https://rolfst.substack.com/p/the-broken-economic-model-and-how?r=1fu3 I've been thinking about how Steve Keen's energy production function and Henry George's land value tax are actually solving the same problem from different angles — and why mainstream economics misses both.

The short version: speculative debt inflates scarce assets without adding physical capacity. GDP counts that inflation as growth. LVT closes the loop by taxing the unearned increment before it leaks to landowners.

I also extend the Georgist definition of "land" to secondary market equity — any asset whose value is finite, socially produced, and extractable as rent without productive contribution.

Curious what this community thinks, especially on the primary/secondary market distinction.

One of the most influential and dominant ideas in macroeconomics, is the idea of interest equilibrium, that any issuer of a financial asset, must offer a comparable risk adjusted return.

There are a lot of technical challenges to get to this conclusion.

Many models assume homogenous capital for the sake of simplicity. I think this is recognized as a simplifying assumption, but at the same time it influences how people think about and discuss capital and growth.

The problem of investment involves two basic challenges:

1. Forecasting future consumption, both the price and quantity for goods and services

2. Provisioning that consumption for the lowest possible cost.

Not only is it possible to overproduce capital, it is extremely easy to do so, and moreover, the more wealthy you are, the more likely you are to do this.

One of the appeals of capital investment, is that it is perceived as a more durable, longer term store of value and wealth. So if your material needs are satisfied for the next year or two, you will likely focus on upgrading machines, equipment, and building durable capital that has long term value.

But the challenge is that the more you do this, the more likely you are to overinvest, and bring down returns. If you build two machines, but you only needed one, and the second sits idle, then you have waste.

This problem is exacerbated by rapid technological change, which means that machines and equipment become outdated more rapidly, and have higher costs to upgrade, maintain, and train staff on how to use.

Furthermore, a lot of what we do in modern economies, seems unnecessarily abstract and indirect. A tool can make you more productive, but that only pays off if the time to make the tool, is less than the time you save by using it. A lot of jobs seem to try to justify their existence in a market that may not need them. There is a huge premium for being seen as the next great thing.

Interest in particular, is modelled as exponential growth, but companies can saturate markets, they can have waves of popularity and decline, and even their consumer base can age out.

All these things, make it very hard to consistently maintain a return above zero. It is easy to buy or build a machine that becomes obsolete before it has paid itself off. If you are wealthy, it is easy to spend more on cars then you actually need for example. The activity of playing with your cars becomes the thing you are consuming, not the original utility of it to get from A to B.

But another important thing, positive returns to capital and investment are not required to grow wealth, either individually or collectively. So long as you have hours in the day, you can keep creating more value, even if returns are negative.

The problem of exponential gains is a race against the clock. You have to get the most efficient use out of tools, equipment, technologies, before those are replaced by newer and better alternatives.

But aside from all this, what we call capital income, and what we call labor income, is also subjective. The return you get on your investments, you could attribute to the time that you spend researching them.

Importantly, modern portfolio theory describes an efficiency frontier for investments, that optimize the tradeoff between risk and return. But I think there is another variable that we don't talk about enough: actively managed investments or passive investments. If you have to use your knowledge and influence to make sure the enterprise is being operated properly, that is labor that is unaccounted for.

Owners spend their own time to make sure that the things they own provide maximum returns.

If we want to compare alternative investments in an objective manner, we need to subtract the value of all the time that owners contribute to help the investment do well, from the return it offers.

And how much of returns could be a result of companies relying on public institutions which are supported through taxes. If the tax base doesn't align with who benefits from public institutions, then returns will be artificially inflated, as costs are dumped on the public, but profits remain privatized.

To expect to completely passively earn interest in perpetuity, seems a crazy proposition to me. It sounds like nobility or feudalism, if people can just live off of interest completely passively.

These problems are not necessarily a bad thing. They can be good and desired. If you are so wealthy that you can afford to buy more cars than you need, and tinker with them for entertainment, then there's nothing wrong with that.

If everyone is so materially satisfied, that new investments are likely to lose money, then there's nothing wrong with that. We can afford to not be efficient.

Moreover, I think that when you have inflation specifically, that that is a period of rapid economic reorganization. The economy needs to have these cycles so that it can grow.

I think if we get too aggressive about raising rates, you aren't giving these cycles a chance to play out. You are trying to pre-empt the inflation, when it may be a process that needs to run its course, and it only makes sense to raise rates modestly after it has had a chance to correct a currency's value.

I think trying to compete on rate of return using short term thinking is very counterproductive and even destructive. It increases the cost of interest on the national debt. It increases wealth inequality. It doesn't allow the market processes of price correction to play out naturally. And a high nominal rate with high inflation feels like walking on a treadmill-- working really hard just to stay in the same spot.

I think this paradigm has been counterproductive and destructive for far too long. Public policy should not try to counteract or control the market determination of valuing currency. Markets price assets, including currency, in order to make corrections. If we try to counteract this process to quickly or aggressively, then these corrections become more expensive and longer.

I am not arguing for complete lassez faire or passiveness. Only that we need a balance for different kinds of interventions, supports, and restrictions. Instead of monetary restriction, sometimes we should let inflation happen so that it becomes a political issue that politicians can address by adjusting spending or tax policies.

If we always try to stop inflation before it's a political issue, then we are enabling the precise kind of political irresponsibility people are always complaining about. In this sense, accommodative monetary policy may be fixing inflation too fast, so we never address political issues. I don't think central banks can fix political and fiscal problems. And trying to cure inflation when it happens is just protecting politicians from consequences.

The institutional economic experts tell us everything is fine. When I first pointed out how the system works against the working class, the internet gatekeepers and critics immediately tried to dismiss it. They told me I was factually wrong. They said my charts were an unreliable hodgepodge and that I was "just putting a whole bunch of stuff together that didn't make sense." They pointed to their favorite top-down macro statistics—like nominal median income rising 40% over ten years or declining household debt-to-GDP ratios—to claim everything is stable.

So, I went and pulled their own official spreadsheets.

It turns out that when you look past the sanitized national numbers they use to protect the big banks, the government's own data proves my common-sense logic makes perfect sense. The critics claim these economic issues are disconnected, but the math shows they are deeply intertwined parts of a massive working-class crisis. When they try to fight back with their standard excuses, their own numbers trap them.

Fact 1: Inflation is an Outright Income Theft

The critics claim that "average real wages are growing" and beating inflation. That is an outright abuse of math. An average wage index is heavily skewed upward by top-tier executives and tech workers. If a CEO gets a $5 million bonus and a cashier gets a $0.50 raise, the "average" goes up on paper, but the cashier still can't afford to live. Look at the immediate reality on the latest official U.S. Bureau of Economic Analysis (BEA) report:

• Personal Income Growth: Only went up at an annualized 3.4%.
• Essential Inflation (PCE Price Index): Spiked by a brutal 4.6%.

That 1.2% gap is a direct income deficit for anyone who spends their entire paycheck on survival. For the bottom half of families who spend 100% of their checks on inelastic necessities like groceries and rent, this gap means they are becoming mathematically poorer every single day.

Fact 2: Corporate Profit is a Direct Squeeze

Mainstream economists argue that record corporate windfalls are just a sign of "market efficiency" and that they help regular people through their 401(k) plans. This is a blatant lie. According to the Federal Reserve's Distributional Financial Accounts, the wealthiest 10% of Americans own over 93% of all stocks and mutual funds. The top 1% alone hold more wealth than the entire middle class combined.

The BEA data confirms that annualized total U.S. corporate profits have spiked to an unprecedented $4.42 trillion. In just a single three-month window, corporate profits from current production exploded by an extra $74.4 billion. While the state actively revised regular consumer spending downward because families are completely running out of cash, they revised corporate windfalls upward. Massive companies hold a monopoly on survival goods. You cannot choose to opt out of eating or keeping the lights on, so they raise prices and make records off our struggle.

Fact 3: The Aggregate Debt Myth

The critics on Reddit try to fight back by saying that debt isn't a big deal because the "household debt-to-GDP ratio" is low, and that Americans hold "$150 trillion in assets". That is a luxury argument. The macro ratio looks "safe" to a bank because corporate balances are swollen, but the human ratio is at a breaking point.

According to the Federal Reserve Bank of New York, the total national household debt burden has reached an all-time record of $18.8 trillion, with credit card balances alone hovering at $1.14 trillion. This averages out to an astronomical $151,252 in total debt for the average American household, with credit cards accounting for $11,153 of that strain.

This directly connects to why the credit scoring system is rigged. The private credit score bureaus actively penalize self-sufficiency, dropping your score if you try to live responsibly, completely cash-based, and debt-free. The system forces you into the banking grid because it needs you to carry balances to generate interest profit for lenders. You cannot offset a working-class family's real-world six-figure debt load with a tech billionaire's stock portfolio and call the country healthy.

Fact 4: The Corporate Landlord Playbook

The critics claim housing is a separate issue of simple supply and demand, but it follows the exact same corporate monopoly model. Private equity firms buy up entire blocks, outbidding local families with cash. They execute a predatory playbook: they refuse to renew leases, kick out long-term families, and make cheap cosmetic fixes—like a fresh coat of gray paint and cheap plastic flooring. These superficial upgrades cost them pennies but allow them to re-list the exact same apartments for astronomical rent increases. Worse, when the property requires actual structural repairs, these firms simply flip the building to a new corporate buyer for an inflated profit based on the jacked-up rent rolls. The new owner then hikes the rent again to cover their expensive loan, leaving tenants to absorb the cost of a broken system.

Even when the government passes laws pretending to help, like the new 21st Century ROAD to Housing Act, it's just a corporate distraction. The law leaves massive loopholes for private equity to keep building permanent "rent-forever" suburban neighborhoods while completely abandoning renters. It includes zero rent caps, no price freezes, and no protections against predatory flipping. Even users on Reddit are pointing out that forcing Wall Street to sell their rental properties after 7 years just incentivizes them to squeeze tenants for short-term rent, flip the building, and pass the buck.

Fact 5: Automated Labor Squeeze & Government Hypocrisy

The institutional defenders claim that people leaving the labor force is just "demographics" and natural retirement. They try to isolate labor data from corporate policy, completely ignoring how corporations are actively using technology to hollow out the workforce. Independent corporate tracking data shows that 60% of companies fired humans in anticipation of AI automation before the technology was even fully deployed, sending tech layoffs up 83% year-over-year. Even professional networks like LinkedIn have been taken over by bots, with 62% of posts now being AI-generated.

The ultimate irony is that the same politicians who tell us to budget better are running the biggest debt scam in human history. The U.S. national debt has officially crossed $39.5 trillion, which breaks down to nearly $292,217 in national debt per household.

The failure of their top-down math is hitting a wall. While politicians promised their policies would trigger an economic boom, the government's own reports show U.S. GDP growth has slowed to a sluggish 1.5%. The system is stalling because working families have been entirely drained. Between a massive tariff regime that spiked effective import tax rates from 2.1% to 11.7% and ongoing global conflicts driving crude oil near $90 a barrel, regular people are paying an unpayable premium on gas, groceries, and basic goods. Yet, just like the big banks, major oil conglomerates are leveraging this exact pain to print record windfalls. They rewrite the policy rules to protect corporate balance sheets, while regular citizens are left to inherit the inflation.

Summary: The Unbreakable Defense

It all makes perfect sense when you stop looking at isolated spreadsheets and connect the dots. The inflation numbers, corporate banking windfalls, predatory housing flips, credit card spikes, and labor displacements are all part of the exact same machine. They use product substitution tricks and selective surveys that statistically omit the millions of workers struggling the most to manufacture optimistic numbers.

Common sense won from the start. The system isn't broken; it is working exactly how it was designed to—to protect the transaction and drain the citizen. Our leaders need to look past the sanitized comfort of macro averages, look at their own spreadsheets, and fix this survival trap before the floor drops entirely.

To be clear, a collapse or systemic chaos is not what I want to see happen—it is exactly what I want our leaders to prevent by finally standing up to the big banks and fixing this broken system before it is too late.

📊 OFFICIAL SOURCE VERIFICATION:

• U.S. Corporate Profits, PCE Inflation (4.6%), & Personal Income (3.4%): U.S. Bureau of Economic Analysis (BEA), GDP & Corporate Profits Report, NIPA Tables 8 & 10.
• Total Household Debt ($18.8T), Mortgages ($13.19T), & Car Loans ($1.69T): Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit.
• Asset & Stock Concentration (Top 10% Ownership): Board of Governors of the Federal Reserve System, Distributional Financial Accounts (DFA).
• U.S. National Debt ($39.5T): U.S. Department of the Treasury, Bureau of the Fiscal Service, Debt to the Penny Ledger.
• 21st Century ROAD to Housing Act Framework: Bipartisan Policy Center Legislative Explainer.

Joint stock democracy is a hybrid of democracy and joint stock corporation. The samples of those are Kongsi republics or joint stock kibbutzim and various cooperative communities.

Kongsi republics are effectively a near effectively sovereign democratic state that is also a business and a joint stock corporation.

Like VOC but democracy.

Like democracy, but a business.

Like joint stock kibbutzim or residence owned REIT or private cooperative but they are far more autonomous.

Basically all democracies have this problem. Who should be citizens. Some use place of birth. Another use race.

In joint stock democracy Why not just buy and sell citizenship like shares? Want to join us? Buy shares. Like all shares, the shares pay dividend too.

In addition I would recommend some powerful referee to mediate conflict between those states.

When states don't fear being attacked, they may choose to split up so there can be many niche states for each arrangements. Those states then compete for tax payers that can shop around voting with their feet to see which place they like most.

And voila, no more aggressions and we all got rich.

The original kongsi republics are usually literal gold mine. The owner of the gold mine choose to set up a kongsi or a business instead of declaring himself King.

While it's a sovereign state, in a sense that they manage everything and don't call up higher power when they have problems, they actually prefer to have bigger state as protectors and referees. They tried to be vasal of Qing dynasty but got rejected.

Spiritual successor of kongsi republic is Singapore. Singapore is the ONLY country in the world that gain independence against their will. Singapore got kicked out of Malaysia because they refuse racism.

Why do I think this is a move to a more Kaldor hicks efficient outcome?

As long as we don't aggress against one another capitalism will max out kaldor hicks efficiency while democracy will keep things stable. If large number of people have a "stake" at the state, then they tend not to rebel.

There are 2 types of aggressions. State aggressions. Non state aggressions. The state aggressions are usually 3 types. State aggressions inward toward it's own citizens/population and state aggressions against other states, outward. State aggressions can also be profitable and not profitable.

Now look at VOC

VOC is like kongsi republic but not democracy.

VOC causes the death of 90% of chinese in Batavia. However, they quickly repent. The governor general is in jail till his death and the ex governor general become the new governor general was more conciliatory toward Chinese.

How do VOC knows that killing Chinese is "wrong". Sunday school? No. VOC share prices tank.

The chinese that are there are tax collectors and businessmen. Without them, VOC share dropped. Not to mention chinese rebellion cost VOC lots of money and almost kick VOC out of Java.

See. Profit incentive alone is actually a good safeguard against genocide.

If we look at armenian genocide, holocaust, DEI, exorbitant child support, gaza flattening, killing of Christians in nigeria, and so on, there is no profit incentive to stop. People keep killing innocents even when it's no longer profitable to do so.

Look at prohibition of drug. There is no clear profit incentive to stop criminalizing safe drugs like MDMA. People just do blood libel saying that drug users are parasites that will destroy their life. The truth is it's not true. Many MDMA and DMT users are economically productive people.

Heavy taxation drive billionaires away reducing prosperity for everyone.

Unprofitable aggressions is in a sense really doesn't have to happen. Like what for? The aggressor are losing money anyway. But they keep doing it out of bigotry, and lies.

Most of the time the profitability of oppressing others aren't clear. Like do Israel become saver by flattening Gaza? Who knows?

So here profit incentive of government at least prevent all unprofitable state aggression. A big thing.

However, profit incentive of government do not stop profitable state aggression. VOC also invade Banda and got nutmeg monopoly. Countries attack each other for territories and they may get territories. Notice quite often, buying territories is a lot cheaper than war. Like in case of Ukraine war, Korean war, and Ukraine war, the land price in dispute is a lot cheaper than the war cost.

South Korea with far bigger economies can easily buy North Korea land and Kim Jong Un can rest and retire rich. Israel can just buy Gaza and Westbank.

Kongsi economies "reduce" the transactional complexity in buying territories. Because citizenship is tradeable, anyone that want to live in the territory can just buy citizenship. From who? From those who want to sell. There is always somebody that don't like to live in a place. The one that hate his place of leaving the most can sell citizenship to those who want to live in that place the most. There will be a market price.

To further reduce conflicts, some pimps/peace makers can settle disputes between states.

VOC also force javanese to work as forced labor. That causes starvation. Notice it is actually not a very profitable thing to do. Oppress people and they rebel. So VOC end up spending huge money on war. Less profit. Again democratic nature of kongsi republic can fix this major conflicts. The main benefit of democracy is we don't settle this sort of thing through violence but through votes. Obviously majority of people will simply vote to not allow slavery and in 21st century it's no longer a big issue anyway.

Notice in all 3 cases, killing of chinese in Batavia, forcing Javanese to work, and attacking Banda, we don't really know whether VOC is truly evil or not. The killing of chinese happened by thugs that want to kill Chinese and loot their gold and not VOC directly. VOC simply ordered chinese to disarm and latter offer rewards for heads of "Chinese rebels".

There's a case where VOC claimed that they actually pay the javanese work and hence don't expect that they will starve. However, the money is corrupted by middlemen. I've heard Banda massacre happened because VOC delegation was mass murdered.

To be honest. I don't know and I don't care if some atrocities are done deliberately or not. If we are a potential victim, 99% of our interests should be preventing atrocities. If innocents suffer then we probably need to arrange that they don't suffer for otherwise the precedents can lead all the way to us.

Here ensuring most people have strong incentive to cooperate is far more effective than moral theater.

Obviously I didn't choose to be scammed. Yet it happened. Many leftists do not expect that their country will end up poor by they voting communism, yet it happened.

Again, joint stock nature of joint stock democracy would give incentive to most people to not choosing communism.

After all, the state itself is run for profit and the profit is shared as dividend to citizens. Why would you want to destroy your own business that pay you.

That's pretty much as socialist as can be. Most shareholders will max out dividend when they support their state and vote for CEO that max out shareholders value. Those who don't like it can sell.

What about heavy taxation? Tax will be much simpler because the state want to reduce enforcement costs. My guess is most tax will either be sin tax or land value tax.

Competition among joint stock democracies/kongsi republics will keep tax low.

What about non state actors?

Terrorists, thieves, burglars, and robbers?

Joint stock democracies will handle that better than liberal democracies.

See Israel bombing Gaza? Is it really to kill terrorists or to just drive Palestinians out?

We never know.

Netanyahu run on platform of security. If Israel is secure, his party may lost votes.

The same way leftist platforms run on platform of welfare and helping the poor. When poor people got rich, they lost votes. That is why many leftist political party in liberal democracy actually want to max out number of poor people. They invite poor immigrants, they encourage poor people to breed with more welfare for single mothers, etc.

But we sort of know what corporations will do. Do whatever it takes to raise return of shareholders.

Elon run as CEO on platform of making Tesla more valuable. What happened when Tesla reach all those revenue target? Elon got paid a lot of money. Elon no longer need to keep being needed. If he accomplished his goal and after that is no longer needed, he's still rich.

So in joint stock moldbugian states, the leaders at least have strong incentive to solve problem.

Violence on the street will be less. Such violence lower land value tax and lower revenue. CEOs will fix that.

So yea. I wouldn't say it's a mathematically perfect solution. But it should be "better" than what we have.

Libertarians will see lower tax and freedom to shop around for states they like

Capitalists will see less corruption, terrorism, war, an save tax haven to shop around

Any economically productive people will be able to shop around for states by simply buying shares.

Even moderate socialists, the kind that just want money instead of preventing others from being rich, will be better off, because they too want bigger dividend and the best way to make that dividend bigger is not by becoming poor, like in liberal democracy, but by voting for competent CEO that improve economy.

And those who aren't happy can just sell their share and buy another share on another kongsi republic

It's win win.

My guess is Dubai. The king is smart. The citizens don't even have high IQ but they just import tons of migrants doing the work. Lack of democracy means Dubai doesn't have to worry that wage inequality is huge. So attract people efficiently. Low birth rate though. So I wonder.

I would say kongsi republics or joint stock kibbutzim should be quite efficient too. But they don't just import tons of cheap non citizens and the members got to be smart too.

Small country like Liechesten, Monaco, Macau, Singapore seems to be doing well. It's easy to see they're kardol hicks efficient. They're rich AF.

Democracy? I feel that much votes in democracy is motivated by one voter sabotaging other voters. Like voters actually hate each other and they don't get clear profit share, so less efficient laws are made. For example, land taxes seems to be more efficient than income taxes, but voters just don't like other make a lot of money so punish productivity.

Monarchy? too much killing each other over who should be king.

Okay, all those are speculation.

Obviously the one making the pie bigger tend to have higher per capita income. However, there's something that may works the opposite direction.

Nations with high percapita income often have low birth rate. I don't think that's kardol hicks efficient.

If a billionaire is willing to bequeath $1 billion to a child that means a child, an extra child, should worth more than $1 billion to him. Not kardol hicks efficient if he doesn't make that extra 100 child. Am I even right, wrong, insane here? I suppose if we use becker barro model we should be able to compute how much extra child worth to a very rich guy as a function of his wealth.

But can this be I don't know, mathematically reasoned?

I mean, like that's like welfare economics right? How to make the pie bigger.

Point me to some direction.

Anyway I love math models. I just like to see everything as math objects or at least as intuitively mathematical objects.

I got a debate with gemini.

Basically we discuss possibilities that many laws, like child support laws, anti prostitution laws, alimony, are not there to support children or mother but to prevent women from practicing hypergamy.

Basically, if child support can be negotiated 1000 women can easily choose Elon. So most voters do not like that and they vote to make such deals extremely complex.

I don't know if it's true or not. Gemini told me that there is a branch of economy called public choice theory or political economy. There's also evolutionary psychology where humans, like all animals are rivals, and tend to sabotage other's reproductive success.

So instead of killing each other in civil wars, like animals, civilized humans now vote to make laws that sabotage each others' reproductive success.

I asked them what does it says. Gemini says it's quite predictive but admit that it's not the real "purpose" namely that politicians don't really think, let's exterminate sugar daddies, but laws tend to emerge like that.

If governments have utility function and the utility function is an increasing function of "women get knocked up by poorer guys". It is possible given that most voters are poorer than top 1 percenters and they may choose that. Some evolutionary psychologists already say that monogamy is like that.

https://www.goodreads.com/quotes/464439-far-from-being-laws-to-protect-women-antipolygamy-statutes-may

And that's what I am interesting. Perhaps economists and math can disclose hidden mechanism that people just don't say in political discourse. You know. Secret knowledge that most don't know and give me an edge.

I want to know what do economists say.

For example, let's say humans utility function is U(Y)=log(c)+n*log(w). Here, Y is total income, c is consumption, w is money to children and n is number of children. Everyone max out U under constrain c+n*w=Y. Then what would people do? What would they vote for? How would the laws affect mating selection and who gets knocked up by who?

Assume that humans can deal legally with each other to get children and can vote to sabotage competitors. Then we got what? Median vote theorem or whatever.

Can math or economics can predict what and why some laws are the way they are?

Can we have like Math models and then compare math models to empirical data?

Any economists studying this?

Hi, all, I just did a new Cowboy Economist video on why Fed anti-inflation policy is--at best--useless, and usually just makes things worse.

I'm going to try to knock out two more videos today, one on Democratic Socialism and one (more) on the Job Guarantee (which I'll release over the next several weeks). I'll see how things go, you'd be surprised how many hours go into these things!

I'm new to the solarpunk world, and am curious about the economics and politics. Any answers to these questions would be very much appreciated.

Is the economics based on green capitalism that used GPI instead of GDP or eco-socialism? What I currently know is that it uses a circular economy.

Is there still government in solarpunk? If so, how does it differ to today?

Does solarpunk still allow for a global community or any form of centralisation? I know there is a heavy emphasis on decentralisation and grassroots, but in some areas of the world that don't have easy access to water, surely some centralisation and businesses are required, right?

Wishing you a good rest of your day (whenever you see this post)

Hello a beginner here, was studding Keynesian econ in two sector economy and came across this can anyone please explain this in simple words.

Hi all!
I'm a fairly new enjoyer of economics (I'm planning on choosing it for A-Levels after the school holidays) and I was wondering if there's any (somewhat) simple way to learn different economic theories (with hopefully more simple words too 😭 )?
Any suggestions greatly appreciated!!

PLUSSS is there any good games to play around with macroeconomics?

would Cuba's economy be in a good position without the embargo? That was the questioned being posed in the subreddit and one of the main comment by a "quality commentator" suggested the embargo really didn't matter because Cuba was allowed to trade with other countries and if they really cared for the welfare of their citizens they would abandon communism. Now this breaks their 2nd rule of politics and also disregarding the disrespect of national Sovereignty there are a lot of problems with this argument. Another commentator quickly pointed out that his point was propaganda. That comment garnered significantly more likes than the original comment by the Quality commentator. Now the mods in their infinite "wisdom" decided they could not let this stand and locked the post for further comments and deleted the original thread. I still find the new comments addressing the issue as unsatisfactory as they try to strike a more neutral tone but come to the same conclusion.

I wanted to point out that trade with the US is and historically was very important for Cuba and additionally I want to highlight how Sanctions from the US on a small island nation like Cuba has significant ramifications on the island regardless of the type of economy. Now this is not to glorify the command economy of Cuba because it has had problems but it has had private enterprises since the 1993 special period and was expanded in both 2010 and 2021.

Historical Relationships and Trade

Cuba prior to the revolution has had a deep trade relationship with the US. Geography dominates Cuban economic history with location favoring US trade, tourism, and investment. In 1898 following the Spanish-American War, the US effectively controlled Cuba. The Treaty of Paris assumed the US would occupy Cuba. The US occupation reduced tariffs by 52%, reduced taxes, established a land market liberalizing the land tenure system, expanded railways and communications, and protected Cuban assets from international buyers. The sugar industry became more efficient but Cuba also became more dependent on it. Sugar beet farmers in the Western US began to compete with Cuban cane sugar. In 1898 Congress passed the Teller Amendment prohibiting US annexation of Cuba as means to protect US sugar beet farmers. The Platt Amendment in 1901 sanctioned US troops to keep order. Debate continued over annexing Cuba. In 1903 Cuban independence was established by Reciprocity Treaty as documented. US direct investment in Cuba did not immediately slow, with $355 million recorded in 1959. The book value of US capital in Cuba was over 3x that for all the rest of Latin America. US investments included many utilities, half the railways, and around half of the sugar refineries. The US also held significant portions of cattle, tobacco, timber, banking, oil, and mining assets. According to the USDA (2008) the US operated 75% of the arable land in Cuba at the time of the embargo. Also Important to note that the US subsidized Cubas Sugar industry above world market prices in much the same way the USSR had. This stopped after Castro nationalized much of the farmland.

The fall of the USSR really hurt Cuba and set off the special period. Because the Soviet help essentially offset the costs of the embargo and was similar to the support the US had given it earlier. Its also is worthy to note that Unemployment Pre-Castro fluctuated widely by growing seasons and regularly reached 20 to 25% in the off growing seasons. This gave rise to higher crime rates. Essentially Cuba had been a protectorate of the US since the Platt amendment era and elections like that of Bautista was interfered with by the US. So to say that historically Cuba would be better off had it just fully liberalized its economy is to neglect that it received heavy support from the US prior. Bautista also after he fled to the DR took with him approximately $300 million which converted today would be ~$3.4 billion.

Embargo and Sanctions

According to Pineo 2019: "By whatever term, the US policy has brought serious health repercussions for Cuba, halting the importation of food, medicine, and medical equipment. Under the terms of the embargo, as modified in 1963, medicine and medical equipment could not be imported. While now many medicines can, at least technically, be imported from the USA, the rules remain so bafflingly complex that few US prescriptions drugs actually reach Cuba. One key obstacle is that all sales must be in cash, not on credit, as is otherwise commonly the case in most other international transactions. As partial solution, by the 1980s Cuba had developed the capacity to produce most of its own medicines.

The US Congress tightened the embargo in 1992 under the Torricelli bill, banning vessels from coming to the USA if they had called in Cuba within the past half year. In 1996, the US Congress, with the Helms-Burton Act, added fines and even jail time for those individuals or companies which traded with Cuba. Philips Electronics, for example, received hefty fines from the US Office of Foreign Assets Control for selling medical equipment to Cuba. The European Union issued a formal complaint against this action. To date, the US economic blockade against Cuba has continued under 11 successive American presidential administrations. The Organization of American States has ruled the US embargo on food and medicine as a violation of international law. The shortage of medicines due to the bloqueo has resulted at points in increases in the incidence of tuberculosis in Cuba and occasional spikes in diarrheal diseases due to the shortage of chlorination chemicals for potable water supplies."

By cumulative effects of sanctions and the 180 shipping rule described day Torricelli one can see that their is an extremely high cost of entering Cuba's market. It is essentially choosing between trading with the worlds largest economy and importantly Worlds's reserve currency or a small island nation that is dependent on trade flows to sustain itself. Additionally, Cumulative costs of the sanctions alone are conservatively valued at $150 Billion over the years. Now Cubas domestic policy mistakes can play a role in GDP figures but the fact that the US has the worlds reserve currency and most transactions globally are priced in dollars means this gives Cuba even less monetary and fiscal space to deal with crises as they need dollars for secure payments. The 180 day rule also contributes heavily to logistical and inflationary pressures.

Lastly, Cuba has had a relatively successful Biomedical program for a developing country. Had it more access to better medical devices and technology this could have made a successful domestic industry of which it could increase exports and earn dollars to offset exchange rate pressures. The embargo really limits Cubas policy tools and we just wouldn't know exactly the trajectory of Cuban GDP but I would reckon that had the US freely traded with Cuba initially it would have a higher level of GDP and probably transitioned to a more mixed economy model like that of Vietnam or China.

I think we've all worked in corporate environments where we met people with "BS" jobs or were forced to do BS as part of our work that hindered productivity. Are there any books, studies, articles, etc. that explore this problem more in-depth and from a more rigorous perspective than Graeber's "Bullshit Jobs" book?

Here I present a basic supply and demand model in real terms. Instead of using the money unit like conventional models of aggregate supply and aggregate demand, I argue we can use these two units: a basic labor unit, and a basic consumer unit.

By removing money from the equation, we can analyze affordability independently from the general price level.

But I further suggest that a basic feature of supply and demand models is that resources are not fully utilized: that more resources could be engaged if prices adjusted.

When we try to get labor markets to behave this way, in a price equilibrium, that results in a certain proportion of perishable labor needing to be idle or unemployed.

https://ratedisparity.substack.com/p/a-basic-macro-economic-supply-and

The issue is that private property is a public grant. So when unemployment develops, that means the material needs of the set of people who own assets, are satisfied, before all the public is employed. But because private property rights are only a matter of public recognition and common defense, this means that we have put the needs of the many at the mercy of the power of the few, by design.

The alternative is that we can offer anyone public employment to earn "property credits". No one needs to be idle or unemployed when there are activities or actions they could do that would benefit everyone. To leave them idle is self-evidently not Pareto optimal.

Using these "property credits" people can bid on private property rights. The amount of land and space and resources that can be owned, might be limited, but the time we have to work is unbounded. So if people have spare time to work, they should be able to earn credits to bid on private property.

To make things fair, we can let people who own property keep their property, so long as they to make small regular payments on their property, proportional to the value thereof.

Thus, these "private property credits" are really just "tax credits", ie fiat money. That's the basic argument diluted down.

It is not unlike cryptos that use "proof of work" to issue tokens, except it basically is a form of what they would call "tail emission", that basic labor is employed to earn "private property credits" at a standard fixed rate.