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Can Capitalism Be Improved?

ataraxia

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In the 20th century, there was a battle between communism and capitalism as economic systems. By the end of the century, it was clear that pure communism was not working, in any country in was tried, from Russia and China to Cuba and eastern Europe.

So capitalism won and communism lost, and now we must pursue pure free market capitalism without any regulations or socialist safety nets, right? Well, it doesn't seem that way. That's because pure classical liberal capitalism was also tried and dispensed with by numerous countries, far earlier: the late 19th century and early 20th century. When left completely free, the ever rising and shameless abuse and exploitation of child labor, the rise of monopolies, the socially destabilizing extremes of wealth and poverty, and numerous other problems, led to numerous regulations on the pure free market. Even at the height of the cold war, the US was never without welfare and social programs and safety nets and regulations on its capitalism.

But today, it seems the US, having won the cold war, has defined its cultural identity by what the former USSR was not: if the USSR was atheist, the US was going to be the most religious developed nation on the planet. If they were communist, then that meant we should take away all safety valves and safety nets on our system of capitalism and give it the freedom of the jungle, where the strong and privileged survive and thrive, and the weak and vulnerable get eaten for lunch.

So isn't it time to leave aside the old 20th century black-and-white dichotomies of American capitalism vs. Soviet communism, and realize the situation may be far more nuanced and complicated than that? That if we are going to do better in the future, there is a lot of room for further discussion on how we can continue to improve on this model? All developed modern economies in the world today are mixed economies, and it's not because they don't appreciate the benefits of capitalism. Of course capitalism is a proven, powerful engine of economic growth. But don't all powerful engines, whether in cars or in a chainsaw, need brakes, safety valves, and other safety features which keep them from hurting people in serious ways? Can we start to think of capitalism the same way?

This was a great video I saw recently which talks about how we might be able to continue to tweak and improve on the current systems we have. We may not have the perfect final, ultimate answers yet. There may be room for improvement. Let me know if you agree and what you think.

 

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In the 20th century, there was a battle between communism and capitalism as economic systems. By the end of the century, it was clear that pure communism was not working, in any country in was tried, from Russia and China to Cuba and eastern Europe.

So capitalism won and communism lost, and now we must pursue pure free market capitalism without any regulations or socialist safety nets, right? Well, it doesn't seem that way. That's because pure classical liberal capitalism was also tried and dispensed with by numerous countries, far earlier: the late 19th century and early 20th century. When left completely free, the ever rising and shameless abuse and exploitation of child labor, the rise of monopolies, the socially destabilizing extremes of wealth and poverty, and numerous other problems, led to numerous regulations on the pure free market. Even at the height of the cold war, the US was never without welfare and social programs and safety nets and regulations on its capitalism.

But today, it seems the US, having won the cold war, has defined its cultural identity by what the former USSR was not: if the USSR was atheist, the US was going to be the most religious developed nation on the planet. If they were communist, then that meant we should take away all safety valves and safety nets on our system of capitalism and give it the freedom of the jungle, where the strong and privileged survive and thrive, and the weak and vulnerable get eaten for lunch.

So isn't it time to leave aside the old 20th century black-and-white dichotomies of American capitalism vs. Soviet communism, and realize the situation may be far more nuanced and complicated than that? That if we are going to do better in the future, there is a lot of room for further discussion on how we can continue to improve on this model? All developed modern economies in the world today are mixed economies, and it's not because they don't appreciate the benefits of capitalism. Of course capitalism is a proven, powerful engine of economic growth. But don't all powerful engines, whether in cars or in a chainsaw, need brakes, safety valves, and other safety features which keep them from hurting people in serious ways? Can we start to think of capitalism the same way?

This was a great video I saw recently which talks about how we might be able to continue to tweak and improve on the current systems we have. We may not have the perfect final, ultimate answers yet. There may be room for improvement. Let me know if you agree and what you think.

We have considerable brakes and safety valves on our system.
 

Luckyone

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In the 20th century, there was a battle between communism and capitalism as economic systems. By the end of the century, it was clear that pure communism was not working, in any country in was tried, from Russia and China to Cuba and eastern Europe.

So capitalism won and communism lost, and now we must pursue pure free market capitalism without any regulations or socialist safety nets, right? Well, it doesn't seem that way. That's because pure classical liberal capitalism was also tried and dispensed with by numerous countries, far earlier: the late 19th century and early 20th century. When left completely free, the ever rising and shameless abuse and exploitation of child labor, the rise of monopolies, the socially destabilizing extremes of wealth and poverty, and numerous other problems, led to numerous regulations on the pure free market. Even at the height of the cold war, the US was never without welfare and social programs and safety nets and regulations on its capitalism.

But today, it seems the US, having won the cold war, has defined its cultural identity by what the former USSR was not: if the USSR was atheist, the US was going to be the most religious developed nation on the planet. If they were communist, then that meant we should take away all safety valves and safety nets on our system of capitalism and give it the freedom of the jungle, where the strong and privileged survive and thrive, and the weak and vulnerable get eaten for lunch.

So isn't it time to leave aside the old 20th century black-and-white dichotomies of American capitalism vs. Soviet communism, and realize the situation may be far more nuanced and complicated than that? That if we are going to do better in the future, there is a lot of room for further discussion on how we can continue to improve on this model? All developed modern economies in the world today are mixed economies, and it's not because they don't appreciate the benefits of capitalism. Of course capitalism is a proven, powerful engine of economic growth. But don't all powerful engines, whether in cars or in a chainsaw, need brakes, safety valves, and other safety features which keep them from hurting people in serious ways? Can we start to think of capitalism the same way?

This was a great video I saw recently which talks about how we might be able to continue to tweak and improve on the current systems we have. We may not have the perfect final, ultimate answers yet. There may be room for improvement. Let me know if you agree and what you think.

All I can opine on is that uncontrolled greed is bad, meaning that some controls on Capitalism should be imposed. The only way that I can think of is through some form of increased taxes as the wealth increases. I do know that Elizabeth Warren is proposing a wealth tax on the super rich. This has been tried before in other countries with limited success so something like that but tweaked might work.

There is a point where Capitalism goes to an extreme and it is there where controls have to be placed. I have no suggestions at this time but I am sure there is a way that will work. Certainly there is clearly a point where enough money has been made to last a lifetime and the lifetimes of all family members and at that point the next of kin, which is the American public, should start getting some of the benefits of that person's ability to make money.
 

ataraxia

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We have considerable brakes and safety valves on our system.

Is that a good thing, or just a vestige of communism which is causing a drag on the economy and should be taken away if we are really to take off?

What is considered a good amount of brakes and safety valves, and when is it just a slippery slope to Soviet style communist tyranny?

Is it OK to sacrifice a little bit of economic growth for having some safety nets and brakes in our society?

In Sweden, they say that their safety nets not only don't impede growth, but provide the sense of security for people to take some entrepreneurial risk and good for long term growth. If the price of failing at a business is for you and your whole family to end up on the streets forever, one can see how that might give people more pause before taking the entrepreneurial plunge. Do you agree with this "Nordic model"?
 
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ttwtt78640

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I agree that market tweaks (the nice way to say more government or union regulation?) can improve 'private' systems yet also require placing air quotes around private in the process. Where the line gets drawn between too little, too much and just right (optimum?) tweaking (regulation) is the tricky part.

IMHO, unions in theory tend to work better than unions in practice do. The idea that the X maker union (allegedly looking out for X laborers) knows best how to 'self regulate' X making than having some outside (higher level of government?) group do so (with input from al concerned with X) sounds logical until one realizes that making X depends on having raw materials for X supplied, the infrastructure/investment put in place to make X and X wholesale/retail sellers who must satisfy X buyers - the basic reason for having X to begin with. In theory, Capitalism places the ultimate control in the hands of (potential) X buyers.

When any one entity involved in/with X in this case. the X makers union, has more power than any other party concerned with X then they will eventually **** up the X (free?) market by demanding a bigger share of the X proceeds (profits?) than is optimal. Of course, that is also true if any other party involved with X, say the X retailers, gets to much say (they only want Xs that return a 10% net profit). Add to that an outside determination that only government spec (US made?) Xs can be owned (thus made/sold) and you also have problems.
 
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Harshaw

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Is that a good thing, or just a vestige of communism which is causing a drag on the economy and should be taken away if we are really to take off?

It's in response to the idea that somehow capitalism in the United States, or really anywhere, is somehow "unfettered," as is often said. The premise of your post seemed to be that there aren't any checks or safety mechanisms. There are plenty. We do not have unbridled capitalism. Far from it.

What is considered a good amount of brakes and safety valves, and when is it just a slippery slope to Soviet style communist tyranny?

Is it OK to sacrifice a little bit of economic growth for having some safety nets and brakes in our society?

You tell me. How much is too much?
 

ataraxia

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All I can opine on is that uncontrolled greed is bad, meaning that some controls on Capitalism should be imposed. The only way that I can think of is through some form of increased taxes as the wealth increases. I do know that Elizabeth Warren is proposing a wealth tax on the super rich. This has been tried before in other countries with limited success so something like that but tweaked might work.

There is a point where Capitalism goes to an extreme and it is there where controls have to be placed. I have no suggestions at this time but I am sure there is a way that will work. Certainly there is clearly a point where enough money has been made to last a lifetime and the lifetimes of all family members and at that point the next of kin, which is the American public, should start getting some of the benefits of that person's ability to make money.

Yes. It seems in a pure free market system, there is great economic growth, but all that money goes into the pockets of only a handful of people at the very top who control the factories/corporations. That's how it worked in the 19th and early 20th centuries. And that has been the trend since Reaganomics and trickle down policies have kicked in.

It makes sense. If you are the first person the money comes to, and you get to decide how it gets disbursed, it's easy to see why you would only pay everyone else only enough to barely survive and come back to work the next day, and the rest you keep. This idea that it's going to trickle down eventually has never really seemed to work. No economist today believes trickle down policies really work.

And yet enough of this myth persists in the US that politicians, funded by wealthy donors, can successfully continue to cut their own taxes to the rest of society's detriment, as the last round of tax cuts proved. And what's tragic is that those "everyone else" does this with such enthusiasm, because it is seen as the American thing to do. There is this myth that the only difference between them and those folks at the top is just that those guys work harder and are smarter. So maybe if they just hold down that third job they might just be able to make it there.

Sad.
 

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It's in response to the idea that somehow capitalism in the United States, or really anywhere, is somehow "unfettered," as is often said. The premise of your post seemed to be that there aren't any checks or safety mechanisms. There are plenty. We do not have unbridled capitalism. Far from it.



You tell me. How much is too much?

I don't know. But what makes me nervous is the idea that the less regulations, the better it is. Do you agree?
 

ataraxia

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It's in response to the idea that somehow capitalism in the United States, or really anywhere, is somehow "unfettered," as is often said. The premise of your post seemed to be that there aren't any checks or safety mechanisms. There are plenty. We do not have unbridled capitalism. Far from it.

I understand. But my question is: is that a good thing or a bad thing?
 

Harshaw

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I don't know. But what makes me nervous is the idea that the less regulations, the better it is. Do you agree?

I understand. But my question is: is that a good thing or a bad thing?

Depends on what and why.

Those things which produce distortions, with potential for large ones, like monopolies, are appropriately-regulated.

Those things which are based on the idea that someone makes too much money relative to someone else aren't.

For more granular thoughts, I need more concrete suggestions.
 

<alt>doxygen

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We have considerable brakes and safety valves on our system.

If those were working well that GWB would not have had to “abandoned free market principles to save the free market system”. They (and Obama later on) bailed out the capitalists that were allowed to go too far in writing their own rules over the previous 25 years or so. It would have been an interesting experiment (and real justice) to let them crash and burn.

I know you'll say that it was all government regulation that caused it. We can just agree to disagree there.
 

Harshaw

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If those were working well that GWB would not have had to “abandoned free market principles to save the free market system”. They (and Obama later on) bailed out the capitalists that were allowed to go too far in writing their own rules over the previous 25 years or so. It would have been an interesting experiment (and real justice) to let them crash and burn.

I know you'll say that it was all government regulation that caused it. We can just agree to disagree there.

The free market system was in no mortal danger in 2008 to need to be "saved." It would have recovered on its own. It could have sucked worse without the measures which were taken, but we'll never know that for sure. Perhaps recovery would have been quicker without them. Not having the means to peer into an alternate history, there's no way to know.

But assuming arguendo measures were necessary, judging the entire system against a very rare catastrophic event is like judging a highway system by how well traffic flows during a hurricane.

Never mind that "working" doesn't mean "never a problem" or "the best possible outcome for all people at all times."
 

<alt>doxygen

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The free market system was in no mortal danger in 2008 to need to be "saved." It would have recovered on its own. It could have sucked worse without the measures which were taken, but we'll never know that for sure. Perhaps recovery would have been quicker without them. Not having the means to peer into an alternate history, there's no way to know.

But assuming arguendo measures were necessary, judging the entire system against a very rare catastrophic event is like judging a highway system by how well traffic flows during a hurricane.

Never mind that "working" doesn't mean "never a problem" or "the best possible outcome for all people at all times."

The system would have survived. And I agree nothing is ever perfect. However, a little more level would be better for most of us.

Goldman and AIG, among others, would have dried up and blown away - deservedly imo. The problem is that a lot of people and firms that unknowingly or otherwise bought their garbage would have taken hits along with them. I think that pain on the part of main street might have forced a healthy rework of the systems those Wall St. folks use, but we'll never know.

Underneath all of that, our economic system remains a long way from the optimized capitalist hybrid it could be.
 

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It's in response to the idea that somehow capitalism in the United States, or really anywhere, is somehow "unfettered," as is often said. The premise of your post seemed to be that there aren't any checks or safety mechanisms. There are plenty. We do not have unbridled capitalism. Far from it.



You tell me. How much is too much?

There are no checks or safety mechanisms that I am aware of that don't have loopholes attached. When Warren Buffet's secretary pays more in taxes (percentage-wise) than he does, it does not suggest that there is a check of safety mechanism to prevent that from happening. The laws in place right now allow such a situation to occur.

As far as how much is too much, lets say that if a person and all his family members have enough to live 1 or 2 lifetimes in wealth, without any worry, that should be too much.
 

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There are no checks or safety mechanisms that I am aware of that don't have loopholes attached.

You not being aware of something doesn't mean it isn't there. Or, you have ridiculous standards.

When Warren Buffet's secretary pays more in taxes (percentage-wise) than he does, it does not suggest that there is a check of safety mechanism to prevent that from happening. The laws in place right now allow such a situation to occur.

This, even if true (which I've always doubted), doesn't have much to do with capitalism.
 

Harshaw

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The system would have survived. And I agree nothing is ever perfect. However, a little more level would be better for most of us.

What does "level" mean?
 

ataraxia

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Depends on what and why.

Those things which produce distortions, with potential for large ones, like monopolies, are appropriately-regulated.

Those things which are based on the idea that someone makes too much money relative to someone else aren't.

For more granular thoughts, I need more concrete suggestions.

But any intervention, by definition, induces distortions. But is that always necessarily a bad thing?
 

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You not being aware of something doesn't mean it isn't there. Or, you have ridiculous standards.

I do not know why you found the need to insult by saying "ridiculous" standards but since you did, would you be so kind to explain why you see them as ridiculous?



This, even if true (which I've always doubted), doesn't have much to do with capitalism.

Unless you think that Buffett is a liar, it is true. He personally said it and I saw the tape several times of him saying so. In fact, he said there were 15 out of 18 of his office workers that cooperated with an internal survey and it was found out that all 15 of them paid lower taxes percentage-wise that Buffett.

As far as Capitalism is concerned, this whole thread is about controlling Capitalism and certainly allowing the wealthy to make more money percentage-wise than the normal worker does not do anything for controlling Capitalism. Additional taxes on the wealthy will have some effect given that every time they make more more they will have to pay more in taxes. At some point, paying taxes on making more money than can be spent in a lifetime should control the desire to make more, given that they are not accomplishing any new benefits but are having to pay more and do more paperwork.
 

<alt>doxygen

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What does "level" mean?

Everyone has the same rules apply to them and penalties are equal, both under law and in fact for everyone. Corporations and other entities that are granted status of "person" are included.
 

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Sorry, made a mistake in my last post when I said the "workers paid lower taxes than Buffett". The correct statement is "higher taxes than Buffet"
 

Harshaw

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But any intervention, by definition, induces distortions. But is that always necessarily a bad thing?

A monopoly distorts. Preventing monopoly prevents the distortion a monopoly would create. Thus, it's an appropriate regulation.
 

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Everyone has the same rules apply to them and penalties are equal, both under law and in fact for everyone. Corporations and other entities that are granted status of "person" are included.

Well, that's just plain appropriate rule of law. A bit broad to be useful in this particular convo, though. Did you have something more specific in mind?
 

ataraxia

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The free market system was in no mortal danger in 2008 to need to be "saved." It would have recovered on its own.


There is nothing inherent in the free market that says that an economy in a recession should recover any time soon. It could take decades.


It could have sucked worse without the measures which were taken, but we'll never know that for sure. Perhaps recovery would have been quicker without them. Not having the means to peer into an alternate history, there's no way to know.

Actually there is no question among economists that Keynesian stimulus spending helps economies recover more quickly from a recession. The only point of controversy is whether it's worth the ensuing deficits. It is if, after the recovery, you raise the taxes to pay off the deficits.

Today's GOP, however, seems to want to do it exactly backwards. They DON'T want to spend money to bring the economy quickly out of a recession (especially if there is a Democrat in the whitehouse, and once a recovery is under way, they want to DECREASE, not increase, the taxes. That way the deficits keep ballooning, and if there is another recession, you are out of ammo.
 

ataraxia

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A monopoly distorts. Preventing monopoly prevents the distortion a monopoly would create. Thus, it's an appropriate regulation.

How about that if corporations can get treated like people when it comes to campaign contributions, they also get treated like people for getting taxed?
 

ataraxia

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A monopoly distorts. Preventing monopoly prevents the distortion a monopoly would create. Thus, it's an appropriate regulation.

What about leaving child labor free? Let the market decide if children can't work. And get rid of minimum wage laws too.

After all, we have tried that already. When the market WAS completely free in the late 19th century, you had young children working 80 hour weeks, with dangerous equipment and chemicals, with still barely enough to eat. The factory owners, on the other hand, could work 2-3 days a week, and were making more than the entire GDP of some nations. Left alone, the problem was only getting worse not better. Is it OK to introduce distortions to try to regulate such trends?
 
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