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Myths About Capitalism

Sandokan

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Myths About Capitalism
John Stossel : Myths About Capitalism - Townhall.com

by John Stossel
April 21, 2010

I won 19 Emmy Awards by reporting a myth: that business constantly rips us off -- that capitalism is mostly cruel and unfair.

I know that's a myth now. So I was glad to see the publication of "The 5 Big Lies About American Business" by Michael Medved.

I invite him on tomorrow's Fox Business Network show to talk about that.
"You can only make a profit in this country by giving people a product or a service that they want," he says. "It's the golden rule in action."
I have no problem with rich people, as long as they understand that they rely on us. I also understand that the wait staff suffer a loss when people cut back going out to eat, since we rely on each other to get by in this world. Working hard in your chosen enterprise should lend itself to rewards; whether it's a comfortable middle class environment or a mansion with lots of hired help. However, there is a need for some regulation to keep the greed in check; otherwise some people will take advantage of others.
 

rathi

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"You can only make a profit in this country by giving people a product or a service that they want," he says. "It's the golden rule in action."

I would argue that such a rule is crucial to functioning of capitalism, but is being undermined in the current day. Activities like day trading or the entire credit-swap debacle don't provide any useful value at all, yet still command huge sums of money. Long term investment in solid products has been replaced my sacrificing everything in order to make the quarterly reports. CEO's can run a company into the ground and still make a huge personal profit for failure. Manufacturing is outsourced, and degrees in engineering are being replaced by business majors. People have figured out how to game the system to get money beyond the value they add to the system. The point isn't to claim that capitalism is some evil way to screw people, but point out mistakes so they can be fixed and the system be improved.
 

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I would argue that such a rule is crucial to functioning of capitalism, but is being undermined in the current day.

It's not. What you term as "undermining", is actually the normal functioning of any growing system worth having.

All systems that allow for innovation and growth, new opportunities, etc., will test the boundaries of what is good and not good, what works and what doesn't work, and over time you learn, react, and adapt.

You know the term growing pains as it applies to business right? Same thing applies to any of these markets, societies, etc. You grow, but growth causes issues that you did not, or could not, have predicted. Because you don't needlessly waste money investing all potential future outcomes, you end up seeing what breaks, then fix it, then put prevention in place. Using your reasoning, when something breaks, that undermines the system? NO! It's part of any such system. Do we say that the round earth idea "undermined" science? Ot certainly broke the science of the day...but I think we all know the value of having systems that embrace dynamics.

Evolution does this, business does this, human culture does this, science does this. You have to VALUE (in context)the people who push the envelope because without stressing the system, you stagnate and become more vulnerable. Surely you want to push the envelope in a way that CAN be reacted to...I mean, setting of all world nukes to see "how to adapt" might violate the rules of the game...but you get the point.
 

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I have no problem with rich people, as long as they understand that they rely on us.
We all ultimately rely on each other. Who argues otherwise? You rely on your employer too, it goes both ways. Although depending on you and your employer...you might be more easily replaced, based on market conditions right?

Working hard in your chosen enterprise should lend itself to rewards;
Not necessarily. Choose the wrong enterprise and you should be free to lose it all...just as you should be free to make enormous gains. Risk reward. Most people are paralyzed when actually faced with the prospect of putting significant skin in the game. Try it, it's looking into the abyss.

However, there is a need for some regulation to keep the greed in check; otherwise some people will take advantage of others.
Absolutely. Regulation/government should set the rules of the game, and we the people should then busy ourselves pursuing our life, liberty, sex, and what not. Although I'm not worried about greed per se. It's fraud, violence, manipulation, etc., that are best to regulate against. Greed sounds like a religious term, irrelevant IMO.
 

Geo Patric

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Stossel is a whore and always was. He has a new pimp... one he expects to make more money for him.

he is right of course.

geo.
 

Hoplite

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Capitalism is based on a faulty idea: that people will not allow their own selfishness to over-ride people's ability to pay for what they provide.

"But if people cant afford a service, people wont buy it and the business will go under."

True, unless you have a big enough customer base and a wide enough market, then you can afford all sorts of underhanded tricks to save money and just bury any bad reports with a publicity blitz
 

LaMidRighter

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Capitalism is based on a faulty idea: that people will not allow their own selfishness to over-ride people's ability to pay for what they provide.

"But if people cant afford a service, people wont buy it and the business will go under."
This is faulty analysis. First off "selfishness" is nothing more than an emotional word with no quantitative value. The second flaw in your analysis is the complete omission of the supply chain, things cost money including but not limited to raw materials, distribution, labor, means of production, taxes, regulatory costs, etc. All of these things will change the final price of any good or service. The third flaw is the assumption that the market should be "made accessible" and this will increase the consumer base, this is possibly the most flawed argument because of the human condition....tastes, tolerance for price, value considerations, and other decisive factors in any given transaction.

True, unless you have a big enough customer base and a wide enough market, then you can afford all sorts of underhanded tricks to save money and just bury any bad reports with a publicity blitz
You cannot simply add to a market by artificial expansion of such, see above.

If nothing else, this does not speak to myths of capitalism, rather a complete lack of understanding of such and too much reliance upon Keynsian economics.
 

Hoplite

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This is faulty analysis. First off "selfishness" is nothing more than an emotional word with no quantitative value.
I disagree. I think you can very adequately quantify the idea of selfishness with the conditions of self-interest violate the rights of others or cause a person to mistreat others out of self-interest.

The second flaw in your analysis is the complete omission of the supply chain, things cost money including but not limited to raw materials, distribution, labor, means of production, taxes, regulatory costs, etc. All of these things will change the final price of any good or service.
I dont disagree, but I dont see what it has to do with the idea.

The third flaw is the assumption that the market should be "made accessible" and this will increase the consumer base, this is possibly the most flawed argument because of the human condition....tastes, tolerance for price, value considerations, and other decisive factors in any given transaction.
Im not sure what you mean.

If nothing else, this does not speak to myths of capitalism, rather a complete lack of understanding of such and too much reliance upon Keynsian economics.
A base argument, I admit, but I consider it a valid one none the less
 

LaMidRighter

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I disagree. I think you can very adequately quantify the idea of selfishness with the conditions of self-interest violate the rights of others or cause a person to mistreat others out of self-interest.
You cannot quantify it because it is subjective. I have seen people saying those who want taxes to be fair and equally contributory being accused of selfishness, for the simple fact that they want to keep more of what they have earned. Then of course there are those that say people who save money are "hoarding" it, which is another way of saying "selfish". So no, there is no accurate way to quantify "selfish".

I dont disagree, but I dont see what it has to do with the idea.
It has everything to do with any monetary system, especially when the market sets the price i.e. Capitalism. To ignore these factors or not mention it is an omission and a critical error.

Im not sure what you mean.
You mentioned "bringing people up" to paraphrase, and the phrasing led to the speculation that you mean through government means.....that means you have to take from others which brings them down. It is a market manipulation.

A base argument, I admit, but I consider it a valid one none the less
[/QUOTE] I disagree with the validity but do appreciate the honesty.
 

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The 5 Big Lies About American Business" by Michael Medved.
Those lies are so obvious that it is amazing they need to be repeated. It seems that each generation must re-learn the very same lessons that previous generations learned at great pain and sacrifice.

We live in the richest, freest and most powerful country in the world. It’s Constitution, its rule of law and respect for basic rights of the individual has lifted millions out of poverty and oppression.
It defeated Fascism, Socialism, and Communism in the last century, and continue to outperform socialist economies in fair competition. The model of free markets and democratic governments limited by the rule of law has over and over again proved its superiority to the collectivist principles.
 

Hoplite

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You cannot quantify it because it is subjective. I have seen people saying those who want taxes to be fair and equally contributory being accused of selfishness, for the simple fact that they want to keep more of what they have earned. Then of course there are those that say people who save money are "hoarding" it, which is another way of saying "selfish". So no, there is no accurate way to quantify "selfish".
Again, I think we can come up with at least a mutually agreeable definition of selfishness using the definition of an instance whereby someone indulges their self interests purposefully to the extent that it knowingly harms someone else.

It has everything to do with any monetary system, especially when the market sets the price i.e. Capitalism. To ignore these factors or not mention it is an omission and a critical error.
Ok, I dont see how they're being ignored.

You mentioned "bringing people up" to paraphrase, and the phrasing led to the speculation that you mean through government means.....that means you have to take from others which brings them down. It is a market manipulation.
I must admit I'm confused because I havent mentioned that phrase or idea in this thread.
 

reefedjib

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Other than resource rich countries that exploit their natural resources, practically all developed and developing countries are capitalist to a degree. They each have monetary policy. They each have fiscal policy. Their populations are able to pursue private enterprise. They each have some degree of regulation of industry and economy. They all have some degree of public assistance. They each have some degree of taxation. They are not pure capitalist economies in the sense of the Chicago school or the Austrian school.

One thing is for sure, people are greedy and act our of self-interest and will screw over the next guy for a buck. This doesn't change as the preceding degrees are changed. The most regulated economy, through attempts to restrict greed, abound with greed. The greed will be most visible where the power lies and an economy with lots of regulation has a lot of greed in the government.

The degree of greed can be seen by the degree of corruption, the real enemy of capitalism. We ought to regulate for safety. We ought to attempt to eradicate corruption.

The US system abounds with corruption at our highest levels of government. We don't even remark on it. Earmarks and lobbyist payouts and industry enticements for jobs all reek of corruption. The worst aspect is that it prevents our government from delivering changes that are critical to our health as a country. Case in point: cutting entitlements.
 

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Reef; all i can say is 1) we are absolutely corrupt at the top and 2) our system minimizes corruption. when you get taken by the police here, it is assumed you will be treated in accordance with the law. no millionaire can offer a judge a free house in return for an innocent finding, nor can a poor individual be found guilty for lack of the ability to offer the same. this is not necessarily the case in other nations; only generally in what we would call "the West". having a limited, balanced government in which various powers are set in competition against each other ensures that corruption always has an enemy (Sestak's case would go away tomorrow if Republicans quit making noise about it).

corruption (desire for power and wealth irrespective of the law or justice), like greed, is part of the human condition. the answer is less to simply try to regulate it to death (those who are trying to personally profit from the system will always have greater incentive to think of ways around the regulation than those who are writng it) and instead to try to devise a system that turns these two drives towards the public good.
 

LaMidRighter

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Again, I think we can come up with at least a mutually agreeable definition of selfishness using the definition of an instance whereby someone indulges their self interests purposefully to the extent that it knowingly harms someone else.
Highly unlikely. I consider the far left elitists to be among the most selfish people because they want things their way to feel better about themselves using other people's money, that is the worst and most dishonest "selfish" there is. It is subjective so I don't think two people can agree on it.

Ok, I dont see how they're being ignored.
Your analysis didn't include any mention of these things and appeared to blame those who sell.

I must admit I'm confused because I havent mentioned that phrase or idea in this thread.
Actually, you did if you read back. You just may not realize it.
 

reefedjib

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Reef; all i can say is 1) we are absolutely corrupt at the top and 2) our system minimizes corruption. when you get taken by the police here, it is assumed you will be treated in accordance with the law. no millionaire can offer a judge a free house in return for an innocent finding, nor can a poor individual be found guilty for lack of the ability to offer the same. this is not necessarily the case in other nations; only generally in what we would call "the West". having a limited, balanced government in which various powers are set in competition against each other ensures that corruption always has an enemy (Sestak's case would go away tomorrow if Republicans quit making noise about it).

corruption (desire for power and wealth irrespective of the law or justice), like greed, is part of the human condition. the answer is less to simply try to regulate it to death (those who are trying to personally profit from the system will always have greater incentive to think of ways around the regulation than those who are writng it) and instead to try to devise a system that turns these two drives towards the public good.

I see corruption as a more local phenomena. It is our cities and rural areas in which corruption thrives. Cops take payoffs and building inspectors too. We get certain ethnic groups taking over industries, like waste management, police, gambing, etc. It reaches state levels when representatives are corrupted, which happens way to often. National congressmen are also corrupted by local forces. It does reach the President I am sure. But it's base is local.

Our system and rule of law does help to minimize it and pursue it. More so than most countries I think. So those things you mention don't really happen here. It is more of an influence game.

I think regulate sometimes helps to create corruption.

Since greed and corruption are part of the human condition, our society will always have both. I think our system already tends to temper greed and minimize corruption. I am not clear on how it actually does this.
 

Deuce

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Better title: "Strawmen about Capitalism."

edit: Or maybe "Myths about capitalism if you are incapable of thinking in terms other than black and white."
 
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LaMidRighter

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I think regulate sometimes helps to create corruption.

Since greed and corruption are part of the human condition, our society will always have both. I think our system already tends to temper greed and minimize corruption. I am not clear on how it actually does this.
Very simple IMO. Under a system with too much regulation profits are lost to compliance cost increases and there are two choices 1) increase consumer base in order to absorb cost or b) increase price. When prices are increased a smaller pool of consumers either will or can participate so option b creates a problematic scenario, larger corporations can fully comply or pay fines without much budgetary damage because of their established consumer base, buying power, and good name so smaller companies must get creative.......or unethical to compete. Under a more free market the big guy and the little guy have similar lattitude and can more fairly compete, necessary regulations have demonstrable benefit and shouldn't be an undue burden so the incentive is to produce the best service possible to the public and allow for the "best man" to win. There is less reason to be corrupt when losses are minimal and honesty is truly the best business practice.
 

Geo Patric

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You cannot quantify [selfishness] because it is subjective.
no it isn't. self interest, self concern. and Hoplite is absolutely correct; capitalism is the economic principle of self interest. there is nothing wrong with pursuing one's self interest, though, unless it steps on the interests of others... which capitalists are given to.

Smith was a political theorist, not actually an economic theorist. He thought the interest of the State, or political entity, should be subjugated to those of the 'nation', or the people of the State. When the people benefit, the State does so by default; the reverse is not true. He was right.

Capitalism is a materialist theory, that is, a theory regarding how goods and people are related. He was arguing against the 'zero sum' argument of the then prevalent economic system known as 'mercantilism' which was centered around simply buying and selling and equated wealth and 'stuff' such as gold or silver, which itself actually has little value. Smith held that wealth was other kinda sorta stuff and that that the resources for profitability were limitless and so profit could be limitless. he was wrong about that.

Capitalism is a form of materialism that centers around self interest:
- Goods and services are produced for profitable exchange - Human labor power is a commodity for sale - value in not innate but derives from labor. he was right about that, too. but, so was Marx. Marx argued that Smith's labor = value paradigm had been distorted, that the greatest value STILL went to those who provided the least labor. HE was right about that.

Smith believed the 'free market' would resolve the issue of the 'selfishness' of self interest. This would occur as a 'natural result of he called the 'invisible hand' - a fanciful notion about the leveling effect of the confluence of self-interest, competition, and supply and demand. He believed that the market was 'self regulating'. he was wrong about that too and lived to know it.

Competition was to be the propellant of the free market, ostensibly causing producers to protect consumers by protecting themselves against the competition. Instead, of course, they created monopolies and consortia to protect themselves while screwing the consumer. They created their own 'market controls' to limit production, driving up prices while driving down costs and increasing profits.

Capitalism is not good or bad... capitalism is an idea. What people DO with capitalism may be good or bad - the two terms really only have meaning as a qualifier of behavior. If how we practice capitalism is strangling a good many of us (and it damned sure is), it is IN 'how we practice' it.

geo.
 
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Deuce

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Very simple IMO. Under a system with too much regulation profits are lost to compliance cost increases and there are two choices 1) increase consumer base in order to absorb cost or b) increase price. When prices are increased a smaller pool of consumers either will or can participate so option b creates a problematic scenario, larger corporations can fully comply or pay fines without much budgetary damage because of their established consumer base, buying power, and good name so smaller companies must get creative.......or unethical to compete. Under a more free market the big guy and the little guy have similar lattitude and can more fairly compete, necessary regulations have demonstrable benefit and shouldn't be an undue burden so the incentive is to produce the best service possible to the public and allow for the "best man" to win. There is less reason to be corrupt when losses are minimal and honesty is truly the best business practice.

On the other hand too little regulation and companies quite literally get away with killing people in the name of profit. Or are you not even willing to admit that much?
 

Geo Patric

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there are two choices 1) increase consumer base in order to absorb cost
except that increased production equates to REDUCED value. Even simply meeting, as opposed to exceeding, supply suppresses demand.. Getting enough gas will cause gas prices to fall and reduce profits on the gas that is sold. Oil companies learned long ago that their best bet is limiting availability to drive UP prices.
There is less reason to be corrupt when losses are minimal and honesty is truly the best business practice.
whadda, ya? trying to save Tinker Bell? A sucker is born every minute.

geo.
 

Orion

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My main beef with capitalism right now is corporate monopolies, corporate lobbying of government in the millions of dollars, and corporate personhood. If those three things could be rectified, then I think we'd make huge progress.
 

Geo Patric

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can't argue with that.

geo.
 

Deuce

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My main beef with capitalism right now is corporate monopolies, corporate lobbying of government in the millions of dollars, and corporate personhood. If those three things could be rectified, then I think we'd make huge progress.

Yeah, this whole discussion on whether government is bad for business is pretty moot when business more or less controls the government.
 

LaMidRighter

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On the other hand too little regulation and companies quite literally get away with killing people in the name of profit. Or are you not even willing to admit that much?
Of course. The idea is to regulate that which is provably necessary using facts only. Most regulations that are problematic come from emotional or rhetorical twisting, those are the ones that must go.
 

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Those lies are so obvious that it is amazing they need to be repeated. It seems that each generation must re-learn the very same lessons that previous generations learned at great pain and sacrifice.

Yes, evolution is hard. :)
 
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