It looks like you're using an Ad Blocker.

Please white-list or disable AboveTopSecret.com in your ad-blocking tool.

Thank you.

 

Some features of ATS will be disabled while you continue to use an ad-blocker.

 

Why Capitalism Fails

page: 2
6
<< 1    3  4 >>

log in

join
share:

posted on Sep, 17 2009 @ 01:30 PM
link   
Can I jump in here?

There is no economic system in the world that runs perfectly. Communism fails to provide a legitimate means for one to reap rewards for diligent work or talent, while Capitalism tends to reward those who have been just plain lucky. Running without regulation, both systems are constructs for failure.

The difference, as I see it, is that Communism cannot be regulated. Communism is regulation. There is no economy as we know it under Communism; everyone (ideally) receives everything they need and works to provide those needs for others. It sounds ideal, even Utopian, on the surface. But Communism does not take into account the human factor.

In my present job, I was able to land the position of Company Driver, based on my previous truck driving career and my spotless DMV record. I make the same during the job that everyone else makes, actually a little less than some who have been there mush longer than I, but then I receive additional pay for driving the company van. There is only one additional member of my crew that has the qualifications to drive the van: the crew leader, and she does not like to drive, nor does she want to drive.

The rest of the crew members either have no drivers license or have a record of tickets and/or accidents.

I drive while everyone else sleeps, sometimes leaving my house as early as 1:00 AM and arriving home last. Yes, I make more money. But I work more as well. And I still get to hear innuendos about how I should be 'ashamed' to make more than the ones asleep in the back.

That's human nature, to be jealous of others, even when there is no reason to be. Some of the ones who complain the loudest are the very ones who complain continually about getting picked up an hour after I start work; why would they be jealous of a job that made this worse for them? But they are.

There are also people who will work diligently and hard to do the best job they can do. Others will just do what they must to get by. I have noticed that it is typically those who do the worst job who also complain the loudest when they get reprimanded for low production.

Put these two aspects of human nature together and you have a serious flaw with Communism. Communism assumes that everyone is equal in every aspect; that is simply not the case with humanity. Some will be better workers than others, people will all have different talents and interests, and some will rise to positions of power whole others will seemingly run from anything such. Good workers will receive rewards, even if those rewards are something as simple as a couple extra minutes at break or a good rapport with the boss. Those who refuse to do what is necessary to succeed will still be jealous of those that did.

When the very system of economics refuses to recognize the diligent workers from the apathetic, it will lead to everyone becoming apathetic. That will lead to poor performance and poor efficiency. What is the reason one should be diligent if they receive the same regardless of their diligence?

Capitalism rewards diligence and discourages apathy by making one's rewards tied directly to their performance. Do a better job, and you get more money. More money means nicer living conditions and more of the benefits of society. That is incentive to become diligent and efficient, as well as cause to ignore the jealousy of others.

But Capitalism too has its own drawbacks. Since it is by definition based on who has the most money, those who are born into a disadvantaged class or who are beset with bad luck can easily find themselves unable to compete with those more fortunate, irregardless of actual self-determined situations. In simpler terms, an individual's condition can be determined by things that are out of the individual's control.

On the other hand, someone who attains a great deal of money becomes extremely powerful, regardless of whether that person attains his position via birthright, hard work, diligence, or blind luck. Power can become so great that one person can have influence over the economy that is out of proportion to the energy he puts into it.

For that reason, I favor regulated Capitalism. Government has, IMO, an actual obligation to regulate uncontrolled growth of power and to assist those who, through no fault of their own, become indigent. Thus, I favor the graduated tax plan we employ today. I favor anti-monopoly laws that act as hard brakes to uncontrolled growth. I favor regulations to prevent fraudulent growth, such as truth-in-advertising efforts and public awareness education. I favor assistance to those in need, as long as that assistance is minimal and serves to make the recipient once again a productive member of society.

All of these regulations keep Capitalism flowing smoothly. Companies are born, they grow according to their societal contribution, and then eventually die off or adjust to new demands. People are free to move from class to class based on their personal decisions and the amount of diligence and hard work they are willing to put into their personal lives.

Where Capitalism tends to fail is when the socialistic aspect of any society becomes too large and interferes with the normal checks and balances of the Capitalistic system. Things such as minimum wage laws can easily interfere with the normal operation by inflating a product (unskilled labor) to an artificial level. Everything else then balances out to absorb that artificial inflation and the entire system re-establishes a balance with the same proportions as before... inflated from any economy which has not established such an artificial regulation.

Even worse is what happens when services are made mandatory. Not only does this go against the free will which is inherent ion Capitalism, but it also artificially creates a customer base who have no choice but to buy. There already exists in our society a method for providing necessary services to all which are by some part of their nature unable to be efficiency provided by the Capitalistic system: taxation and governmental services. Roads are a great example: under conditions of private ownership of land, a network of highways would be virtually impossible. A single individual could stop the construction of a 2000-mile long major traffic artery simply by refusing to sell a portion of land. Government has the power to, under restricted circumstances, force the sale of that property. Can anyone imagine the horror if a corporate entity had such power?

Here we just had a law recently passed that made garbage pickup mandatory. While I admit the need for such county-wide collection, it was done by hiring a company to perform the collection, then allowing that company to bill 'customers' directly, all the while making refusal to take their service illegal. This has led to poor service, even poorer response to complaints, and inflated costs. Should any service be deemed to be mandatory, it should them be provided by government and paid for by taxation, not by private companies operating with the full power of government.

These are only two ways that the government can (and has) interfere unduly with the free operation of Capitalism and create problems. We could talk about relegating monetary policy to private entities (the Fed), operating as a lending institution using taxpayer money (the bailouts), undue regulation based on suspect scientific research and outrageous expectations of technology (the EPA), and many more.

So if you want to see why Capitalism fails, I suggest you look to governmental (and by virtue of political affiliation, public) interference with its natural operation.

TheRedneck




posted on Sep, 17 2009 @ 01:56 PM
link   

Originally posted by TheRedneck


Capitalism rewards diligence and discourages apathy by making one's rewards tied directly to their performance. Do a better job, and you get more money.


I was with you right up to this point.

That's not true at all... think of the TONS of crappy products we have? Companies currently make stuff so that it breaks within a certain time period. It's common practice in the larger companies to make sure the purchaser feels that they at least got their value out of it enough to buy another one without heartache.

As for your direct scenario of workers getting paid. It *can* work that way, or it can go the other way. I'm an 80/20 guy myself. I do really superhuman work every once in a while.. the rest of the time I'm a slacker... And I make out better than any of my friends who are diligent workers.

I used to be a protestant work ethic kinda guy, and then I started, gradually to realize that the less effort I put into work, the better off I became...

Don't get me wrong. In the situation where you run your own business... you are EXACTLY right. However, in the situation where "popularity" comes into play, that goes right out the window... just ask any woman who has been passed over for a "more attractive" woman.






More money means nicer living conditions and more of the benefits of society. That is incentive to become diligent and efficient, as well as cause to ignore the jealousy of others.



Here's another thing which I don't think is facilitated by capitalism. Efficiency. I've seen more inefficient processes in monolithic corporations like some of the older Airlines. It comes with the age of a corp and the way it has grown over time. For example, look at Clear WiMax. They can do what the older telco's can't. They can be more efficient because they don't have but one thing to focus on. Yet the older compaines have been around longer...

What does improve efficiency is not having much. Since the economic downturn I learned how to make bread, bagels, and a host of other items that I used to purchase... I save SO MUCH more money now because of the scarcity in the system... not necessarily because of capitalism.






But Capitalism too has its own drawbacks. Since it is by definition based on who has the most money, those who are born into a disadvantaged class or who are beset with bad luck can easily find themselves unable to compete with those more fortunate, irregardless of actual self-determined situations. In simpler terms, an individual's condition can be determined by things that are out of the individual's control.



Yep.. and once again Psychology plays a huge part in this. I remember when I was younger my thoughts of what was possible were based on what my father achieved. Once I achieved all that my father achieved within half the time it took him I was lost as to what I should do next. I had never thought about doing anything else...

I started changing my psychology and the next thing you know I was starting companies and getting books published.... I have to say though, that I believe capitalism allows a person who can change their psychology to prosper.

(I am afterall a capitalist... I just think we need to inform our children more on how to participate as more than a consumer)




On the other hand, someone who attains a great deal of money becomes extremely powerful, regardless of whether that person attains his position via birthright, hard work, diligence, or blind luck. Power can become so great that one person can have influence over the economy that is out of proportion to the energy he puts into it.

For that reason, I favor regulated Capitalism.



I'm right there with you brother... The thing is, that it has to be smart regulation IMHO. For example, you have to look at what you are incentivising and what you are protecting... the unintended consequences.

Like I believe relaxing regulations on home loans, the very thing our Bonds are tied to is like removing the lock from your bank vault... it's just silly. If we want a free market, we have to at least protect those things which allow that to happen.

I had a client who wanted no restrictions on their network traffic... yet they seemed to think that should also apply to their routers and switches... I had to explain that if you want an open network... that's a philosophical choice... but if you want to sustain it for any length of time you have to protect the foundations. The same is true for the market.




...

So if you want to see why Capitalism fails, I suggest you look to governmental (and by virtue of political affiliation, public) interference with its natural operation.

TheRedneck


I agree completely with the remainder of your post... however I do think that there are other dangers to capitalism than this last piece you point out. Minsky's belief was that it was due to over leveraging that capitalism eventually collapses onto itself. I'd be happy just to limit that, and let the rest be free.



posted on Sep, 17 2009 @ 01:57 PM
link   
reply to post by mikerussellus
 


That is utter nonsense... and not proven anywhere.

Capitalism fails because it eats itself. The urge seen most clearly in corporate mergers to control most of the production it can is a prime example. It in the long run destroys the very thing that capitalism claims is its greatest product...choice.

Don't believe me....go to mal-warts.

[edit on 17-9-2009 by grover]



posted on Sep, 17 2009 @ 02:21 PM
link   

Originally posted by tinfoilman
reply to post by HunkaHunka
 


I don't really think Capitalism failed per se. I mean it did exactly what it was designed to do. Get as high up on that cash cow as possible right? At least for a while right? The only problem is, everything in life is a trade off. For every high there's a low.




Well exactly what Minsky predicted occurred...

Call it what you will... implosion, failure, or intended result...



posted on Sep, 17 2009 @ 02:34 PM
link   
reply to post by HunkaHunka

think of the TONS of crappy products we have? Companies currently make stuff so that it breaks within a certain time period. It's common practice in the larger companies to make sure the purchaser feels that they at least got their value out of it enough to buy another one without heartache.

Your point is well-taken. I was speaking more in a theoretical sense at that point. Taking reality of humanity into the equation, it is true that making too good a product is actually a hindrance to profit.

Theoretically, someone could run such companies out of business by making that more perfect product, but reality again rears its ugly head. For someone to manufacture anything today requires a massive investment. The average person simply does not have access to that kind of capital. So the only way to create a manufacturer is to go through some sort of investment process, which is both over-regulated in some areas, under-regulated in others, and controlled by the very people you would be putting out of business. That's not a hopeful scenario.



Don't get me wrong. In the situation where you run your own business... you are EXACTLY right. However, in the situation where "popularity" comes into play, that goes right out the window... just ask any woman who has been passed over for a "more attractive" woman.

Unfortunately, that is where we are in our society at this point in time. I know where to place a portion of the blame, but I don't pretend this is the only cause:

I have personally noticed, both by watching how co-workers behave and by attempting to hire good workers myself, that the good diligent worker is far from the norm. the norm today is some guy who doesn't want to come in to work, constantly complains about the job, tries to backstab co-workers to get ahead, sucks up to the boss every chance he gets, and still would turn Heaven and Earth to keep that job he supposedly hates.


Go figure.

But what has happened is that managers are actually becoming accustomed to this type of worker, and policies are now in place that do not intend to reward good behavior and high production, but to try to keep the idiocy down to a bare minimum. Thus, when a good productive woprker comes along, often they are rewarded simply by being overlooked, since no one ever has to reprimand them. Even a reprimand brings familiarity, and since there is no hope for a good worker, there is no need to keep an eye open for one.


For example, look at Clear WiMax. They can do what the older telco's can't. They can be more efficient because they don't have but one thing to focus on. Yet the older compaines have been around longer...

I would expect that the older companies who are now less efficient were just as efficient when they were smaller.

It appears to me that it is not the corporate structure itself that is to blame but the size of the entity. As any entity grows larger, more and more decisions are being made by those who in reality have no idea what they are regulating. The focus becomes more on statistics and numbers than on individual job performance and the intricacies associated with it that are unable to be represented on a spreadsheet.


What does improve efficiency is not having much.



I couldn't agree with you more on this!


(I am afterall a capitalist... I just think we need to inform our children more on how to participate as more than a consumer)

I have heard it said that if we took all the assets from everyone in the country and redistributed it equally, within 6 months 95% of all the people would be in the same economic situation they are in today. I tend to believe that.

Psychology is indeed a major factor in success. Most people do not even know how to define success; so how is it they expect to achieve something they cannot define?


I'm right there with you brother... The thing is, that it has to be smart regulation IMHO. For example, you have to look at what you are incentivising and what you are protecting... the unintended consequences.

Like I believe relaxing regulations on home loans, the very thing our Bonds are tied to is like removing the lock from your bank vault... it's just silly. If we want a free market, we have to at least protect those things which allow that to happen.

It would seem we are in complete agreement on this entire subject then. The difference between a needed regulation and interference with the free market is the consequences you speak of. It seems today that not only our children, but our politicians as well, need some of that economic education you mentioned earlier... or could it be the politicians know what they are doing? Hey, you're not paranoid if everyone really is out to get you, right?



I agree completely with the remainder of your post... however I do think that there are other dangers to capitalism than this last piece you point out. Minsky's belief was that it was due to over leveraging that capitalism eventually collapses onto itself. I'd be happy just to limit that, and let the rest be free.

Oh, that was just a few examples... there are many many dangers to free operation of Capitalism out there. And I do agree with Minsky, at least on this issue. Leveraging is an evil which must be stopped. Leveraging and speculating was the sole reason for the tremendous recent spike in energy prices.

If you want to invest in speculation, fine. But put up the money... sheesh...

TheRedneck



posted on Sep, 17 2009 @ 03:45 PM
link   
reply to post by HunkaHunka
 


And what system do you suggest seeing as you only manage to insult anyone who agrees with you?

Capitalism is not unstable, the cycles of prosperity and depression are that of supply, and are natural for a healthy market.

The system we see now, injected with capital and credit that exceeds the entire Dollar supply is a product of Governments and Banks (to which there is no difference) .. the Federal Reserve is Government, and there hands have been all over the economy for decades.

This system WILL fail.

But what do you suggest, since I know you will only insult me, I just want your opnion.

[edit on 9/17/2009 by Rockpuck]



posted on Sep, 17 2009 @ 05:09 PM
link   

Originally posted by Rockpuck
reply to post by HunkaHunka
 


And what system do you suggest seeing as you only manage to insult anyone who agrees with you?

Capitalism is not unstable, the cycles of prosperity and depression are that of supply, and are natural for a healthy market.

The system we see now, injected with capital and credit that exceeds the entire Dollar supply is a product of Governments and Banks (to which there is no difference) .. the Federal Reserve is Government, and there hands have been all over the economy for decades.

This system WILL fail.

But what do you suggest, since I know you will only insult me, I just want your opnion.

[edit on 9/17/2009 by Rockpuck]



RockPuck, I only suggest one thing in general... That we approach capitalism with less of a worshiping stance like so many do, and more of an understanding of how this large generative force can be applied as well as it's pitfalls.

More specifically we have to teach our children to be producers and not so much consumers... to pay attention to what we consume, and to protect the foundational elements of our economy... like home loans... whoever turned that into a "free market" fiasco had a total brain fart that day.



[edit on 17-9-2009 by HunkaHunka]



posted on Sep, 17 2009 @ 05:37 PM
link   
reply to post by HunkaHunka
 


Well put.
I actually agree 100%..

One aspect that I believe would benefit capitalism is to outlaw ALL forms of usury.. that way private institutions cannot generate wealth without production or even a basis as to why they produced that wealth.. illegalize usury and this collapse could never have happened..



posted on Sep, 17 2009 @ 05:45 PM
link   
reply to post by desert
 





Sigh, for the last 30 years, I've overheard the cries of the Freemarketeers, the unfettered capitalists, sound every bit as defendant of their idea of capitalism as the old radical left was of communism.





Another one not to actually read the article. The man was born in 1919...


First where and when have you seen "unfettered capitalism" or a true "free Market"? The USA has never had "unfettered capitalism" since the barter system of the American Natives. Certainly after 1913 Capitalism was completely screwed up by the minipulation of the bankers and the US government.

The 1920 speculations using bank loans and the 1980's - 1990's "leveraged buyouts are a very good example of the banks playing the Asset Grab game. Mad speculator buying of corporations using borrowed fiat money followed by a bank manufactured crash allowed the bankers to walk away with everyone's Assets while they rest of the citizens took dives out of windows.

Corporations and bankers Hate real capitalism and have done their best to circumvent it, vilify it and destroy it. Corporations want laws that allow them the advantage of killing of competitors. Regulations with lots of red tape and unevenly in forced laws are the favored weapon. An excellent example is President Clinton's pet the World Trade Organization Agreement on Agriculture followed by international HACCP regs. The follow up is the "Food safety bills" designed to wipe out not only all independent farmers but home gardens as well. The Fake Food Safety Bills



According to John Munsell, Manager, Foundation for Accountability in Regulatory Enforcement (FARE), when USDA “officials initially described HACCP to the industry in the mid-90’s, the agency made the following enticing promises:

* “Under HACCP, the agency will implement a ‘Hands Off’ role in meat inspection.
* “Under HACCP, the agency will no longer police the industry, but the industry will police itself.
* “Under HACCP, the agency will disband its previous command and control authority.
* “Under HACCP, each plant will write its own HACCP Plan, and the agency cannot tell plants what must be in their HACCP Plans.”

As a result, the plant operator was required to identify potential hazards and the critical points in the process where those hazards could come into play. The plan would then identify procedures that would be used to minimize the hazard risk at those control points. The plant would be responsible for the implementation of the plan.

As a result, the inspector was no longer responsible for what was happening on the plant floor: that was left to company personnel. The new role of the inspector was to make sure that plant personnel were carrying out their duties in a manner consistent with the HACCP plan. In many cases this amounted to making sure that all of the paper work was in the proper order.
www.agpolicy.org...



I know you think I am nuts when I say corporations hate Capitalism. Here is and example of what I mean Note General Electric's connection to J P Morgan.


1931 “Meanwhile, strange collectivist plans for ending the depression were brewing in the business world. In September, Gerard Swope, head of General Electric,..presented the Swope Plan to a convention of the National Electrical Manufacturers Association. The Plan, which garnered a great deal of publicity, amounted to a call for compulsory cartellization of American business—an imitation of fascism..."We have left the period of extreme individualism. . . . Business prosperity and employment will be best maintained by an intelligently planned business structure." With business organized through trade associations and headed by a National Economic Council, any dissenting businessmen would be "treated like any maverick. . . . They'll be roped, and branded, and made to run with the herd."....One of the most important supporters of the cartellization idea was Bernard M. Baruch, Wall Street financier. Baruch was influential not only in the Democratic Party, but in the Republican as well,.... Meanwhile, the states moved in to compel cartellization and virtual socialization of the crude oil industry. The oil-producing states enacted laws to enable governmental commissions to fix the maximum amount of oil produced, and this system is basically still in effect. The state laws were enacted under the public guise of "conservation," which is a pat excuse for any compulsory monopoly or cartel in a natural resource. mises.org...





Here is an example of a banker law designed to kill true "Capitalism"



The Federal Farm Loan Act of 1916... To provide capital for agricultural investment, to create standard forms of investment based upon farm mortgage, to equalize rates of interest on farm loans, to furnish a market for United States bonds...It shall be the duty of the Farm Loan Board to prepare from time to time bulletins setting forth the... advantages of amortizing farm loans.... advising investors of advantages of farm loan bonds...

Much of the money was deposited in small country banks in the Middle West and West which had refused to have any part of the Federal Reserve System, the farmers and ranchers of those regions seeing no good reason why they should give a group of international financiers control of their money. The main job of the Federal Reserve System was to break these small country banks and get back the money which had been paid out to the farmers during the war, in effect, ruin them, and this it proceeded to do.

First of all, a Federal Farm Loan Board was set up which encouraged the farmers to invest their accrued money in land on long term loans, which the farmers were eager to do. Then inflation was allowed to take its course in this country and in Europe in 1919 and 1920. The purpose of the inflation in Europe was to cancel out a large portion of the war debts owed by the Allies to the American people, and its purpose in this country was to draw in the excess moneys which had been distributed to the working people in the form of higher wages and bonuses for production....
www.apfn.org...


We saw Communism in action in the USSR and other places. So what about Socialism?


When the Pilgrims first settled the Plymouth Colony, they organized their farm economy along communal lines. The goal was to share everything equally, work and produce.
They nearly all starved.




In his 'History of Plymouth Plantation,' the governor of the colony, William Bradford, reported that the colonists went hungry for years, because they refused to work in the fields. They preferred instead to steal food. He says the colony was riddled with "corruption," and with "confusion and discontent." The crops were small because "much was stolen both by night and day, before it became scarce eatable." mises.org...



"So as it well appeared that famine must still ensue the next year also, if not some way prevented," wrote Gov. William Bradford in his diary. The colonists, he said, "began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length after much debate of things, [I] (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. ... And so assigned to every family a parcel of land."

The people of Plymouth moved from socialism to private farming. The results were dramatic.
"This had very good success," Bradford wrote, "for it made all hands very industrious, so as much more corn was planted than otherwise would have been. ... By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many. ... "

When action is divorced from consequences, no one is happy with the ultimate outcome. If individuals can take from a common pot regardless of how much they put in it, each person has an incentive to be a free rider, to do as little as possible and take as much as possible because what one fails to take will be taken by someone else.
www.realclearpolitics.com...



posted on Sep, 17 2009 @ 06:01 PM
link   

Originally posted by Rockpuck
reply to post by HunkaHunka
 


Well put.
I actually agree 100%..

One aspect that I believe would benefit capitalism is to outlaw ALL forms of usury.. that way private institutions cannot generate wealth without production or even a basis as to why they produced that wealth.. illegalize usury and this collapse could never have happened..


I do believe we are on the same page Rockpuck




posted on Sep, 17 2009 @ 09:58 PM
link   
reply to post by HunkaHunka
 


If you haven't already, you should read "Can Capitalism Survive?" by Joseph Schumpeter.

Schumpeter was a neo-Austrian economist (sometimes argued as being the greatest Economist of the 20th century) who asked the question: Can capitalism survive?

His answer, to his great dismay, was "No!" The system has a tragic flaw, much like a finely tuned computer that comes across a destructive virus. While explaining this, he finds the time to give the most compelling explanation of the business cycle that I've ever come across.


[edit on 17-9-2009 by theWCH]



posted on Sep, 18 2009 @ 12:10 AM
link   

Originally posted by HunkaHunka

Originally posted by tinfoilman
reply to post by HunkaHunka
 


I don't really think Capitalism failed per se. I mean it did exactly what it was designed to do. Get as high up on that cash cow as possible right? At least for a while right? The only problem is, everything in life is a trade off. For every high there's a low.




Well exactly what Minsky predicted occurred...

Call it what you will... implosion, failure, or intended result...


Well I'd call it all those things. Well because we know there's failures with capitalism, the unknown is how big the failures will be. My theory is how lows the lows go has to do with how highs the highs go, but that may not be the case.

But that's the unknown risk to capitalism. How low will it go when it goes low? Well, there's no way of knowing, but when it goes too low everyone says capitalism doesn't work.

Well what they mean is it's no longer doing what they want it to do, but that doesn't mean it's not working like it was designed to work to an extent.

This is why you see so many systems that are hybrid. Because no one system really does what we want, and some of what we want is actually impossible in the long term so we keep hitting this wall no matter what we do.



posted on Sep, 18 2009 @ 12:42 AM
link   
reply to post by TheRedneck
 


That was a pretty intelligent and thought out post

The only thing I want to add on to that is I'm not really a supporter of the minimum wage per se, but I am for the type of system we have today. I think it's a symptom of the fiat inflationary currency we use.

In other words our money system must be inflationary for it to work, but since everyone is competing with each other the business owners feel pressure in raising the wages so they don't want to, but everything must inflate for the money system to work.

Because we can't have prices going up for ever without wage growth, but you don't get the wage growth automatically like you would in a true free market economy.

The inflation is working as a hidden tax on the business so they feel pressure in raising the wages even when they raise their prices. Because all the raised prices do is cover the inflation of their product because they want to keep prices low. It doesn't cover the inflation they need to make wages grow because someone else will undercut them if they do. That's why you have to have the gov come in.

So yeah it causes inflation, but that's because it's supposed to because our money system doesn't work without inflation. So, it's basically the gov forcing the needed inflation to happen.

Businesses usually use technology to increase productivity to make up the difference in the end though. It's when they can't do that, that they feel real the pressure and where the minimum wage becomes a controversial issue where it normally wouldn't be.

But the point is, because the government adjusted one part of the market then they must come in and adjust another and play whack a mole to make it all work out smoothly. But it's just the price you pay for the regulation.

However, they just have to adjust that little tiny small percentage that doesn't perfectly work out after adjusting the other side of the system. Namely when they print money.

After all, most people already make more than minimum just due to the free market alone. The minimum wage makers are a very small percentage and I just look at it as the government coming in to fix that little glitch that's in the system caused by the money system we have.

They don't always get it perfect, but it works out better for the most part. It raises wages so the prices can continue to rise so the inflationary system can continue on.

In another type of system though it may not be required,



posted on Sep, 18 2009 @ 01:53 AM
link   

Originally posted by HunkaHunka




More specifically we have to teach our children to be producers and not so much consumers... to pay attention to what we consume, and to protect the foundational elements of our economy... like home loans... whoever turned that into a "free market" fiasco had a total brain fart that day.



[edit on 17-9-2009 by HunkaHunka]


Alan Greenspan and Ben Bernanke are the ones you are talking about. For gods sake man. The real estate implosion you are talking about was not a free market issue, the FED manipulated the rates. How in the hell do you get "free market" out of that? Good god!

Fannie Mae, and Freddie Mac where created by the GOVERNMENT, where's the free market there?

If the free market had been running the show there would have been no such thing as an interest only ARM. Honest to god man...... where do you get your information?



posted on Sep, 18 2009 @ 09:28 AM
link   
There are a lot of good thoughts here. Here is what concerns me about US capitalism at the moment.

The fact is, we have a global economy. Unless US capitalism figures out how to participate so that capitalism works best for not just employers but employees, IOW for all, we will be left behind. For three decades now, the fear of being "left behind" seems to have been relegated to only religion.

Instead of building an economy that participates honestly and well in a global economy, we built a financial service sector economy that spewed out shaky financial dealings as quickly as a fast food hamburger.

We let corporations take over our democracy, using political power to gain force on the world stage. Instead of asking the world, how may we help you, with American ingenuity, we ignored the world, save a war or two.

For example, with 21st century problems such as energy and water resources, we not only are not helping ourselves but we are not helping others on a grand scale. We prefer to be held hostage to the old, to the status quo, propping up old ways of doing business if it fits those in power, much the same way failed dictatorships prop up themselves.

Many of those who profess to love capitalism have merely enabled capitalism to destroy itself, enabling it as a family member enables an addict. To me, the only way out of our financial distress is to leap frog over, ignore the status quo, quit doing business as usual, and make sure US capitalism is the leader in helping to solving problems of the 21st century. Unfortunately, the "No we can't" attitude is pushing back on those who truly want to see something new and different.

For a great nation that once focused to put a man on the moon in the space race, we need to focus, not on the religious "left behind", but on what it will take to once again be ahead and not be left behind on the world race course.



posted on Sep, 19 2009 @ 09:55 AM
link   
reply to post by tinfoilman

You make some pretty good points yourself.

Inflation, however, can not be a continual process. It is the steady creep of inflation that will eventually lead to recession (and in severe cases, depression). Just as when you start driving, if you keep accelerating, sooner or later you will run out of road (or nerve!) and have to apply the brakes. Nothing, not even prices and wages, can accelerate forever without causing problems down the road.

Also, as desert so aptly pointed out, we in the USA tend to look at things in the context of our one country. We do not exist as an island in the world. At one time, we could afford that luxury, as we had by far the largest and most robust economy, but today we have competition. Just because we raise our standards does not mean that other countries are under obligation to raise theirs.

There is a belief that profit margins are the only thing which controls costs. That is blatantly wrong. Cost of merchandise is determined by two competing factors: the desire for profit and the market's willingness to pay. The desire for profit means that a company must run efficiently and leanly in order to keep other production costs down, these costs being general overhead of operations, labor, and materials. Profit comes after these costs. A product must be able to be produced and marketed at a price that covers all costs and allows a reasonable product.

Willingness to pay means there is a limit on what someone will pay for the product. If you open a store selling Cokes for $500 a can, you're simply not going to sell any. So if you make a wonderful soft drink, but your costs are $500 for a can of it, you will not make any profit. The lack of willingness of the public to pay that outrageous cost will force you out of business quickly.

Now, when we introduce the inflationary regulations and consider inflation as a normal part of any sustainable growth, we remove the ability of companies to make changes that benefit them in making a product more efficiently. If we act unilaterally, allowing other countries to set their own policies less stringently that ours, we shift the equation. Sure, higher minimum wages will balance out with higher prices, but that actually benefits no one. It matters not whether a day's wages are paying $10 or $100, if the price of a loaf of bread rises 10-fold to match the wage increase. Money is a medium of exchange, not a product itself. You can't eat it, drive it, wear it (although I did see a couple bikini's one time made of money
), or do anything else with it, save to buy those things you can use.

What that minimum wage increase does do is that it allows prices to actually rise by a greater margin than the wages rose, by not only inflating the labor prices of an individual product, but the price of materials from other suppliers who now have to raise their prices to meet the new wages as well. So in the previous example, if while making $10 a day, you could buy bread for $1 a loaf, raising the wages artificially to $100 a day will make bread cost more like $12.50. Whereas at the lower wage, you could buy ten loaves for a day's work, now you can only buy 8. You make more money, but your wages have actually gone down.

Artificial inflation also creates even greater problems when considered in a global context. Countries such as China do not raise their wages when we do. That means that factories in China can now make much more profit on their products while American factories can not even make a profit, and possibly cannot even cover their labor and material costs. This means Chinese workers now have a windfall of work available to keep up with an increasing demand, and American workers are finding themselves laid off from their jobs and unable to buy anything.

That is exactly what we are seeing here today.

A properly functioning free market economy will have inflationary and deflationary cycles, preferably among different areas of the overall economy at different times. It is only when we start instituting artificial controls to micro-manage a system too big to be micro-managed that we tend to get overall inflation and recession. Instead of a self-correcting system, we get a system that overreacts to stimulus and cycles back and forth.

And of course, with each cycle, the wealthy get wealthier, since they have the means to hedge against the coming cycle, and the next cycle is then greater and comes along faster.

We have had the American economy up to 200 mph, cruising down the road of the marketplace. We hit a few potholes (Katrina, the housing bubble, the dot-com bubble, the banking failures) moving too fast. Now the economy is in a fishtail, and we are starting to hit the brakes... too hard.

Anyone care to guess what happens if you do that in a car?

TheRedneck



posted on Sep, 19 2009 @ 10:42 AM
link   
Capitalism is based on personal greed, and that is not a bad thing. Greed enables one to work, to hustle to accumulate more wealth, and that accumulation enables saving, which creates capital, enabling loans to help others satisfy their greed.

Communism is based on sloth. I want stuff, but I really rather let the other guy work his ass off and have to share with me.

The only fly in the ointment of capitalism is government interference, usually well-intentioned, trying to level the playing field.

It starts off well, but more slothful folks get involved and that same interference through regulation, chokes the chicken laying the golden eggs.

Left alone, capitalism is by definition - self-regulating.

Regulation is nothing more than the landlord demanding more and more of the action for themselves through intimidation and extortion.

Extortion being the regulations.



posted on Sep, 19 2009 @ 11:46 AM
link   
reply to post by TheRedneck
 


Using the analogy of a car, could we not say that regulation on financial dealings would be the governor on an automatic transmission? Hell, we didn't even have any jake brakes on this careening big rig! The only option now is to use the runaway ramp, and that comes at a steep price.

When the economy was working for all, minimum wage was not the standard wage for families to survive on. Minimum wage was the wage that teenagers worked for in, say, fast food establishments and summer employment. Adult jobs were above minimum wages, often several times above. Nowadays, minimum wage is closer to being the standard wage to survive on.

IMO the infusion of drug money into the American economy was the "bail out" during the 1980's recessionary times, which was started to counteract the prior time of inflation. The economy stayed afloat, surviving the dotcom bubble burst, but the promises of NAFTA never appeared, and the middle class economy, which had been an agent for overall prosperity, to use the car analogy again, began to run on fumes.

The US economy could not survive two ME wars and deregulation of the growing basis of its economy, the financial sector. With the governor broken, and no willingness to fix it, without an additional supply of money to put into the economy save a wealth on paper, home mortgages/credit, a crash was inevitable. While investors and homeowners got high on the fumes, even those didn't last.

So, while we're mired in the runaway ramp, a tow truck was sent out to help us, but unless we get serious about fixing the problem, all we're doing is changing the tires on a disabled vehicle. I'm all for profit; but part of the problem was the unethical amount of profit that drained money from the middle class. And still does via, for example, health insurance co's. I can refuse to buy a pair of expensive shoes, but it gets tough to avoid a needed doctor's visit.

If you've ever had the experience of trying to refuel a truck through using a pump that either has a small hose or clogged filter, which is what our economy is now, it can be an interminably long wait. Eventually, we'll be able to drive away; meanwhile, the rest of the world has passed us by.

Hey, today's low point is the start of the next cycle of prosperity! I probably just won't be around to see the next high point.



posted on Sep, 19 2009 @ 11:51 AM
link   
Capitalism fails because it is governed by men with flawed human nature.
It IS the best system by far for personal freedom though.
However, within a corrupt society, it has and will always fail.
It promotes greed, glutony and self exaltation by its very nature.
Not sharing, humility or compassion fro others.
Thus, with peoples inherent human nature involved, it will never work properly or last indefinately. Evil wins.

Indeed history is but a long list of failed captalistic "free" empires.
Given the choice, people will always demand a leader.
However, this person of power sooner or later abuses it and
uses it for personal gain, thus destroying the society.
Only in a few rare cases were kings ever "righteous".

Governments must exist if for no other reason but to avoid anarchy.
However it must also provide some level of security and basic services
for the people it professes it serves.

Most people see nothing beyond their human nature and they assume, erroneously, that their human nature is always good.

Until we get a handle on this flawed human nature,
we will never have a free capitalistic society.
Only one based on corruption, greed and self service above all else.



posted on Sep, 19 2009 @ 12:24 PM
link   
reply to post by desert

Using the analogy of a car, could we not say that regulation on financial dealings would be the governor on an automatic transmission?

Yes, if you realize that this governor over-reacts and tends to lock the brakes instead of easing off the gas a bit.


Hell, we didn't even have any jake brakes on this careening big rig!

They came standard, but we disabled them because we put that over-braking governor in.


The only option now is to use the runaway ramp, and that comes at a steep price.

It's steeper than you think. When we went into the business of publicly bailing out private companies, we replaced the sand and hay piles with jagged rocks and a brick wall. They're so much more efficient at stopping a runaway truck.



When the economy was working for all, minimum wage was not the standard wage for families to survive on. Minimum wage was the wage that teenagers worked for in, say, fast food establishments and summer employment.

That just got you a star.

The real problem came into being when a generation of kids who A) had no idea of how an economy was supposed to work, and B) was accustomed to having the government instead of their employer dictate their wages came into adulthood. One of the primary self-governing characteristics of Capitalism is that people are greedy and strive to get more for themselves. Without governmental interference, that places this greed and the desire for a raise at odds with the profit motive for the employers. In the end, both sides wind up giving in some, the workers because they can't find better jobs than the one they have, and the employers because they don't want to run the risk of losing their best workers.

It's like two men facing off with sticks. One starts hitting the other, and the other retaliates. Eventually, they grow tired of the battle and decide to at least take a break from beating each other as much. When the government steps in, it's like handing one of the combatants a sledge hammer. They will then proceed to beat the other one until they give up and leave.

When business gives up and leaves, we have unemployment.


...the promises of NAFTA never appeared, and the middle class economy, which had been an agent for overall prosperity, to use the car analogy again, began to run on fumes.

The promises of NAFTA were at odds with the reality, had people looked at the logical consequences of the treaty. Far from leveling the playing field, NAFTA brought in biased referees and placed the playing field on the side of a sheer cliff.

The moral of the story: just because your Congressman and the guy on the news says it, it doesn't make it true.


The US economy could not survive two ME wars and deregulation of the growing basis of its economy, the financial sector.

We actually survived the two wars pretty well; it was the prolonged and mismanaged police action that came afterwards that has weakened this economy so much.

The deregulation of the financial sector was a much worse shock to the system than both wars and the police action combined. It was in reality nothing more than fraudulent theft of the nation's resources by a select group of wealthy individuals. It didn't clog the fuel filter; it pumped all the fuel out.


I'm all for profit; but part of the problem was the unethical amount of profit that drained money from the middle class. And still does via, for example, health insurance co's. I can refuse to buy a pair of expensive shoes, but it gets tough to avoid a needed doctor's visit.

The problem (and I believe I addressed this earlier in this thread) is whose definition of excessive do we use? Everyone has a different take on excessive.

There is a built-in governor that came standard with this economy. This governor works perfectly! The problem is that this governor operates on people's refusal to overpay for goods and services. or to work for less than a reasonable wage. We have now disabled that governor by making people believe that prices can be set by government, wages can be set by government, and the businesses will continue operating at a loss and will still supply more and better paying jobs because of this.

If we ever want a free market system again (or at least something akin to one like we have had far in the past), we must re-educate our population in what actually creates an economy and how it works. The car is fine; we just need to get rid of the myriad of silly government-issued governors that we have added on in our haste and ignorance. They didn't work; take them OFF.

TheRedneck


[edit on 9/19/2009 by TheRedneck]



new topics

top topics



 
6
<< 1    3  4 >>

log in

join