Myths About Capitalism

[DrunkenAsparagus]

This post is in complete contradiction to history.

Well let's see: land giveaways to railroads, corporate personhood, and granting monopolies to certain companies. Some monopolies may exist without government favoritism, but the vast majority come from Uncle Sam helping them. Look at bailouts, our loophole filled tax code, and progressive taxation of business which discourages growth. Big business, loves big government

 

[ALIHAYMEG]

And what incentive is provided to them by treating them like children? Yes, some are born into more fortunate situations than others, and this makes it easier for them to be successful. That's undeniable. However, the ultimate responsibility lies with the individual.

I'm not sure how your question is relevant. You are trying to convince someone who works in the welfare system that its clients are treated like children. I can assure you they are not. I appreciate you acknowledging my point about some having a much easier time than others because of environmental factors. It is undeniable. Even after admitting that, you seem to want to go right back to not caring. I'd like to see how you would do under those circumstances.

Firstly, I never called for getting rid of all government assistance to the poor. Go see my link on the negative income tax (although I think the $10,000 per person is a bit much from a cost point of view at this time). What I said is that the welfare system essentially pays people to remain on the system, and discourages them from trying to break the cycle.

I know what you think about it, but you have failed to explain why you think the system "pays people to remain on the system, and discourages them from trying to break the cycle" or show that you have any understanding of how the system works. I might have something to consider if you offered something more than a blanket statement that sounds an awful lot like a regurgitated and biased opinion.

Having read the research on the Income Maintenance Experiments conducted, I can see some positive things that could come out of it in regards to education incentive. It would provide some base of support for young people who would otherwise have no income to sustain them while attending college. I really like that part of it. I don't think it does enough to address the medical needs of people though. Maybe combined with Medicaid it could be enough. There are still many other factors to consider though.


Here are some of the well published results of a "negative income tax" system. http://www.bos.frb.org/economic/conf/conf30/conf30a.pdf

"In short, the four income maintenance experiments showed that
guaranteed incomes reduced work effort. The reductions were probably
larger than advocates had hoped, but considerably smaller and more
precisely measured than predictions based on prior nonexperimental
research. Even though the overall work reduction is small, the resulting
earnings loss among recipient breadwinners would represent a large
fraction of the payments to low-income families. This is a significant
political impediment to trying to reduce poverty through a system of
pure cash transfers."

This approach doesn't seem to encourage increases in work effort.

"David Ellwood basically agreed with Cain that very little has been
learned from the negative income tax experiments about separation and
divorce. The evidence indicates that the programs probably were not
stabilizing and may have been somewhat destabilizing. This, however,
was to be expected given the generosity of negative income tax
payments relative to those provided under AFDC. The small sizes in the
Seattle-Denver experiment for groupings by race or site or treatment
preclude any definitive findings with nationwide application."

There is no reason to think it has any stabalizing effect on marriage or families staying together.

"Hence, to the extent that improved health is of
particular interest, programs aimed directly at health care have a better
chance of success than do cash transfers. In terms of psychological wellbeing
and participation in community life, again the researchers found
no effect. Overall, the results suggest that the lives of recipients were
not altered dramatically by the payments offered in the experiments."

This approach doesn't seem to encourage people to change for the better.

I can see some posibility there though if it could be combined with other programs.

 

[DrunkenAsparagus]

Welfare provides security to many low-income people. However, like everyone, these people may be apprehensive about change. Leaving the system, means less security, and discourages them from trying to get off of it. Just one example, me aunt was unemployed and receiving benefits. She decided to take a class to become more skilled and better her situation. When the state of New Jersey learned about this, they threatened to cut her payments.

 

[ALIHAYMEG]

Welfare provides security to many low-income people. However, like everyone, these people may be apprehensive about change. Leaving the system, means less security, and discourages them from trying to get off of it. Just one example, me aunt was unemployed and receiving benefits. She decided to take a class to become more skilled and better her situation. When the state of New Jersey learned about this, they threatened to cut her payments.

That's terrible. There is nothing better for a person than furthering their education. The Federal guidelines don't allow college to qualify as an activity but each State has the final say. The State in which I work not only allows college to qualify as an activity, but it also doesn't allow a person to be sanctioned for not meeting the Federal minimum hours as long as they are making satisfactory progress in an educational activity. Unfortunately those people count against our participation rate, but we feel it is worth the loss of Federal funds and better for our citizens if they can acquire an education. That is one of the things that need to change at the Federal level. I absolutely agree that there are further changes needed.

 

[Sandokan]

You are talking absolutes, otherwise a form of extremism. Absolute socialism and absolute capitalism are both dubious concepts.

There aren’t any “absolutes” taking in my statement. I am just expressing my opinion.

I'm not sure if people understand the conceptual reality that taxes pay government employees, and that government becoming a bigger employer is a recipe for disaster. As in the case of Greece, there are only so many Greeks that you can fleece in order to support the government and its pensions, you run out of "Greeks" and your only alternative is to cut those jobs and pensions or raise taxes even more, a rollercoaster to hell is the result.

 

[LiberalAvenger]

There aren’t any “absolutes” taking in my statement. I am just expressing my opinion.

I'm not sure if people understand the conceptual reality that taxes pay government employees, and that government becoming a bigger employer is a recipe for disaster. As in the case of Greece, there are only so many Greeks that you can fleece in order to support the government and its pensions, you run out of "Greeks" and your only alternative is to cut those jobs and pensions or raise taxes even more, a rollercoaster to hell is the result.

I am more worried about fighting useless wars in which we win nothing and do not even tax people to pay for it. Instead we cut taxes for the richest.

You are not including the faux taxes that most people pay. I am talking about "fees", parking tickets, user fees, tobacco taxes, taxes on booze, sales taxes, property taxes, etc. These have all soared ever since reagan began his trickle down economics shell game.

The rich can all afford to hire tax consultants to find loopholes to evade a lot of their taxes.

 

[DrunkenAsparagus]

That's terrible. There is nothing better for a person than furthering their education. The Federal guidelines don't allow college to qualify as an activity but each State has the final say. The State in which I work not only allows college to qualify as an activity, but it also doesn't allow a person to be sanctioned for not meeting the Federal minimum hours as long as they are making satisfactory progress in an educational activity. Unfortunately those people count against our participation rate, but we feel it is worth the loss of Federal funds and better for our citizens if they can acquire an education. That is one of the things that need to change at the Federal level. I absolutely agree that there are further changes needed.

I think that we can agree on some assistance to the poor. I just feel that it's usually better handled on a more local or state level and if the poor are given autonomy, but at least we can find some common ground.

 

[Opteron]

What many people don't understand about capitalism, is that as long as the same rules apply and are enforced on all, however few rules there may be, malignant and oppressive monopolies can't exist. They will fall of their own weight.

As soon as they fail to provide a service or product, at a reasonable price, someone else will cut them off at the knees, it's the very nature of the beast.

The only monopoly that can exist in a Free Market Capitalist society is government. They set the rules and there is nobody allowed to cut them off at the knees when they become oppressive.

In the US, the people are the only competition the government has. That is why the government and those who support this government like the left, are so vehemently opposed and so vitriolic toward the Tea Party, because they are keeping them from expanding their malignant and oppressive monopoly.

That's wrong. Take the example of Andrew Carnegie and his steel monopoly. Free markets gravitate toward monopolies. Companies only try to get bigger and get more market share and make more money. There aren't companies that will say, "hey, let's split ourselves up and make it better for the consumer". It's why dumping is illegal. If we didn't have government, fair laws, and regulation, dumping would be allowed and would only lead to more monopolies. Andrew Carnegie practiced dumping to put his rivals out of business to consolidate his monopoly. Monopolies are one of the major detractors of the free-market capitalism system.

 

[Kushinator]

That's wrong. Take the example of Andrew Carnegie and his steel monopoly. Free markets gravitate toward monopolies. Companies only try to get bigger and get more market share and make more money. There aren't companies that will say, "hey, let's split ourselves up and make it better for the consumer". It's why dumping is illegal. If we didn't have government, fair laws, and regulation, dumping would be allowed and would only lead to more monopolies. Andrew Carnegie practiced dumping to put his rivals out of business to consolidate his monopoly. Monopolies are one of the major detractors of the free-market capitalism system.

You are a tad mixed up. Monopoly is all about setting price. The relationship between price setting and profit maximization is ambiguous given your tone. None the less, price setting is usually pursued as a means of controlling/containing transaction costs (including both governmental and resource constraints). There are however natural monopolies which are severely difficult to counter act (see Don's thread on Rare Earth Metals in the econ sub forum).

 

[Sandokan]

I am more worried about fighting useless wars in which we win nothing and do not even tax people to pay for it. Instead we cut taxes for the richest.

You are not including the faux taxes that most people pay. I am talking about "fees", parking tickets, user fees, tobacco taxes, taxes on booze, sales taxes, property taxes, etc. These have all soared ever since reagan began his trickle down economics shell game.

The rich can all afford to hire tax consultants to find loopholes to evade a lot of their taxes.

The top 1% (the rich) paid 40% of the income taxes, the top 5% paid 60%, and the top 50% paid 97% according to the IRS income statistics division released data in 2008. But thirty percent of American voters pay nothing. The taxes for the rich keep going up all the time, for example in 1980 the top 5% paid 37%. The next time you hear a liberal candidate, political leader or supporter allege that the rich aren’t paying their fair share, direct them to the IRS data. Numbers don’t lie, politicians do

Just because the rich can afford to be taxed at high rates does not make it moral nor is it proof that it is the best method to distribute wealth. Unless you think it's fair to make the most productive members of our society foot the bill for everyone else.

 

[Opteron]

You are a tad mixed up. Monopoly is all about setting price. The relationship between price setting and profit maximization is ambiguous given your tone. None the less, price setting is usually pursued as a means of controlling/containing transaction costs (including both governmental and resource constraints). There are however natural monopolies which are severely difficult to counter act (see Don's thread on Rare Earth Metals in the econ sub forum).

I don't understand what you're saying. Monopolies are not about setting price, they're about eliminating competition using any means necessary, that includes undercutting or buying out people or whatever. Can you clarify your post? Anyways, markets will tend to consolidate into monopolistic companies as much as possible, not fragment. And if it wasn't for regulation and sensible laws, most companies would probably engage in price fixing with other companies against the consumer.

 

[Kushinator]

I don't understand what you're saying. Monopolies are not about setting price, they're about eliminating competition using any means necessary, that includes undercutting or buying out people or whatever. Can you clarify your post? Anyways, markets will tend to consolidate into monopolistic companies as much as possible, not fragment. And if it wasn't for regulation and sensible laws, most companies would probably engage in price fixing with other companies against the consumer.

How does a monopoly "illiminate" competition? How does any firm "illiminate" competiton? The key is the ability to set market price. None the less, the simplistic neo-classical explanation for market concentration is a bit boring and quite a leap considering NC theory of the firm. Firms grow and/or consolidate based on the level of transaction costs of their respective industry. Why? Because the firms who minimize transaction costs maximize profits to a greater extent.

 

[LiberalAvenger]

The top 1% (the rich) paid 40% of the income taxes, the top 5% paid 60%, and the top 50% paid 97% according to the IRS income statistics division released data in 2008. But thirty percent of American voters pay nothing. The taxes for the rich keep going up all the time, for example in 1980 the top 5% paid 37%. The next time you hear a liberal candidate, political leader or supporter allege that the rich aren’t paying their fair share, direct them to the IRS data. Numbers don’t lie, politicians do

Just because the rich can afford to be taxed at high rates does not make it moral nor is it proof that it is the best method to distribute wealth. Unless you think it's fair to make the most productive members of our society foot the bill for everyone else.

Like I have said before, income taxes are not the only taxes paid. The main point is that the rich have thousands of times more disposable income left over after paying taxes (all taxes, fees, etc) than the ordinary, payday to payday, working people in this country.

There are quite a few rich people who legally avoid taxes by exploiting loop holes in the tax system.

Elvis Presley used to pay 90% of his income in taxes. He still had enough left over to buy anything he wanted.

We need to collect more taxes in order to pay for our international police actions or, so called, wars.

Do you believe it is in our national interest to borrow money to fight wars?

 

[Kushinator]

Like I have said before, income taxes are not the only taxes paid. The main point is that the rich have thousands of times more disposable income left over after paying taxes (all taxes, fees, etc) than the ordinary, payday to payday, working people in this country.

Very true.

There are quite a few rich people who legally avoid taxes by exploiting loop holes in the tax system.

Only if you call the capital gains tax a loophole.

Elvis Presley used to pay 90% of his income in taxes. He still had enough left over to buy anything he wanted.

Not entirely true. During the Presley era, the highest marginal tax rate might have been 91%, but that was at the highest bracket ( I believe over $1,000,000)
at the time.

Something interesting: From 1950-2007, tax revenues have always remained @ 19.5% of GDP, regardless of the top marginal tax rate. The only caveat to Hauser's Law is the "fixed taxation"( FICA and FUTA) ; when you consider them both, tax revenues decrease as the top marginal rate decreases. This is quite the empirical phenomena.

 

[Opteron]

How does a monopoly "illiminate" competition? How does any firm "illiminate" competiton? The key is the ability to set market price. None the less, the simplistic neo-classical explanation for market concentration is a bit boring and quite a leap considering NC theory of the firm. Firms grow and/or consolidate based on the level of transaction costs of their respective industry. Why? Because the firms who minimize transaction costs maximize profits to a greater extent.

Thanks for clarifying. I think I follow your point buy I think you're neglecting some things though. The monopoly could also buy out the smaller company or sign exclusive contracts with their supplier, not just set a lower price. And don't forget when they set a lower price, its just temporary, once they consolidate a monopoly they will raise the price very high. Entry costs and capital prevent other companies from entering the market place. Also, firms could engage in price fixing, in which they collaborate with other companies secretly to raise the prices of goods. A free-market is not really good for the consumer, you have to have regulation to go along with it.

 

[Edward_L._Sin]

The thing is, it isn't that we are too Capitalist that we have these problems -- it's that we are not Capitalist enough. Socialism is indirectly proportional to Capitalism, and yet people still want to unite these two theories together, but that want is what has caused the majority of the market crashes and subsequent bailouts we've seen. In a truly Capitalistic society, you won't see market crashes, or at least to size at which we see the market crashes today, nor would we see bailouts, because the government would be taken out of the picture of the free market. There would be no subsidization or help from the government to make any corporation, "too big to fail," and the government would never have the power to use the taxpayer's money to reward failure. Make no mistake -- regulations will no help us, nor will taking over these corporations help us -- less regulation will, and therefore less involvement and subsidization in the free market will help us.

 

[LiberalAvenger]

The thing is, it isn't that we are too Capitalist that we have these problems -- it's that we are not Capitalist enough. Socialism is indirectly proportional to Capitalism, and yet people still want to unite these two theories together, but that want is what has caused the majority of the market crashes and subsequent bailouts we've seen. In a truly Capitalistic society, you won't see market crashes, or at least to size at which we see the market crashes today, nor would we see bailouts, because the government would be taken out of the picture of the free market. There would be no subsidization or help from the government to make any corporation, "too big to fail," and the government would never have the power to use the taxpayer's money to reward failure. Make no mistake -- regulations will no help us, nor will taking over these corporations help us -- less regulation will, and therefore less involvement and subsidization in the free market will help us.

Less regulation? Do you like eating lead?

 

[Edward_L._Sin]

Less regulation? Do you like eating lead?

Well, justify why you believe there should be regulation, or even more regulation.

 

[LiberalAvenger]

Well, justify why you believe there should be regulation, or even more regulation.

Well, if you took away the FDA we would all be poisoned very quickly. Look at the damage that ddt did before it was regulated.

The Chesapeake bay is still poisoned by kepone.

The Cuyahoga river in ohio once caught fire.

Child labor was once the norm before regulation.

Would you like to drive in rush hour traffic without regulation?

Would you like to pay a 300% annual interest rate on loans? Never mind we already have that because of deregulation.

In short, in an overpopulated world, dog eat dog would lead to absolute chaos and survival of the fittest.

 

[Edward_L._Sin]

Well, if you took away the FDA we would all be poisoned very quickly. Look at the damage that ddt did before it was regulated.

The Chesapeake bay is still poisoned by kepone.

The Cuyahoga river in ohio once caught fire.

Child labor was once the norm before regulation.

Would you like to drive in rush hour traffic without regulation?

Would you like to pay a 300% annual interest rate on loans? Never mind we already have that because of deregulation.

In short, in an overpopulated world, dog eat dog would lead to absolute chaos and survival of the fittest.

Key points. However, why should the FDA be a forced regulation rather than an incentive for food companies to enter, as a means to garner more trust from the public over the healthiness of the food for which they sell? I've been out of country beforehand, and I've eaten some food that wasn't regulated by a governmental bureaucracy, and I'm fine now. Essentially, I need you to justify why the government needs to impose regulations and not the buyer to influence the seller into imposing regulations onto themselves over the threat of boycotts and a loss of profits. I don't see how the step into getting the government involved was made.

 

[Opteron]

Key points. However, why should the FDA be a forced regulation rather than an incentive for food companies to enter, as a means to garner more trust from the public over the healthiness of the food for which they sell? I've been out of country beforehand, and I've eaten some food that wasn't regulated by a governmental bureaucracy, and I'm fine now. Essentially, I need you to justify why the government needs to impose regulations and not the buyer to influence the seller into imposing regulations onto themselves over the threat of boycotts and a loss of profits. I don't see how the step into getting the government involved was made.

It kinda doesn't work that way because the seller could lie to the consumer and the consumer would have no way of knowing what the seller did or did not do. And also false advertising, the consumer might not know or be able to influence the seller if he lies or does something like that until its too late. That's why false advertising and lieing and committing fraud are crimes. Without this regulation it would be more difficult for the market principles to work.

It's not just any regulation that works, but it has to be good and sensible regulation. But generally, sensible regulation is more beneficial than just having a free market.

 

[Edward_L._Sin]

It kinda doesn't work that way because the seller could lie to the consumer and the consumer would have no way of knowing what the seller did or did not do. And also false advertising, the consumer might not know or be able to influence the seller if he lies or does something like that until its too late. That's why false advertising and lieing and committing fraud are crimes. Without this regulation it would be more difficult for the market principles to work.

It's not just any regulation that works, but it has to be good and sensible regulation. But generally, sensible regulation is more beneficial than just having a free market.

Good insight. Good insight. Now, here is something that people might misconstrue about my position for an unregulated, free market, and most of this stems from how I use the term regulation. By regulation, I mean an unnecessary law made by the government to benefit the people, when they are in the position of the buyer, arbitrarily. For example, laws against price gauging are a regulation, but I don't consider laws against fraud a regulation, because that's just a necessary law in order to ensure the integrity of the transaction between two people. A contract is only valid, after all, if both parties have full knowledge of what they consent; therefore, laws against fraud should be enforced in all cases. In a sense, I support regulations that a free market imposes by its very nature, and that includes laws against fraud, because, for a free market to work, it requires the facts to be correct and not falsified.

"And also false advertising, the consumer might not know or be able to influence the seller if he lies or does something like that until its too late."

Now, that issue would only be the case, if the transaction would endanger the life of the buyer or seller. If it doesn't, then it would never be too late to garner reparations for fraud through the legal system.

 

[ALIHAYMEG]

Now, that issue would only be the case, if the transaction would endanger the life of the buyer or seller. If it doesn't, then it would never be too late to garner reparations for fraud through the legal system.

It is always 20+ years after a toxic substance has been introduced that it becomes known just how toxic it is. By that time, the company that manufactured it has already made its profit and the consumer is left to suffer the effects. That is the current state of things even with regulations in place to protect consumers. Consumers can never have full knowledge of what the effects of the many man-made chemicals that they are exposed to on a daily basis are until it is too late. De-regulation isn't necessary. All it takes is a strong lobbying presence and several million in campaign contributions to buy a senator or committee chairman. That is the motivation that a purely capitalist mentality encourages. We need less of that, not more.

 

[Geo Patric]

The thing is, it isn't that we are too Capitalist that we have these problems -- it's that we are not Capitalist enough. Socialism is indirectly proportional to Capitalism, and yet people still want to unite these two theories together, but that want is what has caused the majority of the market crashes and subsequent bailouts we've seen. In a truly Capitalistic society, you won't see market crashes, or at least to size at which we see the market crashes today, nor would we see bailouts, because the government would be taken out of the picture of the free market. There would be no subsidization or help from the government to make any corporation, "too big to fail," and the government would never have the power to use the taxpayer's money to reward failure. Make no mistake -- regulations will no help us, nor will taking over these corporations help us -- less regulation will, and therefore less involvement and subsidization in the free market will help us.

how utterly bizarre!

true free market capitalism has been tried and has failed because it depends on greed ("self interest") so that capitalists try to cut the heads off of the competition.

get a history book. read it. you will find that not only do you see market crashes but that such collapses are endemic to the system. The first inroads that 'socialism' made in the emerging capitalists nations of europe were instituted by the capitalists themselves to protect themselves from each other.

no system that depends entirely on competition succeeds. none. the end result of unregulated competition is the loss of all but one. with no one to compete with competition itself fails.

think about it a minute. or two. take as long as you need.

geo.

 

[Edward_L._Sin]

how utterly bizarre!

true free market capitalism has been tried and has failed because it depends on greed ("self interest") so that capitalists try to cut the heads off of the competition.

get a history book. read it. you will find that not only do you see market crashes but that such collapses are endemic to the system. The first inroads that 'socialism' made in the emerging capitalists nations of europe were instituted by the capitalists themselves to protect themselves from each other.

no system that depends entirely on competition succeeds. none. the end result of unregulated competition is the loss of all but one. with no one to compete with competition itself fails.

think about it a minute. or two. take as long as you need.

geo.

Well, thank you for unintentionally making my case in point. The thing is, free market Capitalism would not depend on greed -- in fact, greed, if over-the-board, would be detrimental to the corporation or person in which greed was present. Now, I think that I do know the diagnosis for the differences between our perceptions, which is epitomized by this quotation: "get a history book. read it." The thing is, 99% of people have read history books, but only 1% of people actually evaluate that history. For example, you said, "The first inroads that 'socialism' made in the emerging capitalists nations of europe were instituted by the capitalists themselves to protect themselves from each other. " If what you said is true, then doesn't that mean that greed has a higher affinity with socialism than Capitalism, and doesn't it mean that greed, a bad, tries to distance itself from competition, a good? Wouldn't it then be logical for socialism or regulation to be forsaken by the people, so that the CEOs have to contend with the troubles of Capitalism and competition, which they so fear? As someone who has studied Microeconomics, I thought about the subject considerably enough to form my own opinions.