"Ed Huntress" wrote in message
...

"F. George McDuffee" wrote in message
...
On Sun, 2 Nov 2008 20:41:00 -0500, "Ed Huntress"
wrote:

The question is how you make capitalism work without growth. This is a
very
old question that's been bantered around for at least a century. There
are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this, but
when I was a student, the answer to the question of how you have
capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form of
socialist birthday cake with capitalist icing on top.
------------------
Continued growth is only a problem when the organizations
involved become fixated on it. There appears to be no intrinsic
reason that Capitalism and/or "the free market" [these are not
the same] can't exist in a mature or static economy.

Without capital growth there isn't enough reason to assume risk, George.
The thought on this is that the system runs down like an unwound watch
when the only return on capital is dividends.

Nobody has ever tried it -- successfully.

Ed, you are showing you age. You whipper snappers don't remember America pre
1958.
It was at that time that equities and bond yields flipped more or less
permanently.

In the second quarter of 1958, the dividend yield on stocks was 3.9% and
the yield on 10-year Treasuries was 2.9%. Three months later, dividend
yields were down to 3.5% while Treasuries had climbed to match them at 3.5%.
The next three months stock prices kept rising and pushed the dividend yield
down to 3.3% while bond prices fell, driving bond yields to 3.8%. The two
yields had come close in the past but had always diverged. In 1958, they
reversed their historical positions more or less permanently.

The period between 1958 and 2008 might only have been an anomaly that is now
correcting as dividend yields revert to past tradition and rise above bond
yields.

Until 1982, the rate of unemployment (unemployment as a percent of the
civilian labor force) and the median duration of unemployment (in months)
moved up and down together in almost lockstep. Since 1982, however, the
duration of unemployment has increased dramatically relative to changes in
the unemployment rate. 1982 was also the point at which the growth rate of
real compensation began to lag productivity -significantly and persistently.

Income inequality has risen steadily over the past fifteen to twenty years.
Just how much longer will Americans tolerate these trends?

Thousands of Americans are losing their homes to foreclosures. Congress has
just passed a bill that "bails out Wall Street." The recent failures and
mergers of investment banks have been accompanied by stupifying bonuses to
the very executives responsible for much of the carnage left in their wake.


JC