Capitalism has failed

It has.  See.  The evidence is in a single picture.

Compare the prices of the goods and services markets highly touched by government against the ones less touched by government.

The evidence is clear.  (if in doubt – this is TAFKAS being ironical)

 

 

This entry was posted in Uncategorized. Bookmark the permalink.

35 Responses to Capitalism has failed

  1. Rafe Champion

    Nice work!
    BTW was there ever so much bad news in one edition of The Aust?

  2. Herodotus

    Hmmm. Now let’s see. Will you find more “progressive leftists” in the red area or the blue?

  3. Tel

    The argument given at the linked article was that it shows comparison between good subject to global competition, vs goods produced locally.

    That’s a highly suspicious argument … food for example gets massively transported around the world, just coffee beans on their own are the second largest global commodity market.

    Housing in terms of land prices and construction costs must be local, however building materials (e.g. steel) are heavily traded (mostly imported from Asia into Australia from our perspective).

    The graph leaves off energy prices, but I think we can all agree that energy price inflation is easily on the high side of that. In 1998 I was paying around 10c per kWh for electricity, now I’m paying about 22c for the same so put energy in the same category as child care and medical care. Well energy is also globally traded, with Australian coal being one of our main exports and huge international trade in oil and natural gas. Sheesh, that’s what most of the wars are about.

    Then there’s the tech gear where it’s a tiny bit questionable as to what the price has done. A decent laptop in 1998 cost you around $2000 for something that was about middle of the market at the time. Today, about the same $2000 is still around the middle of the market, but the laptop you buy today is more powerful for the same money … but you need it to be more powerful, in order to handle the sort of software that is around. There certainly are cheaper laptops around now, with netbooks and tablets, etc. so the BLS does this thing called “hedonic adjustment” which makes a presumption that even though the typical price of laptops is about the same, they will make them effectively cheaper to compensate for additional features.

    This goes for phones as well, a typical iPhone now is about $1000 in Australia and I remember around 1998 you could buy handsets typically in the $500 range … yes the iPhone does more, but maybe what you want is just a phone, in which case you are paying twice as much for something that isn’t even such a brilliant phone (ergonomically the old flip phones were better to use if all you do is make phonecalls). That means, strictly speaking the tech gear is not “more affordable” it is about the same affordability but does more things. Some of the things it does (like track you and spy on you) are negative features, there should be an “unhedonic adjustment” applied for those.

  4. Percy Popinjay

    Agreed, TAFKAS – you would have to be an utterly irredeemable imbecile to look at that chart and not make an immediate connection between the dead hand of government and exorbitant increases in the prices of the useless, inefficient, heavily regulated and quite often unavoidable “services”* the morons attempt to “administer”.

    Of course, some idiots cited in the linked piece have done exactly that, leavened with some convenient all purpose Fatty Trump Derangement Syndrome.

    *See also utilities costs and insurance premiums (especially in this country).

  5. Dr Fred Lenin

    Oh ,I see the red lines are the increasing sprt fot global nrxist fascism he blue ns are the decreasing suportir consvative rotten opressive captalism , comrade Albanese will be pleased there is proof of his success as El Lider’.

  6. Chris M

    Good graph Tako…. wonder if Rafe has a similar plot showing Australian energy prices?

  7. Rafe Champion

    Yes but not at fingertips on my phone.

  8. Justinian the Great

    I don’t think your “capitalism has failed” line is all that ironic. Capitalism is failing as government’s regulate the life out of it and the more that ends up quasi-government supplied instead of private sector supplied.

  9. Driftforge

    Contrary position – the lines moving north are characterised by a) being inherently human interaction intensive and/or b)luxury items. That government is typically involved to some degree is incidental.

    The items heading south are those with less human interaction and greater capacity for automation in their manufacture.

    What you are seeing is simply the continuing divergence between time and goods that is a result of increasing automation.

  10. Anthony

    I would argue Baumol effect (cost disease). Most of those going North are labour intensive and the coats get inflated because pay rates in older low productivity industries need to keep up with those in newer high productivity industries.

    Of course, for industries like childcare, you could argue it is a double hit of both cost disease and government regulation.

    Housing going up is a weird one, to my mind, housing should be going down – no shortage of land, better technology for construction etc. I would suggest the high housing costs are a combo of govt red tape, artificial constriction of available land, NIMBYism, lack of new rail going into CBD in new suburbs. Also, failure of the industry to embrace new technology like making houses via robots in factories contributes somewhat.

  11. Ben

    The graph is mostly services (going up) vs products (going down).

    I’d like to know more about the underlying supply/demand for services, vs labour costs and other factors.

  12. David B

    Being the biggest borrowers government has an interest in keeping inflation (reasonably) high to reduce the value of their repayments. If they have no control over the price of goods on the global market then those goods and services in the domestic market will have to do the heavy lifting.

  13. Iampeter

    Yet socialism keeps enjoying a resurgence and capitalism is at best getting a measly one and a half cheers even from many of it’s supposed advocates.
    Almost like the real issue isn’t about economics.

  14. Eyrie

    Robert A. heinlein once wrote an essay about housing, he asked what the cost of a new car would be if it was manufactured and assembled in your driveway from raw materials and a few pre-fab parts.

  15. Bruce of Newcastle

    A nice supporting article from Daniel Greenberg, about the Chicago teachers’ strike:

    Chicago Teachers Strike for $100,000 Salaries (29 Oct)

    Since October 17, the Chicago Teachers Union has banished 361,000 students from their classrooms by going on strike to demand a $100,000 [=A$146,000] average salary for its members.

    Currently, Chicago teachers are living on starvation wages of $78,211 a year. The people responsible for that 57% “record” are shortchanged with a miserly starting salary of $52,958, a beggarly $82,630 10-year midcareer salary, and a $108,242 maximum salary that barely keeps them out of the poorhouse.

    They can’t live like this.

    “The fact is there is no more money,” Mayor Lori Lightfoot insisted. “Period.” … Not only is Lori Lightfoot, Chicago’s mayor, a black woman, but so is Janice Jackson, the CEO of the public school system. But, even when the mayor is a black lesbian, the race card never expires.

    Apparently “rich white men” are the problem. Chicago public sector schools are probably worse than NSW public sector schools, though I have no data to support that statement. Both are pretty bad, which is why parents are fleeing the system, and in Chicago’s case the entire city. But at least teachers will live well until they all run out of other people’s money. Then the gravy train will stop.

  16. Roger

    But at least teachers will live well until they all run out of other people’s money. Then the gravy train will stop.

    With an $800 million budget shortfall the destination of Socialism has been reached: OPM has run out.

    Meanwhile, productive Chicagoans – black and white – are fleeing the city to escape punitive land and other taxes that are making it unaffordable to live there.

    It’s a pity this story isn’t getting more traction here; it’s a case study on a comprehensible level of why Socialism always fails.

  17. Colonel Crispin Berka

    Using the average wage was a bit of a stuff up. They should use the median.
    Increases in Jeff Bezos’ stock dividends don’t reflect what the average typical Joe in the street sees.

    Will you find more “progressive leftists” in the red area or the blue?

    The red, for sure, although in “computer software” Google has been getting fairly “woke” lately.
    I’d say it depends more upon the sector or industry that the software is written within or selling into.

  18. max

    Faith is basic to the lives of all people. Most of what we believe we take on faith. We have not scientifically examined everything we believe. Most of what we fervently believe is not subject to the rigorous but narrowly focused techniques of scientific testing. We believe it anyway.

    I call the free market economy a predictable institutional result of society’s acceptance and enforcement of these principles, all of which are mandated in the Bible: the doctrine of linear time, the doctrine of ethical progress (progressive sanctification), private property, the rule of law, civil laws against theft, taxes below ten percent of income, men’s strict legal responsibility for their actions, the rejection of envy, wealth as a confirmation of the covenant, and men’s commitment to leaving an inheritance to their grandchildren.

    https://www.garynorth.com/public/16723.cfm

  19. Overburdened

    Thanks Tel.

    The value of money is the driver of expenditure, and this is a subjective issue in terms of discretionary spending for those on the planet that have anything left over after primary needs are covered.

    The distortion in Australia is that there is a significant proportion of people with enough discretionary income to not cook in favour of eating out and are repetitive consumers of end products, which drives the service industry and makes nothing that primarily drives the economy like mining, farming etc.

    The way I see it is that the Government over time since Whitlam has created a churn of money that closely resembles a Ponzi scheme relying on the plebs to spend continuously on new or different things.

    When one considers that the plan requires people that make no contribution by way of employment or misfortune to have enough money to buy into the program, it becomes clear that it is unsustainable.

    When those who are employed are under water breathing through a straw in terms of debt liability make no attempt to reduce their discretionary spending and in many cases add to the situation by having a splurge on the plastic, it reduces the previously expected passing on to the next generation.

    Hedonism has been taught and nurtured into the mindset of the population and it is poorer for it, in spite of the people queued at Maccas who would tell me I’m a fuckwit if I wandered in with a soap box and started expounding this idea.

    This is because whilst being indoctrinated into the lifestyle, the population has at the same time been intentionally dumbed down so there is no reflection or critical analysis going into peoples decision making and no intellectual tools to problem solve.

    On the big screen, the Governments policies on production and trade are all predicated on keeping the Budget in as good a situation as possible, which is pretty shithouse from all accounts.

    One obvious solution in the minds of the Government is to increase immigration.

    You know it makes sense.

  20. max

    trust and rules go together

    “Behind every legal order there is always a god, be it God Himself or those who have control over the state machinery.”

    Rule of Law

    The rule of law is absolutely essential for any nation’s government to treat its citizens in a just manner. If the laws in a nation are arbitrary and do not apply uniformly to all people, including government leaders, the laws will then be used to abuse and steal property from the people by their own government leaders. Therefore, for any nation to establish a government just legal system in which the liberties of all individuals will be respected, everyone must be subject equally before the laws of the land.

    trust and rules go together

  21. max

    The Holy Roman Empire from about 900 AD – 1800 have/had similar faith and laws — basically gigantic “free zone” to trade.

    long time ago some people did trade/deals by way of shake of hands — do you think this people where different religions or same?

    trade is based on trust that you get something in exchange — well if other side do not honour their trade than what?

    that is why trade with people that have other belief or custom is costly comparing with trade with people of same custom/belef.

  22. Ubique

    An Australian version of the chart would be very useful. Electricity and water charges would be useful. As would public transport and port charges. Airfares are a very powerful illustration of the power of competition driving innovation and lowering costs.

  23. pbw

    takfas said,

    Rubbish. The system is based on trust not faith.

    What’s the difference?

  24. Overburdened

    Trust involves crediting others, generally informed by faith, which is an individual thing.

  25. Iampeter

    Most of what we fervently believe is not subject to the rigorous but narrowly focused techniques of scientific testing. We believe it anyway.

    Of course it’s not. Instead most of what we believe in day to day should be subject to rigorous and broadly focused thinking skills. This is a pre-requisite before you get into any of the special sciences anyway.
    And if you don’t have a good reason you can think of for an idea or action then you should absolutely NOT just believe it anyway.
    This is what separates those of us who value and want to live in civilization from those who would fly hijacked planes into skyscrapers.

    Rubbish. The system is based on trust not faith.

    That’s the same thing.
    The system, to the extent it works, is based on reason. Certainly not anything religious.

    Contrary position – the lines moving north are characterised by a) being inherently human interaction intensive and/or b)luxury items. That government is typically involved to some degree is incidental.

    Nice try. But the lines moving north are doing so because those areas need to be regulated in order to maintain control over peoples lives by collectivists. In the meantime, who cares what drapes the peasants hang or what trinkets they call each other on.

  26. Sydney Boy

    I don’t know how anyone can walk into a supermarket today and claim “capitalism has failed”.

  27. Overburdened

    Sydney boy

    That’s because the day of reckoning hasn’t arrived.

  28. Overburdened

    FWIW I agree with you that capitalism hasn’t failed.

    I think it will fail in Aus because of the loss of the heavy lifters and the rise of the entitled.

  29. Iampeter

    I don’t know how anyone can walk into a supermarket today and claim “capitalism has failed”.

    That’s not what they would say though.
    They would say “you didn’t build that.”
    Meaning the supermarket wouldn’t be possible without roads paid for by taxpayers and minimum wage jobs and unions who made that possible, etc. In other words, they’ll argue that it’s all thanks to socialist policies that his wealth is possible.

  30. RacerX

    “Yet socialism keeps enjoying a resurgence and capitalism is at best getting a measly one and a half cheers”

    You are talking about in the media right?

  31. Percy Popinjay

    Housing going up is a weird one, to my mind, housing should be going down

    About 40% of the cost of a new house in this country is tax, as is the cost of a new car.

  32. max

    Iampeter say:

    Of course it’s not. Instead most of what we believe in day to day should be subject to rigorous and broadly focused thinking skills. This is a pre-requisite before you get into any of the special sciences anyway.

    Question for you Peter:
    How did person who publish this:
    Gold and Economic Freedom by Alan Greenspan
    Published in Ayn Rand’s “Objectivist” newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.
    End up as FED chairman?
    How did Greenspan reason lead him to become chairman of FED — non free market institution?

  33. max

    And Peter about science:

    The German physicist Max Planck said that science advances one funeral at a time. Or more precisely:

    A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die and a new generation grows up that is familiar with it. . . . An important scientific innovation rarely makes its way by gradually winning over and converting its opponents: it rarely happens that Saul becomes Paul. What does happen is that its opponents gradually die out, and that the growing generation is familiarized with the ideas from the beginning: another instance of the fact that the future lies with the youth.
    — Max Planck, Scientific autobiography, 1950, p. 33, 97

    Planck’s quote has been used by Thomas Kuhn, Paul Feyerabend and others to argue that scientific revolutions are non-rational, rather than spreading through “mere force of truth and fact”.

  34. Percy Popinjay
    #3197699, posted on October 30, 2019 at 5:09 pm

    Housing going up is a weird one, to my mind, housing should be going down

    About 40% of the cost of a new house in this country is tax, as is the cost of a new car.

    What an absolute disgrace. Same as it ever was in the penal colony of Botany Bay.

Comments are closed.