Basic Economics: A Common Sense Guide to the Economy

Category: Economics
Author: Thomas Sowell
This Month Reddit 5


by _bobsacamano   2019-11-17

> This is my entire point though, why kick out some of the lower class instead of getting rid of the upper class

Is this a joke? Considering the appalling decline in education over the last few years and the total breakdown of objective journalism I'll give you the benefit of the doubt here. I just need three sentences to totally shatter your worldview:

The top twenty percent of income earners in this country pay 87% of all federal income taxes. The top one percent paid 37% of all federal income taxes. The bottom 50% pay 3%.

> The reason that there's a growing lower class is that upper class people keep making more and more money,

No, sorry. Try again. This was Marx's main prediction and the data show the exact opposite has happened. He couldn't have been more wrong if he tried.

First of all, income is a lump measurement of all workers in any given year. It doesn't account for say, age. So that means we're comparing a fresh college graduate with someone who has been working in their career for twenty years or more. Who do you think makes more money? A brand new law grad working as a temp while they study for the bar or a partner at a law firm?

So that new grad studying for the bar will eventually become a lawyer and maybe even make partner. That means the SAME PERSON will be represented in two or likely many more totally different income brackets in their lifetime.

According to research from Cornell, FIFTY percent of American workers will make it into the top ten percent of income earners for at least one year of their lives. No fair right? Well, 94% of these evil, evil, one percent income earners will only be in the one percent for ONE YEAR OR LESS. Only THREE percent stay in the top one percent for more than a decade.

In 1895, 90% of the world's population lived on less than a dollar a day IN TODAY'S DOLLARS. Today that number is well under ten percent and shrinking every day. More than a BILLION people have been lifted out of extreme poverty in the last thirty years. One of the main reasons for this is China abandoning Marxist economic principles.

> middle and lower classes have less access to it and are the ones getting screwed out.

Huh? Money is not a pie that the government hands out slice by slice. Do you honestly think that a rich person making a lot of money means there's less left over for you?

Read this book:

It was written by a former Marxist.

by bonked_or_maybe_not   2019-11-17

> predatory business!

Just goes to show, like Starr, you love to read, but are terrified of this book. You think money literally is a limited pie that someone taking a piece of leaves less, while at the same time refusing to acknowledge that business that fail to operate within a budget, fail to exist.

See my other comments, WHERE does this money magically come from?

by zhcyiD9-png   2019-11-17

do some reading. the fact that these are being bought and resold instantly is more an indicator that Blizzard set the price too low for what people are willing to pay. wherever there are imbalances like that, arbitrage is going to happen, whether you like it or not.

by ExisDiff   2019-08-24

> it is up to someone to prove that consensus wrong.

Keep being disillusioned.

> Start with this, then maybe sometime we'll talk about it.

Is this book the problem? Why is that book the problem? I thought you were going to explain it to me?

by Austro-Punk   2019-08-24

> You're thinking of the wrong one.

They're all the same.

>It sometimes works to invoke an argument from authority.

When the entire economic community has a consensus, it is up to someone to prove that consensus wrong. You have not done so. You just handwave

>Will you now tell me the huge problem?

Start with this, then maybe sometime we'll talk about it.

by o7murica   2019-08-24

This, but unironically

by pushtoclose   2019-07-21

Established? What do you think the bank does with the money "just sitting" there?

Basic Economics: A Common Sense Guide to the Economy

by Str4ngeL   2019-07-21

They bring 25,000+ jobs, plus working class construction jobs to build their facility.

It boosts NY economy when people are working and getting paid.

Socialists need to read this.

by icomeforthereaper   2019-07-21

> 1.5 trillion dollars and giving most of it away to the richest people in the country,

First of all, how is letting people keep their own money "giving it away"? If you pay me $100 a month and one month I say I only want $80, I have "given" you literally nothing. You just kept more of your own money.

Also, you do realize that the top twenty percent of income earners in this country pay 87% of all federal income taxes? That the bottom 44% pay ZERO in federal income taxes? Yet somehow you're pretending to be shocked that the group who pays 87% of the taxes gets more back than people who pay ZERO PERCENT of taxes.

>Do you know how deficits work?

LOL I do. The left has been telling us deficits are no big deal for decades now and suddenly since more american workers get to keep and spend more of their own money you're concerned?

Also, you do know what modern monetary policy is and who supports it? Maybe spend a few more minutes reading and a few less screaming next time.

This is a good start:

by Elite_dean   2019-07-21

by gt4674b   2019-07-21

Very much disagree. There is nothing wrong with natural monopolies. That just means they are the best. However, I agree that monopolies that are a result of government interference/regulation are bad. The answer isn’t breaking them up though. It’s removing the artificial barriers to entry that government enacts.

Edit: Pretty disappointed in the comments below. Made a more detailed answer to one commenter. TL;DR Natural monopolies are ok because the boatloads of money they make inspire competition. Government created monopolies are not and the correct answer is to reduce artificial barriers to entry. Conservatives should support reducing govt barriers, NOT picking winners and losers.

No disrespect, but a lot of y’all could use a better understanding of economics.

Economic in One Lesson by Hazlitt

Basic Economics by Sowell - abridged

Basic Economics purchase on AMZN

by harrison_wintergreen   2018-11-10

>Am I being naive or stupid to want to sell all of my bond holdings and focus only equities, gold and cash?

over the long-term, gold is a worse investment than bonds.

>...a dollar invested in bonds in 1801 would be worth nearly a thousand dollars by 1998, a dollar invested in stocks that same year would be worth more than half a million dollars. All this is in real terms, taking inflation into account. Meanwhile, a dollar invested in gold in 1801 would by 1998, be worth just 78 cents. The phrase, “as good as gold” can be misleading as the phrase “money in the bank”, when talking about the long run.

Thomas Sowell, Basic Economics (2007)

as for bonds, the old advice (100 minus your age, result in stocks the rest in bonds) started decades ago. Under Nixon or whoever you could expect stocks in the 8-10% range and bonds about 6-7%. not a bad plan. nowadays, however, bonds are barely keeping up with inflation, but the old advice hasn't really changed for most people. I stopped buying bonds a few years ago after tracking down the research mentioned in the link below about how stocks are actually the most stable investment:

by harrison_wintergreen   2018-11-10

> Whether it's true or not I don't know.

not true.

>...a dollar invested in bonds in 1801 would be worth nearly a thousand dollars by 1998, a dollar invested in stocks that same year would be worth more than half a million dollars. All this is in real terms, taking inflation into account. Meanwhile, a dollar invested in gold in 1801 would by 1998, be worth just 78 cents. The phrase, “as good as gold” can be misleading as the phrase “money in the bank”, when talking about the long run.

Thomas Sowell, Basic Economics (2007)

by Where_You_Want_To_Be   2018-11-10

You didn't answer any of my questions, you just said "research these bad things that have happened!" And then your final answer to my overall question is "I'll leave you to figure this one out on your own."

You're as bad at arguing a point as you are with all of your failed startups apparently, no wonder you can't stay above water.

Read this some day:

by IcecreamDave   2018-11-10

You might want to read this

by BurgersBaconFreedom   2018-11-10

>You are okay with being forced to pay to watch netflix sperately with no realchoice in the matter? Pay to access google?

Absolutely. It's this way with literally any other service or good I purchase. Also, why do you just assume it's going to cost an insane amount? Have you ever considered it might be cheaper for most folks to pay for access separately? EG: I don't use social media outside of Reddit and Instagram. If I can drop access to Facebook, Twitter, etc. and lower my monthly bill, that's great for me. I don't need streaming 4k service because my TV is 720p. If I can drop my bill because of that, awesome. My grandparents are on a fixed income and literally just use the internet to access Facebook and Gmail. Can I bundle that and save them $40/month on their bill? GREAT.

Pricing is basic economics. If you price too high, you lose customers. You price too low and you don't remain profitable. If the government starts distorting the market signals of pricing, the whole machine is basically fucked.

>DO you expect the government to eventually ban those deals and deal with the lack of N while you have no NN?

Without NN, the government couldn't ban those deals. We all might save money as a result. I don't understand the second half of that question.

>People wont drop the only ISP they can have because their isp is throttling them, the people within those monopolized areas are like a captive audience and have NO choice but to pay. You say government regulation wont fix the problem, but you know the market wont fix the problem itself. That feels like a major contradiction to me.

The market will absolutely fix the problem if you don't fuck with price signals. If people literally can't afford their ISP, they will drop it. And several more tech minded customers will likely form a WISP to compete (assuming they are allowed to with NN being repealed). Where ever there is demand, markets form. It's been demonstrated throughout history.

>This feels very pro-monopoly, and actually against the free market

You clearly do not understand how markets or monopolies work. I highly recommend Basic Economics by Thomas Sowell as a primer (not being cheeky, it's an excellent read and one of my favorite books).

Let me ask you this. What companies are prepared and ready to offer 4k streaming services to every single customer at a fixed price? Now tell me who benefits from NN? The answer to both is Time Warner, Verizon, Comcast, etc. Major monopolies that have the right infrastructure and large scale development completed.

>It would be like if some piping company started charging prices for hot and cold water separately. You need water so you have to pay and there s no other infrastructure around you. Many people work only on the internet nowadays, so they are forced to pay or they would STARVE to death if say, their isp started throttling youtube and that was how they made money.

This is just ridiculous hyperbole. No one is going to starve to death because their internet bill went up or down $20/month. If they use the internet for their business then the entire bill is tax deductible anyhow. You still haven't convinced me that a company being able to set prices for service at market rate will even be higher. Or how that is somehow anti-free market.

Also, you do realize that NN does nothing to remove the entrenched monopolies, right? You mentioned in an earlier comment that regional monopolies would be addressed by NN, but it actually won't. Comcast will still be the only option in most cities under NN. And you've just made it harder for their competition to start up and steal customer base by not allowing them to offer lower prices.

by jub-jub-bird   2018-11-10

> All the difference. A government helmed by the motivations of Adolf Hitler or Jefferson Davis will have different outcomes than a government helmed by Franklin Roosevelt or Abe Lincoln.

*sigh* I'm not saying that motivations aren't important. I'm saying that they don't magically make government oppression into some kind of private act of oppression. I was asked for examples of government oppression and provided one and you are saying it doesn't count because laws aren't government oppression if the legislator writing the laws has certain motivations.

> I think you’re having trouble conceptualizing the extreme level of hatred towards black people throughout the United States during the Jim Crow era.

I don't have trouble conceptualizing it at all. My point is that it produced government oppression which perpetuated and encouraged that hatred.

All your examples of businessmen behaving poorly and your point that businessmen didn't lead the charge for civil rights don't change the essential fact that their racism was not only encouraged but often mandated by government. Examples of racist individuals has little to do with my point that Jim Crow laws were in fact laws. I never once disputed that nearly everyone at the time especially in the south, including businessmen, were racists and would behave in racist ways. My point was that absent laws requiring them to do so the free market tended to undermine such behavior.

> Your claims about black unemployment are unfortunately total bullshit.

You're right.

I misremembered my source to include the '30s when it actually was excluding the '30s pointing out that 1930 was the last year in which Black unemployment was lower than whites after decades when it had been. The Forgotten man " by Amity Shlaes widely considered to be one of the foremost works of recent scholarship on the Great Depression which states the case thusly:

> Data from the 1930 census would show black unemployment nationally standing slightly below white unemployment.” (i.e., in 1930 a greater percentage of black Americans held jobs than white Americans) - The Forgotten Man, Amity Shlaes

Sowell's Basic Economics makes the same point though with a bit more of an ideological edge noting that the federal minimum wage law which prevented price competition for labor was passed that year and pointing out that what was true in 1930 had been true for the preceding decades as well.

> The history of black workers in the United States illustrates the point. From the late nineteenth-century on through the middle of the twentieth century, the labor force participation rate of American blacks was slightly higher than that of American whites. In other words, blacks were just as employable as the wages they received as whites were at their very different wages. The minimum wage law changed that. Before federal minimum wage laws were instituted in the 1930s, the black unemployment rate was slightly lower than the white unemployment rate in 1930. - Basic Economics, Thomas Sowell

You also said:

> Sure, you can make the homo economicus argument that assumes perfectly rational business owners and customers, but we know that for 100 years after the Civil War the Jim Crow economy hummed along happily with the majority of white southerners.

Again 100 years of Jim Crow laws. Government was enforcing racist behavior thus encouraging continued racist attitudes. I agree entirely that "homo economicus" arguments do NOT explain everything everyone does. BUT over the long haul people DO gradually tend to align with such incentives. Even the most racist businessman who will happily forego some profit for the sake of his racism will NOT however take sustained losses for it. Jim Crow laws were passed because the racists in the legislature though they were NECESSARY in order to maintain the racist behaviors and attitudes they sought to preserve against the corroding influence of free market capitalism.

by drizzy_chioska   2017-12-06

There ya go :)