad defensive and cranky.
Dishonesty gets my back up. Especially dishonesty posing as
"science."
> The Sahara is simply a common example of land that has become
>desert and thus lost its ability to support the herders and farmers who once
>called that territory home. As such, it is land that has depreciated.
Indeed. And if people were now leaving it alone, instead of
continuing to overuse (and more importantly, misuse) it, it would
return to its undepreciated state, as other land does. Contrariwise,
if people were now leaving it alone and it were _not_ returning to its
undepreciated state, your snide little comment would have some actual
merit, rather than being proof of your ignorance and/or dishonesty.
>>>The
>>>Sahara was once much better land yet is depreciating, at least for most of
>>>the purposes humans would use it for, for a host of reasons.
>>
>>??? The number of people living on it has increaased markedly, and
>>the impact of their activities on the land's natural state has
>>increased even more.
>
> Reference? Dig deep....
<yawn> The World Almanac. You can check out the population and
economic statistics for yourself, I assume. Most of the countries in
the area have extremely short population doubling times, and their
economies tend to be dominated by extractive industries.
>>Why don't you just admit that you tried a little debating trick, I
>>caught you out on it, refuted it, and humiliated you for it, and now
>>you're feeling a little chastened?
>
> I just raised a classic example from environmental studies.
Wrong. Your "classic" example was totally irrelevant, because the
Sahara is _not_being_left_alone_. Now, you can just admit that, or
you can continue to embarrass yourself.
>>>>>>Prof. Mason Gaffney of UC Riverside has written a paper detailing
>>>>>>(including quotes from their own writings) how the founders of
>>>>>>neo-classical economics, like J.B. Clark, set out to eliminate the
>>>>>>distinction between land and capital purely in order to deny Henry
>>>>>>George and the Single Taxers the logical tools they had been using to
>>>>>>prove they were right.
>>>>>
>>>>> Um...and Galton was a fan of eugenics, does that mean that genetics
>>>>>and regression analysis are crap?
>>>>
>>>>Is eugenics crap? It works with animals. The objections, it seems to
>>>>me, are moral, not scientific.
>>>
>>> Um...you perhaps have problems with following sentences written in
>>>English?
>>
>>No. _You_ just have a problem getting your fallacies, evasions,
>>rationalizations, equivocations and irrelevancies past me.
>
> No, I'm just not buying into your use of the ad hominem fallacy.
It's not an ad hominem at all. The redefinition of capital to include
land is not deceitful garbage because J.B. Clark and others did it.
It is deceitful garbage because they consciously and deliberately
_designed_ it that way.
>>>Galton is tied to eugenics, a morally disturbing topic, so should
>>>look with prejudice upon all his other work?
>>
>>For one thing, the redefinition of capital is not "other work." It is
>>the work in question. For another, you're dragging red herrings
>>again.
>
> No, the question is not, "How must capital be defined?"
That is the question I am interested in right now. It is the question
you asked me to answer. Remember?
>The
>questions are broader, and relate to whatever is the issue at hand that we
>wish to understand.
Or obfuscate...
>For many uses, a definition of capital that aggregates
>factories with land and perhaps even human capital is just fine, for other
>purposes, it may be inappropriate.
True. But why, then, did the early neo-classical economists insist on
redefining capital to include land, rather than making up a new term?
It is normal in science to use technical terms consistently, not to
redefine them according to the end one wants to promote. But then,
economic "science" does tend to be the province of special
pleading....
>You perhaps have an interest in
>questions relating to income distribution between various groups with one of
>them being land owners?
I have an interest in clarity.
>If so, then some narrower definition of capital may be preferred.
Real sciences do not adjust their technical definitions to yield the
result that is "preferred."
>>>(And as eugenics and animals,
>>>a puzzle in that field is why race horses don't seem to be getting faster in
>>>spite of stunning efforts toward that end.)
>>
>>Wrong. It's no puzzle. The gene pool is (artificially and
>>arbitrarily) kept too small.
>
> Reference? (You do seem the sort who might have deep experience
>with breeding with livestock.)
??? You introduced the racehorse issue (and eugenics, for that
matter) as a red herring. Not me. _You_ claimed it is a puzzle why
racehorses are not getting faster, not me. Now you are telling me you
know no more about race horses than you do about definitions?
>>Aggregation of unlikes is unlikely to explain anything better than
>>their disaggregation.
>
> There was quite a shout when it was realized that Darwin was
>aggregating humans in with other animals, but was that such a mistake?
Animals and humans are likes, not unlikes.
>Newton and Kepler aggregated the behavior of all celestial bodies as though
>they were the same with good results.
For the purposes of celestial mechanics, planets are likes, not
unlikes.
>>>>And what do they do when they are not trying to confuse themselves and
>>>>everyone else about capital?
>>>
>>> Teach at the best universities in the world.
>>
>>Ah. That must be why the products of their teaching have achieved
>>such stunning success applying those teachings in Russia for the last
>>decade.
>
> No, that would be Shliefer and Vishney....
?? You're going to pick two guys and blame them for the whole mess?
Reference?
> So, you're unread in the work of anyone who does modern empirical
>work in this area? Well, time for me to get busy with some intersting stuff
>then. But if you'd like to explain how Russia's problems are somehow
>related to how it aggregates capital, that would surely be a fine piece of
>work.
Against the advice of dozens of eminent Western economists, including
_four_ Nobel laureates, Russia declined to retain land in public
ownership and collect its rent to finance government operations. It
presumably did this because the neo-classical economists (trained at
the best universities in the world, by your heroes) whose advice
Russia _did_ take told the Russians a tax on land was a tax on
capital, and thus known to be economically destructive.
And btw, you wouldn't know a fine piece of work if it sat on your
face.
-- Roy L
Mark Patrick Witte
No, it's a request for you to come up with a definitive definition.
Why is something definitive, because you say so?
So, why is it never acceptible to include land in capital? Why will
that crash every economic model that does so? Can you give some specific
examples of why it overturns the results of some of the research I have
cited in our little dialog. Don't feel you really need to reply, if like in
your last post, you really have nothing to add.
>
>-- Roy L