We All Work at Enron Now
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1. Ten years ago, some people committed egregious accounting fraud.
2. Let's imagine what would happen if everyone committed accounting fraud. (Where we re-define accounting fraud in a very liberal manner.)
3. Sprinkle in lots of non-sequitur. Oh look, this is an explanation for the current state of the economy and Everything Else!
4. Therefore, the environment is going down the drain and we're all screwed, unless all principles of accounting are re-based upon environmental economics.
Come on Umair, you can do better than that!
5. Fortunately, the Internet has Changed Everything and, like in $CONTEMPORARY_REFERENCE, all bad things will be swept away. The End!
Whether it is by imperfect competition due to myriad reasons (information asymmetry, {mono|duo|oligo}poly, "regulatory capture" or blatant corruption of governments) or industry verticalization or horizontalization, the end result is always one or a cabal of big ass companies runs everything, exploits its workers in one or more industries, and the smaller competition gets squeezed out to the point where the barriers to entry are impossible except through regulation (and, often times, regulation is the reason it makes it hard to compete).
How many more times can we say "Capitalism would be perfect, if it weren't for humans" before we conclude that we need something different? And, why do we continue to pursue it in practice if we know it doesn't work in almost any situation?
In fact the only industry that is known to have "perfect competition", the one taught about ad nauseum in econ classes, is fishermen in Southern US. And, even then, governments and even the Ku Klux Klan were called in when hard-working Vietnamese immigrants came in and fished harder and longer. There's no win when Free Will is involved.
Pure capitalism doesn't work (or else we'd have done that already), communism doesn't work. Something in between, but what?
That's the leanest, strictest, "aspie"-est role of government that I've seen. We don't need anything: An army, navy, NIH, IRS, Student Aid, welfare, SS, Medicare. We need nothing but the government to ensure that what I make I can keep and what I do with it is my business. Everything else, and I mean all of it, as cute and as cuddly and toothless and gross and poor and pathetic, can fall where it may.
In this situation, "ask not what your country can do for you, ask what you can do for your country" is tantamount to treason, if and only if we lived in a pure capitalistic society.
Any disputes to the above are the very first that I've heard of and is not pure capitalism.
When you see people standing up for capitalism, ask yourself: Are they promoting the correct operation of the price system, or just helping out some friend of theirs?
Finally, I think there really is no such thing as an "Externality". If you build a plant next door that is polluting, you're going to owe me money. This is an internality, it is part of your operating cost. I will sue you, and in any fair system, the damage you do to my persons or property is something I can recoup.
If you're afraid that the ability to sue for such damages is impaired, then get rid of the EPA and other government regulations that provide cover for this pollution.
Lawsuits are a form of market pricing of the cost of doing wrong. And generally, most businesses will try not to do wrong because it is a lot easier to just do things right the first time than face the liability of injuring people or property.
of course, removing limitations on liability is important for this. IF that's what you meant by a "Tax on externalities" then great.
http://en.wikipedia.org/wiki/Externality http://www.econlib.org/library/Enc/Externalities.html
Starting in 1900 socialism in many forms started to take over the country, resulting in the great depression, the new deal, etc. But still, between 1900-2000 despite inflation eroding the purchasing power of the dollar by %90+, the standard of living for the lowest %20 of americans increased drastically. We went from nobody having any electric utilities in 1900 (of those in poverty, maybe lights and phone service) to it being fairly common for the lower %20 to have computers and internet and TVs and electric dishwashers, etc.
Too long of a time horizon? Look at india from 1980-2000. India is a socialist country and did not embrace pure capitalism, but had reforms that greatly reduced buracracy making starting small businesses much easier. The per-capita income of India doubled in that time period. That is over a billion people. Many of them are still poor, but their relations who are now living in first world standards can send money back home and the quality of life of the poor was improved dramatically-- just by lessening the burdends of socialism slightly.
Seriously, if you study economics, and you look at history, you'll find that where a country has a relatively free economy, the standard of living of the poorest %20 improves. Where a country has a relatively unfree economy, ranging from British socialism to German socialism to the USSR and North Korea, the poor have much lower standards of living.
If socialism is very dominant, it is true that there is "less poverty", but this is simply because everyone but the government is made to be poor. The only economic equality historically comes from everyone being poor.
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Finally, I think that, given that the purpose of this site is to foster a startup spirit, you really should question whether a startup is for you if you reject capitalism.
I don't see how you can make good business deals, treat your employees right, or be a success if you thin the very nature of what you're doing is bad or evil.
Capitalism works because in a consentual exchange, both parties profit. When we trade, we are trading something we value relatively less for something we value relatively more. The apple farmer has so many apples, he'd rather have money, while the cobbler has no apples and wants to buy some.
When you give government control over the economy you naturally create centralized planning and inefficiencies that lead to shortages. Either they price things too high or too low, because they aren't aware of the market signals. Compulsion of force eliminates choice which eliminates the method by which consumers give feedback to economic entities. This is why there was scarcity in the USSR while there was abundance in the USA despite the USSR having more resources overall.
Of course, it is also in governments interest to indoctrinate people with the idea that they need government, which is why governments take over schools and then proceed to teach children that socialism is necessary to for "equity" while ignoring that it has failed everywhere (even the USA.)
Study economics. It isn't that difficult of a subject. The obfuscation and handwaving is all about trying to make keynsianism seem viable. Economics in one lesson, by henry hazlit is free online from various sites and gives very succinct arguments for why various programs do or don't work, and how the world works economically.
We're in a depression in the US caused by a distortion of the market from government. Under clinton it was decreed that loaning money only to people who could repay it was racist, and under Bush it was decreed that the rate of interest should be below the rate of inflation. This caused the housing bubble and the consequent bust. It is no wonder that the perpetrators of this crime -- years after it turned out that there was no racial bias in the loaning results-- blamed the wall street banks and "bailed them out", often forcing solvent banks like wells fargo to take "Bailouts" even though they didn't need them...and to try to push thru congress the power to arbitrarily force mergers of banks at the federal reserve level.
Capitalism works. Freedom works. Let people be and they will make better choices for themselves. Try to impose your whims on them and you will make their lives worse.
You need to embrace this if you want to run a business.
Uh, US poverty in 1900 was immense. This was the era of the Wobblies, The Jungle and the Robber Barons. Yes, a variety of radical ideas appeared about then. Why?? Look at the conditions...
It seems like length abuse is creeping into HN...
People talk about the "Robber Barrons" but this is really a pejorative. Standard oil, for instance was able to lower the cost of gasoline dramatically, I believe it was more than an order of magnitude. This paved the way to the car being a viable product for the middle class and eventually nearly everyone.
Government limited to the enforcement of property rights allows each of us to accumulate capital.
But some of us are smarter, work harder and defer consumption. They can accumulate more than others. There is nothing wrong with that.
Then mass production and mass media came along, enabling some to sell what they produced to millions of people and accumulating a lot more. Still no crime committed.
In fact, the average person benefits when others are able to produce a lot with little effort. Things become cheaper.
And those who save rather than consuming benefit us too. We can borrow their money and invest in improving our own productive abilities.
Its true that those who commit crimes and get away with it also can accumulate wealth, but that doesn't mean that those who've respected the rights of others don't deserve what they've accumulated.
But, then saying such a condescending thing, you back that font of economic prowess with:
"We're in a depression in the US caused by a distortion of the market from government. Under clinton it was decreed that loaning money only to people who could repay it was racist"
That's not true at all. First off, way to blame the world financial crisis on poor people (because _that_ isn't playing class warfare at all /s). Secondly, If it were just a bunch of poor people defaulting on mortgages, we wouldn't have needed two "quantitative easings" via buying 2.1 Trillion in MBS, three bailouts, and a stimulus. It wasn't Clinton, or Fannie/Freddie, or even Barney Frank that forced banks to invest 30:1 in toxic securities, and if we had regulations put in place, 30:1 bets on the so-called "poor people's" mortgages wouldn't have been allowed.
Place the same blame on this bust that we had on the one during the 20s and then during the S&L bailout in the 80s: Pure Wall Street avarice. They can use the poor people, the government, "insurance" companies, tax shelters, the Fed, asset leverage, and finally the People's tax largesse to stoke their fire. In pure capitalism, everything burns.
In the examples you cite, the benefits of progress in technology confound the changes you attribute to developments in policy and government.
If we look to only the recent example of India, it's decreasing poverty rate has been decreasing prior to "lessening of the socialist burdens" that you cite between 1980 - 2000. On page 4, it appears to be trending down in the 1970s and actually becomes stagnant in the 1990s.
Secondly, in the same study, for the time period you cite, India's Gini coefficient, a measure of income inequity, goes up.
http://www.ekh.lu.se/ekhcgu/teaching/401d4/poverty%20in%20in...
I'm all for capitalism, but I think it's misleading to think that it's everything for everyone. There are a lot of examples of great capitalism models as well as socialist models, and I think the idea of excesses in unregulated capitalism (ie. the cost and moral hazard of healthcare) are extensively documented.
"income inequality" presumes that everyone should make the same amount of money. This is silly, and the only way to achieve it is to have absolutely everyone be poor.
The overall total wealth of the country, and the standard of living of the lowest %20 goes up more when you allow for capitalism.
There are no excesses in unregulated capitalism that I've seen because there is no unregulated capitalist country. The extensive "documentation" you refer to, that I have seen have been essentially easily refuted propaganda.
I do not doubt that there are a lot of people who wish to see society absolutely controlled, such that nobody is richer than them. But in doing so, they make everyone poorer.
It is a statistical fact that people who live in countries which promote greater wealth equality are on average happier, healthier, and enjoy better relations with their fellow man. Redistributionism has won. As they say, live in America to get rich but in Europe to be happy.
I just want to note that a 4th year economics course was the hardest course I ever took at university. And I'm a guy who liked economics, though I didn't major in it. The course had to do with economic analysis of the law. It explained why the law was the way it was, why it was applied the way it was, etc. I never had a textbook before that made my head literally hurt, nor did reading the phd papers each week help either. I have a lot of respect for the difficulty of real economic study and the intelligence of real economists after that course.
An interesting aside, my Stanford friend told me that the best mathematicians seem to be economists by far. I don't know what to make of that anecdote, but he was an engineer in a masters program, now doing his phd at Berkley. He's run into a fair bit of smart people, so I'm guessing his anecdote is worth something.
For example, a group of property owners could agree to a contract that controls whats on sale at stores in their collection of properties, decide what channels are available on its cable tv system, ban smoking of tobacco and even combine their bargaining power to get better deals on credit cards, lawn mowing, etc.
I think we'd certainly see such systems evolve if government restricted itself to just enforcing property rights and contracts. There is nothing about this that conflicts with property rights, as long as people can enter and leave these contracts and the terms cannot be changed arbitrarily.
A lot of these things are impossible for government to do without stepping on the rights and preferences of large portions of the population. It tries and fails at many of them. It actually regulates very badly compared to standards that
For example, we still don't have smoke free communities. I doubt it will ever be mandated. But its been possible in private property forever. And smoke free communities can coexist with communities that allow smoking (except for whoever's downwind).
These neighborhoods would attract people who value the overall quality of life who may even disagree with some parts of the contract, but are willing to tolerate the rules to get the safety and health benefits or just to live with people like themselves. And there'd be others who'd prefer not to be involved with any such arrangements.
That's an 'externality'. Regulations are a pretty good way of dealing with them, even if imperfect. I believe it's good for there to be a more or less continuous debate on the nature and scope of those regulations - too many stifle business and personal liberty, too few can cause problems as well.
They will indeed evolve. As the time goes, more and more local regulation would be added, and you will need people doing full time tracking and enforcement of it. Eventually, enough neighborhoods will notice how much similar regulation they have, and agree to outsource that part to be managed by an independent body focused on the issue. They will fund this body by paying a share of their budget, as obviously people doing this work need to live off something.
At this point of course, you get a government.