Thread: An explanation for the failure of capitalism

Originally Posted by Kantian Pragmatist

It would counter the effects of inequality that builds up in such a system of free exchange as I have described. It wouldn't return things to their initial, absolutely equal state, but it would prevent individuals from being priced out of participation in the economy. I would think it would also be important to index the tax credit to inflation, once the credit has been established. And there are a lot of other reasons to favor this. It would let single mothers stay home with their kids, and lessen the pressure on parents to constantly work, so they could check homework, and encourage their socialization. It promotes personal freedom in that it would give the individual the option of "opting-out" of being someone else's laborer in a job they dislike. It gives them some capital they can use to form their own small business. It wouldn't require us to promote some religion or any religion at all in order to alleviate these inequality effects, preserving the freedom to believe. This is actually an idea I've been thinking about for some time, and I haven't found a downside to it yet, other than a possibility for a short-term spike in inflation. But as I said, inflation isn't necessarily a problem, unless it leaves some group of people out.

all well and good... but where does the money come from? to my way of thinking, the only way for the government to be able to afford to NOT take so much of our money is to spend less... a LOT less, if your numbers are to be realized. such a radical budgetary shrinkage would seem to necessitate a much smaller government than is currently in place.

also, by "tax credit" do you mean "rebate," or "reduction of taxable income?" from your wording it is not clear, they are two very different things.

In spite of the explanation for the failure of capitalism, capitalism still hasn't failed.

a couple quick points or thoughts i have reading those responses.

1 - your belief that inflation is fine and equal i'd can agree with if it occurs equally across all individuals in the economy. however this will never happen in real life. 2 quick reasons that come to mind are - 1; the economy is now global and while we can alter the progression of inflation in our economy we are not effecting overseas economies equally thus someone doing business and repatriating funds will see a different inflation (fx rate, gdp/cpi differences in those countries) and bringing that money back home will help/hurt them more then everyone else. and 2) is that if we had instantly over night 50% inflation in goods at no time would that be instantly recoup'd via salaries/pay. thus the poor would be instantly more poor due to less coming in and unable to buy goods they once good while the rich would be able to continue purchase those goods (at least for a while but by then we'd have revolt and anarchy, we are animals at our core)

2 - what about something simplistic as the stock market for your game? it levels the needs of people to simply making money. you will still see that as individuals we have different risk tolerances, some more risky some risk adverse and that is at the core of the capital distribution and thus capitalism. i ran a hedge fund in nyc for 6yrs and it was a great learning experience. simplistic to the core in the objective, to make money. it was amazing to see how few people had the risk tolerance to make it in the industry. its a small industry of people who want to take risk but even within those few, only about 10% of those really have the risk tolerance needed to persevere.

3 - lets take that last sentence on risk and say that we further the cause of this capitalism due to our risk differences. i am 100% pro someone starting a business or having an idea that grows huge and they making 25mil a year while a worker at his shop makes 50k. at some point the inventor/entrepreneur had to dig down, stop what he was doing, leave the saftey net, put up his hard earned money or go well in debt borrowing to take a chance to make something/ start something great. many many fail and people lose all but other ones work out and thus they deserve to make the $$ from it. many people will never take this risk as they are happy to glide thru life on cruise control, making their salary, spending X, saving X and budget it all out. few are the ones who say "screw that" and put their savings into starting something on a chance. the worker makes less, the producer/owner makes more but that producer is enabling the lifestyle of the worker who never had the idea or was too risk adverse to act upon it. in my eyes they deserve to make more.

~J

Originally Posted by Kantian Pragmatist

Surely, you're not insinuating that I'm evil incarnate.

No! Meaning that your agenda is becoming clearer and clearer with every post you make.

Originally Posted by jockeys

all well and good... but where does the money come from? to my way of thinking, the only way for the government to be able to afford to NOT take so much of our money is to spend less... a LOT less, if your numbers are to be realized. such a radical budgetary shrinkage would seem to necessitate a much smaller government than is currently in place.

also, by "tax credit" do you mean "rebate," or "reduction of taxable income?" from your wording it is not clear, they are two very different things.

I mean rebate. Think of it like being paid to file your taxes, no matter how much money you've made, you get paid the same amount.

As for paying for it, I rather like Milton Friedman's suggestion of a 50% flat tax on all income regardless of its source. We could also pay for it by reducing our national defense spending, since we pay more for our national defense than nearly the entire rest of the world combined.

Tim, I believe my suggested fix here is among the least interventionist things a government could do to effect the economy. Police forces, fire departments, road services, and typical forms of welfare are far more interventionist. Please don't mischaracterize me here. The only intervention here is so that a system of free exchange can sustainably continue without limiting anyone's personal liberty. I know full and well what the definition of freedom is and what it entails. Consequences of actions is not a part of the theory of freedom, it is part of the theory of existence. Self-control of action is part of the theory of freedom. I believe relying on religion or culture to "self-correct" this problem with free exchange is incredibly naive and ultimately wrong, given the history of organized religion in the world.

lets take that last sentence on risk and say that we further the cause of this capitalism due to our risk differences. i am 100% pro someone starting a business or having an idea that grows huge and they making 25mil a year while a worker at his shop makes 50k. at some point the inventor/entrepreneur had to dig down, stop what he was doing, leave the saftey net, put up his hard earned money or go well in debt borrowing to take a chance to make something/ start something great. many many fail and people lose all but other ones work out and thus they deserve to make the $$ from it. many people will never take this risk as they are happy to glide thru life on cruise control, making their salary, spending X, saving X and budget it all out. few are the ones who say "screw that" and put their savings into starting something on a chance. the worker makes less, the producer/owner makes more but that producer is enabling the lifestyle of the worker who never had the idea or was too risk adverse to act upon it. in my eyes they deserve to make more.

I'm all for this as well, which is why I'm not advocating that we take all of everyone's wealth periodically and redistribute it, merely a portion. And I insist that we take from everyone equally (proportionately to their wealth) and distribute to everyone absolutely equally. Those who have risked and succeeded do indeed deserve to reap the rewards of that success. But I also think that it's in our collective interests to support those who've risked and failed, and give them another chance to risk and succeed.

Originally Posted by JMS

No! Meaning that your agenda is becoming clearer and clearer with every post you make.

Then pray tell, enlighten me. Since I believe that my only agenda here is to present this idea and discuss it with others.

Originally Posted by Kantian Pragmatist

Tim, I believe my suggested fix here is among the least interventionist things a government could do to effect the economy. Police forces, fire departments, road services, and typical forms of welfare are far more interventionist. Please don't mischaracterize me here. The only intervention here is so that a system of free exchange can sustainably continue without limiting anyone's personal liberty. I know full and well what the definition of freedom is and what it entails. Consequences of actions is not a part of the theory of freedom, it is part of the theory of existence.

How can any intervention not effect personal liberty? That is the essence of eliminating freedom.

Police forces and fire protection are not by nature interventionist, they like road services are the services we pay the government for. All of your ideas require direct intervention in every citizens life, thereby proving you are not a fan of liberty.

Consequences of action must be allowed for freedom to exist. the ability to fail is the only motivator to succeed. Without the desire for success why be free.

Originally Posted by Kantian Pragmatist

Self-control of action is part of the theory of freedom. I believe relying on religion or culture to "self-correct" this problem with free exchange is incredibly naive and ultimately wrong, given the history of organized religion in the world.

What problem were we talking about again?

Oh yea the lack of a safety net to catch the stupid or unlucky. See the only reason to have a safety net is to allow the lowest common denominator to propagate. Doing this weakens our system creating the very instability you fear so much.

I still fail to understand why you think a system based upon free exchange will fail. It is the most basic system possible. You have what I want, I can't take it so I must earn it. How can that fail?

Let's see capitalism bad, pure socialism bad, communism bad, dictator bad, gathering berries to stay alive bad, anarchy bad! Did I miss any? Which of the forgoing is the one that most want to live under? All these systems are made by man and, as we all know, they are not perfect.


My 2 cents

Richard

Originally Posted by riooso

Let's see capitalism bad, pure socialism bad, communism bad, dictator bad, gathering berries to stay alive bad, anarchy bad! Did I miss any? Which of the forgoing is the one that most want to live under? All these systems are made by man and, as we all know, they are not perfect.


My 2 cents

Richard

Nice post! Well put!