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Future of Capitalism

  1. Mar 16, 2009 #1

    Astronuc

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    The Financial Times has started a new series - The Future of Capitalism - which should provoke a lively discussion.
    http://www.ft.com/indepth/capitalism-future

    There is also another independent discussion on "Rethinking the Wealth of Nations".
     
  2. jcsd
  3. Mar 19, 2009 #2
    This is all very interesting, but what is your view/vision/opinion?
     
  4. Mar 19, 2009 #3

    Astronuc

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    I've been meaning to dig up Adam Smith's "Wealth of Nations" and read it so that I know what he wrote, as opposed to what people these days claim he wrote or meant.

    I'm waiting for the 'impressive' leadership in the US and various nations and/or markets.


    There has definitely been a blow to some peoples' perceptions of 'free market' ideology, or perhaps it's just more awareness that a 'free market' simply does not exist. What has happened in US and global economies during the last 6 months was expected.

    Economies of the western or industrialized nations may drift somewhat toward the left politically, but I waiting to see.

    I've been making notes on "Rethinking the Wealth of Nations", but that's taking time. I plan to attend a lecture by MIT Professor and Economist Daron Acemoglu on the subject next month when he visits a local university.
     
  5. Mar 19, 2009 #4
    >>>or perhaps it's just more awareness that a 'free market' simply does not exist.<<<

    I think this is the case. We don't have a free market system. We have a corporate welfare system, at least in the US. Is there any doubt considering what's taken place in the last few years in the US?

    I don't think capitalism is dead. I think from the US perspective, we need to either become more like European social democracies or else go to a truly free market system. The special interest driven madness we have in the US is definitely not sustainable. Print money and give it to big banks and huge multi-national conglomerates? Yeah, that's working really well.
     
  6. Mar 19, 2009 #5
    Democracy doesn't work (too) well with capitalism. It's the parties with money who get to power and create the corporatism all over again, which eventually leads to crashes like this. If you want to break this cycle, something has to change. The link between private/public money and politicians has to be severed, so that they can make independent decisions. In Asia this works somehow, but the corruption is at atrocious levels.
     
  7. Mar 19, 2009 #6

    Astronuc

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    It's the appalling lack of ethics/morality that has undermined the markets/economies, moreso than government intervention. Of course, corruption of the government and political process undermine democracy.

    True, what we have in the West is better than a totalitarian state like the former Soviet Union and Warsaw pact nations, or Peoples' Republic of China under Mao, or Deng, but I think we can and must do better.
     
  8. Mar 19, 2009 #7

    mheslep

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    By who?
     
  9. Mar 19, 2009 #8

    mheslep

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    Where in Asia does 'this', no link between capitalism and democracy, happen?
     
  10. Mar 19, 2009 #9
    >>>The link between private/public money and politicians has to be severed, so that they can make independent decisions.<<<

    I think there are ways of doing this. We need to start demanding that politicians are accessible to their constituents, not lobbyists. We need to start asking political candidates to take accessibility pledges where they agree to interact with public message board sites and attend public meetings in their districts at least once a month. We should absolutely demand this of elected officials. If they don't agree, vote them out. They should be meeting openly with the public, not privately in their offices with lobbyists.

    >>>True, what we have in the West is better than a totalitarian state like the former Soviet Union and Warsaw pact nations, or Peoples' Republic of China under Mao, or Deng, but I think we can and must do better.<<<

    I'm much more cynical about this. I've talked to people who lived in the former USSR, and they have way less animosity towards their government than people do right now in the US. Remember, people who post on the internet are not the entire country. Certain segments of the country face a veritable Gulag, with the US maintaining the highest incarceration rates for any nation in history.

    We have material wealth, yes at least for the present. But that's not the only way of measuring the success of a nation. Don't get me started on this. I was arguing with a friend of mine how in certain ways Afghanistan under the Taliban was less oppressive than we have now in our techno driven police state. I don't want to live under Taliban rule, but I was using it as an example of certain types of freedoms and liberties that Americans overlook when deciding that we're absolutely free.
     
  11. Mar 19, 2009 #10

    Evo

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    Hi Jake, please use the quote button at the bottom right of the post(s) you wish to quote, thanks.
     
  12. Mar 19, 2009 #11

    Astronuc

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    By those paying attention.
     
  13. Mar 19, 2009 #12

    mheslep

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    That's pretty slippery, which would be fine over on PWA, but not here. You made a point blank statement that what happened in US and global economies during the last 6 months was expected.
     
  14. Mar 19, 2009 #13
    Future of capitalism? This country isn't practicing capitalism if corporations are receiving large subsidies from the federal government and if corporations are asking Congress to bail them out everytime business goes bad. What we are practicing is corporatism. I think we should start practicing capitalism more and let the businesses fail so they will have the incentive to reformulated their failed business model or developed a new business model instead of just asking for a handout. Look at Hong Kong for example: It is one of the wealthiest nations on the planet and it also happens to have one of the freeist capitalistic economies on the planet. http://en.wikipedia.org/wiki/Economy_of_Hong_Kong
     
  15. Mar 19, 2009 #14

    Dale

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    I agree pentazoid. Failing businesses are not just failing because of some cosmic lottery ticket, they fail because they adopt bad business practices.
     
  16. Mar 20, 2009 #15

    russ_watters

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    There is no such thing as a "corporate welfare system", that's just a buzzword that people like to throw around for political reasons. People describe any law that benefits a corporation as "corporate welfare", but usually, those laws are just about not taxing a corporation for certain things. Except for certain very specific industries, the government doesn't actually hand corporations any money. And most of those are to benefit individuals, such as with farm subsidies.

    The various bailouts of the past year, for example - none of them are just handing corporations free money. Some are loans and some are purchases of company equity.
    What an odd thing to say! We should do one of two things, both complete oppopsites? IMO, the extremes have been shown not to work, so we should be looking for something in the middle.
    Money isn't given to banks either - it is sold to banks. The second part I already addressed.
     
  17. Mar 20, 2009 #16
    Well I think we should have an economy where there aren't that many regulations and not many papers to fill out and it would be easy to open up a business . Our economy should be modeled after Hong Kong's economy. Obviously , an even mixed economy is the product of an economy with a 12.3 trillion dollar deficit like we have currently. What do you mean the federal government only hands out subsidies to farms? According to Cato Institute, in 2006 alone the federal government spent 92 billion dollars handing subsidies to corporations like IBM, Motorola, Xerox, General electric and many other corporations.
    Taxpayers are forced to pay the bailout of a failing business and I think that is wrong even if taxpayers are paid back, it is still stealing.
     
  18. Mar 20, 2009 #17
    There is no democracy. So no link.
     
  19. Mar 20, 2009 #18
    Maybe, but not all banks are getting it. Only the chosen few.

    Are they really the complete opposites?
     
  20. Mar 20, 2009 #19
    Hong Kong was special, because trade to China flowed through it. After UK gave it back to China, all that was lost. Hong Kong is a declining city. But this isn't about running a few million people in a special privileged location. It's about running nations populated by several hundred million, geographically spanning thousands of miles, having ethnic colorfulness, strong economical diversity and a strong political divide, which they get from their breast milk.
     
  21. Mar 20, 2009 #20

    turbo

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    If you will go the the beginning of the "what is wrong with the US economy" thread and start reading posts, you will see that some people (including Astronuc and myself) could see what was coming (or already underway) in terms of recession, over-valued assets, etc, in our country's economic house of cards. Of course, we were routinely ridiculed and nay-sayed by people who believed that the "free market" was working just fine.
     
    Last edited: Mar 20, 2009
  22. Mar 20, 2009 #21
    Russ, any below market transaction by the government with private parties is a subsidy according to basic finance theory. That's corporate welfare, and that's what these bailouts are. If you wanna call it a buzzword, go ahead. There are plenty of other corporate welfare policies in our government, for instance subsidizing medicare drug purchases instead of letting them trade at market rates. Military spending in its present state is a form of corporate welfare as well. The list is actually quite large.

    Pentazoid, I agree with you. It would be good to move to a more free market system. It would also be better than what we have to move to a more socialist system like in Europe. What we have right now in America is madness, though. Our "free market" system drove our economy off a cliff and took the rest of the world down with it. It's definitely not working.
     
  23. Mar 20, 2009 #22

    mheslep

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    A lot of broad swipes about how Bush and the neocons were destroying the economy, or how the little guy was falling behind, or claiming crisis and catastrophe again and again without a coherent argument - none of that equates to an identification of the current credit problems and recession set off by flawed risk analysis of mortgage backed securities, $5 trillion of them held by government sponsored agencies. There were some informed observers that pointed out in detail some parts of this problem: the WSJ editorial pages for years attacked massive portfolios of Fannie/Freddie, Greenspan and Bernanke also warned about them; Nouriel Rubini and Nassim Taleb warned in general about leveraging and debt risk; notably Peter Schiffer warned about housing and MBSs. None of these people saw the extent of the linkage between these problems (nor do they claim to now).


    Nor is carrying that kind of hand waving over outside of PWA acceptable, to my mind.
     
  24. Mar 20, 2009 #23

    mheslep

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    No, if you want to be technical about it the economic term of art for welfare is 'transfer payment', essentially a check in the mail for which the government expects nothing in return. Transfer payments specifically do not count towards GDP. You can decry specialized tax breaks and over payment brought on buy special interest pleading (I do), but they are not transfer payments.
     
  25. Mar 20, 2009 #24
    mheslep, I'm not sure if you're trying to use Nouriel Roubini to emphasize your point or not by the way you're writing it.

    However, this is in fact what Nouriel Roubini has to say about the issue:

    "This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street."

    http://www.rgemonitor.com/roubini-m...shareholders_and_unsecured_creditors_of_banks
     
    Last edited by a moderator: Apr 24, 2017
  26. Mar 20, 2009 #25

    mheslep

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    That echos something Friedman and Kuttner agreed on in a debate about health care some time back, implying that we are in a sorry middle, between a free market system and completely government run one:

    They're referring here to the tax deductible employer based health insurance system with $20copays that we have now:
    http://www.prospect.org/cs/articles?articleId=10764
     
    Last edited: Mar 20, 2009
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