(09-10-2013, 11:50 AM)freedom Wrote: [ -> ] (09-10-2013, 11:31 AM)specuvestor Wrote: [ -> ]Thanks freedom for a more balanced response.
Like I said below that's a good summary of where we differ:
(07-10-2013, 12:51 PM)specuvestor Wrote: [ -> ]Secondly I also have an issue when one thinks we should have a supercar lane rather than a bus lane because the former pays more tax. This example essentially divides our views. Capitalism is efficient, but it is not effective.
Your focus is again primarily on efficiency... that's where capitalism excel. But you are confusing efficiency with effectiveness. As a government I don't think I should take care of those hot money fly-by-night "taxpayers". These people come for very specific mercenarious purposes. I would suggest we treat them merceneriously as well. I would take care of my citizens that stick through thick and thin with me. That is also Buffett's principles when he talks about long term shareholders.
I'm constantly bringing Buffett up because he blends the ideology of capitalism and socialism pretty well. At least in theory 
When a score of people in a trading rooms can destroy the lives of millions and not get charged
When SuperPac allows faceless corporates to wield more influence in a democracy for the people, of the people and by the people, and supreme court actually thinks that is constitutional
When taking care of the less fortunate when it is no fault of their own (luck of the draw ie Buffett quote of "members of the lucky sperm club")for eg diseases, poverty trap, etc is considered entitlement
We know something is wrong structurally. It is obvious unless we stuck ourselves in a dogma that efficiency is best, or liberalism is best, regardless of the environment and circumstances.
My apology that "all entitlement are wrong". That's too extreme. Maybe I should narrow it to all wasted/ineffective/inefficient entitlements.
As I said before, those less fortunate are mostly covered. They can get as much help as they want at a reasonable level.
The problem in US now is not about those less fortunate, but more broadly, a huge part of the population. Social securities/medicare/meadiaid, I would not say all are wasted, but quite a significant part of them is simply transfer. So how does transfer improve effectiveness? How does long unemployment benefit improve effectiveness?
What I see here is quite some money is wasted. There are plenty of work to be done and there are plenty of people unemployed. If the government is really effective, at least it can bridge these two. But I ain't see any.
I agree with freedom on pensions and social security. However my issue with them is more due to it's structure than it's intentions.
I think all defined benefit pension schemes are a recipe for disaster, especially given the world's habits of assuming large returns/growth and therefore under-funding it. Defined benefit pension plans have caused numerous problems, in both the public and private sector, due to complexity and the inexact science of financial and economic modelling.
The complexity also raises the cost of maintaining the infrastructure to support the plans, requiring many lawyers, accountants, actuarial science experts etc. Our Singapore government uses CPF, which is a defined contribution plan, and already sees the need to tweak it from time to time as assumptions made in the past don't hold up.
I think transfer payments overall can be of a limited use, as the poor will most likely have a greater propensity of consumption, therefore driving up aggregate demand.
(09-10-2013, 10:02 AM)safetyfirst Wrote: [ -> ]Even if the fed wants to print more money to buy bonds, it can only buy existing government bonds, it cant buy newly issued ones because the government cannot issue new bonds soon.
Safetyfirst explained it well
I am worried for a blackswan event but so far looks like Obama gonna hang on there for a lasting legacy, for better or for worse, while republicans seems losing the fight, if it comes to a lower house vote.
http://www.bloomberg.com/news/2013-10-08...lment.html
(09-10-2013, 10:02 AM)safetyfirst Wrote: [ -> ]Fed creates money to purchase/ in exchange for governement bonds, mortgage backed securities, etc.
As for the US government, when it has to spend money, say to pay the civil workers, run public programs, etc, it has to first look at its bank account. Currently, there's only tens of billions left. Once it has finished spending this remaining money, it will have to raise money. It does so by selling government bonds.
However, by law, if the debt ceiling is not raised, the government cant sell more bonds.
Even if the fed wants to print more money to buy bonds, it can only buy existing government bonds, it cant buy newly issued ones because the government cannot issue new bonds soon.
Haha, hope i didnt make it more complicated for you
I disagree with you on the highlighted part.
Who said the government can't issue new bonds? If the government is using the newly issued bond to redeem the matured ones(Currently the treasury has an account in Fed which has billions, so it can repay the matured ones and issue new bond to park in Fed). It has no problem. It just can't issue
MORE, not
NEW bonds. Whether the government can issue new bonds depends on whether there are buyers for it in that case.
Let's hope no party is going to make mistake on this issue...
US govt shutdown will end soon: Secretary of Commerce
SINGAPORE — United States Secretary of Commerce Penny Pritzker said today (Oct 9) that Washington’s defaulting on the country’s debt obligations is not an option, and is optimistic issues that led to a partial government shutdown will be resolved by next week.
“Default is not an option. The United States has to meet its obligations,” Secretary Pritzker told reporters after giving a speech at the Singapore University of Technology and Design this morning.
“The congress knows what it needs to do and I’m hopeful that it will get resolved by the 17th of October.”
...
http://www.todayonline.com/business/us-g...y-commerce
In the US unemployment figures, they also look out for those that "give up" looking for a job. From an opportunity cost perspective, it is probably more expensive than a year of unemployment benefit . It is well known that TOTAL cost of recruitment TO THE FIRM is probably 6 months the salary of the hired hand in terms of disruption, retraining, learning curve etc. The manager just don't have incentive to look at the "opportunity cost" to the firm.
Indeed incentives will drive behaviours and if benefits/ transfers are too generous it will increase inertia. That's why policy makers have to make sure the policies will benefit MOST people rather than a small group. And critical medical service is usually not a matter of choice, which I disagree that some leaders previously think there should not be a safety net for it.
An academic that I actually admired is this straight hitting US Senator Elizabeth Warren who summarised socialistic idea simply:
"There is nobody in this country who got rich on his own. Nobody. ... You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea. God bless. Keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along."
Paying it forward is how societies progress swiftly. We see that idea most markedly during the Renaissance era where ideas were exchanged and dogmas challenged, while Ming China which was arguably the most powerful country then went into demise because Chinese always 留一招
(09-10-2013, 11:50 AM)freedom Wrote: [ -> ]The problem in US now is not about those less fortunate, but more broadly, a huge part of the population. Social securities/medicare/meadiaid, I would not say all are wasted, but quite a significant part of them is simply transfer. So how does transfer improve effectiveness? How does long unemployment benefit improve effectiveness?
What I see here is quite some money is wasted. There are plenty of work to be done and there are plenty of people unemployed. If the government is really effective, at least it can bridge these two. But I ain't see any.
Quote:some leaders previously think there should not be a safety net for it.
I don't think that the argument lies on whether there should be a safety net, but how to fund the safety net. If what takes is to only raise the tax for middle class and the riches, I would be with those who objects such safety net. However, if the safety net is mostly funded by all the beneficiaries, please go ahead. I believe the ultimate issues regarding social security/mediaid/medicare is how much should be funded by the government. Current estimate is that around 3/4 are funded by the government, which is an obvious problem for long term sustainability. In that sense, CPF is much more sustainable model for retirement and medicare. The members of CPF are funding most, not the government.
I strongly disagree with Senator Elizabeth Warren. Yes, everyone is given basic benefit of the society, but why does not everyone become rich because of it? She does not recognize that the individual gets rich because he/she puts more effort into it rather than the society gives him/her voluntarily. I don't object that he/she who benefits should give back, and they already do it by paying various taxes and offering employment opportunities, any more than that should be his/her own decision other than government enforcement. On the other hand, she is discouraging more people from working hard to improve their own lives by imposing more charges to the able ones.
(09-10-2013, 12:08 PM)Clement Wrote: [ -> ]I agree with freedom on pensions and social security. However my issue with them is more due to it's structure than it's intentions.
I think all defined benefit pension schemes are a recipe for disaster, especially given the world's habits of assuming large returns/growth and therefore under-funding it. Defined benefit pension plans have caused numerous problems, in both the public and private sector, due to complexity and the inexact science of financial and economic modelling.
The complexity also raises the cost of maintaining the infrastructure to support the plans, requiring many lawyers, accountants, actuarial science experts etc. Our Singapore government uses CPF, which is a defined contribution plan, and already sees the need to tweak it from time to time as assumptions made in the past don't hold up.
Agree the idea is right but the execution sucks
Another idea that is right is that insurance is a game of numbers. So doing essential insurance on a national level makes a lot of sense. But that would anger a lot of international insurance companies and also where they would put their asset under management.
Defined contribution CPF is also another right idea but sucked on the way when it allowed people to use more and more of it for housing. That defeats the purpose of having a retirement income when it is stuck in the roof over your head.
(10-10-2013, 01:29 PM)freedom Wrote: [ -> ]Quote:some leaders previously think there should not be a safety net for it.
I don't think that the argument lies on whether there should be a safety net, but how to fund the safety net. If what takes is to only raise the tax for middle class and the riches, I would be with those who objects such safety net. However, if the safety net is mostly funded by all the beneficiaries, please go ahead. I believe the ultimate issues regarding social security/mediaid/medicare is how much should be funded by the government. Current estimate is that around 3/4 are funded by the government, which is an obvious problem for long term sustainability. In that sense, CPF is much more sustainable model for retirement and medicare. The members of CPF are funding most, not the government.
I strongly disagree with Senator Elizabeth Warren. Yes, everyone is given basic benefit of the society, but why does not everyone become rich because of it? She does not recognize that the individual gets rich because he/she puts more effort into it rather than the society gives him/her voluntarily. I don't object that he/she who benefits should give back, and they already do it by paying various taxes, any more than that should be his/her own decision other than government enforcement. On the other hand, she is discouraging more people from working hard to improve their own lives by imposing more charges to the able ones.
In short you don't believe in cross subsidising while I think the able should help the less able. Not to the extent that it becomes unsustainable.
Societies will not benefit if a "caste system" of have and have-nots appear. It almost always happen if we are not careful, in terms of race, wealth, religion. But what is more potent is that the haves control the means of productions that the have-nots wanted to
stay alive or be relevant, vs say religion.
The incentive for the innovator is that he/she "Keep a big hunk of it". Not everyone can be wealthy at the same time though Singapore has fared quite well on that score, but EVERYONE benefits when most people benefits. India vs China is a very good example. Indonesia went into turmoil in 98 because of the social unrest that has been accumulating... the crisis was just a catalyst. Now we see a better wealth distributed indonesia with rising middle class and everyone benefits, including the poor.
If you only expect the poor to help among the poor and the rich to mingle with the rich, it is not going to work in the long run, or in a social contract. There had been a misconception that if we raise taxes higher than HK the rich will leave. Firstly if the rich comes they should be citizens, otherwise they are non-vested and leaving is a mercenerious understanding. Secondly if they prefer the environment of HK better than all the best to them. What I am saying is that there is a social contract as a package. They are not coming to Singapore to stay just because of low taxes. I don't fly to a crime-ridden, unrest country just because the airfare is the cheapest. Incentives is more than just $$$
Quote:In short you don't believe in cross subsidising while I think the able should help the less able. Not to the extent that it becomes unsustainable.
What you are saying is not true. The able ones already subsidise the less able ones by paying higher tax. But how much more should the able ones subsidise the less able ones? Or how much are you proposing as a threshold for sustainability?
Or another question, how does the able ones subsidising more to the less able ones benefit the society as a whole? Transferring wealth from the able ones to the less able ones does not produce wealth. No significant amount of money is hidden under someone's pillow. Not transferring additional money from the able ones to the less able ones does not prevent the money from circulating in the system.
My ultimate goal for the government is not to transfer or distribute wealth(that's a small part of their job scope, as most people are able to provide for themselves), but to provide a platform for everyone to utilize their ability to contribute to the society(the most important job scope).
(10-10-2013, 01:30 PM)specuvestor Wrote: [ -> ] (09-10-2013, 12:08 PM)Clement Wrote: [ -> ]I agree with freedom on pensions and social security. However my issue with them is more due to it's structure than it's intentions.
I think all defined benefit pension schemes are a recipe for disaster, especially given the world's habits of assuming large returns/growth and therefore under-funding it. Defined benefit pension plans have caused numerous problems, in both the public and private sector, due to complexity and the inexact science of financial and economic modelling.
The complexity also raises the cost of maintaining the infrastructure to support the plans, requiring many lawyers, accountants, actuarial science experts etc. Our Singapore government uses CPF, which is a defined contribution plan, and already sees the need to tweak it from time to time as assumptions made in the past don't hold up.
Agree the idea is right but the execution sucks
Another idea that is right is that insurance is a game of numbers. So doing essential insurance on a national level makes a lot of sense. But that would anger a lot of international insurance companies and also where they would put their asset under management.
Defined contribution CPF is also another right idea but sucked on the way when it allowed people to use more and more of it for housing. That defeats the purpose of having a retirement income when it is stuck in the roof over your head.
(10-10-2013, 01:29 PM)freedom Wrote: [ -> ]Quote:some leaders previously think there should not be a safety net for it.
I don't think that the argument lies on whether there should be a safety net, but how to fund the safety net. If what takes is to only raise the tax for middle class and the riches, I would be with those who objects such safety net. However, if the safety net is mostly funded by all the beneficiaries, please go ahead. I believe the ultimate issues regarding social security/mediaid/medicare is how much should be funded by the government. Current estimate is that around 3/4 are funded by the government, which is an obvious problem for long term sustainability. In that sense, CPF is much more sustainable model for retirement and medicare. The members of CPF are funding most, not the government.
I strongly disagree with Senator Elizabeth Warren. Yes, everyone is given basic benefit of the society, but why does not everyone become rich because of it? She does not recognize that the individual gets rich because he/she puts more effort into it rather than the society gives him/her voluntarily. I don't object that he/she who benefits should give back, and they already do it by paying various taxes, any more than that should be his/her own decision other than government enforcement. On the other hand, she is discouraging more people from working hard to improve their own lives by imposing more charges to the able ones.
In short you don't believe in cross subsidising while I think the able should help the less able. Not to the extent that it becomes unsustainable.
Societies will not benefit if a "caste system" of have and have-nots appear. It almost always happen if we are not careful, in terms of race, wealth, religion. But what is more potent is that the haves control the means of productions that the have-nots wanted to stay alive or be relevant, vs say religion.
The incentive for the innovator is that he/she "Keep a big hunk of it". Not everyone can be wealthy at the same time though Singapore has fared quite well on that score, but EVERYONE benefits when most people benefits. India vs China is a very good example. Indonesia went into turmoil in 98 because of the social unrest that has been accumulating... the crisis was just a catalyst. Now we see a better wealth distributed indonesia with rising middle class and everyone benefits, including the poor.
If you only expect the poor to help among the poor and the rich to mingle with the rich, it is not going to work in the long run, or in a social contract. There had been a misconception that if we raise taxes higher than HK the rich will leave. Firstly if the rich comes they should be citizens, otherwise they are non-vested and leaving is a mercenerious understanding. Secondly if they prefer the environment of HK better than all the best to them. What I am saying is that there is a social contract as a package. They are not coming to Singapore to stay just because of low taxes. I don't fly to a crime-ridden, unrest country just because the airfare is the cheapest. Incentives is more than just $$$
I think more along utilitarian lines. The rich sometimes seem to forget that the poor are still potential customers at the very least. There is no way an economy can prosper if a larger proportion of wealth is in the hands of a smaller proportion of people. The rich can have the resources to invest and help that way, but too much investment and too little consumption leads typically to asset bubbles and bridge to nowhere situations.
(10-10-2013, 02:13 PM)Clement Wrote: [ -> ]I think more along utilitarian lines. The rich sometimes seem to forget that the poor are still potential customers at the very least. There is no way an economy can prosper if a larger proportion of wealth is in the hands of a smaller proportion of people. The rich can have the resources to invest and help that way, but too much investment and too little consumption leads typically to asset bubbles and bridge to nowhere situations.
May I ask a question? How could investment not turn into consumption?
Does the investment not provide job and income for the people? Does the investment not produce tax for the government?
To me, every investment eventually turns into consumption somewhere. Of course, some stimulate more consumption and some stimulate less. But no investment curbs consumption.