Value in Socialism?
John Paulson made $5 billion, Wall Street profits are up, and pay is set to go off the roof.
Cue the Huffington Post.
Enter the shocked, aggrieved, and grossly affronted liberal masses.
Alright angry bald guy from the Huff Post, Wall Street and its denizens do not contribute “a single iota of productive addition nor economic benefit to the economy,” you and your ilk have made that opinion quite clear.
And shucks, that was some solid small talk socialist Suzie, we really should be more sensitive to those who don’t work and strive for the better. It’s so clear to me now; the answer really is more free stuff for them out of my own pocket, the world would be such a better place then.
Yeah, that's it alright. Most of us here on WSO despise all these affronts to capitalism; we’ve argued endlessly over new policies; their benefits and their impairments, ranging from taxes, healthcare, to railroads.
One thing however that we miss that Main Street loves to hone in to is value.
Wall Street doesn’t add value.Big Corporations don’t add value.
ZOMG! All they care about is profit!
Alright then, can anybody here see things their way and explain to me how socialism truly adds value?
Worldwide, socialist proposals akin to what the public views as value adding and virtuous have been disasters.
Land reforms to fix inequality: Check
Nationalizations for the people: Check
And let's not forget how much progress welfare states have given to humanity.
Value, value, value, everyone’s so concerned with value.
What value are they really expecting to see anyway?
[sheds a tear of joy]
The only problem is that the banking sector and wall st have nothing to do with capitalism nowadays. When they got in trouble they went crying to the government and took their hand-outs just like a welfare mom with 5 kids and no income. Not the hedge fund industry, but the banks and dealers have a business model that basically relies on their losses being socialized when they get into trouble. So while I agree with your post, it doesnt really have any place on a board about the finance industry.
And we have a winner!!!!!!!
If you work in finance and you don't agree with this statement you are like a hooker who says she's all about hanging out with people and making friends. SB.
On an inheritance tax note, just tax anything above ~10mm at 90%+. Inheritance is not in line with the idea of free markets and meritocracy. And 10mm is more than sufficient to allow your children to buy themself the best education possible and get off to the best start possible.
This would also not discourage people from working hard. Nobody wants to get rich so his grand children are still billionaires, we are not that sociable as human beings.
Wall Street adds tons of value. The problem is that this value is intangible and complicated enough that the average citizen cannot understand it. A farmer growing corn and you eating it is simple to get. An investment banker bringing a middle market company public so that the person who build the company can cash out and retire is full of intangibles.
Socialism is 100% wrong because it goes against human nature. Socialism is akin to forcing people to walk backwards. It could be done, things could function with it, but every second or every day, we would be tearing at it to break free.
Milton Friedman is a god. I could watch him speak endlessly.
If pure capitalism is good, then the bail outs were not justified.
Even Adam Smith was not for pure capitalism. With that said, capitalism with a few limits is the optimal solution.
Milton Friedman is indeed a genius, and rightfully one of the most influential, if not THE, most influential economist of the past 50 years. The one inherent flaw with capitalism, as state in Nouriel Roubini's book "Crisis Economics", is that capitalism is inherently unstable and prone to crises. It's a system of economics that is indicative of humans in general. We are unstable, and susceptible to our emotions getting the best of us, which is manifested in greed and irrationality. While I do think capitalism is the best system of economics, there has to be something better, We have seen capitalism fail us on an epic scale, about 3 or 4 times throughout my lifetime, with the S&L, dot-com, and mortgage bubbles. Dating all the way back to the tulip crisis in Holland in the 1600's, capitalism has shown time and time again that is meant to be rigged by the brightest.
The one paradox I find in society today is that we advocate free-market capitalism axiomatically and with such conviction, but when it fails, our solution is to use socialistic programs and solutions.
just to play devils advocate there are some problems with modern day capitalism. for one it seems that in a globalized economy the polarization of income is a cyclical self enforcing phenomenon that in equilibrium could threaten the stability of the whole system.
also barriers to entry in almost every market have become extremely high which weakens competition.
Capitalism is successful and the best economic system because it most directly incentivizes hard work and production. With that being said, if effort and incentives were to remain (hypothetically) fixed, a socialist distribution of goods would be optimal if we were choosing behind a veil of ignorance. IMO socialist programs are good so long as the benefit from having a more optimal distribution of goods is preferred to the decrease in net goods produced from the decreased incentives to production.
If that makes any sense.
^^How does the polarization of income threaten the stability of the whole system? Your whole first paragraph could easily be rephrased to "differences in income could threaten the system".
Barriers to entry doesn't necessarily weaken competition. The only thing thing that weakens competition is the governments intrusion in the free-markets with price controls, some necessary, some not. If a firm has a competitive product or service, their value will become notices. Perhaps if this was 20-30 years ago this argument could be made, but with the advent of the internet, there is truly nothing that isn't impossible. There are numerous examples of this. Furthermore, with venture capital and angel investors always looking to seed funding to start-up companies so that these companies can compete on a much larger scale, your argument is based on rather outdated assumptions. Now the problem with free-markets and competition is when we lose what Joseph Schumpeter calls "creative destruction", which was totally avoided over the past 3-4 years.
Some of these barriers to entry are completely artificial as well, created by the government through subsidies, grants, etc. The truth is, it's impossible to revert to a completely capitalistic society with the socialist structure that we have in place.
Socialism isn't the best economic system because a) it isn't pragmatic (who determines the best allocation of resources - although technological progress could potentially make socialism more pragmatic) and b) it doesn't give free will to the individual. As I've mentioned before, under a utilitarian ethical framework, free will to the individual does not matter, and since socialism works best under this ethical framework, then the absence of free will for the individual does not matter because it is in the best interest of society.
I'm sorry, but way too many people believe that "the free market is god". This religious zealot like fanaticism surrounding free market capitalism is unwarranted. Capitalism is certainly a good economic system, but I'd only say it is better than socialism because it gives the individual free will, which is not allowed under a socialist system.
I would certainly argue that under a capitalistic society, freedom does not exist. I say this because as long as greed is able to exist, a person is not free. I'm not talking about the traditional definition of freedom, but the real definition of freedom. As long as humans put profit over people, we will forever be slaves, in our minds as well as in our reality. Capitalist does perpetuate these psychological shortcomings of humans, envy, greed, jealously-and as long as these exist, we will never be free as a society. Henry David Thoreau said it best "Material possesions are not only not indespensible, but a positive hindrance to the elevation of mankind". As long as we television corporations looking for profits, thus convincing us we need to go into debt to be socially accepted, we will always be slaves-slaves to our work, slaves to our peers, and slaves to money. This envy, jealousy, and greed has caused our existence to halt to a virtual standstill, because we are so worried about social conformity for the sake of material security. The cover of Forbes magazine had a great write-up about Peter Thiel- the first investor in facebook. His views on civilization are rather unorthodox, but make a lot of sense.
eyelikecheese,
I tend to focus on theoretical aspects of capitalism and socialism over pragmatic, practical applications of these economic systems.
Free will does exist in a capitalist society (note, the capitalist society we live in today is hardly capitalist at all. The "free market choir" above will claim that the government should not intervene in free markets, but they fail to recognize that by establishing corporations as separate, legal entities with limited liability, a government is in a way intervening in free market activity and distorting the rational, effective allocation of resources).
The idea is that, in a free market capitalist system, you, the individual, has the ability to VOLUNTARILY engage in transactions which other (which you believe will enhance your overall utility). The key word here is voluntarily. Individuals in a free market system must never engage in a transaction under threat of force. Otherwise, those individuals would not be acting in their own individual RATIONAL (ok, technically, when threatened under force, if one complies with the demands of the agressor, he is being prudentially rational. However, I am focusing on those who act epistemically rational) self-interest. In a socialist society, individual decisions do not matter, because the end-aim is to maximize utility for everyone as a whole, done through collective ownership of resources, and thus the will of the individual is second to the will of society as a whole. (In other words, society, as one, collective group, has free will to act in its own best interest, but this may be counter to the interest of the individual).
I don't think Wall Street adds much value to society at all, but neither do a host of other professions, doesn't mean they should cease to exist.
College kids brown nosing Milton Friedman ... how cute!
As someone said it earlier in this thread Wall Street today has nothing to do with capitalism as it has been described by Friedman or Von Mises. Capitalism described by ideological economists from the Austrian school or Chicago is the same as socialism: an utopia! In theory both systems are great, in practice it's another story.
I expect some monkey shit for this one, but makes sense within the framework of free market: 100% tax on inheritance over X million (notice the problems behind setting an X).
This follows the idea of W.Buffett : "[The perfect amount of money to leave children is] enough money so that they would feel they could do anything, but not so much that they would do nothing".
I can explain the rationale, but first i would like to hear some criticism XD, i love to debate.
I am in love with quote. I just texted it to my lazy underachieving siblings!
First of all, anyone who thinks Wall Street doesn't add value is mistaken. Just check this out, and I think you'll see what I mean: http://www.econtalk.org/archives/2008/10/munger_on_middl.html
[quote=econ]First of all, anyone who thinks Wall Street doesn't add value is mistaken. Just check this out, and I think you'll see what I mean: http://www.econtalk.org/archives/2008/10/munger_on_middl.html[/quote]
Incredible.
I'm telling you, those podcasts are the most incredible thing I've ever stumbled across. Incredibly entertaining, insightful, and worth every minute of your time.
eyelinkcheese: You are obviously bright, a thinker, and well read. Like most intellectuals though, I think you completely misunderstand the benefits of capitalism. I could try to explain them myself, but it's probably just better to refer you to those who are much more thoughtful, intelligent, and articulate. A good place to start would be FA Hayek. I think public choice is also something that might give you a new perspective.
But does public choice exist in a society which lacks the ability of independent thought? Not specific to individuals, but the population as a whole.
It's similar to the sports fans paradox, will elaborate if need be. Any book or essay recommendations on FA Hayek. In addition, it's not that I misunderstand the benefits of capitalism, but I don't think it is the answer, and anyone that would disagree has hundreds of years of overwhelming evidence to the contrary. It is the best system we have now, but it does reinforce elitism and totalitarianism is a way. In the wise of of Karl Marx "The history of all hitherto society is the history of class struggles". I do no advocate communism nor socialism, but would love to have some perspective on how these countries that implement these systems fare. Moreover, I do believe that it is rather inexcusiblynaive of some people, including myself, to oppose one system over another without actually having experienced or lived in a society where they exist.
Are we talking about the same public choice? I'm talking about public choice theory, a branch of economics, which basically gives one reason to doubt the effectiveness of political/centralized solutions to problems. In these debates, it's often useful to keep in mind the difference between centralized and decentralized systems.
I'll see what I can come up with.
I'm not exactly sure what you're saying with the hundreds of years of overwhelming evidence. Are you suggesting that capitalism has obviously failed for hundreds of years? If so, I would urge you to think about something I've heard Milton Friedman say a few time: "History suggests that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition." Likewise, I've heard him say something to the effect of: "Most people, for most of history have been extremely poor. Only a small number of us, have been able to escape that grinding poverty. I challenge you to name one counterexample, where capitalism hasn't been the main economic system, where people have been able to escape this poverty."
P.S. Interestingly enough, some of the hardest proponents of capitalism where Socialists beforehand. I'm talking about people like FA Hayek, Thomas Sowell, and I believe, even Milton Friedman.
Capitalism does not give people "free will", it gives capital free will. We are all slaves of the capital. Most of us feel happy, however, simply because it's better to be a rich slave than a poor one. I must admit the "free people" foretold by Marx have never existed, yet, so it might be a good idea to be a rich slave.
Not true. The first is STATE Capitalism and the second is not, as in socialism the proletariat controls the mean of production. I must admit that some so-called socialist countries (China, for example) actually has the operating system of state capitalism.
You don't get it. I don't say that capitalism as it exists today is socialism. I am saying that capitalism as a theoretical concept has nothing to do with capitalism as it exists in the U.S. Capitalism as it is talked about by Friedman for instance is just another form utopia. This time instead of a state acting for the welfare of all, the markets play this role with all the myths supporting this: meritocracy (seriously please tell me you don't believe the U.S. is a meritocratic society!), fairness, freedom ('it's real hard to be free when you are bought and sold in the marketplace' my respect for the one able to tell me from which movie it is without looking up on google)...
It's at least the way I see it and what I have experienced in the 22 last years.
No one here is saying socialism is better than capitalism. Just trying to question the current system and its many shortcomings.
Great thread! You guys are all providing very thoughtful and intellectually stimulating perspectives.
To the OP, this post kind of comes out of nowhere. Who says Obama or any in the mainstream Democratic party wants socialism? You sound like a talking head on Fox News.
Agree with BondArb 100%, the current banking system is not a form of capitalism.
ANT: saying capitalism is human nature is exaggerating and taking on a very extremist view. Capitalism is simply the system of society which on aggregate has shown to work the best so far.
I agree that a society that wants to prosper economically should have its foundations rooted in capitalism. However, just like with anything its never black and white, and this is basically what the debate has gotten to. People arguing that 'freedom and liberty' is the ultimate goal and everything we do has to satisfy this constraint. However, the capitalism process is very reflective.
Let's say a baker needs to make a profit and there are three time periods. In a capitalistic system he is incentivized to make quality products in time 1 so that customers come back, and he is rewarded by satisfying what consumers want with profit. But what if he can make shit ass bread in the first period, that costs close to nothing to make and the expected profit in only the first time period is greater than the expected profit of making quality bread over the three time periods. You can see where the incentives break down. Now this is all right with stuff like shit tasting bread, where a customer who bought at t1 will simply go elsewhere at t2 and t3, but what if you consider products where the quality is hugely important, ie medicine. You need to have the regulation to prevent a shitty bread maker BEFORE he starts selling, whereas capitalism is very good at identifying and punishing producers AFTER. So you cannot simply say deregulation and freedom is better in a black and white sense, and people who do say that I just ignore because I know they are adamant about their views and no amount of evidence will even make them budge a little. Interestingly these people are usually also the ones who are 100% against gays and gay marriage, which is ironic since they care so much about freedom in every sense. I guess its 'freedom is great, except when I dont agree with it.'
Capitalism is definitely a contributing cause to alleviate poverty and is the best system for those born into poverty to escape poverty. But no crisis in history really has anything to do with poverty, at least none that come to mind. While you correct, I think your angle at escaping poverty dodges the argument somewhat. There is no rebuttal to what you are saying, but I was saying that for hundreds of years capitalism has failed us and most countries that implement this. "Crisis Economics" by Roubini details these shortcomings and failures in great detail dating back to the 1600's tulip crisis. several railroad crises in Europe and the US, the recessions throughout the 1800's as well as the banking crisis of 1907 and 1921, the Great Depression, and the 3 crises we have witnessed in our lifetime. Also, great literature on the effects and cyclicality of economic/political systems of oppression turned freedom-->capitalism-->communism/totalitarianism regimes is none other than George Orwell's "Animal Farm". Furthermore, capitalism does have the unfortunate consequence of Social Darwinism whereas the power does become concentrated in the hands of a select few, i.e the ruling elite class, and thus sets a country on a destructive path that will result in forever languishing in mediocrity due to lack of innovation and invention. Instead of trying to elevate humankind through alleviated poverty with free-market solutions, space exploration, alternative fuel sources and colonizing the oceans, we are too worried about regulating pay, medicare, and other futile attempts and solving our long-terms problems with short term, inadequate solutions.
You have mentioned a few things here and I will try to touch on all of them.
First, a crisis is the product of human nature regardless of capitalism. You talk about the tulip bulb crisis and other major crisis's that have happened over the last 400 years and think that they are the product of capitalism when in fact crisis have happened in every country including every economic system. Just look at Russia in the early 20th century. I am going to be very general, but it had famine and economic crisis after famine and economic crisis and in these crisis's millions of people died each time when was the last time an economic crisis in a capitalist country caused 4MM people to die. And in Russia, the crisis was always stopped after the communist government took on more capitalistic economic policies (including at one point, merit based pay, free trade of extra grain, and giving more power to factory managers).
The worst that a crisis ever did to a capitalist country is still better than the "best" a crisis every did to a socialist/communist country. A perhaps that is what makes capitalism the best economic system. crisis will always occur, but it capitalism that allows countries to rebound the fastest. You mentioned all those capitalism crisis's and guess what...........We're still here! Better and stronger than ever.
You talk about how capitalism concentrates the power into a select few. Have you looked at the US? A country made up of immigrants and the poor. The poor in the US are still 10x wealthier than the poor in other non-capitalist countries. Also, have you seen the number of millionaires that call the USA home. These millionaires aren't some landlord aristocrat, they are all self-made. In what other economic system can so many people become millionaires?
All those things that you mentioned (space exploration, alternative fuels,ect) it's the capitalist private corporations that are exploring all those ideas and it's the government that is more concerned with medicare and regulating pay. If anything, a socialist country would care even less about alternative energy and focus much more on entitlement spending.
Okay, so we agree that capitalism is the best way to alleviate poverty. Can we also agree that capitalism is about freedom and decentralized power? Capitalism is fundamentally about non-coercion and voluntary exchange (i.e. exchanges that lead to mutual benefit).
You keep mentioning crises, so I guess part of your argument is that capitalism has inherent crises and meltdowns that taint it. This is such a tricky argument because in many cases, people will tell you that government intervention (in other words, the departure from capitalism) is what truly caused these crises. For example, many people (including Milton Friedman) believe that the great depression was the result of horrible Fed policy (more specifically, they turned a recession into a depression). Likewise, I've heard Nassim Taleb stating that the most recent crisis was partially a result of governmental policies and interventions (some of which date back to bailouts in the 80s). My point is not that they're correct, but rather that it's a tricky issue, which (at least in my opinion) is not clearly a knock on capitalism. Furthermore, even if recessions are an inherent part of capitalism, I'm not exactly sure why that's a problem. Everybody kept talking about how this was the worst recession since the great depression, but that fact is, at the lowest point we had only went back to GDP per capita of 2006. Even if we did have a great depression drop, it would of only took us back to the late 90s or something like that. In other words, even if you have recessions under capitalism, todays low will often be much higher than yesterdays peak. (You keep mentioning the tulip thing, but there's a book written saying that it's mostly a myth. If you're interested, let me know and I'll dig it up.)
It's funny you mention Animal Farm because I read that less than 2 months ago. If anything, that book just solidified my belief in capitalism (even though, I am fully aware that the author is a socialist). What I took away from that book, is how dangerous political, centralized power is. At the root of capitalism is the idea of decentralized power and the absence of coercion.
I totally disagree with your Social Darwin comment. People talk all the time about how rich have more power in a capitalist system, but I just think of it more as them having more money. Bill Gates doesn't have much ability to encroach on my life, liberty, and property, as far as I can tell. On the other hand, my local mayor has the ability to coercively take away my property (through taxation), tell me which people I can trade with (through licenses, quotas, etc), and a whole host of other legislation. So, once again, I'd like to stress that capitalism is fundamentally about voluntary action and not being able to force people, which is why I totally disagree that the rich have more power.
Where is the evidence that the rich or capitalism set us on a path of mediocrity and a lack of invention/innovation? These are things that capitalism is great at producing, and if anything, the rich and the poor often come together to bring the world these great innovations. When some broke PhD dropouts start Google, they get funding from rich people (angle investors, VC investors). The students trade some of their equity for capital, the investors do the opposite, and everybody (not the least of which are consumers) benefits.
And, with respect to your last sentence, capitalism does elevate the material well being of the poor.
Banks fail all the time. The govt bailed out the financial sector because the entire thing was going to collapse. Had we not prevented all the banks from failing this country would be in the stone age right now. Furthermore, we not give these banks money, we lent it to them. It is being paid back. GM and Fannie/Freddie are the illustration of political bailing out. All the other banks are making a profit for the people.
No on at any of these banks sat around and said yay, let's bankrupt America. This was a blackswan effect. On could also argue that it was cause by government interference and therefore ultimately not capitalism run wild.
Socialism only works on very small scale situations. Nationally it fails. Moderated capitalism in a Democratic society with a bill of rights is the ideal solution. Humans have innate desires and motives. We are simply animals capabil of speaking. Just as dogs have evolutionary desires, so do we. Being rewarded for out effort, freedom to do as we please as long as it doesn't hurt someone else, competition to be the best, ect are all basic human traits.
As far as taxing inheritance, just because you don't like rich, snobby kids doesn't mean taking the money someone worked hard for is right. Besides, if I was so rich that I would be effected by this I would simple hid my money or leave this country. The day America starts robbing people who work hard to that level, that's the day I stop supporting this great nation.
Agreed, but assuming we go with the markets, earning a lot of money should imply that I was very lucky, I was very good at something valuable or I was thrifty and eventually got some wealth together. I would then argue that if you make a ton of money you should be able to keep most of it (implied low taxes) and spend it as you wish, however after I (and my wife or partner) die my wealth is not to be completely transfered to my kids for this would mean the markets will be less efficient afterwards allocating wealth. In case the tax were in place, they should also have to prove their worth, and also this condition would generate incentives for me to spend my current money on positive political intervention, investment in education and provision of public goods, as I would know they will be left with not enough money to shield them from anything, in case I cared for them.
Of course that would create incentives for people to hid its money, although there are already some in place, but I am not talking about what is feasible but what I believe would improve the efficiency of markets. Furthermore, on the same line I could say cash should be made obsolete and transactions be made only on its own certified bank accounts, but this could end up being very dangerous measure and undermine democracy. If we talk about the possible, I dont expect much to change through my lifetime, some go up, others down, same thing.
You know, while I am not going to argue that certain aspects of WS might not "add value", we really don't know what they add until they are gone. It is always easy to dismiss something as worthless while it is still around. Just saying.
If this were a socialistic society I would not work as hard or at all. I think my feelings are pretty common. That is why socialism fails. People simply will not kill themselves for those outside of their family or possibly direct community.
Soldiers don't fight and die for a flag. They do it for their friends and unit. I don't work for the GDP of America. I do it because this great nation had the foresight to allow my efforts to translate into reward for those closest to me.
Ant, always enjoy reading your posts, but I'm having a hard time with your comparison. I think soldiers, politicians, and non-profit workers are more prone to believe in a higher purpose. Of course there are always exceptions, but I think finance professionals are more pragmatic and want to see their efforts translated into tangible short term benefits.
Ant, it's important to ensure our economic system provides the right incentives to work and invest. I think the point that some of the other posters have made is that at its extreme capitalism has a tendency to weaken or eliminate these incentives (or worse yet, create perverse incentives) and you end up slow economic growth and little innovation. As a result, it's important to take a balanced view. Not everything is black and white.
I am originally from a country that used to be about as capitalistic as it gets and all of the rents/wealth went to a select few. This had the effect of reducing productivity, wasting talent, and creating an economy run purely based on nepotism. I don't think this is the "capitalism" that Friedman envisioned. We do need some regulation.
A lot of people are - as usual - mixing socialism with communism (the latter being an extreme form of the former). You can have a philosophical debate about having a larger or smaller government (socialism typically is in favour of a larger government), but equating socialism to communism is simply wrong. Thought it was important to point that out.
A lot of people are - as usual - mixing socialism with communism (the latter being an extreme form of the former). You can have a philosophical debate about having a larger or smaller government (socialism typically is in favour of a larger government), but equating socialism to communism is simply wrong. Thought it was important to point that out.
I think his point was that if left totally unchecked capitalism ends up mutating into something that is less than ideal. For example, if capitalism leads to extreme income inequality (which, in theory at least, it shouldn't get in the way of) to the point that only a few people control 30, 40 percent of a country's economic resources you then probably naturally will see rent-seeking among the few elites. This, in the end, is a distortion of capitalism that may flow out of capitalism in the first place.
A couple short responses:
1) I'm not convinced that capitalism necessarily leads to more inequality. Maybe some centuries it will and others it won't. More importantly, people often get confused about what these figures tell us, since people often forget about the mobility aspect. In other words, increasing income inequality doesn't tell you that "the rich get richer and the poor get poorer." Check this out for more:
2) Rent-seeking by "the few elite" is only possible with political power (at least, that's how it seems to me). Again, Bill Gates doesn't seem to have too much power over my life, unless he can subject me to various laws. If anything, Gates has provided me with an enormous benefit through his products. Put differently, the mechanism "the elite" use to have power over me, is the political system and not the free-enterprise system.
I am not saying it necessarily leads to extreme income inequality. I am saying that an extreme form of capitalism (totally raw) could lead to it. There would really be nothing to stop it. Also, you're right that we need to look at social mobility to get a sense of how damaging income inequality really is. In the U.S., social mobility is lower than it is in the rest of the developed world. I don't think that's good.
Just because Bill Gates doesn't engage in rent-seeking behavior doesn't mean others don't or won't. Do you honestly believe that those with immense economic power won't ever try to influence politics or government? They will do so if somehow they can obtain competitive advantages by doing so. The economic elites try to influence government/politics in such a way that it benefits them. There is nothing wrong with that. We just have to realize that people will act in their own best interests, and in the case of folks with a lot of economic power they can likely wield substantial influence over politics and government if the conditions allow them to. Let's not be naive here.
The problem in the US today is that no one knows what socialism really is. The political spectrum goes liberal/moderate>>>>>>>>>> fringe right wing. There is almost nothing in between. The stuff the right spews out is so far to the right that it would not be treated as mainstream dialog in any other country in the world. But no one gets that.
The language used in the public discourse is so extreme that neither side (though it is mainly the conservatives) can make a cogent argument without calling out the other side as fascist, socialist, communist, etc etc.
Go onto politifact or factcheck to see how much politicians lie and distort what they say. Both parties are at fault, but the amount republicans lie about their devotion to fiscal responsibility is almost laughable. Only in America is letting tax cuts we can't afford expire and raising the top income tax bracket by 2% considered communism.
Agreed. And if you disagree with a conservative then they accuse you of advocating social engineering. Utterly laughable.
Oh, and I'm actually not a conservative...
I think only those are are approach logical debates with candor and an open mind can change their views. It's all about the "view" of the participants in a competitive debate. It is the goal of the participants to reinforce their conclusions with sound assumptions and facts, rather than axiomatic conclusions and emotionally-charged rhetoric.
A great book on is "Informal Logic: A handbook for critical argumentation" by David? Whalton. This book will equip you with the necessary skills to engage in constructive debates which are devoid of fallacies.
Nothing in its most pure or extreme sense is right, capitalism being no exception. That being said, this country needs no more nanny state, socialism-esq policies. I could careless how casually we use the word socialism in this country. What Obama wants to see happen is "socialism". Maybe not in the pure definition or maybe not what Europe would call socialism, but according to US standards.
I am also so sick of hearing the "taxing the top 2% is not socialism" argument. Just because you can milk a minority to death does not make it correct or right. The top earns pay the majority of taxes. Maybe we should make the government more efficient or reduce spending. Continually shaking down people who make a certain amount of money is mob behavior.
If I was super rich and saw the vitriol this country has towards those who are successful, I would simply move to a more friendly climate. Very rich people are also very mobile. We continue to create a hostile environment for those who succeed and they will simply go elsewhere. Honestly, can't say I blame them.
You seriously live on another planet. You are honestly one of the most insane right wing nutjobs I have ever come across, and that is a big statement.
The USA is known internationally for celebrating sucess, and there is no where else in the world that loves a self made man more than the USA. You want vitriol against the rich, go to the UK. Have you ever lived abroad in another major financial center?
By your definition every country in the world is socialist. Your libertarian utopia does not exist and has never existed. Are there any modern day examples of a political system that would satisfy you? Nothing short of abolishing income tax seems to make you happy.
What you can't seem to get through your head is we don't care how Europe taxes their people and we don't care to live abroad! He never said abolish income taxes, in fact, he has said numerous times that taxes are needed. Leyman's terms: cut spending and you in turn can cut taxes. Fact of the matter is too much government spending is wasteful and too many people rely on receiving something for nothing while the top percentage of tax payers pay for it.
Besides, I thought I was the most right wing nut job?
I've said it once and I will say it forever, socialism can only work under the threat of violence. Redistribution (theft) only happens when you have the state enforcing totalitarian rule. China, USSR, Africa, South America, Cuba, all socialist states have totalitarian governments who will not think twice about taking your freedom the second you question their altruistic theft.
Nah, that's not totally true, plenty of capitalistic (mercantile to use a proper term) regimes were totalitarian and brutal. It really has not much to do with it. totalitarian politicians can easily make you drink whatever they believe is the right path to prosperity.
Germany in 1930s was more tilted toward capitalism, the same with Japan. Even Egypt right now is much more a capitalistic nation compared to what their people would love to. It really has nothing to do with it.
State Capitalism is far different than the capitalism we enjoy in the U.S.
Totally agree. That's why I've been saying all along that you gotta watch out for politics. One must separate economic and political freedom. Capitalism embodies one type of freedom -- the freedom to truck, barter, and exchange without some third party setting up all kinds of restrictions.
I want to add to your opinion.
Some situations [ or countries/continents] you cited do not have the same situations. Africa situation can be traced through WW1 and the division of the entire continent into colonies of Belgium, France, UK, Italy and Netherlands. USSR- became a socialist nation a little bit after 1920 with their Red revolution. Actually the monarchy which was pro business was abusing the population South America- the same with USSR in general, each nation had their reasons essentially which mirrored a lot with Africa around 1960s after their independence. Cuba- 1958, the population was abused by Batista [I m not too sure] and Castro took power and made them believe in socialism
As you can see, things are not quite linear and simple.
I think capitalism is the best path for any societies, however, because capitalism require that some people fail- even for a short period of time- societies as a whole will never accept it.
Populations will not accept unemployment, even if the employment market may need some correction; like the stock market. Populations will not accept inflation, even though it might be the best course Populations will not like not having safety nets; thus Social security etc. Populations will demand that some services be free or heavily discounted, water, health-care.
You just cannot have a 100% capitalistic society, no politician would ever be elected following such model. If unemployment falls under 15%, you would have unrest, it is that simple. People would want unemployment to stay at 1%- like in Cuba.
It is all about finding the right balance, and to be honest, Western nations have done a great job, we sometime want to simplify things that are very complicated.
Not to mention that South America and Africa are not states but continents. Also, someone is confusing communism with socialism. The USSR was communist and China, and Cuba still are. Many of the European countries are socialist, but not communist and certainly do not have dictators or live under authoritarian rule.
And I agree with johnnie, you can have totalitarian and brutal dictatorships in capitalist countries. All the right wing dictators in South America were capitalists. And there are also plenty of left wing/socialist dictators there, too.
That's why I objected to you calling me a conservative earlier. There is a difference between conservatives and libertarians. Sure, some right-wingers in the US are fans of capitalism. But, plenty of them want to impose restrictions (I saw a stat recently that something like 1/3 or 1/2 of republicans now oppose free trade). And even the ones who are hardcore laissez-faire, want to impose all sorts of restrictions in other domains. In my opinion, neither party is truly for individual freedom. In fact, I'll state it more strongly, each party is only in favor of individual freedom when it happens to coincide with their views.
I mention Africa and South America because more than one nation in those countries/geographic areas are socialist/communist. I frankly see no difference between socialism and communism. They are both equally as bad.
Socialism and Communism cannot function in a free society because they go against peoples innate desires. Just like people can be forced to walk backwards, the second the threat of violence is gone, they will turn around and be normal again.
One more thing....
I totally agree that we should separate communism and socialism for this debate. Socialism, in it's original form, is about central planning and government ownership of property. Interestingly enough, economists Ludwig Von Mises and FA Hayek have made a very compelling case for why socialism (in it's original form) could never work. If you're interested, check out the following link/paper, which lays out many of the arguments quite nicely (and may also give you a better sense of why capitalism is so successful): http://www.princetonphilosophy.com/background/Hayek.pdf
P.S. Here's another nice description of what capitalism is all about: http://www.fee.org/pdf/books/I,%20Pencil.pdf
I wonder how much the Huffington sale to AOL contributed to the bonuses of the bankers at their sellside advisor.
[double post]
Awm always clutch with te witty and insightful posts. Didnt realize going to school in the UK and getting yourfirst job made you an expert on taxation and liberty. Also a gun expert lol.
Learn what a semi automatic is and then come back to the discussion junior.
Yea, they are definitely witty and insightful. Although he may not be an expert, he uses facts to back up his arguments. Keep 'em comin awm55! Not everyone on this forum is a "nutjob"
Facts from the Liberal Times, excuse me, NY Times. Freaking hysterical. You obviously did not read the article awm posted. It says taxes will have to rise on the "affluent", UNLESS cuts in social and other spending are created. I am advocating those cuts.
Let me see if I can steer this conversation back on track a little. You guys are talking about income taxes, so I'd like to ask, what right do people have to keep what they earn? Seems like some of you guys want the top earners to pay an extra 2, 5, 10, whatever percentage. I'd just like to ask what role freedom and property rights play in this discussion? Why should "the rich" have to pay whatever the majority thinks? Isn't this what John Stuart Mill warned against in his book "On Liberty?" And what right do they have to keep what they earn?
econ, those are difficult questions to answer and rather rhetorical at this point since we have a functioning political system that makes these decisions. The polity ultimately makes that decision through elections for Congress every two years and for President every four. As someone mentioned earlier, it is a question of values. My values say we should cut some spending and also raise marginal income taxes on income over some amount. I do not know exactly where to draw the line for both cutting spending and raising marginal income tax rates simply because I do not know what it will take to eliminate our deficit. Obviously, there are many kids on here that disagree with me, and that is their right. These debates will rage on for generations and each side will try to convince enough of the population to put in place their agenda. I have voted my values (though definitely not my checkbook) since I became eligible to vote.
Let's raise the taxes and give more money to the government because they have finally learned their lesson, Illinois just raised their income tax to 5% with zero spending cuts and an increase in workers. Giving these fools more money is akin to lighting it on fire. I've gone through the I'll budget line by line so dont pull any right wing bullshit.
I love how being for people keeping money they have earned and being for more liberty and reaponsibility makes you a right wing nut. Showa how perverted this country has become.
prinmemo: So people should be forced to pay whatever the political system says they should pay? Part of the reason this is such a heated debate, is because property rights are such a huge component of capitalism, and income is a form of property...
And one more thing, let's not forget the losses in productivity that are produced by increases in taxes of any kind...
In a word: Yes. If the political system deems it so (and it is constitutional) then all citizens must abide by those rules or face the consequences. If you create a "voluntary" system whereby citizens can choose to abide by laws or rules passed by its representative government then you will have utter chaos and very little certainty. Have you not heard of the Leviathan, my dear child? lol
I'm not talking about voluntarily abiding by laws. What I'm talking about, is individual rights. Have you ever heard of tyranny of the majority, my dear child? Just because something is the result of our political system, doesn't make it right. Should the political system be able to take peoples houses and cars, as well? Or do you see a big difference between confiscating money and confiscating goods? What about confiscating/redistributing labor? Should that be allowed? Should those who work at McDonald's for 40 hours a week be forced to mow investment banker's lawns and do their laundry?
Lastly, let's not forget how much people (especially "the rich") voluntarily give to private charities, which arguably are more effective than public sector solutions. I think I saw a stat that the US donates more to charity than all of the European nations combined. So while I agree with you that citizens shouldn't be allowed to choose whether or not they want to abide by laws, I think they should have much more control over how there money is spent, for charity or otherwise. Also, sadly, taxation drives out voluntary charity.
Isn't awm the one who claimed people in the U.S. could just go to a store and buy an automatic weapon or a machine gun?
Lol yes
Thats why I love Texas. We love our guns, women, camo, energy, BBQ, jacked-up trucks, no state taxes, low-cost of living. You guys come to Texas and we will settle this. We shall get a nice roundtable discussion going of like-minded thinkers: the austrian school matching wits with the keysians, chicagoans, right-wing nut-jobs, nazis, egyptians, libertarians..it doesn't matter as long as you can back up an argument with solid rhetoric, or take a good gentleman's beating from a profound opposition
The result of said rountable:
The beginnings of a second american revolution OR a night of drunken debate-ridden debauchery and plenty of black eyes and broken noses to go 'round
You guys are so manly in Texas. The manliest men in the world. God damn manly.
I just came back from Texas and love the state. While the nanny state north withers and dies, the south continues to grow. Keep taxing and driving people out of these northern states.
^^^I sense a little sarcasm. If you wanna throw down fisticuffs fine. I got Jack Johnson and Tom O'Leary waiting for ya
You win. You are a manly man. And so is every man in Texas.
Prinmemo-A tip of the hat to you, sir. Obviously you cannot see past the irony of my previous few posts.
@Econ. Funny you should bring up charity in a soclialistic debate. For charity is a wonderful example of socialism on a remarkably inadequate scale. Charity, whether it be administered by the government or privatized, is socialism, and as long as the wealthy continue their insufficiently ambitious plan to help out those less-fortunate by giving to them, instead of arriving at free-market solutions to solve these problems, it will always be a cycle of poverty and inadequate attempts at altruism.
I couldn't disagree more...
I think people often misunderstand capitalism, and that's why they see charity as socialist. Socialism is about a lack of property rights and a lack of freedom, which is not what charity is about, at all. People shouldn't think of capitalism so narrowly, it includes voluntary charity. I seriously urge all of you to check out this podcast, as I think it'll give you a completely new perspective on this topic (it's about the economics of Hurricane Katrina): http://www.econtalk.org/archives/2006/12/boettke_on_katr.html
Military spending and social programs make up the bulk of the budget. Cutting the military is perfectly fine. It will reduce as we wind down the wars. With that said, you also need to increase the retirement age, reduce some benefits, possibly eliminate benefits for people with certain asset levels.
We need to cut the waste in medicare/caid. We need to eliminate the tax deductibility or mortgage interest, we need to eliminate the child tax credit. We need to eliminate any benefit afforded towards marriage.
All of these cuts will reduce the deficit. We also need to eliminate pensions for government workers and scale back the size of government, starting with consolidation and reduction in work force. This has to extend to the states and local municipalities also.
Increasing taxes is not the solution. At least not right now. The government wastes so much god damn money I simply cannot support giving it anymore, not until things have been fixed.
I agree that we need to invest in infrastructure and education. Fine, these are good things that the government can focus on. These things need to be funded by cutting waste and bullshit the government has no business in.
Why is it that everyone and everything cuts back when times are tough, but asking the government to cut back is the gravest insult. Anyone who says that the government should cut back and get leaner and meaner is a right wing nut, instead of a rational, common sense bloke.
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