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How has Capitalism failed America? (1 Viewer)
- Thread starter IC FBGCav
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Juxtatarot
Footballguy
I posted this Ted Talk in the socialism thread last night. He talks about some of the problems and possible solutions regarding modern capitalism:
The dirty secret of capitalism — and a new way forward
The dirty secret of capitalism — and a new way forward
Dinsy Ejotuz
Footballguy
I don't think Capitalism has failed, I think regulation of Capitalism has failed.
It's the difference between saying everyone is free to drive whenever and wherever the want as long as they obey traffic laws, and getting rid of lane lines, traffic lights and signage. Both are still driving, but one of them is going to cause an awful lot of problems.
It's the difference between saying everyone is free to drive whenever and wherever the want as long as they obey traffic laws, and getting rid of lane lines, traffic lights and signage. Both are still driving, but one of them is going to cause an awful lot of problems.
Drunken Cowboy
Footballguy
Predictably so.
ren hoek
Footballguy
Thanks for sharing, I agree with a lot of what he is saying. The problem I have is that this economy is fundamentally a bureaucratic, extortionary creation. It’s not the end product of open markets, but of regulatory capture and extortion rackets.
On what planet would people in a truly open, voluntary economy pay for bajillion dollar drones that massacre innocent people, private prison networks that enslave millions into corporate slavery, cops that shoot people with a lower standard of accountability than the rest of us, and enforce laws we don’t like? Who among us would actually bail out a bank? Who would pay $5.6 trillion dollars for the Iraq war, and for the local police station to get its own Bearcat? Nobody. And yet these institutions grow all the time while working people get left with scraps.
I used to say capitalism is awesome- a little kid setting up a lemonade stand or something. Two people making a voluntary exchange. That was capitalism to me. Similar to how conservatives like to trash socialism by comparing it to Venezuela- a country at odds with empire since the inception of socialism and now effectively blacklisted from western financial systems- capitalism to me has been unfairly conflated with the modern monstrosity we have now. Now I just prefer to say I like markets.
In 1964 the minimum wage was $1.25, which in terms of pre-65 silver coins was just under an ounce of silver, or $18 today. The dollar has lost 98% of its purchasing power since the creation of the Fed. The highest minimum wage we’ve ever had, adjusted for inflation, was $1.60 in 1968. As we get better at making things, prices are supposed to come down, not scale infinitely upward. The reality is that true purchasing power has been stolen from us, and reallocated to people with no interest in our wellbeing.
Any argument that ignores this- that our nominal wages are being stolen by huge institutions and transnational corporations, in a practically invisible way- is missing the most crucial lever of economic power that has caused our problems.
Centering the argument around minimum wage basically ignores what’s going on behind the curtain, and assumes the smartest guys in the room figured out the best economic model for the rest of us. It assumes a model where we all live and die by the grace of the US petrodollar is inherently correct. So long as governments have a monopoly on money, it is incorrect to call it capitalism.
If I can’t pay my debts in metals or crypto or bottlecaps or whatever, if I can’t get paid in anything other than USDs and the rigged financial system that comes with it, if I’m subjected to a gazillion tax events and capital gains taxes just for trying to hold items that don’t lose value like the dollar has, much less actually use them as money, then it isn’t a free market and it isn’t capitalism.
The capital and resources we might have once had to reinforce our own economy, the ‘middle class’, a more conscious system, to build a real livelihood- have been stripped away, and extracted to soulless corporate interests in faraway lands. There is no amount of fiddling with the wage rates or installing a progressive tax regime that can deal with the systemic rot of granting monopoly power over money to banking/corporate/militarist institutions.
In 1964 the minimum wage was $1.25, which in terms of pre-65 silver coins was just under an ounce of silver, or $18 today. The dollar has lost 98% of its purchasing power since the creation of the Fed. The highest minimum wage we’ve ever had, adjusted for inflation, was $1.60 in 1968. As we get better at making things, prices are supposed to come down, not scale infinitely upward. The reality is that true purchasing power has been stolen from us, and reallocated to people with no interest in our wellbeing.
Any argument that ignores this- that our nominal wages are being stolen by huge institutions and transnational corporations, in a practically invisible way- is missing the most crucial lever of economic power that has caused our problems.
Centering the argument around minimum wage basically ignores what’s going on behind the curtain, and assumes the smartest guys in the room figured out the best economic model for the rest of us. It assumes a model where we all live and die by the grace of the US petrodollar is inherently correct. So long as governments have a monopoly on money, it is incorrect to call it capitalism.
If I can’t pay my debts in metals or crypto or bottlecaps or whatever, if I can’t get paid in anything other than USDs and the rigged financial system that comes with it, if I’m subjected to a gazillion tax events and capital gains taxes just for trying to hold items that don’t lose value like the dollar has, much less actually use them as money, then it isn’t a free market and it isn’t capitalism.
The capital and resources we might have once had to reinforce our own economy, the ‘middle class’, a more conscious system, to build a real livelihood- have been stripped away, and extracted to soulless corporate interests in faraway lands. There is no amount of fiddling with the wage rates or installing a progressive tax regime that can deal with the systemic rot of granting monopoly power over money to banking/corporate/militarist institutions.
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wikkidpissah
Footballguy
It fails America most when it stifles innovation. The American Miracle was born of frontiers. Europeans flooded these shores because everything was already owned & regulated where they were. This vast land of borderless bounty gave trying & failing & trying again an ethos which changed the world. Whether one became a cowboy, a miner, the faucet king of SW Minnesota, whatever, it was wholly one's own choice & gifts & sweat which made it so and something worth fighting for. That created the spirit which built a great nation and then saved the world twice, once on two fronts. And we became civilization's boozy hero and got all the backpats and picked up all the checks and were occasionally played for the fool, but we could afford it all cuz we were THAT good.
And then marketing replaced manufacturing as what America did most. Cornering markets, stifling competition, budgeting sales over research, arbitrage, heedless lobbying and other ways of rigging the game. In two generations, there were no longer free-market, competitive solutions at the ready for America's continued prosperity, only that which a self-interested few allowed to be explored. And entire demographics of our population - it just so happened to be mostly the cowboys, miners, and faucet kings - began to become obsolete in generational metrics. Then the self-interested few bought the government, monopolized & manipulated the opinions & activities of the citizenry with media. We continue picking up the checks but are getting more buttkicks than backpats for our trouble and, yet, we careen along our stumbling course. If two generations can effect this kind of perverse revolution, it is but nightmare to consider what the next two generations might bring. Enjoy -
And then marketing replaced manufacturing as what America did most. Cornering markets, stifling competition, budgeting sales over research, arbitrage, heedless lobbying and other ways of rigging the game. In two generations, there were no longer free-market, competitive solutions at the ready for America's continued prosperity, only that which a self-interested few allowed to be explored. And entire demographics of our population - it just so happened to be mostly the cowboys, miners, and faucet kings - began to become obsolete in generational metrics. Then the self-interested few bought the government, monopolized & manipulated the opinions & activities of the citizenry with media. We continue picking up the checks but are getting more buttkicks than backpats for our trouble and, yet, we careen along our stumbling course. If two generations can effect this kind of perverse revolution, it is but nightmare to consider what the next two generations might bring. Enjoy -
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Science has failed us a lot worse than capitalism has. The science of chemistry is what makes chemical warfare possible, and physics and biology are even worse. End science now!
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zoonation
Footballguy
Dude. Brilliant. I don’t have the time to unpack and critique (if warranted) the merits of the post, but the prose is seriously off the charts.
much respect.
Captain Cranks
Footballguy
MTskibum
Footballguy
I calculated it a few years ago, but it still holds up. I arbitrarily chose 1980 as the reference year.
Interest rate 1980: 16.35
Interest Rate 2019: 4.94
https://www.valuepenguin.com/mortgages/historical-mortgage-rates
Housing Cost 1980: 64,000
Housing Cost 2019: 299,000
https://www.census.gov/construction/nrs/pdf/uspricemon.pdf
1980:
Payment Every Month $821.50
Total Payments $295,740.24
Total Interest $231,740.24
2019:
Payment Every Month $1,574.46
Total Payments $566,804.85
Total Interest $267,804.85
In 1980 it took 3.10 to be worth a dollar today, so the total cost of housing has gone down relative to inflation rate. Depending on the exact year you choose it varies slightly, however historically our housing cost is the same as or cheaper than it always has been. This is even though our houses are giant compared to what they were 40 years ago. The reason I chose 1980 was because of the stats below. The average housing size now is almost 50% larger than it used to be.
Housing Size
1980: 1,740
2014: 2,657
https://www.newser.com/story/225645/average-size-of-us-homes-decade-by-decade.html
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IvanKaramazov
Footballguy
Also, interest rates are at least partially a policy choice. If you want to evaluate housing costs, it's better just to look at home prices separately from the issue of financing IMO.
IC FBGCav
Footballguy
Not for the ten of thousands that die every year due to lack of healthcare and the people that go bankrupt from medical bills.
urbanhack
Fight The Power!
Sure...just take a look at the influence of the sugar lobby and its effect on our food pyramid dating back to the early 70s when they buried the report that said was it was harmful. And it's injected in almost 70% of our supermaket products and it's killing us.
MTskibum
Footballguy
I 100% promise that I chose a year at random, I have no ulterior motive and I did this a couple years ago just for my own benefit. Everyone talked about the cost of housing so i did my own analysis and what I found was that depending on the time you compared it to that housing either was cheaper now or very similar priced to the historical average, home prices in 1970 do come out slightly cheaper to today's housing price. Houses in 1970 were significantly smaller compared to today's housing size. On a cost per square footage bases, housing is cheaper now.
Every other year I compared against shows that housing is more affordable today than in the past.
1990
Interest rate: 10.67
Average Home Price: 125,000
Monthly Payment: 1,159.34
Total Home Cost: 417,362.77
Inflation since 1990 is 100%, so the cost of this in today's dollars would be 800,000.
1970
Interest rate: 7.71
Average Home Price: 23,500
Monthly Payment: 167.71
Total Home Cost in 1970 dollars: 60,374.80
Total Home Cost in 2019 dollars: 400,000
2000
Interest Rate: 8.64
Average Home Price: 164,000
Monthly Payment: 1,277
Total Home Cost: in 2000 dollars: 459,837
Total Home Cost in 2019 dollars: 670,000
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MTskibum
Footballguy
The interest rates have as much or bigger influence on the cost of housing as the actual price of property, yes it may be a policy choice but it is certainly a major factor in the cost of home ownership for the majority of people buying a house.
I myself have a 30 year mortgage, and that is my point of reference in the above analysis. I initially did this analysis before purchasing my first house a few years ago and it was for my benefit.
For cash purchasers who do not benefit from the low interest rate, obviously the price of a house today is more expensive than it was in the past. Hopefully one day I can be in that demographic at which point I will change my argument and complain about the high price of housing.
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Bottomfeeder Sports
Footballguy
You know I'm largely with you in spirit, but you just proved jon correct. In a country of 300+ million people tens of thousands is insignificant in a macro context. Of course in the micro context of these tens of thousands of lives it is anything but insignificant and it would be cruel - like so many do - to say "hey it works fine for me and most people so I think I can be indifferent to those that it doesn't work for because it must be the fault of some more failure of their own." (Okay, maybe they don't say exactly that, but...) Too many people at some level promote the idea that the "invisible hand" as a god rewarding the righteous and punishing the sinners. That idea is what leads to failure, or more accurately indifference to the individual failures.
The argument shouldn't be whether or not something is a success or failure if it doesn't achieve 100% success but what to do about those that it fails. How do we help those that for one reason or another don't thrive or even survive very well in this environment? I think step 1 is to stop caring about whether or not the individual is at fault for some failing, I think step 2 is to stop creating systems that people can work at rather than doing something else. Which all leads to universal floors for everyone. A basic income level to meet most needs. A basic health care level to meet health needs. Opportunities to continuously educated or re-educated to keep up with fast changing world. These things are all items that remove distortions from the markets to allow capitalism to do what it does best.
IC FBGCav
Footballguy
But we don't have Capitalism. We got a rigged game. Why can't we import drug that are 3 to 5x cheaper other places? Sounds more like corruption not Capitalism.
Godsbrother
Footballguy
You should also factor in property taxes and interest which used to be deductable, not so much for the average person any more.
IvanKaramazov
Footballguy
"But we don't have capitalism" is actually a pretty good response to the question "How has capitalism failed America?"
Bottomfeeder Sports
Footballguy
My friend you are not helping the cause of your thread title. Is capitalism what failed america? Or is it the rigged system? Or is the rigged system an obvious consequence from capitalism which leads to failure? I'm given you a way out of the corner you backed into, can you pause and reflect long enough to take it? I'm betting you can. Go for it!
wikkidpissah
Footballguy
I haven't much of an understanding of economics, but it continues to mystify me why i am unaware of any new science in economics that is not in service to present financial structures. Capitalism seems to want to rig markets as quickly and thoroughly as it can; anti-trust legislation at the turn of the last century sought to place government as a referee, keeping this phenomenon from becoming systematic, but Wilsonian democracy and FDR's bailouts ruined the standing of government to be impartial enough to keep a balance. It has been my observation that size of private & public institutions is a factor in this interruption of progress and that equilibriums - formulas by which to maintain optimal range for both private gain and public interest - should be developed to maintain democratic capitalism in proper balance. Why am i missing evidence that anything like this is being done?
IC FBGCav
Footballguy
Because Capitalism led to the corruption of itself. I know that many can't grasp that.
Bottomfeeder Sports
Footballguy
Great question. I don't have any "reasoned" replies. From my "knee jerk" side of the brain I'd say that many people treat economics like it is physics where it's natural laws can be all broken down into calculus equations. But it is not. Economic is a social science like sociology or political science where there is much "art" as there is "science" in trying to understand the outcomes of various human interactions. And as such it doesn't really lend itself to such predictions as much as workings itself out. Maybe a real economist like Ivan can pick this all apart with countless example of this being done, but like I said it was reply from the "knee jerk" side of the brain.
Zegras11
Footballguy
culdeus
Footballguy
Are we better off when the jobs are retail and sales oriented? Dead end low value and low pay jobs shouldn't be the marker.
wikkidpissah
Footballguy
Ivan thinks my conjectures are poppycock, so unschooled to be unworthy of his notice.
Your observation of modern economics as a junk science, is similar to my feeling about psychiatry - "farts & arces" my research scientist father calls it. One would think, though, with the fate of the world in the balance that, lacking a third option to capitalism or communism, some kind of "fluid economics" to explore the middle ground for a higher purpose than exploitation would be at hand.
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MTskibum
Footballguy
That is happening regardless of the economic model, the US is right inline with Australia and Western Europe.
This is not related to capitalism but is because of technology. We need less people for agriculture and manufacturing than we used to need. Productivity has never been higher.
https://data.worldbank.org/indicator/SL.SRV.EMPL.ZS
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IvanKaramazov
Footballguy
I'm somewhat confident that government corruption exists in non-capitalist societies.
IvanKaramazov
Footballguy
No, on the contrary there's a lot of work in the discipline along the lines you described. My sub-field (industrial organization) regularly features work on regulatory and anti-trust issues. Those papers tend to focus on particular industries, not "the economy" as a whole though.
Bottomfeeder Sports
Footballguy
I don't think Ivan is too fond of my "trolling" either.
In any case I am assuming that you mean capitalism and communism in theoretical senses and not really how they have existed in practice? Or in Marx's writings. I think they both work just fine along the theoretically "pure" sense in small groups but have issues in scaling. From a communism perspective I think it is one thing for a group where everyone knows and trusts everyone else to share just about everything, but it becomes different when asked to share the bounty from your hard work with "others" that you don't know and might not trust and especially might not respect. For capitalism I think the same is true when it comes to seeking a fair exchange between individuals. It breaks down and becomes a power struggle to get the upper hand the more distant the individuals are from each other - especially when one of the individuals isn't an individual at all but a "corporation".
So while I'm not sure that capitalism and communism really represent end points on a line where the correct choice is somewhere in the middle because this is multidimensional, the sentiment that the answer isn't some static point in the middle but ever changing - fluid - is one I agree with. But how do we get to that "higher purpose than exploitation" seems to be to keep plugging away. Hopefully that the one free market place that ultimately works is the one for ideas.
wikkidpissah
Footballguy
No, i meant them as the two macrosystems, one of which is a proven failure, the other teetering on the brink. It's unthinkable that, in over a century and a half of volatile changes in all other aspects of life, we cling to two systems which fairly well pre-date the Industrial Revolution, with no movement toward entirely different solutions.
I remember two distinct things which have always been at the base of my wondering & confusion. The America into which i was born had more radical leftists than radical conservatives. What became Reaganism was not only a minority, but a fringe viewpoint. With echoes of the Great Depression still a presence and middle class life yet to be entirely settled upon all our worldwarriors. they were many more who thought capitalism was broken than those who didn't question it at all. As prosperity grew throughout the 50s, that sentiment subsided, but it made an impression on young wikkid.
Then, when Reagan came in in the 80s and starting hacking at tax rates - i think the top rate was 78% percent then - the biggest issue of talk between left & right was what the percentage which began to strangle incentive & innovation. We just assumed that someone in David Stockman's office or the Keynesian oppostion would come up with an answer, but they or anyone else never did. Apparently, it was a dodge to cover the fact that moneyed interests were going to keep hacking at the rate until someone stopped them. No one has yet, but i still have a deep feeling that there are floating percentage ranges - what i call "equilibriums" - which can arrive at optimal numbers for wage/price/tax/fairness/opportunity/etc in case this country ever decides to cooperate in the name of progress & prosperity again.
Bottomfeeder Sports
Footballguy
I will reply from my "knee jerk" side again. Have you ever read "Let there be markets"? I think the problem is economics is too much its own religion. We in the US worship the invisible hand. I think the communist tried to develop the same type of faith driven approach but it teetered out. I'm with the originator of this thread and others that we go too far in our unquestionable faith in the "markets" as if it was perfectly created by God (or some god). But I'm not sure we need to abandon the system completely.
We need to understand the shortcomings of capitalism when scaled and address the results of these failures. Some people are left behind - take care of them without otherwise distorting markets. Don't try to thwart automation eliminating jobs but try to find ways to keep those that are displaced healthy, feed, sheltered, and busy enough to feel fulfilled. Some people are going to try to be modern day robber barons - thwart that. I don't know that we need a different system, just need to be obvious about the one we have. And I'm not so sure that communism wouldn't work just fine if we could address its short comings someway other than with a brutal, authoritarian power structure - I just haven't spent much time trying to figure out how that might look
.In any case I think any system we devise whether ancient or brand new will create winners that thrive and losers that hardly survive. We just need to be honest about the failures and collectively work to adjust for them. We only seem to do that sporadically.
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urbanhack
Fight The Power!
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Jackstraw
Footballguy
Didn't you just lecture me on substance and the topic of the thread? Just sayin.
Dinsy Ejotuz
Footballguy
I don't know what's out there that's published, but I saw a lecture by Robert Shiller who argued we should index inequality so that when it gets out of whack we automatically adjust. For example, raising taxes if it's "too unequal" and cutting them when it's "too equal". Basically come to an agreement on what sort of society we want to be and then index the levers we can pull to make it happen so that we don't have a fight every single time and can react productively to keep things in balance.
ETA: I probably saw him in 2007 or so, but it looks like he's still banging that drum.
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I think you'd have to put it in the Constitution to stop having a fight every single time.
Which would make the initial fight super high-stakes.
Dinsy Ejotuz
Footballguy
Indeed. He kind of acknowledge that in the discussion, but I felt like that was a glaring hole in his idea. And that was 12 years ago -- you can imagine how much worse it would be today.
wikkidpissah
Footballguy
Seems a bit engineered, post-modern, result-oriented kind of thing in my limited understanding. Attempting to assure results is probably as ruinous as assured markets. I'm looking first for a science of calculating equilibriums for tax rates, wage structures, pricing, trade deficits, optimal interest & unemployment rates, etc which can be taken as reliable by most entities of finance, manufacturing and government and upon which we can rely to decide if we should tax wealth right up to the highest number in the range or not and make other similar decisions.
parasaurolophus
Footballguy
This would be like talking about the cost of college without factoring in the effects of student loan availability.
MTskibum
Footballguy
Just wondering if you had a chance to look at the interest rates per year and have had a chance to come to a different conclusion. I do not want to people to think that I cherry picked data to prove my point.
Already two people have liked your post when in fact I did choose the year at random.
Workhorse
Footballguy
I think it paints an incomplete picture. While lower interest rates may hold monthly payments somewhat flat over time, it ignores other factors such as property taxes and decreasing ability of prospective homeowners to make a substantial down payment, to cite two obvious ones.
Capitalism is only for individuals and small companies, while large companies and the very rich get as much socialism as they want in bailouts, tax rebates, and other sources of free money independent of doing a "good job". The board of directors for companies often have CEOs of other companies, and I am fully convinced there is collusion to drive CEO benefits and pay up in a quid pro quo manner. Get fired from starbucks - nothing, get fired being a terrible CEO and driving your company into the ground, like the We Works CEO - get 9+ figure golden parachute (link below).
https://www.cnn.com/2019/11/05/perspectives/adam-neumann-golden-parachute-wework/index.html
https://www.cnn.com/2019/11/05/perspectives/adam-neumann-golden-parachute-wework/index.html
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MTskibum
Footballguy
Insurance is another factor that is more negatively effected by a higher price/lower interest rate. If you just look only at the factors I considered above there is a 30+ year period where home ownership looks cheaper now.
However, I think once you consider these other factors you mentioned above, the price of home ownership is along the lines of historical average(although significantly cheaper today on a price per square foot).
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Bottomfeeder Sports
Footballguy
Housing prices already bake in the interest rates to some extent. That is if interest rates are high the market is going to push housing prices down and vice versa to get to a sizable enough population that can afford the monthly payment to find buyers. At least in the macro sense.
ETA: The same way student loans allow higher college cost.
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