Required viewing: Why creating value is a *moral* imperative - Jonathan Haidt on the power of Capitalism

[ChrisV]

This was one of the most life changing talks I've ever seen. I think it should be required viewing for any Fastlane Entrepreneurs. Most people (even fastlaners) don't have an idea as to the shear magnitude of how utter miraculous capitalism is. I was always a believer of Capitalism, but when you actually look at the data, it becomes obvious how much of a miracle Capitalism is. I started the video at 5:20 to save a little time. It's very much worth the watch. This talk really changed how I see much of the world.

View: https://youtu.be/iOu_8yoqZoQ?t=320

It's human nature to believe that the world is going to hell in a hand basket, but the data doesn't support that idea. In reality the world is getting better and better near miraculous rates. Regarding capitalism, the 'advent' of modern Capitalism started with the industrial revolution between 1760 and 1840. Take a look at the start differences prior to the Industrial Revolution, in comparison to today:

 

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[ChrisV]

I think the session here is obvious. Like Jonathan said, 'creating value' is NOT a buzzword. It's actually a moral imperative. You have a moral obligation to make the world better. You are wasting your potential otherwise.

Thoughts? Arguments? Notes?

Curious as to what you guys think

 

[Kevin88660]

Well most people who look at the evidence and follow common sense will want to live in a capitalist economy.

Just that people always want to bend rules when the situation is not in their favor. You have unions who want a high minimum wage. You have lobbyist which want to have their special interest written in the law. Now we have powerful sovereign countries like U.S. and China backing their own business and industries ferociously.

 

[Walter Hay]

In my view, as a general principle, capitalism is greedy and socialism is idealistically naive.

Since the Industrial Revolution there have undoubtedly been huge improvements in living standards in most capitalist countries, but inequalities are glaring. There have also been lesser improvements in some socialist countries, but inequalities are glaring there also.

The contrast between the two ideologies is clear, yet the recent socialism conference in Chicago shows how blinded by naivety people can be.

The biggest problem is IMO greed. Not only for wealth, but also for power.

I find it refreshing to see the "help others" mindset that pervades this forum. While we can all do our little bit in that regard, sadly, we are not a force that will change the world.

Walter

 

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[Kak]

In my view, as a general principle, capitalism is greedy and socialism is idealistically naive.

Since the Industrial Revolution there have undoubtedly been huge improvements in living standards in most capitalist countries, but inequalities are glaring. There have also been lesser improvements in some socialist countries, but inequalities are glaring there also.

The contrast between the two ideologies is clear, yet the recent socialism conference in Chicago shows how blinded by naivety people can be.

The biggest problem is IMO greed. Not only for wealth, but also for power.

I find it refreshing to see the "help others" mindset that pervades this forum. While we can all do our little bit in that regard, sadly, we are not a force that will change the world.

Walter

I disagree with the notion that capitalism is inherently greedy. Voluntary transactions between two parties are "profitable" for everyone.

I personally think socialism is the system of greed driven to the point of armed robbery. Theft, fraud, and taxes are the only occurrence where only one side of a transaction profits.

It all depends on how you look at it. Capitalism is downright charitable to the world by comparison.

 

[ChrisV]

I think socialists are moderately well-meaning... they're just retarded. A quick skimming of any Economics 101 textbooks would debunk all the central arguments of socialism. A simple reading of an Evolutionary Psychology textbook will show you that no matter what, humans will be driven toward status. It would literally take a neural-neutering to kill the human drive for status.

The fact that so many socialists come out of academia leads me to think there are far too many liberal arts classes available.

I don't think that most people are greedy. I think most people are just trying to create a good life for themselves and their families. Are their greedy people out there? Of course. Their are a lot especially among high-ranking positions. But it's certainly not all of them. I don't believe that Bill Gates, Steve Jobs, Musk, Bezos, Page, Edison, etc were particularly greedy. They just liked changing the world, and used the money as a means to change the world. You need money to hire better people and innovate improved things. Like the way that Amazon almost never turns a profit. Bezos just dumps any profits he makes into making the company better. Jobs too. Jobs took a $1/year salary. I think a lot of these movers and shakers just want to make something cool and bring it to the world. I know that's my personal motivation.

I find it refreshing to see the "help others" mindset that pervades this forum. While we can all do our little bit in that regard, sadly, we are not a force that will change the world.

Not sure I quite agree. I mean not to get all corny, but what if MLK said that. I think we underestimate the amount of change one human can bring. And maybe statistically not many are going to bring that level of change, but you can still change your community, or even just family. Not everyone has to set out to change the world.

 

[ChrisV]

Perfect notes on this:

Speaking of which, I read a few papers showing that the best predictor of Stock Performance is a company's customer satisfaction ratings. In other words, the best way to turn a profit is by pleasing your customers.

 

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[MJ DeMarco]

Awesome video, almost should be required viewing before someone even bothers to comment.

There are truths to both sides.

He discusses the far reaching benefits of capitalism, but also touches on "the squeeze" and stakeholder issues that I've written about in Unscripted and even posted about here. (For ex: FiveRR goes public, will it become HundredRR?)

The biggest problem is IMO greed

Human beings have a monopoly on GREED -- it doesn't care about political orientation. You can be a greedy capitalist who wants to SQUEEZE every employee and you can be a greedy socialist who wants to STEAL every dollar from "the rich" thru legal theft. As they say, it's easy to be "charitable" and "well intentioned" when your idea of charity is spending other people's money you didn't earn.

MARKED NOTABLE for the video and accompanied graphs.

 

[Walter Hay]

There is a very interesting, and sometimes amusing, paper published here on the Washington State University site: Social Basis of Human Behavior: Greed The author is Richard F Taflinger. I recommend it for reading.

Here's just one quote: "The thing to bear in mind is that 'greed is good.' That is, it's good for the individual, but perhaps not for the society in which that individual lives. "

Walter

 

[ChrisV]

I think we also have to separate a ‘desire for money’ with ‘greed.’

Greed, like many of the other 7 deadly sins (pride, greed, lust, envy, gluttony, wrath and sloth) I believe come from an internal emptiness, that one tries to fill will external things. Not to get all deep here but an 'emotional void' if you will. But the problem is that material things only give someone temporary relief from said emptiness.

So someone who makes a lot of money isn’t necessarily greedy. Also in the same vein, poor people can be greedy as well. They just havent figured out yet how to get what they want.

I think that a desire for money is good, but greed is not. Greed leads to what MJ calls ‘chasing money.’ Coming up with clever marketing schemes to sell people highly polished dogshit without regard for their wellbeing.

I don’t think that innovators like Henry Ford, Karl Benz, etc are in this category. I spoke about this in another thread, but I think greed is essentially an addiction to money. It’s an attempt to fill a void. I don’t think that your average value-providing millionaire is in this category.

 

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[Tourmaline]

But dear @Walter Hay, Greed is Good.

There is not a single bad thing about Greed itself. It is when Greed is divorced from compassion, empathy, and the serving of life that any bad may come of it, but for whatever strange reason Greed takes the blame, and serves as the scapegoat, but not the actual cause for the negative behavior.

without Greed
man would become robot
more quickly
than a tadpole become frog

 

[FierceRacoon]

I think socialists are moderately well-meaning... they're just retarded. A quick skimming of any Economics 101 textbooks would debunk all the central arguments of socialism.

Since the Industrial Revolution there have undoubtedly been huge improvements in living standards in most capitalist countries, but inequalities are glaring.

Those are hardly problems at all, if you put them into context. And I find the comparison between capitalism and socialism absurd.

The problem is that first well-meaning fanatics proclaim those arguments, then cynics come after them. Those cynics could not care less about creating value. They don't want to create any value, they just want to take. The problem is protection against people who just want to take, and capitalism+democracy is a system somewhat less vulnerable to it. Again, the problem is not someone working for 5 years to create a business and getting 10 Lamborghinis (and not paying enough taxes after that). The problem is someone playing political games for 5 years, producing nothing, getting their opponents imprisoned or destroyed, then getting hundreds of Lamborghinis, without having created absolutely anything of value, without even contributing any slowlane-type value. The alternative is between cynical capitalists getting rich who create value by partly sucking it from their workers, the environment, and bureaucrats getting rich who only extract value from the country without creating anything — yet who extract a lot more.

Consider the Soviet Union, the country that had proclaimed socialist values.
Ever heard of kulaks? (Kulak - Wikipedia)
In 1920s those were entrepreneurial peasants who worked super-hard, then hired extra helpers and outperformed their neighbors and thrived. (Inherited wealth had been confiscated in 1917-1919, so by 1920s nobody in the entire country had any inherited wealth.)
Then guess what happened by 1929? About a million of the best performing peasants were effectively punished by death, including their families, while a few more million were sent into exile.

I wish I were making it up. Under such a policy, everybody on this forum would either get killed or sent into exile with their stuff confiscated.

Consider also that
* in the USSR, entrepreneurship was illegal. That is, it was technically against the law to operate your own enterprise of any kind. Storing U.S. dollars was, by the way, also illegal.
* not having a job was technically illegal, though the punishment was mild. Most famously, Joseph Brodsky, the subsequent winner of the 1987 Nobel prize in Literature, was charged under that statute:

Social parasitism (offense) - Wikipedia

en.wikipedia.org

* most peasants in USSR in 1934-70s were not allowed to have passports and not allowed to leave their village for more than 30 days.

In other words, it's easy to complain about capitalism eroding values, until you get to experience communism/socialism.

Let me elaborate: you have created a business and you are trying to get more value out of your workers to create better value for the customers, so you can be rich. In doing so you make your workers work long hours, perhaps harm the environment, and you have to lie a lot to get away with it. Consider the alternative: you have received a business that you did not build. You are trying to get more value out of your business to create better value for yourself. You couldn't care less how your customers feel. You make your workers work long hours AND you create a crappy product for your customers AND you harm the environment and get away with it. That is socialism: instead of a greedy capitalist now you have an absolutely incompetent bureaucrat in charge who has even fewer moral rights for exploiting the workers. Yet the workers end up being exploited much more harshly.

Think it sucks working for a minimum wage at a hard job, when you cannot afford to leave? It does, and I have not experienced it to be sure. But contrast it with a situation where you are legally not allowed to leave? Not even because some criminal has taken your documents and has captured you as a slave — no, because the laws of the country would not let you leave! If you hate your incompetent boss who makes you quit — imagine if a conflict with your boss could get your spouse fired as well, even though she worked in a different field, and at a different organization? And your son kicked out of college, all because of you "deviating from the official ideology"?

Capitalism creates at least some form of accountability, and it requires a certain degree of ethics as well. It's not great at all — frankly, it sucks — but if you want an alternative, you better have a specific way to get there. If you just hope for the best, you will quickly find yourself ruled by cynics. You will be slaving away at a slowlane, while they will be building themselves exotic palaces and flying on private jets, without producing anything.

Socialism in its idealized form simply does not exist. Nordic countries are essentially capitalism with some tweaks, as far as I understand. The countries claiming higher moral ground above capitalism realistically are often ruled by ruthless demagogues who absolutely do not practice what they preach. Socialism is a myth, it is not reality. It's like the story about investing in mutual funds and having zillions 50 years later: it sounds great, but it's not how people get rich. Similarly, socialism sounds great in theory, but it is not how real people get happy and in control in real life.

This is not to say the idea is without merit. E.g. Slowlane teaches self-restraint, and it is important for anyone. Similarly, a well-intentioned capitalist democracy could show self-restraint by minimizing advertising, introducing laws to protect the environment from greedy companies, and so forth. It's just that we should not be delusional about the ultimate possibilities of a Slowlane. Similarly, we should not be delusional of the ultimate possibilities of a Socialist state as we know the idea today.

In a way, Capitalism is the elevation of those producing value. It does have side effects, as e.g. useless stuff on TV can be seen as value, and then people are manipulated into spending their hard-earned money on useless junk. The alternative is just underpaying all those people so they do not have any surplus hard-earned money in the first place. We should surely try to solve consumerism and its effects on the planet. But people are not "less spiritual" under capitalism. If you take USSR or China or any other XX-th century communist country, people there were more materialistic. Much more so! Anything material such as better car, chocolate candy, rare liquor, of course, a better apartment, was worshipped. A lot of people would lie and betray their friends to better their lot. Not everyone, but the things that were routine in those societies are almost unthinkable in the modern West.

Yet to reiterate once again, you might sympathize on some level with the idea that "the capitalist class" somehow exploits "the working class". You might feel the idea has merit and that capitalism as is is not entirely fair. It is all very good. Understand that people proclaiming those values are not interested in being in the working class. People proclaiming socialist values typically want to better their lot, similarly to self-help gurus and investment advisors who tell you to invest in a mutual fund so they can do better themselves. The advocates of communism and socialism very often want to do well themselves — to live in nice apartments, have nice cars, not to work other than by promoting socialist values full-time, which they feel is fun and easy work. If you want to truly help the working class, approach it intelligently. Fairy tales about class struggle do not good, because they do not produce anything extra. Just think it through: what would be the organizing principe behind a large enterprise if not capitalism? Who would direct it and on what basis? Would this be an effective way to create value? What system can effectively motivate people to create more value? and so forth.

 

[ChrisV]

Capitalism is creating the utopia that socialism strives for. And this isn't just some blind theorizing. The data I posted are clear on that. Like Jonathan said, up until the industrial revolution, people lived on about $1/day in constant 1991 dollars. ONE DOLLAR PER DAY. You would only have to work one week per year at a minimum wage job to make $300/year. One dollar per day before the industrial rev means you were rich if you had food. Forget your iPhone, your MacBook, your Mercedes, your triple mocha frappichino from Starbucks and whatever. Being poor in America means you still have the iPhone 6 and and can only afford TV dinners. 250 years ago it meant you were dead. Again, Capitalism is creating the utopia that socialism strives for.

I don't think people realize the extent of the pure evil that happened in the former Soviet Union. It was just as bad as what happened in Germany.

Consider the Soviet Union, the country that had proclaimed socialist values.
Ever heard of kulaks? (Kulak - Wikipedia)
In 1920s those were entrepreneurial peasants who worked super-hard, then hired extra helpers and outperformed their neighbors and thrived. (Inherited wealth had been confiscated in 1917-1919, so by 1920s nobody in the entire country had any inherited wealth.)
Then guess what happened by 1929? About a million of the best performing peasants were effectively punished by death, including their families, while a few more million were sent into exile.

Yea and by killing off all their highest producing workers they effectively starved the country. "Let's take all the people who make the most food for the country and throw them in the gulag or kill them." Literally the dumbest idea ever.

The problem is someone playing political games for 5 years, producing nothing, getting their opponents imprisoned or destroyed, then getting hundreds of Lamborghinis, without having created absolutely anything of value, without even contributing any slowlane-type value.

But that's the issue. Socialists don't want to just tax the bad apples, they want to tax the shit out of anyone who makes money. Because they think anyone who makes money is a bad apple.

They just have an issue with the 'evil rich guy,' but when you press them for one of those 'evil rich guy's names, they're usually at a loss for words. Why? Because it's largely a figment of their imagination. It's largely from movies they've seen. We have laws to take care of people who make money dishonestly. Jordan Belford (The Wolf of Wall Street,) Mafia crime bosses who were defrauding gasoline companies, scam artists, game players, and the like. The law isn't ignoring these guys.

I love the way that Jonathan put it in the video. Capitalism inspires constant new methods of innovation. But sometimes that innovation can include new types of exploitation. Evil people exist all the way up and down the ranks. And as far as I can tell, the government does a good job keeping them at bay.

Nordic countries are essentially capitalism with some tweaks, as far as I understand.

I think the Nordic countries have a pretty good system. But also keep in mind, they're wealthier than the United States. They have a much higher Per Capita income than we do. So they can afford programs like 'healthcare for everyone.'

 

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[guy93777]

. Again, Capitalism is creating the utopia that socialism strives for.

I don't think people realize the extent of the pure evil that happened in the former Soviet Union. It was just as bad as what happened in Germany.

yes and we can see the logical conclusion :

1) capitalism is the best thing ever seen on earth

2) users here are the vanguard of capitalism

logical conclusion : people here are the vanguard of the best thing ever seen on earth

MJ Demarco achieved welalth, financial freedom and so on very quiclky

he is a Grand Master of value creation

 

[Kevin88660]

There is no serious competition against Capitalism. Berlin wall fell 30 years ago.

There is not even much real socialist voice there nowadays. Most labor or left wing parties are just arguing for more regulations, more welfare and higher minimum wages. That is not really arguing against the system. To protect the environment you need money. To protect the jobs of the workers you need to have business profits. Event he most left-wing politicians know it.

The future battle of systems will be more likely a factional competition between two types of capitalism- the Washington led liberal democratic kind of capitalism versus the Beijing bureaucratic and technocratic kind of state oriented capitalism.

 

[Everyman]

I think the session here is obvious. Like Jonathan said, 'creating value' is NOT a buzzword. It's actually a moral imperative. You have a moral obligation to make the world better. You are wasting your potential otherwise.

Thoughts? Arguments? Notes?

Curious as to what you guys think

Hey Man

I like your positive attitude and approach. And I mean it.

Would you mind answering. Why these graphs, not other? Were there other graphs that you excluded?

 

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[Kevin88660]

I think if we have to find fault on the modern capitalism as it is today I think one criticism is this current fiat money/ excess liquidity/over-financialisation of assets and capital.

It used to some inventing things, innovating and providing massive value. It still is. But by an large if you study people who really strike it super rich today, it largely coming from turning the business into an ipo project and cashing it from the obscene valuation 50-100 times PE. It is something that the old generation business people do not have access to. Warren buffett made his first billion when he is 60!

It totally changed how people do business today compared to 15 years ago. Bust your a$$ for ten years and hope for IPO? No way. People get VC to burn cash to acquire users to target for IPO less than five years.

Look at the latest e-commerce giant pinduoduo from China that just took three years to get IPO in Nasdaq. They were preparing for IPO from day one they start the business. They have acquired massive users due to heavy subsidy sponsored by VC and has been losing money as a business.

MJ used to say:”The easiest way to start a business is to sell hundred dollar note for fifty dollar”. It is a joke to illustrate the point that consumers care about value not anything else.

But now the irony is we have new business model today. Get an idea of selling 100 dollar note for fifty dollar. Do not worry about it because VC will burn cash to back you. Acquire market share as quickly as possible. Get an IPO quickly so that your companies will be valued at billions and every founder and the Vc will be rich. Is It only me who is seeing something really abnormal with the current tech business paradigm???

 

[Bhanu]

In this context book named 'Man search for meaning' by Viktor Frankl is very apt .
It argues that a person who lost his meaning in life almost always died in Nazi Concentration camp.But a person who had a meaning ,a purpose survived .Shows how having a meaning can affect you in life.

The only system which allows you to decide what you want to become and hence have a meaning to your life is Capitalism IMO.
Capitalism : A jungle where you are free to decide what you want, but security is very less.
Communism/Socialism: A zoo where you will have all the comfort but no freedom .

 

[ChrisV]

Hey Man

I like your positive attitude and approach. And I mean it.

Would you mind answering. Why these graphs, not other? Were there other graphs that you excluded?

Well the other graphs weren't really relevant to the topic... World Population Density, Fertility Rate, Renewable Energy

I Just picked out the most and revealing interesting ones.

But off you want to check the rest out, the data is from one of my favorite data sites:

Our World in Data

Research and data to make progress against the world’s largest problems

ourworldindata.org

 

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[SD Entrepreneur]

Well the other graphs weren't really relevant to the topic... World Population Density, Fertility Rate, Renewable Energy

I Just picked out the most and revealing interesting ones.

But off you want to check the rest out, the data is from one of my favorite data sites:

Our World in Data

Research and data to make progress against the world’s largest problems

ourworldindata.org

Great site @ChrisV... "Research and interactive data visualizations to understand the world’s largest problems." Could be a treasure trove for finding business ideas that solve problems and provide valuable and needed services to help eliminate or minimize those problems.

 

[ChrisV]

Edit: whoops .. double post

 

[Consolation]

You have unions who want a high minimum wage.

Just a side note but seems related. Do you know who killed P. Ramlee in Jalan Ampas?

The trade union.

 

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[ChrisV]

Also, since everyone knows I'm big on research-informed decisions, Jonathan runs a great nonprofit site called Ethical Systems, dedicated to good, honest business and providing free research to organizations

From the site:

Ethical Systems is a collaboration of top researchers, most of whom are faculty at leading business schools. We all share the conviction, backed by research, that in the long run, good ethics is good business. We believe that integrity in business can be enhanced by wise leaders who take a systems approach to their organizations and the environments in which they operate. Ethical Systems is housed in NYU Stern's Business and Society Program. Our mission is to bridge research by leaders in academia and the corporate world.

Ethical Systems makes accessible the best research on systems thinking, psychology, and behavioral economics to improve the ethical culture of organizations.

Ethical Systems

www.ethicalsystems.org

 

[Everyman]

I will repeat what I wrote before. I totally agree with the subject of this thread and with you being positive because we control so little in our lives that having positive mindset is better than having a negative one.

With that being said I hope you don't mind me challenging what you wrote here (a bit).

It's human nature to believe that the world is going to hell in a hand basket, but the data doesn't support that idea. In reality the world is getting better and better near miraculous rates.

We cannot really compare living in 1700s and 2000s. It's subjective. Owning a horse in 1700s might have been equal to owning a ferrari today (don't know, just an example). Or owning a stable back then equals owning a NBA team now.

We are developing but BUTTTTTT - look at this example. As the productivity has been growing, so has the number of people. So the wealth 'has to be' divided. Per capita (which I think is ridiculous but just for the sake of the argument).

As far as I can see, Europe is dying!!! There are fewer and fewer people born. With all bad things that has been associated with 'Europeans', people from Europe have been driving development in the past 2000 years (roughly). White males from Europe. They established colonies in America etc etc etc.... So Europe is in decline. So are the descendants in the US (look obesity rates skyrocketing, fertility rates, food stamps, social welfare benefits, number of people working etc...).

With that coming. I have been reading 'industrial' entrepreneurs (guys that push this world) and they say 1. there is a knowledge gap - people that can continue manufacturing goods on the same level as today are not being born and trained. 2. Look at cars from 1970s/80s and even 90s. Average mileage would be 500k-1M kilometers. Cars produced today have problems with going above 200k. I won't mention other goods.

So average household indeed has a refrigerator (at least in developed countries) but the quality of the fridge has been decreasing. Which I am believing has something to do with this - global currency losing 99% of its 'value' (which is also connected to slow collapse of 'the Empire').

Same goes for literacy levels. It's great that it is increasing and it means more and more people can read and use more advanced learning tools. Flip side of that is people still don't understand what they read / see / hear and don't understand the reality surrounding them. And my explanation to 'the rich are getting richer' because smart people constantly learn while those 'sedentary' are getting left farther and farther behind.

Look at the below graph. Sorry for the lack of source but I have seen it in many places. And I don't think it's a secret. So there is less and less wealth in the hands of the 'bottom 90%'. Again might have something to do with the FED dollar being printed with the speed of light killing it's value, 'salaries' not following and diluting it, making it more difficult to advance from the bottom to the top.

Ask someone that remembers 1970s airports and flying and now compare it to the 'experience' (let's call it like that) that you get today. More consumption but less freedom? Higher literacy levels but lower understanding of what's really going on?

I believe life on Earth is cyclical. Economy is cyclical. So in the long-term we develop but we have hiccups. And the more artificial (paper currency / printer FED powered) the growth, the bigger hiccup afterward.

As for capitalism I agree that people should have freedom to do what they like, but respecting tradition, values and behaviours that we know are good (e.g. 10 commandments - don't kill, don't steal) but monopolies are the biggest 'problems' of any system, in capitalism too and monopolies cause imbalances in every aspect of our lives. In perfect conditions you would have big companies collapsing and being replaced by smaller companies but monopolistic power is being used to preserve 'the landscape'. Big company don't have any chance against small company, in terms of being agile and flexible. Not to mention being advanced.

My conclusion is that growth is not exponential. It's linear (some say 6% per year or less). Short-term can be exponential... Individuals can develop faster (aka rich are getting richer).

One more time I will emphasise that I agree with what you wrote. Creating value is the number one thing we should be focused on. Like in the Parable of the Talents.

 

[ChrisV]

These are all good theoretical considerations, but they've all been taken into account by economists.

We cannot really compare living in 1700s and 2000s. It's subjective. Owning a horse in 1700s might have been equal to owning a ferrari today (don't know, just an example). Or owning a stable back then equals owning a NBA team now.

Which is why Life Satisfaction is an important metric. Even since 1973 it's been rising:



And despite popular opinion (ie 'money don't buy happiness!') happiness does correlate with wealth.



That's things like 'owning a Ferrari might have been like owning a horse' is common misconception. Life in 2019 is objectively better than it was in 1719, by pretty much every metric we have. Human Happiness is largely determined by how many of their needs are satisfied.



As Technology increases, and our basic needs are consistently met, it frees up out time and energy to fulfilling higher needs like Self-Actualization. It's somewhat hard to follow your destiny when you have to spend all day raising crops, or before that hunting food.

Relative income is a factor in happiness (ie how rich in comparison to the guy next to you,) but it's only a small percentage of the variation. So statistically, someone who owns a Ferrari in 2019 is objectively happier than someone who owned a horse in 1619, despite having similar relative social status (ie the top 1% of the living population.)

We are developing but BUTTTTTT - look at this example. As the productivity has been growing, so has the number of people. So the wealth 'has to be' divided. Per capita (which I think is ridiculous but just for the sake of the argument).

All of these numbers are based off Per Capita income. Not absolute income. The per-person, inflation adjusted income is too skyrocketing.




Note that both graphs are per capita and inflation adjusted.

As far as I can see, Europe is dying!!! There are fewer and fewer people born. With all bad things that has been associated with 'Europeans', people from Europe have been driving development in the past 2000 years (roughly). White males from Europe. They established colonies in America etc etc etc.... So Europe is in decline.

Population always levels off when nations become wealthier. It's actually an evolutionary adaptation. The reason is, when you live in an unstable economy women have to produce more children because the children have less of a change of survival. When an economy becomes stable, women produce less children because the ones they do have have a better chance of survival.

View: https://youtu.be/obRG-2jurz0?t=25



It's the reason why people in low income areas (popularly known as 'ghettos') have so many children. There's a good chance those children will end up dead or in jail.

Europe's population reduction is actually a sign of positive growth. By every other measure, Europe is thriving.

So are the descendants in the US (look obesity rates skyrocketing, fertility rates, food stamps, social welfare benefits, number of people working etc...).

Obesity is complex, but seems to have more to do with other factors. In the last century in around the 1960's a small study linked fats to heart disease. By the 70's people took it as gospel, but later we found out that study was greatly flawed. But the damage was already done, and companies started demonizing fats when the real culprit was sugar. Every company started making 'fat free' foods replacing fats with of course... carbohydrates (which is sugar)!

Exercise Can't Save Us: Our Sugar Intake Is The Real Culprit, Say Experts

A group of experts likens the food industry's PR “machinery” to big tobacco’s. Ouch.

www.forbes.com

That seems to be the main cause of obesity.

Sugar companies started lobbying the FDA to try to get more carbohydrates on the food pyramid, and make fats the 'bad guy,' but the fact was that fat doesn't make you fat. Sugar (carbohydrates) does (do).

Are fats so bad? - Harvard Health

For years, many people stopped eating healthy fats. Instead of helping us slim down, the decline in fat consumption was accompanied by higher rates of overweight and obesity....

www.health.harvard.edu

What The Government Got Wrong About Nutrition -- And How It Can Fix It

What The Government Got Wrong About Nutrition -- And How It Can Fix It

www.huffpost.com

Food Stamps I don't know the data on, but I don't think it matters. The bottom line is basically every American (even the absolute poorest) has food. This was not always the case.

Look at cars from 1970s/80s and even 90s. Average mileage would be 500k-1M kilometers. Cars produced today have problems with going above 200k. I won't mention other goods.

It may seem that way (ie people staying 'they don't make them like they usta!') but cars are getting more and more reliable over time (as rated by number of defects per 100,000 miles)

However, the general consensus seems to be that modern cars don't break down as often as older ones. When the U.S. government offered the "Cash for Clunkers" program in 2009, it was intended to stimulate the economy and improve the fuel efficiency of the American cars on the road. It also served as a tacit confirmation that newer cars are better. That might be a controversial claim, but the numbers don't lie: The car with the record for the most miles driven was a 1989 Saab 900SPG, owned by a Wisconsin traveling salesman who logged 1,001,385 miles in 17 years before retiring it [source: AP].

The decline of car maintenance costs also shows that modern cars are becoming increasingly less problematic. In the United Kingdom, for example, the average cost of maintaining a car declined by 13 percent between 1997 and 2009 [source: Savage]. As a result of this improved reliability, people are hanging onto their modern cars longer than before. In 2009, J.D. Power and Associates reported that the average trade-in age of a car in the U.S. is 73 months. Just three years earlier, the average trade-in age was 65 months [source: Butcher].

Are modern cars less problematic?

There's a debate raging amongst two bitterly divided sets of car buffs: Are older cars more reliable -- or are modern cars easier to fix? The answer: Both.

auto.howstuffworks.com

Either New Cars Are Getting Less Reliable Or Olds Are Just Cranky

Increased complexity always frightens car enthusiasts, thinking at the newest crop of tech-heavy cars may be much less dependable in the long-term than their predecessors. A new JD Power survey might justify that fear.

jalopnik.com

Ask someone that remembers 1970s airports and flying and now compare it to the 'experience' (let's call it like that) that you get today. More consumption but less freedom? Higher literacy levels but lower understanding of what's really going on?

Unfortunately that's not a reliable way to gauge satisfaction because people always remember 'the good old day' as better than they actually were.

Rosy retrospection - Wikipedia

en.wikipedia.org

Rosy retrospection refers to the psychological phenomenon of people sometimes judging the past disproportionately more positively than they judge the present. The Romans occasionally referred to this phenomenon with the Latin phrase "memoria praeteritorum bonorum", which translates into English roughly as "the past is always well remembered".[1] Rosy retrospection is very closely related to the concept of nostalgia. The difference between the terms is that rosy retrospection is a cognitive bias, whereas the broader phenomenon of nostalgia is not necessarily based on a biased perspective.

It's also the same reason that people think that cars are getting less reliable when in actuality they have less problems per 100k miles. People perceive the past as significantly more rosy than it actually was.

And my explanation to 'the rich are getting richer' because smart people constantly learn while those 'sedentary' are getting left farther and farther behind.

The rich are getting richer, but the poor are also getting richer. The rich men get 'more rich' than the poor, but the poor are still getting richer.



Again, being poor in 2019 means you only have an iPhone 7. Being poor in 1700 meant you were probably dead, or on the verge of starvation.

Perfect illustration below:

Look at the below graph. Sorry for the lack of source but I have seen it in many places. And I don't think it's a secret. So there is less and less wealth in the hands of the 'bottom 90%'. Again might have something to do with the FED dollar being printed with the speed of light killing it's value, 'salaries' not following and diluting it, making it more difficult to advance from the bottom to the top.

<img

That's only regarding income distribution, not Per Capita income. In 1910 the Per Capita GDP was only $5,000/yr, now it's more like 35,000/yr. All this means is that he rich are getting richer at a faster rate than the poor. But the poor are getting richer as well all over the world:

I believe life on Earth is cyclical. Economy is cyclical. So in the long-term we develop but we have hiccups.

Yes.

My conclusion is that growth is not exponential. It's linear (some say 6% per year or less). Short-term can be exponential... Individuals can develop faster (aka rich are getting richer).

6% per year is astronomical. That's almost 100% growth (doubling) every 12 years, which seems about right. Growth may be linear, but the slope of the line is VERY steep.

But again there are all good theoretical considerations, but they've all been taken into account when economists study this data.

As far as we can tell, aside from some minor hiccups, everything is getting better by almost every objective measure we have. And it's all due to innovation.

 

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[ChrisV]

And to anyone still remotely questioning how drastic this effect is, let's take a look at various socialist countries (Argentina, Cuba, Vietnam) in comparison to Capitalist ones (United States, United Kingdom.)



(But also note that the pseudo-socialist countries like Norway, Switzerland and Denmark are doing just fine.)

I mean even look at North Korea (Socialist) vs South Korea (Capitalist) for God's sake:



THEY'RE RIGHT NEXT TO EACHOTHER. THEY USED TO BE THE SAME DAMN COUNTRY UNTIL THEY SPLIT IN 1945.

 

[Everyman]

While the growth in the last 200-300 years is undeniable and I cannot argue with that, I just think last couple of decades are actually 'lost'. And I question some of the numbers you brought because the govs are cooking the books by changing methodologies so we cannot even compare 'apples to apples' because the data has been massaged.

See these couple of graphs.

Alternate Unemployment Charts

www.shadowstats.com

It means that a huge number of people is unemployed (unproductive) at the moment, even though it's close to the peak of current economic cycle.

Alternate Inflation Charts

www.shadowstats.com

10% a year!! WTF! It means that it requires around 7-8 years (no calculator...) for your 100$ bill to lose half of it's purchasing power, or in English. You will only buy 50$ worth of stuff after 10 years, for a 100$ note.

So if the charts are based on the official stats, they probably misrepresent a lot of recent 'achievements'.

Again, being poor in 2019 means you only have an iPhone 7. Being poor in 1700 meant you were probably dead, or on the verge of starvation.

Policy Basics: The Supplemental Nutrition Assistance Program (SNAP) | Center on Budget and Policy Priorities

In a typical month in 2018, SNAP helped more than 40 million low-income Americans afford a nutritionally adequate diet.

www.cbpp.org

40 million out of 327M... So 12% living on a verge of starvation (they cannot afford basic food).

Polityka FED oraz jej wpływ na rynki finansowe

Wielokrotnie słyszeliśmy o programie FEDu, czyli Quantitative Easing. Pojawiło się dużo spekulacji, manipulacji i półprawd. Przedstawię pokrótce kontrowersyjny temat ingerencji banków centralnych w gospodarkę.

independenttrader.pl

The title says 'Historical data on income growth between top 5% and the remainder 4 Quintiles'. Of course 'the poor are getting richer' but in this pace subjective wealth will be lower and lower.

And last (not the least).

My favourite actually. Because I find Bill Gates a business and computer (sales maybe) genius but psychopath in other aspects of life, who should be avoided.

Population always levels off when nations become wealthier. It's actually an evolutionary adaptation. The reason is, when you live in an unstable economy women have to produce more children because the children have less of a change of survival. When an economy becomes stable, women produce less children because the ones they do have have a better chance of survival.

True but Europeans are dying. Check how many children are born per woman (below 2.1 means population decreasing). Find a country that is above this level in EU.

Demographics of the European Union - Wikipedia

en.wikipedia.org

I wouldn't say it's a good sign. It's a sign of incoming cathastrophy (even if in a couple of decades, I don't want to be the one who wasn't born, if you know what I mean...).

I see it more of a sign of this. Have you ever head of the Calhoun experiment (

View: https://www.youtube.com/watch?v=iOFveSUmh9U)?


I am not saying it's 100% this but I am worried. Nevertheless I agree with you. To survive we need to create value and be productive!

It's the reason why people in low income areas (popularly known as 'ghettos') have so many children. There's a good chance those children will end up dead or in jail.

Smart rich people also tend to have more offspring. They know what the game is about.

Private initiative and ownership is vital to our well--being, but with no monopolies or one dominant player on 'the market' (whatever market it is). If there is one, the dominant player will abuse his position to take even more and more until it collapses under his own mass (overweight people are actually a good metaphor). Taking everyone around with him and creating a lot of mess... mildly saying...

 

[TreyAllDay]

Great video. I love what Ben Shapiro says about capitalism - I could care less how rich Bill Gates is getting, as long as everyone is progressively richer.

I hate to sound like a bible thumper, but socialism seems pure evil to me.

 

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[Everyman]

I could care less how rich Bill Gates is getting, as long as everyone is progressively richer.

Exactly!

This was basically my point here. Everyone else isn't getting richer as fast as the richest since around 1970 or late 1980s depending on studies.

1971 is when the Bretton Woods gold standard was unilaterally terminated by the US i.e. allowing FED to print the 'USD' (proper name is probably FED, not USD because it's not US Dollar anymore, it doesn't belong to the nation - since the establishement of FED in 1913 - but to a handful of shareholders of FED).

Late 1980s, I am guessing is when the termination of the gold standard started to showing it's negative effect on general population. Inflation caused by printing currency is always faster and higher than wage/salary increases and in the long-term salaried people lose their purchasing power, take salary decreases every year, every moment actually because currency printing is continuous.

@ChrisV I think I owe you an apology here because I feel as if I had snatched your thread... I am looking forward to more case studies from you proving that creating value is the solution to 'all our problems'.

If you don' mind I have one great case study that is close to my heart, but only if you agree to publish it here...

 

[ChrisV]

@ChrisV I think I owe you an apology here because I feel as if I had snatched your thread... I am looking forward to more case studies from you proving that creating value is the solution to 'all our problems'.

No worries. A little challenge is always useful as long at it's educated. Post whatever you'd like.