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post #21 of 23
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Originally Posted by xlink View Post

Quote:
Originally Posted by inedenimadam View Post

That would seem to be the result on the surface, but a deeper look into the economic effects of subsidizing technology shows the results to be lackluster in the end. The "jobs" are jobs that are being paid for by people who would otherwise be buying other products and stimulating job growth in those sectors without the overhead of a system of theft and mismanagement as overhead. The subsidized technology also marginalizes non-subsidized researchers that would stand to profit from a level playing field, effectively reducing the competition (which is never a good thing for the consumer).

Broken windows fallacy 101

The government cannot "create jobs," they can only rearrange other markets which always results in a net loss of opportunity.

It is possible to "create" additional value to society by rearranging monetary outcomes. Say for example you taxed a CEO who had more money than he'd ever desire(at the point of diminishing returns) and doesn't care about money(he cares about power and prestige hence why he works 80-120 hours a week) you could feasibly create economic value through government intervention, at least in theory. To say it cannot be done is an error.

In practice we have 60 years of economic data at most, often discretized in quarters. Before accurate econometric predictions could be realized, you'd need something like 2000 years worth of data to get accurate estimates(and that potentially more accurate forecasting methods such as neural networks aren't readily interpretable by humans). Then to implement those forecasts you'd have to put forth your assumptions and hope that it doesn't get lost in committee or that reactionary activities by third parties such as foreign governments don't neutralize any positive impact. Simply put, it's easier to make errors than correct actions. In a world where correct micro-economic actions are correlated with future correct actions it makes sense to allow some degree of resource accretion over time and to allow the dissolution economic entities with toxic assets even after considering concepts of myopia and externalities.

Several things wrong with your CEO example. 1)Hypothetical is the only retort at your disposal. 2)Large sums of money are rarely stationary for any length of time. 3) It assumes that those who wish to allocate the funds, are smarter than the ones that earn them. 4)We dont have 2000 years to test your hypothesis, there is already enough evidence against subsidies.

I reiterate, this is textbook broken window fallacy. The butcher cant buy his suit. The evidence against government subsidies overwhelming. However, my biggest problem is not against the subsidies themselves, because subsidies occur in the free market all the time. Someone gets a good idea, and someone with a little extra cash steps up to help make it happen. Both parties understand the risks, and both parties reap the rewards/consequences. My problem is with the involuntary collection of funds to subsidize a market that the individual might have no faith in. Yet, by threat of violence, he is made to subsidize something that he may or may not think is a "good idea".



Whats the fastest way to mess something up? Invite government to the table. 2cents.gif
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post #22 of 23
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Originally Posted by inedenimadam View Post

Several things wrong with your CEO example. 1)Hypothetical is the only retort at your disposal. 2)Large sums of money are rarely stationary for any length of time. 3) It assumes that those who wish to allocate the funds, are smarter than the ones that earn them. 4)We dont have 2000 years to test your hypothesis, there is already enough evidence against subsidies.

I reiterate, this is textbook broken window fallacy. The butcher cant buy his suit. The evidence against government subsidies overwhelming. However, my biggest problem is not against the subsidies themselves, because subsidies occur in the free market all the time. Someone gets a good idea, and someone with a little extra cash steps up to help make it happen. Both parties understand the risks, and both parties reap the rewards/consequences. My problem is with the involuntary collection of funds to subsidize a market that the individual might have no faith in. Yet, by threat of violence, he is made to subsidize something that he may or may not think is a "good idea".



Whats the fastest way to mess something up? Invite government to the table. 2cents.gif

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post #23 of 23
Quote:
Originally Posted by inedenimadam View Post

Several things wrong with your CEO example. 1)Hypothetical is the only retort at your disposal. 2)Large sums of money are rarely stationary for any length of time. 3) It assumes that those who wish to allocate the funds, are smarter than the ones that earn them. 4)We dont have 2000 years to test your hypothesis, there is already enough evidence against subsidies.

I reiterate, this is textbook broken window fallacy. The butcher cant buy his suit. The evidence against government subsidies overwhelming. However, my biggest problem is not against the subsidies themselves, because subsidies occur in the free market all the time. Someone gets a good idea, and someone with a little extra cash steps up to help make it happen. Both parties understand the risks, and both parties reap the rewards/consequences. My problem is with the involuntary collection of funds to subsidize a market that the individual might have no faith in. Yet, by threat of violence, he is made to subsidize something that he may or may not think is a "good idea".



Whats the fastest way to mess something up? Invite government to the table. 2cents.gif

After a certain level of income most people are motivated primarily by non-monetary things. I'd argue that's almost entirely a fact. Power, ambition, ego, pride drive most of the world's "corporate elite". The human mind can only deal with numbers up to a point, afterwise scale becomes an issue. A non-negligible number of people even give away most of their wealth during their lifetimes.
Yes, there is churn in terms of financial assets and there is variance in income, particularly at the higher levels when compensation becomes more tightly tied to equity.
I actually drew up criticisms to the "smarter than" component. While on average those with more wealth are more intelligent and this is becoming increasingly the case due to a shift towards a more knowledge based economy there is a wide level of variance and on a competency-wealth basis there's quite a bit of heteroskedasticity. At a governmental and even a board of director's level most representatives in the US are non-technical. They might be highly capable of dealing with people though they don't have the necessary knowledge to make solid decisions. This is why they have others present information to them. Unfortunately they're often charged with idea creation and that is easier said than done.
The lack of data(or shall we say interpretable information inputs) in making decisions economic decisions is a major issue. Cross-section data does generally go against subsidies as they're presently implemented by limited knowledge politicians. I'm just noting that it IS possible to redistribute assets in such a way that increases aggregate well-being and economic development. I believe it's easier to "mess up" than it is to do well though.
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