This is also a great example for why capitalism is so successful. It's not perfect, but a centrally planned system would, in practice, react much more slowly and/or less accurately.
Of course, sometimes that result involves exploiting the shit out of workers and destroying the environment along the way, but by God they'll get the thing done if said thing makes them money.
Who do you think funded the first railroads exactly?
Hint: if you think it was the government I suggest you start studying the railroad bubbles of the 1830s and 1840s
Also, nationalizing passenger rail travel in the US (Amtrak) seems to have led to one of the worst passenger rail services in the world.
If you are on a paved road, wide enough for two cars to meet, it is almost certainly public.
It appears that can be entirely divorced from capitalism.
Just because we have demand driven resource exploitation doesn't mean that all of the profit has to be provided to a small over-class.
Indeed, wouldn't it create a greater ability to follow demand if the wealth were evenly distributed?
(We might ask if making the human race into the perfect resource-exploiting parasite is going to work well for us long term, but that is a very obvious limitation that diverges from the current discussion.)
Money is invested because people with money chase yield, if yields are positive, but lower across the board, that money would still be making the exact same investments.
But it's certainly not the case that people make the "exact same" investments with or without taxes, especially of course as taxes get higher. Money will shift out of investment to consumption as expected profits decrease, or indeed out of the tax regime to other areas or to black markets.
the goal is to have investments that serve broad interests. instead of investing in better yachts, supercars, jets, etc.
instead of investing into Amazon to dropship fake shit for quick bucks our economic surplus ought to go into developing better actually useful appliances, tools, technologies
for example, instead of OralB and Philips bamboozling us with sonic this and that with smart AI toothbrush marketing we ought to actually figure out dental care.
okay, sure, higher taxes on the wealthy doesn't guarantee more conscious consumerism, but might at least give it a chance.
Except on the middle class. All capital gains do to middle class workers is ensure they stay middle class
That is required for capital markets to work.
How about $5 spread over 1 million people? How about $5 million?
The reason that markets work is because participants have "skin in the game", and losing money would hurt them, so they want to avoid losing money, so they try to make good decisions, and those that don't lose their money and are disempowered in the process. But once you reach a state where you're so wealthy that money no longer matters, you are able to distort the market at will, making it irrational (and thus inefficient) and destroying its ability to efficiently allocate scarce resources.
I wish more people understood this. You don't need to go full communism and make everyone's wealth equal, but if you want markets to work you do still need to make sure that the wealthiest are not so wealthy that they won't suffer from making poor financial decisions.
Please provide a case history.
It’s not, and it is a fiction to say it is.
Capital wealth is a representation of total risk adjusted future expected returns subject to a discount rate.
But we don’t advertise human capital this way; the excess future labor returns adjusted for some basic cost of living.
But they are the same thing: future profits.
If advertised this way, relative wealth would look vastly different.
He uses the phrase "perfect liberty" to describe the ideal version of a market and also understands this will never be equally applied or possible with all markets.
It's an amazing piece of work and I'm really enjoying the audio book as it reads more like a lecture and is very pleasant to listen too.
Airbnb’s founders sold parody cereal to hustle up the money to keep their business afloat.
See North Korea, Cuba, Soviet Union, and China as examples.
With the exception of China those example countries have either rich or poor people. There is no middle class.
At least in capitalist driven societies like western nations there can be a middle class that lives relatively well off and cheap options of consumption that also allow poor to have the basics in life.
A world where the Nazis won might have less inequality after they succeeded in killing everyone without blonde hair and blue eyes. But more likely they would have gone on to look like a brutal dictatorship with very few among the top class living lives remotely similar to what we know today. I doubt they would have had a Moores Law let alone chip manufacturing. We do know the Soviets bankrupted themselves and did have greater inequality than the capitalist system they were competing against while benefiting from its existence. China of course benefitting similarly to modernizing with the modern worlds free market thriving outside its borders. Heck, that tale is a victory story of capitalism over communism as the CCP very much had to capitulate and allow the market to function in increasing scope over time, reluctantly.
If we’re talking about which economic system would have greater inequality than we have to take the thought experiment out much farther than your initial quip. There certainly is inequality in the modern free market. It’s certainly far better and equitable than any system tried before or “on offer” in WWII. That war seeing the victor rebuilding the losers over several decades instead of rubbing sand in their wounds as every war saw in the last to that point. Modern day Japan and Germany.
If economics is to be treated as a legitimate science, it needs to move away from thought-based theory into evidence-based testing.
"Capital" is just a proxy word for resources.
How can you develop anything without resources?
Same critique of so-called “Democratic socialism”. If it’s socialism, it’s not democracy.
Obviously in practice there are often regulations concerning unions, but that's true of basically every part of a market too.
More money for the business = more money for their members.
For example in British Columbia where a relic of alcohol prohibition remains in that the government manages liquor distribution and still has some (unionized!) liquor stores, the union agitated to have those liquor stores open on the weekends. The government initially wasn't interested! Union members though wanted more hours and more money and to sell more liquor.
And although there are clear examples where market economies are nimble, there are also clear examples where market economies are fragile or don't actually produce outcomes that are best for customers or society. A health insurance company that puts most of its innovation effort into finding creative ways to refuse to pay out to its customers while obfuscating this outcome is a natural thing in a market economy.
Health insurance companies in the US are more or less run by the regulators these days. Obamacare has seen to that, driving out of Washington state all health care providers for self-employed people but one.
I have all my other insurance with one company. Their premiums are higher than average. But the times I needed them, they were there with the money and even legal help. They're worth the higher premiums. It's the free market at work.
If you want, I can point at gazillions of other industries where markets have led to obviously suboptimal outcomes. Command economies have major problems and may be worse in almost all circumstances but "markets make everything good" is just observably false.
Whatever you want to call it, the thing that we have and the thing that libertarians want observably produces shit outcomes in a number of domains. If I can't blame the free market, I can blame the political advocates who claim to want a free market for the specific outcomes of their policies.
Please do.
> obviously suboptimal outcomes
I find targeted ads obviously superior to generic ones. And "surveillance capitalism" is so far just a derogatory term for which I am still waiting to see any actual, real-world downsides.
Unlike, say, "surveillance state" which is a horrifying nightmare I had the bad luck to experience.
I’m not making an anti-capitalist point, but I don’t know how well that point holds because it seems like the same case can be made for the other side.
For example, the financial markets were slow to react to information in 2006-2007 until we had already driven off the cliff. Some would say the same about climate change etc.
It seems to me that a hybrid system is actually the best as balancing that risk.
Edit-also the reason you don’t immediately think of the word “regulation” is for the last 40+ years anyone suggesting regulation has been ran from public life as a communist or nazi. But regulation absolutely is just applying the usual legal system to the market to make sure the market stays within acceptable and safe bounds.
A lot of the incentives in the us market are very short term in nature, especially in publicly held companies. It seems like this leads to companies following hype cycles right off of cliffs even when it’s not hard to see problems.
Now, in wind, Europe is still leading.
1. preferential treatment for providers of capital to ventures when it comes to risk & reward (compared to provision of labor or IP)
2. minimal/reduced central planning (aka "free market")
3. regulatory and cultural environment favoring entrepeneurialism i.e. low barriers to starting new ventures/exploring new ideas.
There's no inherent reason that we need to retain all 3 of these, and quite a lot of us would like to keep #2 & #3 and drop or substantially modify #1.
Also, #1 isn't about whether capital is required or provided - it is nearly always necessary. The question is about the distribution of risk & reward between the providers of capital, labor and IP. When capital has outsize economic and political power, it's not suprising that it also arranges for itself a political, economic and cultural environment in which it reaps more of the rewards than the providers of labor or IP.
The current push to onshore production actually feels a little regulatory. It’s a system that does need some “light” steering from time to time.
(I could go on that if a company publishes ads they’re operating market power that should be countered. The reason to the counter is market power means the supply side isn’t producing the market clearing amount of product and instead of selling what they produce there is always waste. But this particular point in time is very anti-progress.)
That's not what this thread discusses, and OP didn't need to be sarcastic. I've lived in centrally planned economy, and it was a failure on every single meaningful level, just like any other centrally planned economy. There were frequent shortages of basic items, some stuff like exotic fruits were literally impossible for common people to buy, or it took 3 hours of standing in the queue. I think some of the western spoiled kids argumenting for some form of communism would be a bit smarter if they actually grew up in systems they push so hard for (of course this time the pipe dream would actually work because XYZ, but these things keep failing because of basic nature of people, good luck fixing that).
Its just like if people generally needed to fear the failure a bit, and society needs to let some people fail in order for the rest to thrive now and in the future. Remove this thread, and next generation will be significantly weaker.
Yes, there will be some corruption in practically any large economy. But certain ay promote more or less, and there is always a tipping point where the economy becomes less stable due to excess corruption.