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Capitalism is inefficient at resource allocation

Nemiroff said:
Capitalism is inefficient at resource allocation
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The problem is that the alternatives don't work.

Back when there was a USSR, the factories were directed by bureaucrats. A furniture factory was ordered to produce X tons of furniture. So, they built heavy pieces of furniture that Russians didn't want to buy. Capitalism is very good at supplying consumers with their needs. Where capitalism fails is when those who have needs can't afford to buy what they need. That's where a governmental strong safety net comes in.
 
MTAtech said:
The problem is that the alternatives don't work.

Back when there was a USSR, the factories were directed by bureaucrats. A furniture factory was ordered to produce X tons of furniture. So, they built heavy pieces of furniture that Russians didn't want to buy. Capitalism is very good at supplying consumers with their needs. Where capitalism fails is when those who have needs can't afford to buy what they need. That's where a governmental strong safety net comes in.
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I think it's just a happy accident that capitalism has worked pretty well for a few hundred years, because it relies on some things that were just a product of time. You need a strong demand for labor in order for capitalism to distribute production reasonably well, so there had to be advances in agriculture to free up some labor.

But in the long run, people can only consume so much in their waking hours, and once you start to hit that level of production where workers are producing more than they care to consume, the demand for labor drops. And because it's capitalism, that high productivity won't result in twenty-hour work weeks, it will just result in higher profit margins, and a smaller piece of the income pie for labor. And that is not sustainable, at least without a HUGE redistribution of income.

At least socialism works in theory (as does communism). You can socialize large parts of society (energy, healthcare, housing, etc.) and leave some things to competition. Because we all need dozens of breakfast cereals to choose from.
 
JohnfrmClevelan said:
I think it's just a happy accident that capitalism has worked pretty well for a few hundred years, because it relies on some things that were just a product of time. You need a strong demand for labor in order for capitalism to distribute production reasonably well, so there had to be advances in agriculture to free up some labor.

But in the long run, people can only consume so much in their waking hours, and once you start to hit that level of production where workers are producing more than they care to consume, the demand for labor drops. And because it's capitalism, that high productivity won't result in twenty-hour work weeks, it will just result in higher profit margins, and a smaller piece of the income pie for labor. And that is not sustainable, at least without a HUGE redistribution of income.

At least socialism works in theory (as does communism). You can socialize large parts of society (energy, healthcare, housing, etc.) and leave some things to competition. Because we all need dozens of breakfast cereals to choose from.
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I was talking with Paul Krugman a couple of years ago, at a Graduate Center event, about how productive has reduced labor and he reminded me that this is an old argument. Before 1910, 80% of the workers were on farms. Machines added productivity to the point where only 3% of workers now work on farms. Yet, unemployment is only ~4%. Someone, new jobs popped up.
 
MTAtech said:
I was talking with Paul Krugman a couple of years ago, at a Graduate Center event, about how productive has reduced labor and he reminded me that this is an old argument. Before 1910, 80% of the workers were on farms. Machines added productivity to the point where only 3% of workers now work on farms. Yet, unemployment is only ~4%. Someone, new jobs popped up.
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I am amazed at some of the useless stuff people spend money on, and I wonder how much of an appetite there is for unnecessary consumption if wages don't keep up. I think there is a limit to this.
 
JohnfrmClevelan said:
I am amazed at some of the useless stuff people spend money on, and I wonder how much of an appetite there is for unnecessary consumption if wages don't keep up. I think there is a limit to this.
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You should watch John Hamm in Apple’s Friends and Neighbors. He’s a formerly rich guy living in a rich neighborhood, that looks like it’s in Westchester. He gets the idea that he can steal from his neighbors’ houses when they’re out. These people have $32,000 bottles of wine and a Richard Mille Felipe Massa $225,000 watches, that they don’t use.
 
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aociswundumho said:
Efficient: Prices adjust based on supply and demand. Producers respond to what sells. If bread sells quickly, more brands appear. If it doesn't sell, they stop stocking it.
Consumers vote with their dollars, signaling what to stock, how much, and at what price. Stores compete, improving quality, variety, and service.

Inefficient: A bureaucrat decides how many loaves of bread to produce, based on quotas - not consumer preference.
Prices are controlled, so shortages and surpluses are common. There is no incentive to produce more or less.
No feedback loop. If people don't like the bread, tough shit. Lack of profit motive means no incentive to improve quality or efficiency.
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That's fine where it comes to bread... but what about something a little more complicated - like healthcare?
 
aociswundumho said:
That's were you want the benefits of efficiency even more.
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But the laws of supply-and-demand don't really work the same way, do they? If you've got a sick child, you're going to spend whatever you have to spend, regardless of cost. It's not like choosing between Whole Wheat and Rye.
 
The problem with capitalism and efficient resource allocation is efficiency is counted as that which costs the least. This paradoxically leads to a lot of material inefficiencies and waste. This also leads to a very overworked workforce leading to longer term inefficiencies.

Musk and his merry band of incels are looking at efficiency from the standpoint of private equity firms. They will destroy the government just like those folks destroy companies.
 
MTAtech said:
The problem is that the alternatives don't work.

Back when there was a USSR, the factories were directed by bureaucrats. A furniture factory was ordered to produce X tons of furniture. So, they built heavy pieces of furniture that Russians didn't want to buy. Capitalism is very good at supplying consumers with their needs. Where capitalism fails is when those who have needs can't afford to buy what they need. That's where a governmental strong safety net comes in.
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Seems like democratic socialism works better. In fact a better world may be possible.
 
aociswundumho said:
That's were you want the benefits of efficiency even more.
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Efficiency in capitalist America means stripping entire hospitals of essential staff and overwork the rest, strip supplies so low that ambulances have to take what doctors might need then overcharge for services.
 
rahl said:
And as healthcare isn’t a commodity, capitalism fails.
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Consider urgent care clinics. Patients simply walk in from the street, get treatment, and then pay in cash or through their insurance. And it's a growing market:

urgent.webp
 
aociswundumho said:
Consider urgent care clinics. Patients simply walk in from the street, get treatment, and then pay in cash or through their insurance. And it's a growing market:

View attachment 67568690
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Now consider getting to an accident, having a heart attack or stroke etc. you have no choice as to where you get treatment. You go to the nearest place and pay what they charge, or die.

As we know empirically, single payer systems are superior to the US system.
 
rahl said:
Now consider getting to an accident, having a heart attack or stroke etc. you have no choice as to where you get treatment. You go to the nearest place and pay what they charge, or die.
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Emergency care is less than 2% of all healthcare spending. The other 98% can and should be provided by the market.
 
aociswundumho said:
Emergency care is less than 2% of all healthcare spending. The other 98% can and should be provided by the market.
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Nope. As healthcare isn’t a commodity. We know empirically that single payer systems are superior to the US system.
 
aociswundumho said:
Then why are there over 14,000 urgent care centers in the US?
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To seek profit over misery.

But as we know, healthcare doesn’t operate under normal market principles because it isn’t a commodity. Which is why single payer systems are superior.
 
rahl said:
To seek profit over misery.
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If the patients weren't happy with the service, the industry would not be growing as fast as it is.

rahl said:
But as we know, healthcare doesn’t operate under normal market principles because it isn’t a commodity. Which is why single payer systems are superior.
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In Canada, the average wait time from initial visit to treatment is over 6 months. That doesn't sound "superior" to anything.
 
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