Made in the USA: Socialism for the Rich. Capitalism for the Rest
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* If uber-profitable companies abuse their wealth for lobbying, then stop allowing these kinds of lobbying. The current system with PACs an Super PACs and so on is unique to the US, it essentially is a societal decision to have a system like that.
* If FAANG companies are very profitable (see p/e ratios) but don't pay taxes, then fix tax law.
* If money is cheap because there is no demand for it to invest into new businesses etc., then raise minimum wages and invest into infrastructure at federal and state level, to induce demand. Remember that low interest rates mean companies have no need to borrow money. This is a common misconception, but low interest rates are a consequence of the current economical climate, not its cause - if money were in demand interest rates wouldn't be so low, see https://en.wikipedia.org/wiki/Natural_rate_of_interest )
* if employers employ illegal immigrants to do tax fraud, then enforce the tax law. The tax fraud part has nothing to do with the immigration, small business tax fraud works perfectly fine with exclusively Americans employed in the company.
True, but I would say better late than never.
Are they not the last person that should do that job given that they are the only ones that have proven that that they cannot?
If that's so, doesn't the defection to an opposing camp make his message even here more credible?
Mea culpas are more convincing when there's some kind of contrition. An intellectually honest person would at least nod towards having a change of heart, updated opinions.
Shoutouts to Liberal (neoliberal?) economists like Ruchir Sharma is progress. Of course, I hope Friedman ventures outside of the Mises vs Keynes food fight. I find Raj Chetty and David Graeber interesting, for instance.
Edit:
Oops. Looks like a "contrarian" economist Sharma is something like a deficit hawk. I regret my suspension of disbelief.
The Rescues Ruin Capitalism [2020/06/24] https://www.wsj.com/articles/the-rescues-ruining-capitalism-...
Are you kinda also thinking of Milton Friedman? Thomas Friedman isn't actually an economist.
All you really need to judge a Tom Friedman article is the "Opinion columnist" badge by his name.
What does he produce? He produces opinion. By what metric are his opinion pieces judged? Engagement.
Tom Friedman - and for that matter, most other opinion columnists (excepting those who are practicing domain experts who occasionally write about those specific subjects) - isn't paid to be right. He can be wrong over, and over, and over again. If the orthodoxy of the group who employs him changes (hey, look who's buying NYT subscriptions these days...) he can be wrong in novel ways. He doesn't have to "show his work." He never suffers any consequences.
He might have re-evaluated things! He might even be right - because hey, a stopped clock is right twice a day! But knowing what his job is and how he's performed in the past, it should be apparent that there's no particular reason one should believe him over, say, a random commenter on HackerNews such as myself. He has no incentive, credentials, or history that suggest a reader could usefully appeal to his authority.
Please explain how you know this. Was there ever any bottom at all for the cost of low-skilled labor?
More people means more workers, generally, I accept that. But more people also means more consumption, generally. And that requires more labor. Surely you don't think that normal population growth implies cheaper labor, right?
https://www.pewresearch.org/hispanic/wp-content/uploads/site...
Where I live low skilled labor is paid well simply because otherwise you wont find anyone who wants to do the job. That is how it should work, educate everyone and there will be a shortage of low skill labor driving up their wages.
- Many overseas markets opened to more outsourcing. Nixon "going to China" was one of the big ones.
- The rest of the world had pretty much fully recovered from WWII and started being more competitive with US manufacturing.
- The collapse of Bretton Woods and the removal of the gold peg for the US dollar freed central banks to pursue aggressive monetary policy.
- Automation really took off in the 1970s, and the computer revolution really got going.
- Women entered the work force in large numbers. In case anyone misreads: I am not against this. I'm just pointing out the supply and demand effects.
- Unions started declining for numerous reasons including the rise of anti-union politics and corruption in unions themselves.
- Increased racial equality is another thing I'm not against, but I am forced to point out that it increases the supply of labor in many labor markets that had been at least partly closed to non-whites.
- Finally, more immigration is definitely on the list too.
... there's a lot more, but those are the big ones. Almost everything I listed is deflationary to labor prices. So many things hit in the 70s it's like the floor dropped out. It's amazing US labor has managed to hang on at all.
Imo wage stagnation in the US seems to be far more attributable to deregulation, decline of unions and pressure from public companies to constantly cut costs to justify rising stock prices.
I am not exactly sure when it started, but if the topic is immigration impact on stagnating wages, I believe unless I am mistaken that the US-Mexico border was in fact a lot more open up to the 50’s, at least for cheap seasonal agricultural workers, until an ex marine general took over immigration enforcement sometime in the 60’s (or maybe 70’s?) with the perverse effect of forcing more seasonal immigrants to stay rather than risk going back home and not being able to come back.
However, the wealthy love this policy. Cheaper labor to build their homes, mow their lawns, clean their homes, and staff their low skill employment needs both at home and their businesses.
Especially with respect to the smaller numbers of startups and the impact of the big players either buying or snuffing out potential competitors among those startups.
Changing the incentive structures around startups, competition and markets propping up so-called "zombie" companies[0] seems like a fertile area for discussion, especially on HN.
Additionally, we've let too many companies buy up competitors. For example, Facebook purchased Instagram and Visa tried to buy Plaid.
It seems to me that any faction claiming to be "pro-business" would champion policies encouraging new business formation, especially smaller and more local.
Stupid obvious stuff like access to capital, helping with health insurance and other benefits, tax holidays like what Amazon enjoyed. There's no shortage of ideas.
Increasing barriers to entry for startups due to increased concentrations of cash/power stifling competition and innovation.
What changes in incentives improve the ability of startups to survive and thrive in an environment dominated by a few, cash-rich and competition-hating mega-corps?
Of course it is. I just thought I'd point up (given the title of the referenced article doesn't provide any real context) the startup angle as a direction for discussion.
No one needs to take that up, of course. But as the submitter I thought it worthwhile to mention.
I want it to be easier to operate a profitable food truck in Flint, Michigan so that it is easier to find a job building software that solves food safety problems for folks in places like Flint, Michigan. Currently, there is not enough anticipated revenue from doing that. Poorer people get fewer votes on which problems (like being hungry for lunch) and metaproblems (like running a food truck) get solved by the free market.
UBI also would make more centrally-decided solutions like education easier to provide. Kids learn better when they have less-stressed parents and aunts who run local businesses.
So many people stuck in jobs just because they can’t risk losing health coverage.
> There is insurance of bank deposits and the further certainty that any large corporation, if in danger, would be bailed out. Modern socialism, as I've elsewhere said, is when the corporate jets come down on National and Dulles airports.[a]
Who loses? Startups, small businesses, and the non-wealthy -- that is, the masses who cannot count on government largess to rescue them.
[a] https://www.theatlantic.com/magazine/archive/1987/01/the-192...
For instance, Sharma wrote in July in a Wall Street Journal essay [0] titled “The Rescues Ruining Capitalism,” that easy money and increasingly generous bailouts fuel the rise of monopolies and keep “alive heavily indebted ‘zombie’ firms, at the expense of start-ups, which drive innovation.” And all of that is contributing to lower productivity, which means slower economic growth and “a shrinking of the pie for everyone.”
[...]
In the 1980s, “only 2 percent of publicly traded companies in the U.S. were considered ‘zombies,’ a term used by the Bank for International Settlements (BIS) for companies that, over the previous three years, had not earned enough profit to make even the interest payments on their debt,” Sharma wrote. “The zombie minority started to grow rapidly in the early 2000s, and by the eve of the pandemic, accounted for 19 percent [1] of U.S.-listed companies.” It’s happening in Europe, China and Japan, too.
[0] https://www.wsj.com/articles/the-rescues-ruining-capitalism-...
[1] https://www.axios.com/zombie-companies-us-e2c8be18-6786-484e...
Technically if you own any stock you're benefiting. If we go by that metric that's almost 50% of people. However, the better question is how the ownership is distributed. One source says the top 1% own 56% of stocks, which paints a less rosy picture that what you're suggesting (that the gains are distributed among the top 20%).
https://financialpost.com/investing/how-americas-1-came-to-d...
Of course, there are a few outlier founders, CEOs, and stock traders that are benefiting much more then average. What separates these outliers from others isn’t IQ, because there are plenty of people with very high IQs that are doing about average economically.
Rich is having a high networth. It's a lot more dependent on what social class in which you were raised (and therefore what networks you can access, and what role models you have) than your IQ.*
My IQ puts me easily in the 95th precentile of tested individuals, but I grew up poor to two alcoholic high-school dropouts.
On the other hand, I have a friend who grew up with CEO father who sits on boards of major public companies. This friend spent college (at a lower-to-mid tier school) as a D1 athlete pounding beers while dealing and using massive amounts of cocaine. This friend will tell you I'm the smartest person he's ever met. He's said it to multiple of his contacts while in my presence.
He pulls in hundreds of thousands of dollars a month due to his daddy's connections, while I scratched and clawed my way to rise above my station and get hired by a FAANG.
*This is completely ignoring that IQ is based off an extremely biased, standardized test and a horrible proxy for intelligence.
Similarly, the Washington Post is a mouthpiece for Jeff Bezos, and all cash made just subsidizes his own investment and agenda.
Neutral corporate media is a contradiction.
Most major websites comply with GDPR, by the way - the more local they are, the more likely it is that I can't see them. So if my sister sends me an article from her local news site, I probably can't see it. Food Network is the biggest site that doesn't exactly work with GDPR: I can't see anything from the American site whatsoever, but can see the british one, who of course, doesn't show the recipe from the American site.
Also, don't forget that there's more to the economy than manufacturing - what about the service-sector, intangibles, finance, the information sector, creative arts, and so on?
Stimulus checks, extended UI, rent and mortgage forbearance etc etc etc. And it won't stop because it can't.
It's really, really not complicated and the way the term has been stripped out of its meaning (primarily in the US) is just awful.
afaik _only_ in the US? or are there any countries where the socialist bogey man is used this way by countries without a working social safety net?
- Paying 20% of your paycheck to insurance = good capitalist affordable.
- Paying 4% of your paycheck to Medicare = bad communist too expensive
Americans are the most propagandized people in the world.
the US agitprop machine doesn't even distinguish between communist and socialist - both terms are used interchangeably.
Bernie Sanders and how he is viewed is a great example here: his policies would have been considered moderate in socialist Europe of the 60ies/70ies (and especially in the often cited "well working" model of socialist Sweden, Denmark Norway).
Besides there's no socialism in most or all of Europe either.
Seeing Bernie-people saying "socialism works just look at Europe" and then pointing at Switzerland for example, is not only worrying but also quite funny.
This is an unfortunate saying, that further perpetuates misunderstanding of what socialism is.
Look at the french definition on wiki for example:
"The word socialism covers a very diverse set of currents of thought and political movements1, whose common point is to seek a fairer social and economic organization. The original goal of socialism is to achieve social equality, or at least a reduction of inequalities2 and, especially for the Marxist-inspired currents, to establish a classless society. More broadly, socialism can be defined as a political tendency, historically marked on the left, whose basic principle is the aspiration for a better world, based on harmonious social organization and the fight against injustice. Depending on the context, the word socialism or the adjective socialist can qualify an ideology, a political party, a political regime or a social organization."
This has lost a lot of its relevance since when it was originally coined in XIX century. I mean, what are the means of production in companies like CD Project Red? The laptops and workstations? Employees can easily afford them. Since we've moved beyond the factory-based model of capitalism, it's become clear that it's not the control of means of production that is the central issue.
The means to deploy knowledge. This ranges from a robust social safety net (healthcare, childcare, housing, food, etc) to as you say laptops and workstations.
> Employees can easily afford them.
For a very specific set of Employees, this is true. For others the outlay for even a derelict hand-me-down laptop is the difference between making this months rent and not.
> Since we've moved beyond the factory-based model of capitalism
The factory isn't making "widgets" anymore, but it's still there and it's making /something/.
> it's become clear that it's not the control of means of production that is the central issue
Owning the means has, is, and will be the central issue until we are post scarcity.
Which is not "...characterised by government giving handouts".
For example: was the USSR socialist? That's the common understanding, but plenty of socialists disagree, arguing that socialism means that workers own the means of production, and that in the USSR, workers didn't really own the factories, not in any meaningful sense, since at the end of the day they were under central government control.
In particular it isn't "Socialism is when the government does stuff and the more stuff it does, the more socialister it is."
Most people in Europe associate socialism with things like healthcare, paid vacations, &c.
Americans associate socialism with china, cuba, no freedom, gulags and famines...
Just the fact that Biden is called a "socialist" or part of the "radical left" (or even close to the left) by a non negligible portion of Americans tells you all you have to know. America/Biden's socialism is the equivalent of progressive conservatism in Europe
What should we call that? Totalitarian Capitalism?
"wiggle room" Exactly right.
I liken it to a control that you can turn to the left or the right. There are an infinite number of degrees in between.
My life experience seems to indicate that the control must be continuously tweaked, like a servo control, to keep a country working. Lock it one place and the system runs out of control.
Side bar hypothesis: Perhaps democracy works merely by chance in that it jerks the control back and forth never allowing a stationary position. (?)
It's typically referred to as "state capitalism"
https://asiatimes.com/2020/08/socialist-or-capitalist-what-i...
"Socialism" is all social security etc. So I actually agree with the parent comment.
So in US, "Communism"=="Socialism", in Western EU !=.
(the GDR didn't call itself a "communist country", because the party realized that the poor condition of the economy doesn't quite fit the utopian ideals of "communism", so they invented the term "real socialism" (https://en.wikipedia.org/wiki/Real_socialism) as one of multiple steps towards a glorious communist future, which would be realized "really soon now, just work a bit harder and one day we'll be rewarded with communism" - or something like that at least, of course nobody believed this bullshit, not even the diehard communists themselves).
Not really the country like that, but the parties Christian Social Union and Social Democratic Party, we would name it "socialistic". Anyone in that party would be a "socialist", but not a "communist". So if they would deliver the Chancellor, we would say the country is run by a socialist.
I didn't know about "real socialism". So glad you're all part of EU now :).
Depending on the definition you want to use. If you want to use "socialism" as the opposite of "capitalism" then of course no, Germany isn't a "socialist country".
The being said Germany is a fairly "social" country in my book, very similar to France. They very often put the emphasis on the group rather than the individual (taxes, education, public infrastructures, health care, work/life balance, &c.)
But again we're mostly talking semantics and local usage of words here, the underlying principles are very easy to tell apart (I doubt anyone could tell with a straight face that Germany and the US are running on the same principles for example.) now some people use the word "socialism" to describe that or part of it
In France 20th century socialists fought a lot for workers rights, abolishing the death penalty, depenalizing homosexuality, warranting liveable minimum wages, earlier retirement age, paid vacations, paid parental leaves, &c, many of the rights we take for granted nowadays are direct or indirect achievements of socialists, which is logical since Europe (mostly invented and) soaked in socialism for the last 150+ years. That being said, yes modern France or Germany "socialism" evolved from their early definition but I still believe they're indefinitely more socialist than the US.
I feel like many people get trapped in the socialism = communism, communism = never worked, hence communism = bad, hence socialism = bad, as if it was a binary thing. I guess we could argue about the exact meaning of "socialism" in 2020 but I doubt we can argue that "socialism" deeply marked a lot of European countries
What? No they don't, at least not in Germany. Here, "socialism" is primarily associated with the Soviet Union and the GDR (East Germany).
"healthcare, paid vacations", in contrast, is not associated with any particular political system, because it's understood to be the baseline, or taken for granted. At best, it's associated with the "Sozialstaat". Note that the term "sozial" in German does not mean "socialism", but rather "caring for others"; it's an antonym to "anti-social", not to "capitalistic".
my experience is very different. maybe an indicator that the info-bubble is stronger than we believe and it all depends on where and _what_ we are.
The "Sozialdemokratische Partei Deutschlands" (SPD) literally has "socialist" in its name. Not once have I heard anyone claiming that they're linked to communism or Soviet Russia.
It literally does not.
First off it's not in a very large part of the world (including the US). Read about the history of workers rights for example. These things didn't materialise out of thin air and are closely related to socialism ideals and social movements of the early 20th century
> Note that the term "sozial" in German does not mean "socialism", but rather "caring for others"
Which is exactly what I'm describing and includes "healthcare, paid vacations, &c."
I'm not a German history expert but in France most of the "social" (hint) progress came from the "socialist" parties with Leon Blum &co for example.
https://en.wikipedia.org/wiki/Léon_Blum
> André Léon Blum was a French socialist politician and three-time Prime Minister.
> gave workers the right to strike
> initiated collective bargaining
> legislated the mandating of 12 days of paid annual leave
> legislated a 40-hour working week (outside of overtime)
> raised wages (15% for the lowest-paid workers, and 7% for the relatively well-paid)
> stipulated that employers would recognise shop stewards.
> ensured that there would be no retaliation against strikers.
Communism, stalinims, totalitarianism.
Socialism suppose encapsulate ideas where you invest into people (social)
so·cial relating to society or its organization.
Investing into ideas that protect and support the very fabric of society, families, healthcare, education, consumer protection - anything that makes it easier for people to prosper and not be abused. It makes people healthy, educated and protected and they will prosper thus creating more wealth.
There was an article here recently that growing up in stable home make you far more successful (avg 75k per year earnings). Its common sense. There will be no next apple created in tent cities of LA.
Observations about the left/right alignment of American politicians are, naturally, made in the context of American politics. It makes little sense to compare Joe Biden's politics to European candidates. He is compared to Bill Clinton, George Bush, Barack Obama, and Donald Trump. Compared to them (even compared to Clinton and Obama), he is significantly farther left.
Imagine how well the converse of the argument would track for a European. "You know that candidate on the Right who wants to abolish your state-run healthcare system? You can tell that's not a radical position--just look at how many Americans prefer a private system!"
Absolutely false. Are you American yourself?
As the Danish PM put it,
"I know that some people in the US associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy."
Everyone who isn't pedantic understands what the title is saying. The current vernacular matters in words like democracy/republicanism/communism/socialism.
Sure the meanings of words can change, but what about actual socialism? Is is it supposed to adopt a new name?
Meanwhile, in the real world, government money during the pandemic is going to individuals who need it and to small businesses. Which is exactly as it should be as we deal with a bad situation. It's a good thing that the stock market remains high, as the economy hasn't taken the big tumble in the US that it has in many other countries.
To be clear, you can do a lot worse than western economies have done over the last 50 years, but I agree with Friedman that we need to refocus our efforts so that the wealth-gap does not continue growing out of control. This, of course, does not have to mean doubling down on the welfare state, but as Friedman said: "cash assistance to only the most vulnerable and more investments in infrastructure that improve productivity and create good jobs." But the tricky part is to do this without unfairly rewarding/propping up anti-consumer monopolies. We need a new era of trust-busting!
My main measure for the long-term success of any economic theory is whether or not it causes a distribution of power across the middle class. If the middle class does not grow in size (relative to the whole population) and in its percentage share in the total wealth/power then I don't think you have a very good system.
Its obvious that the trickle down system was designed to suck up the wealth from the middle class.
Its been proved to not work even by the IMF. But it persists as it still helps to keep the status quo.
>This is all actually making our system more fragile.
>Now that so many countries, led by the U.S., have massively increased their debt loads, if we got even a small burst of inflation that drove interest on the 10-year Treasury to 3 percent from 1 percent, the amount of money the U.S. would have to devote to debt servicing would be so enormous that little money might be left for discretionary spending on research, infrastructure or education — or another rainy day.
>Sure, we could then just print even more money, but that could threaten the status of the dollar as the world’s reserve currency and raise our borrowing costs even more.
The evidence suggests the system is stronger than ever. The US stock market and economy outperformed much of the rest of the developed and remerging world post-Covid in spite of a lot of deaths. It is not the absolute debt that matters so much, but rather the interest paid on debt relative to GDP, which is very low and has been falling for a long time. Rising interest rates does not mans that the debt will be harder to service, because the economy will also be growing more too. There is also huge demand for treasuries by pensions and sovereign funds, which should keep rates very low for a long time to come.
See https://www.cbo.gov/publication/56910
Debt as a % of GDP has been rising since 2000. Our ability to fund our government has been lacking every year since 2001, typically with a deficit each year between $500B and 1.5T a year. We are fortunate to have super low interest rates so that our net interest payments stay low while we spend an incredible amount of money we don't have. Part of the health of the economy now depends on excess government spending (which we can't raise enough revenue to fund). So when interest rates rise, which they will do in time, our net interest payments will rise as well.
While our net interest payments rise, our ability to cut government spending or raise taxes seems unlikely to be able to match it. Furthermore, your assertions that economic growth will cover the rise in interest payments does not seem to be a given to me. We have had solid economic growth over the last 20 years, however, our ability to fund our government spending has not changed at all. See the year after year deficits we always run.
CBO estimates that by the end of the decade, net interest payments will double compared to today, reflecting the thought that we are enjoying historically low rates currently: https://www.cbo.gov/publication/56542