Forum Post: Capitalism Defined:
Posted 12 years ago on Oct. 28, 2011, 5:53 p.m. EST by MarkDuwe
(127)
This content is user submitted and not an official statement
Capitalism is a system based on the exploitation of the proletariat by the bourgeoisie. This exploitation takes place as follows: the workers, who own no means of production of their own, must use the means of production that are property of others in order to produce, and, consequently, earn their living. Instead of hiring those means of production, they themselves get hired by capitalists and work for them, producing goods or services. These goods or services become the property of the capitalist, who sells them at the market.
Except that the proletariat are capitalists tehmselves who sell their labor for profit
It also allows those workers who are motivated to become the owner of their own thing.
If I want to make t-shirts and sell them on the side of the road, I should be allowed to do so.
What is holding you back from doing that? I couldn't imagine you would need product liability insurance. If your not going to sell 10,000 a month I wouldn't even bother getting a federal ID number. Just do it.
Some people have a 'small world view'. I used to work at a little radio station in my small town in Indiana where I worked on the FM side spinning the hits overnights, we also had an AM side that carried many of the conservative talkers you've heard of.
You wouldn't believe how many times I had to answer the phone and explain to people that Rush Limbaugh was not there and did not live in Indiana. Many were crestfallen.
And you dreamt this up all on your own? I'm impressed, really. The fallacy in your argument is that we all own the means of production - it resides within us in the form of creativity, initiative, and self determinism. We own our labor and therefore the means of production. You really need to update your psychology here.
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Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers", he said, "I'm going to reduce the cost of your daily beer by $20". Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his "fair share?"
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man, "but he got $10!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!" "That's true!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!" "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!" The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia.
For evil to prosper good men must simply do nothing,if the guy who likes to drink at a certain bar ,even though, rich and heavily taxed chooses to go every day, he is not just considering cost but must enjoy the bar's, ambenience, the decor the bartender/owner's company as well as the company of his fellow drinkers.Professor why is it necessary for the rich and powerfull to control all and sundry to limit the well being of other's to hoard to even kill to remain insediously in control.As an economist you must understand that for every 1%er there are millions of 99%ers with greater ecenomic power. If the chap in you illustration wants to become trans national please don't let the door hit him on the way out. Liam Sheehy Tipperary Ireland N.F.D.A.L.
@rebelwith: You miss the fact that any of the 9 men could go out and start their own company and make their own money so they can pay for their own beer.
Economics is NOT a "zero-sum" game, where for me to win you have to lose. If we have economic growth, most of us can win at the same time, without anyone losing.
I strongly support training/re-training and more economic opportunities for the 99%.
But, as the Professor says, if you go after the 1% too hard, they'll disappear.
Forgive me for being rude but I repeat for evil to prosper good men must simply do nothing. Some facts over 40% of the population of the U.S. live in ecenomic poverty so how do you expect the 40% to begin to start their own company.The idea that growth will lift all boats to use a cliche is clearly not true see stagnagtion in Japan for proof.Examine growth as a concept how can pernemant growth be achieved if the resources of the earth are finite example how many species of human, animal and plant life are now unfortunately gone never to return. Regards Liam Sheehy Tipperary Ireland
@rebelwith: First, Japan's economic morass is due in large part to a shrinking and aging population. To prevent a similar problem in the US, we need more legal immigration. A growing population results in a growing economy.
For the 40% in poverty, I suggest a massive (and ongoing) re-training program. Anyone who's unemployed, or who feels under-employed, should receive vocational training.
Our middle-class has vanished as global trade expanded. Now, instead of a factory worker in Michigan competing with a factory worker in Mississippi for a job - they're also competing with a factory worker in Shanghai.
We need to focus on making what we make more-efficiently. And we need to re-train displaced workers in higher-value-added work, so they can get well-paying jobs.
What about fighting globalization? We can't put that genie back in the bottle. Today it's the factory worker in Shanghai. Tomorrow it'll be the artificial-intelligence robot you're competing with for a job. Workers need constant re-training for their skills to stay relevant.
Limited resources? Experts have said we were at "peak oil" for decades. Every time the price energy rises, we miraculously find more. Earth has plenty of resources if efficient markets dictate price, and consumers of resources respond to shortages (and their resulting price increases) by behavior modification and substitution.
neo liberal speak perhaps, oil a resource yes but at a price an ecenomic price, resources are not just ecenomic the do not always require a cost benefit anaylisis.First they took the trees and no one said stop, then they took the water no one said stop! finally the took the land and all that it contained , no one said stop, all but a few people remained,when the came for me there was no one strong enough to shout stop.... Thank you for your comments Liam
Regarding oil (and most things for which fossil fuel is used) I am absolutely certain the solution lies in inventions which are economically-preferable to oil.
Many minor inventions will reduce the amount of fossil fuel used per unit of GDP.
One-or-more major inventions will be so compelling as to virtually eliminate the use of fossil fuels as we use them today.
I'm only half kidding when I ask...do the ships in Star Trek consume fossil fuel?
Sure, we need reasonable regulation of the energy industry (like we have).
But the real answer is technology.
One primary goal of the job-training I referred to above should be to train more scientists & engineers & computer specialists, so we can tackle huge technological problems like inventing inexpensive, renewable, clean energy.
I think your retraining idea is laudable but will not work. What will you retrain them to do? Make furniture? sorry that job is already taken in Indonesian factories. Farming? Nope. taken by immigrant labor. Some people just don't have any people skills and can not be trained to take a service based job which is the majority of jobs in America. We definitely need to end globalization.
Globalization can not and should not be ended.
We need fair trade.
But globalization is good.
What would have happened if we didn't allow Japanese cars in America? We'd still be driving crappy Chevys which get 10 miles per gallon.
In a sense, Corporations are inherently lazy, just like people...they'll do whatever is necessary to keep going...but they marshall all resources and transform themselves into better, more-efficient things when stressed/forced.
I agree some folks will be hard to re-train.
But we've got to come to grips with what to do with the developing vast persistently-underclass in our society. They have to find productive, meaningful, well-paying work. We just have to find a way.
It does no one any good to try to turn the clock back 20 years...we need to move forward.
The future is turning out to be more like a sci fi horror flick. What will the masses do if we become so efficient that only one laborer is needed to do the job of 100 men? human's will become obsolete. like you said robots will be working for us one day. So in that scenario how will there be a distribution of that wealth? Will it only go to the massive robot corporations?
You can always go back to the land and create goods for yourself such as food.
I would, I honestly think the amish have it figured out. To do that on my own would be impossible. There would need to be enough people with the same idea for it to be a decent quality of life. I believe that we can have a similar standard of living today with some reforms in how we allow corporations to do business.
There are plenty of communes willing to take newcomers in, I know a bunch of people from one nearby.
Yes, that's where we're heading...our labor becomes obsolete. We've been heading there for over 100 years (since the first automation)...we're just getting there faster now.
I don't have an answer for how to distribute wealth at that point.
Maybe there won't be a need for money. Maybe goods become so plentiful and inexpensive that we all receive small stipends from the Government, and can spend it as we wish. Maybe the robot corporation gives everyone a small stipend so we can turn around and buy what we want from them.
We have some time to figure this out, and I don't have the answer...but we should start experimenting with re-training and reallocating our human capital today.
I'm sorry but technology doesn't make us happier. We were happier as human beings when we worked the land and made things. I wouldn't mind seeing another dark age. This consumerism is killing humanity. The future of human thinking should be more like the teaching of gandi or the dali lama.
I spent 15 years living on a 30' sailboat - a very simple life. 5 of those years were sailing in remote places, where we were almost completely self-sufficient.
I can tell you those were the happiest and most-rewarding years of my life.
But consumerism is addictive, and it's just not going to stop.
Simpler living is idealistic / utopian, and somewhat-attainable for an individual, but not practical for society.
Fair trade is an economic transaction where both parties agree to the terms then execute the deal. Also known as free trade.
Wrong.
That might be Free Trade, but not necessarily Fair. Here's an example:
Let's say China X Company makes refrigerators and are engaged in oil refining and marketing.
China X Corporation wants more of the US market for refrigerators.
So they sell refrigerators here below-cost...and they are able to finance this indefinitely with the profits from their oil refining & marketing business.
That's NOT Fair Trade.
There is undoubtedly some UN-fair trade, and we need to police that and stop it. But if Trade is Fair it should be Free to occur.
And US consumers get a pants-kicking deal on a refrigerator, which they can use the savings from to invest elsewhere, giving them a better life. The Chinese oil company won't keep this up forever because it would be pointless and money wasting. If they did, their cost of oil would go up causing US oil consumers to purchase oil from their neighbors.
And in many cases, the foreign companies are given special treatment and funding from their government. So, yes, they can continue this uneconomic activity indefinitely.
@classicliberal...which side are you on? I'm all for a deal, and I'm all for free trade. I'm pro-business, pro-immigration, pro-growth...but trade needs to be FAIR.
It sounds like you just want cheap stuff regardless of whether it's made & sold fairly.
I'm on the side of humanity, and I think you are, too. But as long as a good meets the following requirements:
It is not produced with stolen goods, such as raw materials or slave labor.
Its production does not unfairly infringe on anyone else's rights.
Its price has not been unfairly tampered with by another larger economic force, that its cost is equal to the costs required to produce it.
That the person buying the good acknowledges what they are purchasing and it is true to what is described
and finally
then there has been a fair and free trade.
The thing with your above scenario, is that, correct me if I'm wrong, you are ignoring the (essentially, a payment) from the foreign company to the US consumer for the difference in the price of the refrigerator he bought with the one he would have bought. Instead of having a refrigerator, he now has a refrigerator and an invisible $50 bill, which he will now spend in the economy.
And I think you and I are on the same page, because in the above example, you said the foreign companies might be given special treatment by their governments. I agree that this is neither fair nor free trade.
First of all, the stagnation in Japan is not a good example. Japan has had several hardships in the recent years (natural disasters, the 1980's asset pricing bubble, the asian financial crisis of 1997, and the most recent financial crisis of 07-08)
We have not reached our growth capacity. I don't believe there is such a thing. Those who are in economic poverty start much lower than their peers, but are not blocked off from forms of progress. Education up to 12th grade is mandated and free for all residents of the US, however, many of these children choose to drop out, or participate in vagrant or socially disruptive ways. In the end, you are the the means to your own ends. If you truly want to succeed, there is no one in the world that can stop you. If you have the will, and are willing to put in hard work (not just all talk), then I have confidence that you will succeed.
I wish everyone took personal responsibility too. but it's not going to happen and just saying shame on you isn't changing the problem. We have to change the way we think about economy as not a bunch of individuals making choices but in fact those individual choices are influenced by a number of factors beyond their control. I may be stretching here, but nobel prize psychologist Daniel Kahneman speaks of how we are not in control of our decisions as you might think.
Picture a human body made up of thousands of tiny cells. Each cell is selfish for resources and wants to survive. Some cells are more important than others in maintaining a healthy system so they get more nutrients. In order for the system to survive the cells must help it's neighbor out by not taking too much resources, other wise it's called cancer. Perhaps you think the irresponsible cells are the cancer. Do you ignore them and hope they die? No, because we all know the system will die if we all do not work together.
The only thing in life that free is .... the air you and I breath the fresh water we drink the sun rise and sunset the moon and stars all the rest you and I and millions of other pay for education, healthcare business Government etc ... What value do you place on human life should it really have an ecenomic value at all .My greatest regret for mankind is that it is only ecenomics the excorises him or her, truly we are better than an accounting chart our language is so limited that all we can do is use accounting speak to create a value system.shame on us.But I digress the 99% have one principle that I believe to be true as with the rulers of early Isreal and Messopetemia debt forgivness for the people must be a prioity.Usury should be outlawed.Thank you for your enlightned comments Regards Liam
Money is actually a good and fair arbiter of value...money has no morals, no agenda, no preconceived notions.
As crass as it sounds, we do need to make decisions based on economic factors.
At some point, we'll need to begin to deal with not expending vast healthcare resources on people in end-stages of life. Something like half of all healthcare is consumed in the last year of one's life.
We should NEVER tell people what to do with their own money...but our limited Government funds should go where they will do the most good.
Debt forgiveness? Fine. Government can fully compensate the lender for all debt it wishes to be forgiven.
If we require banks and other financial institutions to take a loss they would not otherwise take, then we need to expect that for our entire future: 1, Loans will be less-available.
That's just the way it works...increase risk-of-loss, and funds will be less-available and more expensive when they are available.
I'm not the Professor. I just saw this on a bulletin and thought it was interesting to share.
You say that "he is not just considering cost but must enjoy the bar's, ambenience, the decor the bartender/owner's company as well as the company of his fellow drinkers" This may be the case if we were actually talking about something as simplistic as a bar, but essentially it is about the US. As long as they're here, they will be taxed at a much higher rate than the over 40% of Americans who do not pay taxes at all.
It seems to me that there are more of the "99%" who are discontent with the US government than the "1%". If they are so angry, why not just leave? Or try to come together and formulate REAL, FEASIBLE, OBJECTIVE, solutions for these issues instead of protesting for the sake of protesting
From this distant remove, my views are carefully considered, I neither wish to offend but to attempt to enlighten as I have communicated with a previous poster 40% of US citzens live at on or below the poverty treshold.A shocking stat,for a nation so wealthy, the statistics issued by the US government are bogus unfortunately. I have some experience in my country of the argument if you tax the rich too much they will become trans national. Well ! they already are. The 99% seem to me to be true patriots of your lovely country to sign off for evil to prosper good people simply! must do nothing Liam Sheehy Tipperary Ireland.
The means of production that every individual owns are their hands and their mind.
i label myself liberal or progressive but i dont like labeling others -
if 50 workers in a sign making plant decide to "collectively" buy the plant and after a successful decade, decide to sell stock to raise money to expand their factory and hire more workers, who is the CAPITALIST? EXPLOITER?
i would maintain that capitalism and capitalists are not good or bad - in general. Compare Buffet and Jobs with Trump and Koch .
the key to "evil" is not capitalism, it is UNREGULATED capitalism. And by using "unregulated" I mean "unrestrained"
restraints include pollution control, child labor, monopolies, too big to fail, etc AND the fact that the richer you get - the easier it is to bribe Washington to buy the rules you want. Capitalism did work for our country as a whole - since TR fought back - until Ronnie started strangling us.
That would be the closed minded, unsuccessful, "I'm a victim" mentality. That is not the vision that was framed and set forth for our country. It was never meant to be a system of unaccountable capitalism. It was intended to be a system of individual reponsibilty. It has been perverted for a very very long time, by generations of Americans. We have allowed our public servants to change, bend, and manipulate laws and rules that have taken the power away from the people.
This is much closer to that vision.
4 minute read(if your slow) http://sanityscribe.wordpress.com/
That definition is out of date now. What century are you living in?
sounds good, the problem is, that we don't have capitalism, we have corporate oligarchy.
http://www.youtube.com/watch?v=OPR3GlpQQJA
I have been active here since the very beginning, and since the very beginning I have been trying to make some core points. These points clearly have not been digested or fully understood by the mob, and so I'm going to try to make a further attempt here again.
For these reasons, I beg of you to please immediately join me on the wiki. We need to have all of these details and all of these ideas put together in an organized fashion, rather than posted in a long scrawl which will never be read.
http://occupythiswiki.org/wiki/THE_99%25_POLITICAL_PARTY
http://occupythiswiki.org/wiki/Main_Page
http://www.followthemoney.org/?gclid=CMbY87bB-qsCFUPt7Qod9HE8mQ
http://maplight.org/us-congress/guide/data/money?9gtype=search&9gkw=list%20of%20campaign%20donations&9gad=6213192521.1&9gag=1786513361&gclid=CP61oYbB-qsCFQFZ7AodcTF0jw
http://www.opensecrets.org/
http://occupywallst.org/forum/our-new-wiki/
http://occupywallst.org/forum/non-violence-evolution-by-paradigm-shift/
The US President Barack Obama launched his primary anti-foreclosure plan, the Home Affordable Modification Program (HAMP) in 2009 to encourage the US banks to rewrite mortgages of about 4 million homeowners at risk of losing their homes. But the fight against foreclosures continues to muddle and underwhelm. Only 300,000 homeowners received a mortgage modification in the first six months of 2011, while 600,000 houses fell into foreclosure.
The political and economical leadership of the US has chosed to cartel profits and transformed the US economy to serve the colluding and unlawful oligarchy. The US banks are borrowing money at near zero interest from the US government, then lending it to the US government at even mere fractions higher interest than they are paying. The net interest margin made by the US banks by lending the money back to the US government in the first 6 months of 2011 is $211 billion.The US banks also been collecting interest on money they are not lending—the "excess reserves" they have at the US Federal Reserve. The behavior and de facto immunity of the largest US banks is out of control. The financial crisis was created by the biggest US banks to consolidate power. The top 6 US banks had assets of less than one fifth of US GDP in 1995. Now they have two third of US GDP. The big banks became stronger as a result of the bailout. They're turning that increased economic clout into more political power. The US citizens are on the road to permanent serfdom under a police state from oligarchs’ rapacious looting and their purchase of a politically-protected luxurious lifestyle. The behavior and de facto immunity of the largest US banks is out of control. The financial crisis was created by the biggest US banks to consolidate power. in 1995 the top 6 US banks had assets of less than one fifth of US GDP; today they have two third of US GDP. Oligarchy is political power based on economic power. And it's the rise of the Wall Street in economic terms, that it'd turn into political power. And Wall Street then feed that back into more deregulation, more opportunities to go out and take reckless risks and-- and capture huge amounts of money.Wall Street Corporations don't make anything. They don't produce anything. They gamble and bet and speculate. And when they lose vast sums they raid the US.Treasury for bailout, so they can go back and do it again. Never mind that $50 trillion in global wealth was erased between September 2007 and March 2009, including $7 trillion in the US stock market and $6 trillion in the housing market. Never mind that the total amount of retirement and household wealth trashed was $7.5 trillion or the $2 trillion in 401(k)s and individual retirement accounts evaporate. Never mind the $1.9 trillion in traditional defined-benefit plans and the $2.6 trillion in nonpension assets that went up in smoke. Never mind the job losses, the foreclosures and the 35 percent jump in personal and small-business bankruptcies. There are bundles of new money, taken again from us, to make deals and hand out outrageous bonuses. And when these trillions run out they will come back for more until our currency becomes junk
Nalliah Thayabharan
Capitalism and Debt Based Money are just forms of servitude. In order to be a part of the system, you need to be indentified (SSN). Through your SSN, you are tied to an owner (ie, the Fed, Government or hidden entities). They tax your labor, goods and virtually everything and when you do not abide by the system they can take your assets away by law. Your law only recognizes debtor and creditor. We all are debtors who are not a part of the 1% owners. Debt based money is just an extension of a sophisticated pyramid scheme where the debt can never be paid off and the creditor simply prints money that never existed and the banks can lend out money 10 to 1.
Are getting the since that someone’s running a sophisticated game on you?
Capitalism and Debt Based Money are just forms of servitude. In order to be a part of the system, you need to be indentified (SSN). Through your SSN, you are tied to an owner (ie, the Fed, Government or hidden entities). They tax your labor, goods and virtually everything and when you do not abide by the system they can take your assets away by law. Your law only recognizes debtor and creditor. We all are debtors who are not a part of the 1% owners. Debt based money is just an extension of a sophisticated pyramid scheme where the debt can never be paid off and the creditor simply prints money that never existed and the banks can lend out money 10 to 1.
Are getting the since that someone’s running a sophisticated game on you?
And who is stopping the proletariat worker from owning means of production?
This country was built by just such hard-working people who started with nothing and built successful businesses.
It takes hard work, and patience, and persistence.
And, if you don't have the stomach for owning the means of production, you can work for someone who does.
Key word: built. It was built because land was given out by the government to allow for expansion to the West. The AMerican Dream used to be that everyone could own there own land. That's not true anymore and if you want to live the "American Dream", move to Denmark.
We have been completely removed from what the American Dream used to be, and that was land ownership. How can we keep the free market alive and also drive land prices low enough for everyone to afford? We need to tax the land.
The theory of economic rent has been around for some time, but land taxation has seldom been implemented throughout history. It is well known that the factors of production are composed of land, labor and capital. Land, in the economic sense, can be explained as anything with a productive capacity that has not been created by men or women, but has value created by the community. Labor is any human energy spent , whether by the mind or through brute force, that contributes to a means of production. Capital is mainly what is spent from savings for future production. Under the current system, mainly labor and capital are taxed, while the landed elite make out like bandits with the rents that are created by the community! It is no surprise that civilizations have suffered from vast inequalities since the founding of the first governments.
What we need to fight for is a redistribution of these economic rents for the sake of the people, while at the same time reducing the tax rates on labor and capital. These rents from land are the source of all wealth and are presently held by a small number of wealthy people who will speculate and slow there productive capacity in order to increase profits.
This demand goes out to the people of OWS! If there is one thing we need to change in order to promote equality, environmental protection and job creation through increased productive capacity, this is the solution we need. Please read about economic rent and land taxation in order to fully grasp the concept.
This is something proven in theory and not based on anyone's personal opinion or ideology. While we are divided on many things, it's time to come together with some real demands to benefit the majority of unrepresented individuals of the world. Lets show the top 1% that we know where their unearned wealth is coming from and that we know exactly what is needed in order to bring them back to the real world!
I don't know about where you live, but where I live (in Florida) there is a tax on land, and there was (until it was repealed recently I think) a tax on wealth. Admittedly, land taxes are not high in percentage terms...but they are 2% of the value of my house, about $200/mo. That's not peanuts.
Higher taxes, however, would mean we're essentially all RENTING from the Government. And if we can't afford to or don't choose to rent from the Government, we'll ALL be living in tents.
High taxation of land is a recipe for disaster. It will lead to the Government owning most land...and we can see how well the Government handles things - NOT.
Finally, your tone of envy is unproductive...you say:
"Lets show the top 1% that we know where their unearned wealth is coming from and that we know exactly what is needed in order to bring them back to the real world!"
Sounds like you're saying: "If I can't have wealth, then they shouldn't have wealth either".
Instead, why not demand more tools so you can earn your own wealth?
This is NOT a "zero-sum" game. You can generate wealth without taking it from anyone. And we should do a better job of providing the tools for you to do so.
"This is NOT a "zero-sum" game. You can generate wealth without taking it from anyone. And we should do a better job of providing the tools for you to do so."
Actually this system requires losers in order for the system to keep going. Being smart and ambitious are much less determining factors on wealth than a person's social class they grew up in. Social mobility is almost non-existant in America.
And I am not envious of wealthy people, I am envious of the system that allows for this disparity. I am not struggling. My wife is a teacher and I am entering my last quarter of school for my Electrical Engineering degree. We will be fine but I'm worried about all of the people that didn't have the same opportunities I have had.
@ddiggs690 wrong
There do NOT have to be losers. It's NOT a "zero-sum" game. You do NOT have to deprive someone else of wealth in order to be wealthy.
I'll illustrate 2 of the ways this happens:
(1) The velocity of money has amazing effects. It's similar to printing more money in that a high-velocity of money (like we have in boom times when everyone is spending money as fast as they make it (and borrowing to spend it even faster))...and where companies have rapid cash-conversion and inventory-conversion cycles...
Acts like a growing supply of money...the whole pie grows...the rising tide lifts all boats...we can all become wealthier.
(2) When you add value through your labor, you generate wealth. You convert things worth $100 into things someone will pay you $300 for. The person paying you $300 is no worse off, because the goods they purchased are obviously worth at-least $300 to them...and you are $200 better-off because of the productivity of your labor.
And the goods which were worth $100 are worth $300, which is obviously more than $100, hence the economic value created.
SO...we need to train/re-train workers so they can add more value...get paid more...grow the economy!
I do agree with your statement at the end that we need to retrain workers to add more value to the system. I think the only thing I am having trouble agreeing with is your idea that everyone can become wealthier. While the pie does grow as we divide our labor and produce things much more cheaply, that part of the pie that grows mostly goes to those that own the means of labor. They can retain all of the economic rent for themselves and maintain the same existing wages for their employees. The only required wage that people are willing to work for is a wage to survive. The people who own everything can pay any wage they disire as long as there isn't another alternative. Of course in the real world, at least in America, you can't get away with paying people $2 per day because there are other alternatives. But there are sweatshops all over the world raking in massive profits and their employees can barely survive. America is not immune to this and it could happen here if we don't have some way of decreasing this huge income disparity between the upper and lower classes.
And not to mention, the sum of the entire debt in existence is always greater than the supply of money. We are passing debt around like "musical chiars" and indefinitely inflating the money supply to pay for past debt. Yes, there are always losers and will always be losers in this system since there is never enough to go around for everyone.
The solution is to provide upward-mobility for those at the bottom...NOT to force downward mobility of those at the top.
Most wealthy folks and corporations realize that for them to do well, everyone else has to do well also.
Absolutely we need to provide upward mobility and this goes back to my original post about capturing economic rent through land taxation. It's meant to allow for free enterprise while also increasing the wealth of everyone. Instead of the rich getting richer and the poor getting poorer, we can have a society wherethe rich get richer and the poor get richer.
This is not a brand new idea; economic rent is one of the 3 factors of the law of productivity. The problem is that when individuals have exclusive rights to this surplus, it discourages growth and slows down production. We can eliminate all other taxes and fund everything through this surplus wealth while at the same time eliminating all of the waste and dead weight losses that come from taxing labor and capital. Please read about these theories because these are not radical ideas. It's just unfortunate that most people dismiss it before knowing what it's about. This is not something you can just learn in a day and have an educated opinion on it. It takes time to fully grasp. If you are at all interested, here is a detailed analysis of the law of production, specifically economic rent. I urge you to read it.
http://www.henrygeorge.org/pdfs/PandP_Drake.pdf
Capitalism is the idea that business should have no regulations and no rules. It is Anarchy in business. It allows the most viciously selfish and shrewdest and remorseless to become the most powerful and most rewarded. Capitalism when practiced for long enough, will always lead to 1% controlling the world, because only the meanest nastiest people could ever have such aspirations to control others for their gain.
Es hora de cambiar esa dependencia forjando un nuevo sistema donde el obrero(a) y empleado(a) sea copropietarios o accionistas de lo medios de producción (ver el blog de "Gury" en google blogger)
While I do not disagree with this post, it seems slanted.
Technically, Capitalism simply refers to:
"The private ownership of the means of production"
http://en.wikipedia.org/wiki/Capitalism
...Which I don't agree with.
get some skills and you wont feel so exploited.
We will not be successful by being insulting. Our best approach should be straight forward. Spouting commie definitions won't get us anywhere. Please consider restating the definition of capitalism as it is understood by most Americans.
Capitalism is a concept, an economic idea. Exploitation is a behavior that knows no economic parameters, or income brackets, or educational limits.
Capitalism allows "the workers, who own no means of production of their own" to use "the means of production that are the property of others to earn a living"-while they save up some of that living and either on their own, or by partnering with other workers, they then purchase THEIR OWN means of production-which becomes THEIR property-and produce goods and services that become THEIR property that they sell at the market.
Capitalism is whenever it makes me more money to pay you less.
And instead of saving up to purchase the means of production themselves (entrepreneurship) the workers feel they have a right to the means of production without taking any risk whatsoever to obtain them. Yeah, I'm seeing a lot of that.
The point is that no one in this country can afford to become entrepreneurs anymore. Credit is all dried up. Wages for working Americans are frozen and stagnant.
And even if they could become entrepreneurs... No one can afford to buy their goods and services anymore.
And when you FORCE banks to lend to people who are bad risks, look what happens:
We have massive defaults (housing bubble followed by collapse)
Then we scold banks for making bad loans & change rules so they don't do it again.
Then we complain when they don't lend to risky borrowers.
So we scold them more & force them to reduce their fees.
Banks implement other fees to stay in business.
Capital can not be forced to do anything. If we make it economically-unviable for capital to be invested & lent, that capital will go elsewhere. If we want lending, we should stop micro-managing banks.
Sure...bring back Glass-Steegall, and ensure banks are sound...but if you make banks economically-unviable, we'll suffer unimaginably.
No-one forced the banks to do anything. You don't have to force a pig's snout into the trough.
@Dalton: Maybe forced is too-strong a word...but we "coerced" banks to make non-economic loans through legislative measures aimed at increasing home ownership by and lending to unqualified applicants.
Maybe I should have said "coerced" instead of "forced", but the US Government did it.
It's insane to believe banks wanted things to turn out this way. Bank owners have been decimated financially.They thought they were doing the right thing - lending to marginal applicants.
What they should have done, if they lent to these people, was to charge much higher interest rates to compensate for the default risk. But then the banks would be evil for charging high interest rates.
The banks just can't win, can they? What you really want is to destroy banks and our financial system...because if you can't have money, you don't want anyone else to have it either?
Well, economics is NOT a "zero-sum" game. In order for you to generate wealth, you do not have to take it from someone else. You can work for it, doing things that add value, and create your own wealth. Shame on America for not giving you the tools you need to accomplish wealth-building...THAT's what we need to change...provide tools (training/re-training, opportunities, empowerment) for everyone to build wealth.
But it also takes hard work, determination, and persistence on your part.
(1) If you are alluding to the usual nonsense about the CRI, it was passed thirty years before the sub-prime crisis; and it does not coerce the banks to make bad loans. This makes it a poor candidate for a causal factor. Moreover, analysis has shown that institutions bound by the CRI came out of the sub-prime crisis in slightly better shape than those that weren't; the correlation between the CRI and bad loans is actually negative.
The purpose of the CRI was to prevent institutionalized racism in the banking sector, which is of course why the right picked the CRI as an excuse rather than some other completely irrelevant thirty-year-old law --- it allows them to lay the blame for what the banks did on liberals and black people.
(2) No, the banks didn't necessarily want things to turn out this way --- but are you familiar with the phrase "tragedy of the commons"? There was no incentive for any particular creator of mortgages to show restraint, since it wouldn't benefit that particular institution to do so.
(3) I do not "really want to destroy banks and our financial system". Instead of lying to me about what I think, why don't you ask me what I think? I'm right here.
@Dalton: (1) Yes, the CRI encouraged non-ecomonic loans. But institutions which make the loan often sell the loan to 3rd parties. Banks tended to retain better loans for their own books, and sell more-questionable loans. So the negative correlation between CRI and defaults is because riskier loans tended to be created-by and sold-to interests not subject to CRI.
If you want to call-out the "Pigs at the trough", you should be angry at the investors who bought these mortgages from banks...as they are the ones who:
A. created the market / liquidity for risky loans - without which there would have been far fewer risky loans.
B. are to this day unwilling to incur additional write-downs of these loans to help borrowers.
So...much (though not all) of the problem is with investors who bought the loans - NOT with the banks.
(2) Yes, I think you're correct on this. Banks, just as everyone else, tend to predict the future based on what's happening today. When times were good, they assumed times would continue to be good, and people would be able to sell their houses at a profit to repay the loan even if they lost their jobs.
Bank owners have lost most of their money. They acted imprudently, and they lost money. That's the way things go. They deserve to have lost money. But that does not make them evil.
One solution would be to require institutions initiating mortgages to retain, say, 10% ownership of mortgages they sell...so they have "skin in the game".
(3) Then offer solutions to keep banks solvent, healthy, honest, and lending.
I offered a couple solutions:
A. bring back Glass-Stegall
B. make mortgage originators maintain a 10% interest in mortgages.
(1) If you still want to blame the CRI, perhaps you could explain the three-decade gap between the supposed cause and its effect.
(2) It's nice that you think I'm right, but that isn't quite what I was trying to be right about. Even if one knew that the housing bubble would burst, it was profitable to create mortgages so long as one could resell them ... and profitable to buy them so long as one thought one could resell them again before the bubble burst; and even if one knew that this process would be disastrous for the economy in the long run, there was no point in any particular person deciding that he wasn't going to get his share of the profit. Hence my allusion to the tragedy of the commons.
(3) Well, a simple way of avoiding this particular form of moral hazard would be to stop people from reselling the loans they create. That way, they would be stuck with the consequences of doing so.
Perhaps there are subtler approaches, but that would have kept the horse in the stable, would it not?
(1) because housing prices and the economy were good, and default rates low until 2008. If we had seen a 2008-like event in the 1990s, CRI would have been a factor in that as well.
(2) Yes, but the "Tragedy of the commons" is common sense / human nature. How exactly do you discourage this, and is it wise to even try to discourage this? Whenever Gov't tries to meddle in things like this there are "unintended consequences" which are often worse than the behavior they try to correct.
(3) If we eliminate re-selling of mortgages, we should expect mortgages to become:
A. less-available and
B. more expensive
I'm not saying that's a bad thing, but it would do a lot more harm in the near-term than just making originators retain a 10% interest in their underwritings. I think the 10% would achieve most of the benefit without most of the pain.
(1) The economy was not in fact "good" continuously for 30 years.
Here, I made this graphical summary of the Community Reinvestment Act Hypothesis:
http://img35.imageshack.us/img35/2263/cragt.jpg
Am I missing something?
(2) The playing out of the tragedy of the commons may be human nature, but it is not common sense, and yes, it is wise to discourage things which are by definition bad. The TotC is something which can only be fixed by government or by something else that does the same job; some rule put in place to prevent people from doing what is profitable for the individual in the short term.
As for your anxieties about "unintended consequences", will they be worse than the sub-prime crisis? It would be as well for libertarian types who bang on about the "law of unintended consequences" to remember that doing nothing also has unintended consequences. They are not just contingent on government action, but on government inaction. And unlike your shadowy anxieties about what regulation might do, the sub-prime crisis actually occurred.
The trouble with the LoUC is that it's an argument against anything whatsoever:
"People's houses keep burning down." "So?" "So we should establish a fire-brigade." "No, wait. I call Law of Unintended Consequences!" "Like what?" "If we could foresee them, they wouldn't be Unintended, would they?"
(3) Well, as I said, there may be more subtle solutions than my rather crude suggestion of a fix. Perhaps what you suggest would work. But in any case it is in principle fixable, isn't it? We don't have to resign ourselves to letting this happen again next time there's an upturn in the housing market.
Saying no one can afford to become an enterpreneur is an exaggeration.
There is still plenty of venture capital out there for those doing it on a large scale and for "small" people, I agree with classicliberal. I did exactly what he is suggesting in his post.
But - I am still self - employed and my business was hurt by the recession. I worry about my customers continuing to have enough money/credit to help my business grow.
To stay afloat, I had to get creative and that I did.
I am still thriving and am expecting a better Christmas season then I've had yet.
That's great for you... Which explains your myopic viewpoint.
The rest of us on the other hand, are having a far more difficult time of things. And I can assure you that your very limited, priveledged perspective is not the least bit indicative of an accurate cross-section of the population or what we are going through.
Um, you don't need to sink yourself into debt to become an entrepreneur. You can start an online business for one hundred dollars. But of course it's easy to find a reason not to be productive if someone would rather do nothing.
I have owned many businesses, it's not rocket science. I decided I could work on other people's computers so I put an ad in the paper. The cost me about $400. From that I got about $2500 worth of work over the following 2 weeks. (You wouldn't believe how much some people don't know about computers. Most afraid of taking the case off.)
People lik,ed the idea that they didn't have to unplug their machines and haul them somewhere, and then reathach all the cables, it's just a mystery for most.
Janitorial Service is another easy one to start. I did it on a $1000 loan and in 1980 I made over $45,000 the first year.
I've also had a couple of restaurants. That's a tough business, but I love to cook and bake.
I used to buy laptops from eBay and sell them locally. The trick is, get good clean ones that work and have just a little mark-up on them...I could sell 3 or 4 every week and made $40-$50 on each one.
It seems not a day goes by when I couldn't use an extra $40 bucks.
Why were you out being productive when you could be whining in a tent that some people have more stuff than you do?
I don't think we teach entrepreneurship very well in high school. I think I did it mainly because my Dad worked his entire life in a factory making diesel engines and I wanted to do the exact opposite. Then again, I was adopted, so maybe that was a factor. Probably the most important thing you can do is when you have children show them fearlessness by example as often as you can.
But, in this case, the people in the tents have a perfectly reasonable reason to ask for a redress of their grievences. Injustice has been done and wrongs need to be righted. I stand with them, solid.
Sounds great... In theory.
Being a slave to eBay is not my idea of economic freedom.
http://metapolitik.org
Um, how exactly is selling stuff on Ebay being a slave to them? You can stop any time you want. And they can't take any money from you unless they give you a larger share.
How is it any different in theory than in practice? Like all mutual economic transactions, the terms must be predetermined before money changes hands.
I met an Ebay seller once who appeared to be thrilled to death. I guess motivation make a lot of difference.
The simple fact that companies like eBay and Amazon take a cut off the top of every transaction, coupled with the fact that they constitute a virtual duopoly for online sales.
That's how.
People have started as small sellers and become millionaires through Ebay. Others have found ways to replace a salary and have the freedom to structure their own hours, not have to commute, etc.
Yes, there are fees involved. That doesn't prevent thousands of sellers from earning money on those sites.
You always hear about the fabled 'eBay millionaires'... But have you ever actually met one?
Selling on eBay requires a lot of things that the average US citizen can no longer take for granted. Not the least of which is a credit card. But let's not forget:
...And a whole slew of additional requirements that are increasingly becoming harder and harder to come by.
I know a guy personally who went from collecting unemployment to earning 200K in his first year on Ebay. He then opened a hock shop to buy other people's used goods to expand his business. He hasn't had his million dollar year yet, but he's getting there.
If you have no credit card, you can get a card like Russell Simmons' Rushcard and use that as both a debit card and for receiving direct deposits.
Yes, you need a computer & internet access. Anyone who read my post has access to a computer. I also happen to know someone who started selling online from Internet cafes.
You know, maybe it isn't the thing that is going to get a completely destitute homeless person back on their feet, but certainly anyone who was recently unemployed can explore the possibilities of not only Ebay but all the other marketplaces that exist for not only selling goods but services & information, too.
I hire people from this site sometimes:
http://www.freelancer.com/sellers/
and there are others. Many opportunities for someone with a computer & internet.
If anyone wants more suggestions or a little free, casual coaching, feel free to PM me.
Ah yes, Freelancer.com. where US Citizens get to compete with offshore labor that can do the same job at 1/10th the cost.
Spent a couple of years on that site - mostly marveling at the fact that a guy in India can build a $1600 web-app for $160... About half what I pay for hosting.
But hey, thanks for perpetuating the bullshit meme that "anyone can make it in this country if they just work hard".
Same goes for eBay... A site that lets you work really hard just to stay poor.
Yea, well good luck with that.
Guess what, I support some of the change OWS is talking about. I marched to the bridge & Police Plaza with them.
I'm just not a negative fuck who thinks blogging or posting here is the solution to anything.
I'm also not anti-capitalist.
We need change but my idea of change is not throwing capitalism and the constitution out the window and starting from scratch in an unstable system where anyone can step in and take over.
If all you have to offer the jobless is to denigrate Capitalism, that's sad and it ain't gonna put food in their mouth or a roof over their heads.
Capitalism:
An economic system in which the means of production are PRIVATELY owned.
http://en.wikipedia.org/wiki/Capitalism
Who said anything about throwing the constitution out the window?
Stop putting words in other people's mouths TROLL!
You're gonna put me on the blacklist now?
LMFAO. Now you crybabies are even blacklisting OWS supporters.
Good god, I know I'm in crazyland when the dittoheads are starting to make sense.
Later. Have fun stewing in your misery, I have to go sweep my Paypal account.
A) What blacklist?
B) How are you "supporting" #OWS by telling everyone here that they can make a buck on Freelancer or eBay, when the truth is - short of stealing things to sell (which I don't recommend) - they really can't.
You have a really shitty attitude.
Do you have any solutions or do you just bitch?
I think the latter sir.
My solution is to denigrate those who would have us believe that Capitalism is somehow working or that it can continue on it's current trajectory.
But there are operating costs associated with running these sites, in order to bring customers. It's like buying a car in order to drive to work... I'm not sure I get what you're saying.
I am saying that eBay does not constitute a level playing field (see comment above)
I suggest you consult a dictionary.
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