cmaukonen's picture

    Capitalism FAIL

    By cmaukonen on Tue, 06/07/2011 - 8:45pm |

    Greece is once again rioting over the austerity cuts and the unemployment situation here is worse than the depression of the 1930s. 

    Capitalism as a way to trade goods and services - which it is in it's most basic form - works pretty well in certain situations. Just look in any school cafeteria. You will see goods and services traded like crazy. And it anyone tries to cheat the system, they are generally dealt with  - usually on the play ground. 

    And in most societies and countries for a long time this was pretty much the case. Where it did break down, it was caused either by some unforeseen natural occurrence - crop failures and the like - or because a few people got greedy and these were eventually dealt with. Sometimes quite brutally.

    In this country it worked pretty well up until the industrial age really got going.  Capitalism works best when the need for a product and/or service pretty much is pretty much equal to the availability of the product and/or service.  Such as is the case in mostly agrarian societies. Where even hard goods are made by hand with the producer making only what he/she can sell or trade. 

    The industrial age changed this equation significantly to where it was possible to produce much more than there was need.  This was the one primary causes of the depression of the 1930s.   This is where capitalism - in it's more pure form - is incompatible with industrialization.  Too much austerity or too much greed and the whole thing comes unraveled.   And contrary to what those with PHDs in business and economics like to believe, peoples behavior, beliefs, attitudes and politics skew the outcome one way or another making any downturn even worse that it would have been.

    It's a common belief that FDR's policies, especially the new deal, brought us out of the depression of the 1930s. This is only partly true. WWII - which I would call The New Deal On Steroids - had more to do with it. Putting everyone to work and putting industry into high gear. Either fighting The Bad Guys™ or making that which was necessary to do so. I would also call the Cold War that followed, Harry Truman's New Deal  as it did nearly the same thing. Combine that with the space race and the need for housing and new technology etc.

    Is it possible to return to these days of prosperity under the current capitalistic system ? Personally I would say no.

    For one thing we now compete with the rest of the world for .......everything. And the rest of the world does not follow the same rules we do. Nor does it view the world, life and it's interrelationships the same as we do. And it won't no matter how many bombs we drop on it.  Nor can we force people in this country to accept a way of life that the rest of the world has. Despite what our politicians think. Any attempt to do so would result in riots, rest assured. 

    I have read various suggestions from people on either side of the political spectrum and so far none of them are practical or even feasible, IMHO.  Trade tariffs only result in trade wars and eventually shooting wars.

    Forcing people to accept a lower standard of living here, would only result in even more economic contraction and eventually even more discontent and hostility and even revolt.  Forcing the the manufacture of products for this country back onshore would make them even more expensive unless strict controls on prices and even wages were instituted.   You would still have the problem of managing supply and demand such that neither would be greater than the other.

    You can blame the bankers and financiers and what not all you like. But in short capitalism as we have it, simply does not work in the world as we have it today.  Our current economic situation and the likely break up and failure of the Eurozone should be proof enough of that. Something else has to be used to take it's place. 

    Comments

    Capitalism has failed us miserably within a generation; The Great Depression and the Great Recession

    We know we'll never be able to eliminate Capitalism, but we should be able to exact a price for it?

    10 % Social Tithing.... No less, A 10% premium on ALL income, of whatever variety, NO CAPS

    Everyone pays, no exceptions, to fund the ability, to successfully provide for the social good of all Americans. To support the people in the event we have a third failure in a generation.

    We the people are tired of propping up a failed system. Maybe it's time to try Democratic Socialism if they can't get their house in order.  

    First; we should try to exact our price out of their system. A 10% Social Tithe is not that onerous. (You greedy bankers)  2 Times in a generation is enough of this BS.

    Separate the Social Security from the General Fund,

    The Republicans screwed the working class when they called Social Security a liability a few years back.

    It wouldn’t have been a liability, if Congress would have kept their hands off of it; stealing the money to finance other government programs (like tax cuts)  and then giving us worthless IOUS

    Then playing the debt ceiling threat, to deprive the people of their hard earned investment into Social Security.

    We don’t need the peoples Social Security money  to offset wars and Political party lobbyists pet projects.

    That is not the Social Contract's mission.

    Leave our Social Security alone.....' and because you (government) failed to protect our Social Security Program; now the price to fix the mess you created in the Peoples Social Security Program, is now the 10% Social tithe,  to replace and shore up, that which you stole. 

    PS. Aren't the banks required to set aside more reserves? The people want the same thing for the peoples SOCIAL SECURITY.  More reserves set aside to keep the contract from being breached.


    by Resistance on Wed, 06/08/2011 - 1:38am

    An interesting point about WWII is that once the dust settled, the US was the only major industrial economy untouched by the wars in both Europe and the Pacific. That gave the US a definite edge over the markets worldwide.

    Sixty-six years later, those worn-torn industrial economies have re-built their infrastructures and are beating the US at their own game. From my point of view, capitalism in the US squandered their position for financial gains rather than sharpening their focus on keeping their market leadership advantage.

    For instance, moving production facilities overseas to take advantage of lower wages and taxes, tells me capitalism is more like a virus waiting for a host. The end result is once the host resources has been exhausted or it fights back to control the virus, it's time to look for another weaker host.

    Here's an interesting article concerning the US and Germany and how each has handled the financial turndown. Germany has been more proactive at tending the needs of both state and public whereas the US has been exclusively proactive at tending the needs of Wall Street...in my opinion.

    http://www.nytimes.com/2011/06/08/business/economy/08leonhardt.html

    The German government is more concerned with people working to keep the economic engine running than the US. They assist both workers and employers and use their social welfare system as a backup when circumstances warrant. How many people in the US would still be working if their unemployment compensation was part of their salary? The government could use tax incentives to employers in order to keep employees on the payroll and negotiate partial payment of wages until the economy picks up again. Sounds all too simple, but GOPer's won't have anything to do with it because that would be interfering with free enterprise.

    I think the true problem with capitalism is the free reins given to them by all governments. As one can easily see, capitalism flourishes bests when there's no government control. However,  it's brutal on resources and people if left unchecked. 

    Capitalism requires government regulation as to what is being produced, what the markets demand and how much should be produced to meet the demand, not exceed it. However, as with any cartel, there are members willing to allow exceptions in order to capture a larger manufacturing market share. And it's those exceptions capitalism looks for to exploit. Perhaps trade agreements should include enforceable rules detailing controls over each country's economy, such as taxes, wages, market share, resources and so forth, before trade between nations can occur.

     


    by Beetlejuice on Wed, 06/08/2011 - 7:06am

    I don't think it's the system that doesn't work, it's the fact that we've allowed big business / special interests to jerry-rig the system so it is no longer in balance.  Without regulations and without tax revenue, the system will run, but it won't work for the benefit of all.  Today, Capitalism is a mis-shapen, grotesque facisimile of its ideal self, with most of the rewards going to the rich and the corporations that have rigged the system for their benefit.

     


    by MrSmith1 on Wed, 06/08/2011 - 9:54am

    Back To Paying More Taxes Abroad Than To Uncle Sam; Someone Say Jobs, Repatriation, Fair Trade 


    by EmmaZahn on Wed, 06/08/2011 - 11:17am

    I read a quippy little post over at Businessinsider.com about Ben Bernanke's claim that the Fed isn't responsible for the rise in commodities prices.  Given how much of the Fed's largesse is actually hoarded by banks and kept out of the economy, I'm persuaded to mostly believe the Fed chairman.  The author of the piece concluded, based on Bernanke's arguments, that if you think food and fuel prices are too high, you mostly have the emerging markets to blame.  Which is probably also write (and not very novel) but my immediate reaction is, "so... then what?"

    As a developed economy, the U.S. is not going to grow its GDP at anywhere near the rate of growth we see in the developing world.  But, would you rather grow slowly from a state of relative comfort or grow quickly from subsistence living?  Slow growth from the US base is not necessarily a bad thing and, for the most part, people in Japan and developed Europe have not suffered unduly under such scenarios.

    I suspect that the answer to higher growth in the U.S., or at least to strategically vibrant growth, lies in the demographics.  We should be begging people to move here.  I very much believe that the anti-immigration crowd is a clear and present danger to the U.S. economy.  I might go so far as to open the borders completely and to offer citizenship to anyone working here who wants it, both because I think it's the morally right thing to do and because I think it will pay off hugely for us in 50 years.


    by Michael Maiello on Wed, 06/08/2011 - 9:56am

    Could solve the demographic time bomb.


    by Peter Schwartz on Wed, 06/08/2011 - 10:43am

    I already posted a news article The Bullish Case for the US Economy, wherein one Robert Doll also thinks that a larger US population is a good thing:

    "Over the next 20 years, the U.S. work force is going to grow by 11%, Europe's going to fall by five, and Japan's going to fall by 17. This alone tells me the U.S. has a huge advantage over Europe and a bigger one over Japan for growth," he says. "And the reason for this is pretty simple. We have higher immigration than both of these, and we make more babies. We have a higher fertility rate. And they are the long-term determinants of population growth and therefore work force growth."

    But at the same time, he expects structural unemployment to remain fairly high and bemoans health care, tax increases and financial reform. I suspect that he's looking forward to a cheap labor pyramid where he and his heirs are on top.


    by Donal on Wed, 06/08/2011 - 10:53am

    Yes, assuming all those immigrants can get jobs. Otherwise, it becomes its own kind of bomb--masses of unemployed young people.


    by Peter Schwartz on Wed, 06/08/2011 - 2:41pm

    I think it will pay off hugely for us in 50 years.

    We should take a risk for some pie in the sky future? "Hey you downtrodden American workers it will get better in 50 years"

    What have you been smoking, because something has affected your thinking?

    I'd could go along with your plan, if you first strengthen the Social safety net and those of us already grandfathered in;  would retire early and then we could allow the corporations to have all kinds of growth by allowing them more worker (wage slaves)

    Why should we allow only the corporations the ability to have a good life by using wage slaves .

    I am not so sure your morality is any better than Weiners?

    Corporations: "Come all you on the other side of the border, come and satisfy your materialistic desires" "Help us defeat the American workers outlandish demands for an improved standard of living, clean air and water is too heavy a price so eliminate them and watch us grow.

    Corporations:  Who cares that while you immigrants will defintiely see the benefits, your American counterpart will just have to accept less. In 50 years you'll go through the same hell.

    "But hey 50 years is a long time,so dont worry, you'll soon discover Destor didnt know what he was talking about; besides he's been gone for years."

    50 years from now some new Open borders crowd advocate, will try to convince Americans

    Open the Borders, so Coporations can grow.  

    The working class trampled, becoming the fertilizerfor this new growth.

    Hey Destor, they say I have this growth on my arm, caused by the sun. Growth is good right?


    by Resistance on Wed, 06/08/2011 - 10:54am

    The social safety net problems are demographic, right?  Not enough workers supporting too many retirees... so bring in more workers.  More workers leads to more demand which leads to more demand for workers and the tax base is sufficiently broadened so that Social Security and Medicare are paid for by all of these new taxpayers.  If you combined open borders with good, progressive taxation aimed at making sure the middle class gets a rising share of income, you're golden.


    by Michael Maiello on Wed, 06/08/2011 - 10:58am

    Too much kool-aid, destor.  

    Safety nets do not help people who are under them, e.g. the unemployed.  Besides they are by definition full of holes.  

    Adding more people to the mix with open borders does not seem like a workable solution. AND, Social Security is not broke.   It does not need fixing.

    Say it over and over and over and over.  Just like the opposition repeats their points.  

    SOCIAL SECURITY IS NOT BROKE.

     


    by EmmaZahn on Wed, 06/08/2011 - 11:16am

    I agree with you, Emma.  Though I do think the more the merrier.  I support open borders for a lot of econonomic and cultural reasons.  The U.S. frankly needs a huge social shake-up.


    by Michael Maiello on Wed, 06/08/2011 - 11:20am

    It's not  the  workers' headcount  that supports social security, it's the economy. If we grow the economy by 5%/year it will support social security whether that's done by increasing the work force or increasing the output per capita. .

    Some economists are consisent on this point. But manyproject healthy growth rates for the economy and simultaneously moan that ss won't be affordable because of the declining  ratio of workers vs retirees.Tilt.. 


    by Flavius on Wed, 06/08/2011 - 10:42pm

    Not very good at forming sentences this morning but your comment reminded me of something I just read yesterday.  

    Reuters op-ed editor James Ledbetter poses the question, "Must we always try to grow the economy?" 

    and this as well

    Bill Clinton: universal health coverage saves money 

     


    by EmmaZahn on Wed, 06/08/2011 - 11:01am

    Thanks for posting this article. This is a question I've wondered about many a time.

    One reason is... our population is growing, so we need more jobs for more people. The other point may be that an organization has to grow or it will start to die away. He not busy born is busy dying kind of thing.

    And then there's the thought that the economy is always moving, never standing still: new inventions, new products, new ways of doing things, new tastes mean that existing companies need to keep adapting--growing, if you will--to stave off obsolescence and death.


    by Peter Schwartz on Wed, 06/08/2011 - 2:47pm

    Trade tariffs only result in trade wars and eventually shooting wars.

    FWIW Keynes argued the opposite..According to Skidelsky

    That free trade combined with the intrnational mobility of capital was more likely to provoke war than keep peace

    In the first decade of the 20th century the conventional wisdom was that there could never be another war because of the growing interntional trade links.He'd seen that disproven. And then seen the Great Depression.By 1933 in an address in Dublin he said

    But let goods be homespun whenever.....possible and above all let finance be primarily local.

    If the US imposed stiff tariffs it would solve our unemployment problem. If we returned to Ike's tax laws we'd solve our growing inequality problem and probably our deficit one It's not that Capitalism can't work, it's the way we have implemented it that can't work.


    by Flavius on Wed, 06/08/2011 - 11:09am

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