Why Socialism for the Rich, Capitalism for the Poor?
europe.newsweek.com
europe.newsweek.com
Its sort of like claiming corporations love the idea of abolishing contract law, forgetting that no matter how much they'd make in revenue, it would never make up for their expense side going crazy.
Another interesting comparison is in an extremely simplistic manner a company would appear to greatly benefit from dumping all their toxic waste out an open window where it blows 10 miles downwind at some city; however the only thing that could be worse than living in that downwind city is working in the same building next to that toxic open window... I was cool with my local nuclear power plant when it was owned an managed by a corporation 10 miles downwind, not melting down would be very enlightened self interest, but not so cool about the plant when it got sold to someone 1000 miles upwind.
Are they superior products? Meh.
Would you particularly miss them if they were destroyed? Unlikely. Somebody just as good would come along by and by, or one of the other ones would rise to replace them.
Are you gonna pay for them anyways? Bet your ass you will.
A simple, if specious answer: The Golden rule - she who has the gold, makes the rules.
Typically at least effects of scale and cartel-like contracts with other major players.
Those people aren't capitalists in the proper definition of the term. Capitalism is voluntarism, which manifests as free markets in practice.
There are two definitions of "capitalist":
(1) A holder of capital,
(2) An adherent to "capitalism", the dominant economic system of the industrialized West in the mid-late 19th Century (which has been diluted by subsequent reforms, but remains a core element of the structure of economy in most of the modern developed world), named "capitalism" by its 19th Century socialist critics for the ways in which it systematically served the interests of capitalists (by the preceding definition.)
The GP post seems to be accurate whether using "capitalist" in sense (1) or sense (2).
"Crony capitalism" is the only kind that has ever existed, and definitely the kind for which the term "capitalism" was coined. The idea of any other kind of "capitalism" is, well, highly implausible. To avoid cronyism, you are going to have to take out the core features that make it capitalism.
> I'd bet that I'd consider some of the "subsequent reforms" you've described as fundamental corruptions of the system.
Thing like establishing labor rights are certainly "corruptions" if you view the 19th Century system initially labelled "capitalism" as pure.
I don't see "corrupting" the purity of capitalism as a problem, though.
> For example, political donations as corporate free speech (Citizens United v FEC) doesn't make much sense in a world where shareholders aren't engaged and active participants in company behavior.
Citizens United is a move back in the direction of a pure 19th Century capitalism, and a reversal of reform efforts aimed at constraining the dominion of the capital-holding class (which is what campaign finance reform efforts that seek to limit the influence of wealth on politics to protect democracy from capitalism are.)
Whether shareholders are personally active or find it most useful to give management free reign is immaterial to this.
> In other words, corporate governance is broken, something that Reich gets right.
What Reich gets wrong is embracing the idea that capitalism is betrayed by the various failures, rather than the source of them. His idea of supporting a "share the gains" capitalism is amusing: "share the gains" is not, and has never been, capitalism (though it's occasionally a lie that capitalists use to justify capitalism, as in "trickle-down" economics.)
I don't think my ISP choice is a result of free market capitalism. It seems an awful lot like collusion against the free market, against competition, locking me down to one ISP depending in which region I happen to live.
The US definitely does not have a free market. I would venture a guess that most of the regulations are actually designed to benefit a select few at the top of some company or investment system.
Which makes sense, since that's exactly what the label "capitalism" was created for.
Lots of people have, however, bought into propaganda that capitalism is something else that was created by capitalists after the criticism in which the system was named.
Blood lines (either real, or "Roman-style" (meaning voluntary adoption)), outright whim or military power (either individual, or organized), or otherwise advancement within a rigid hierarchy.
None of those seem to me even remotely preferable over a system where making money means advancement.
Unless communism/socialism is not what you mean with "continuing to build".
And consequently, in practice, there are no capitalists and no free markets, by the proper definition of the term.
(As in holders of capital and people following the competitive philosophy.)
If you're a car careening down a road. You're going to fast, and an accident is about to happen, but you can, say, either hit a group of male toddlers or a slightly smaller group of female toddlers. How do you choose ?
Your answer is simply "No", and that's just not acceptable. Does that mean anarchism ? You must choose, because the real world needs to exist and the economy must keep working. Without it, we wouldn't be fed, wouldn't be able to move any significant distance, wouldn't be anything.
The problem with the "no" answer is that a this refusal to choose, in the economy, would match in the dilemma with first hitting all the boys, driving back and forth a few times to make sure you've got them all, and then get going on the girls. That's what shutting down the economy would do. One might assume this is not in fact what you intend, so what are you going to do ? What is the superior alternative to capitalism ?
There are a lot of other, less savory, ways to manipulate free markets to stifle competition, however. Your friendly neighborhood cable company, for one example.
http://www.cnbc.com/2017/02/27/peter-thiels-tech-book-became...
Which is a summary of:
http://www.politico.com/story/2017/02/donald-trumps-shadow-p...
That's not to say I'm anti-capitalist by any means. I think it's a great economic engine and a tool for great good. That we can never turn our backs on, lest it devour us. ;)
You don't have to do it first if everybody before you couldn't close the deal.
> Did Apple look for unfair advantages or did they design products that people loved and bought in preference to others?
They made cool products, but they're the most valuable company in the world, at least in part, thanks to the unfair advantages too. The most blatant of them being the $14.5 billion in unpaid taxes in Ireland. And this is Ireland! Imagine if they paid the taxes proportionally in each of the countries where their operate, or in the US at least.
> Traders (capitalists) should indeed look for monopolies if they don't want a race to the bottom but that monopoly can be based on unique value to the customer if crony capitalism isn't involved although sadly it's all too prevalent.
Never have I heard of an industry that benefited from having a monopoly by a for-profit company more than not. Precisely because they are for-profit. These companies work to increase revenue; as much as they market otherwise, the "value to the customer" is but a means to grow this revenue. If they can grow this revenue without providing as much "value to the customer", or in fact, if they can increase revenue by providing less "value to the customer", they will.
And this is not me vilifying them, it's sadly the way things work. Otherwise, we'd have super cool stuff but companies would go out of business. Take every example of a monopoly though, and since they don't need to provide as much value, they all end up decreasing it.
> Markets are dynamic. Conditions change. People's needs and desires change. The monopoly of today will eventually dissolve and at best become one of many equivalent options, tomorrow.
Except when they don't. I think you're thinking of this only from the tech lens, right after a period of rapid growth and lots of marketing, and he staple child for this claim is probably Microsoft, and how Apple went from the underdog to the beamoth. I have two comments on this;
1. What really broke Microsoft's monopoly? I don't think it was new companies innovating, or people's demands changing. It was a change in the system and ideology. Tech went from being your standard capitalist industry to an interesting beast thanks to the emergence of the Free Software Movement, which shares many ideologies with socialism/marxism.
2. Would Standard Oil or the Bell Telephone Company have "eventually dissolved"? The problem with this system is that it's easier for the rich to get richer; if you have a monopoly and the conditions are changing, easier for you to buy out competition or R&D into the next thing than for any other company. Even now that Standard Oil and the Bell Telephone Company have been artificially split the companies that came out of them are still the biggest ones around; not some new ones, though the times have changed a lot.
> That's one of the messages of zero to one, Peter Thiel's recent book.
Haven't read the book, but Peter Thiel is a businessman after all. I'd take his views more as opinions, since he's not really a full-time economist researcher.
The Left has been pointing out that capitalist markets are coercive rather than free since socialists coined the term "capitalism" for the economic system whose coercive structures they were criticizing, something like 150 years ago.
If you aren't noticing it, you aren't paying much attention to the Left. This often happens when people, for example, mistake the dominant faction of the US Democratic Party (center-right neoliberal capitalists) for "the Left."
Lets say person X wants to have a private bus system, would you call him a hypocrite because he rides public buses as well? I can except and live within a system and still prefer a different system.
If only that were true.
All those poor immigrants that came to the US, when the US had 2% of GDP in Federal government spending, did they all stay poor?
There is a discussion about poor people and opportunity, but your statement is just plain false. Its false both empirically and theoretically.
Also, and more respectfully, look at the effect of capital accumulation on wages. When productive capital (hint: not housing stock) increases, wages rise.
But many businesses are also struggling . By some estimates, this is this harshest environment ever for small business. Employees are being squeezed but so is small business (except web 2.0 and stuff like that), which is another component of capitalism
However the article is careful to distinguish between financial/corporate elites and small business (whose owners are generally not of the former group). It's almost misleading calling both small businesses and large corps "businesses". It's like ignoring the difference between a house cat and a lion in a debate about how one might goose-step on the other.
However, the reality is that if a country has good enough policies so that more industry starts there it will lead to more growth. If you sustain that for 40 years you can go from the poorest to one of the richest countries.
That's how growth works.
It's interesting to me when I think of a world where people that paid higher taxes (absolute values and not a % of income) had more votes during elections.
I'm afraid we are seeing something similar now, with some billionaires desperately trying to reduce any and all kinds of taxes they need to pay. Frankly its breathtaking to see how much greed these people have...also, a supreme lack of solidarity with they society they live in (and apparently a lack of knowledge of historical precedents as well).
I should add that the same doesn't hold for all the rich/billionaires. Very much respect the work the Gates foundation is doing, just as an example.
[0]: http://www.goodreads.com/book/show/9704856-the-origins-of-po...
That's not happening anymore...because campaign bribes.
...is not a defining feature of the real 19th Century system for which the term "capitalism" was coined as a label by its critics.
Robert Riech makes good points but provides zero ideas how to solve them. Relying on the goodness of CEO's hearts isn't going to cut it. That won't help enough people. How do we incentivize the behavior of employee ownership? Right now the incentives are aligned against that, as Reich seems to make clear. He seems to be advocating against more "radical" approaches advocated by Bernie Sanders because there is this glimmer of hope some CEOs will be nicer. It seems like this article makes the point that structural changes are necessary but the author falls short of that conclusion and instead gives glowing praise to a single CEO in hopes it will inspire a few others. It might, but that won't help much.
Plus there are other loopholes, some of which are already used, such as banking in Cayman I islands, and being located in a more "friendly" country.
Also this isnt so much about socialism or capitalism but about why the world seems to favor the rich.
> Because the average employee does not take an active enough role in management decisions.
Think on the politics that are closer most people in their day-to-day lives, at the workplace, active engagement with general policy is disencouraged and might be dangerous. Meaning, most people refrain from engagement with "management material." Being trained like this, it naturally extends to governmental politics.
> Before we go to the barricades, you should know about another CEO named Hamdi Ulukaya [...] Last Tuesday Ulukaya announced he’s giving all his 2,000 full-time workers shares of stock worth up to 10 percent of the privately held company’s value when it’s sold or goes public
This is comparing apples to orange socks. The issue at hand is the safety net. If she gets fired, the underperforming CEO gets enough money to continue her lifestyle - perhaps indefinitely. The Chobani employees get a little more upside, but their downside is pretty much the same. E.g. they're still in deep sh*t if the company does badly.
That's pretty much the opposite of what I'm saying.
> This is comparing apples and orange socks. The issue at hand is the safety net. If she gets fired, the underperforming CEO gets enough money to continue her lifestyle - perhaps indefinitely.
I guess you're saying the comparison isn't even fair because it is completely different playing fields but it's hard to parse that from the above sentence structure.
Chobani does badly -> employees' Chobani stock is also doing badly.
Giving more stock to employees is not a safety net.
Also, people who get angry about this are often beneficiaries themselves - the article mentions the pension funds who own most shares, but who will also later pay most people's pensions.
But VC never fund them, they prefer private owned companies.
Maybe because it is easier to bribe 1 man for 100 grands than 1000 for 10grands
And what if I hire workers to build me a house - should they be entitled to parts of the house after they build it? Or what if they absolute want to put marble into the bathroom, but I don't? Should they be entitled to put marble, because after all they are doing the work?
Meaning what is wrong with making a contract and fulfilling it? You do work x for me, I give you money y in return? Why make things more complicated?
Maybe I've only encountered this with folks working retail and in places like call centeres, never quite having enough either to buy stocks nor exercise their options after they've left the company. Even $75,0000 (half of the lower stock price amount) can be a life-changing amount for someone making 30k per year.
I understand it is cheaper on the bottom line to offer stocks, but it still can be worthless to the bottom-rung employee.
Yeah, ever see the people openly weeping at the end of every Undercover Boss?
The first level is its just political sloganeering.
The next level is they're contract jobs and the pay is high enough to be F-you money if they fail and via the magic of survivorship bias we never hear about those that fail, although they and their kids are the trust fund babies that explode inflation while producing nothing of value other than CO2.
The next level of analysis past that is a matter of scale. I can independently afford food and housing and medical care for my kids, maybe not the best but I'd be OK. If my business fails, no biggie, I just won't buy an ocean going sailboat in the 10+ meter range, we're still going to be OK. Someone lower on the socioeconomic totem pole tries to start a business and fails, or gets downsized from his good job, his wife has to leave him to get herself and the kids on the programs or they'll literally starve, that means she'll get the house, its the end of that dudes life, perhaps literally. Certainly its an economic death penalty even if he physically survives or if by some miracle his family survives intact. So the risk is a bit asymmetric because unless you magically have total equality in income, wealth, education, social connections, you're going to have people who will literally die if they lose $5K and others who can shrug off half a mil or more.