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Problems with Capitalism?

  1. Apr 9, 2015 #61

    lavinia

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    Right. And I think we all would not have all of this information at our fingertips. That is my real point.

    However, now that you mention it I would be fascinated to know what the research is on human Nature. The only things I know of are the ideas of philosophers like Rousseau and Locke and some psychologists like Freud.
     
    Last edited: Apr 9, 2015
  2. Apr 9, 2015 #62
    Those are some motivating words for the misanthrope. "When they're about to become extinct, tell them 'I told you'."
     
  3. Apr 9, 2015 #63

    russ_watters

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    lavina, you are not entitled to try to deflect from your own failure to provide sources. But there is an easy out: just acknowledge that your claim was wrong or that it is unprovable.

    Now, on human nature: Siv brought-up human nature, not me:
    The intended connotation is more negative than I would use, but on the basic issue of what human nature is (the relevant aspect here) and the fact that capitalism utilizes it (or "harnesses" or "glorifies") and communism/socialism fights against it (said in a separate post), we agree. This is all common-knowledge/standard stuff that I already know, so I felt no need to ask Siv to prove it.

    The disagreement is in the opinion about whether we should try to harness or contradict human nature. This is also pretty standard and it and the facts framing the argument and argument itself are easily sourced, so here you go:
    http://www.wsj.com/articles/SB10001424052970204528204577011681658907746

    That's the first hit for a google of "human nature cannot be changed" and discusses everything we've been discussing about it here.

    Where Siv went wrong factually above is the idea that a profit motive can't produce long-term gains because clearly capitalism has.
    The only system that has worked. Again, there has been general agreement in the thread that this common-knowledge fact is true. Certainly it may be possible for there to be other systems that could work. In any case, the link I posted above discusses that as well.

    "Disaster", sorry. But I don't see the difference and you have yet to explain or show what you mean using evidence.

    Again, this was your claim:
    None of what you said there mentions a recovery. So, if you didn't mean that the current state of the economy is a disaster compared with where it was 20-28 years ago, you'll need to modify your claim.
    Clearly, there is controversy because I have disagreed. But if it isn't controversial, you should easily be able to prove your claim.
    Yes.
    Indeed we are: but you used the same word to describe the last 20-28 years.
    It's your word, not mine. I'm not arguing over its meaning at all (because I wouldn't use it) and you are completely free to tell me how you want it defined. So please do: explain how the last 20-28 years have been an economic disaster, worthy of being described with the same word you use to describe the 1930s.
     
  4. Apr 9, 2015 #64

    russ_watters

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    I don't understand. Please explain what you mean.
     
  5. Apr 9, 2015 #65

    russ_watters

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    Note, that I think this comparison is a good one for illustrating why the last 28 years has NOT been a "disaster" if the Great Depression is the benchmark for defining the word.
     
  6. Apr 9, 2015 #66

    lavinia

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    I respectfully disagree. If you have cancer but no symptoms yet - would you say you are in good health?To clarify - and again you have misquoted me - I said that the crash of the real estate market was the disaster. But in my opinion the seeds had been planted earlier through the deregulation of the markets and the widespread use of leveraged investments. A question for you. Do you consider Glass-Steagal to have been regulation? Do you think getting rid of it has anything to do with the economic problems that we ended up with? Also why do you think there was a turn towards speculation in our economy? e,g, the S&L crisis or the advent of mortgage derivatives in the 1980's?

    - If you believe that the Depression of the 1930's was an economic disaster do you think the 10 year plus deep recession in Japan during the 1990's was a disaster?

    - BTW: the word 'worthy" seems to be subjective. Again we are involved in semantics.

    - As far as regulation goes I grant you that I can not document all of it - although Glass-Steagal clearly is an example. But I am challenged to produce the data and accept the challenge.

    - BTW; I think it is fair to ask for documentation of the science on Human nature and what economic systems work since without this level of rigor, these ideas tend to philosophy and ideology.
     
    Last edited: Apr 18, 2015
  7. Apr 9, 2015 #67
    As you said, capitalism works by using some positive aspects of human nature, but inequality is something which I don't really think can be eliminated in any system. 100% fairness to all is just a theoretical concept that will never find it's way into our lives, because the fundamental nature of humans (rather, the nature of human "civilization" itself) explicitly prohibits such a notion from existing. It's just how humans are. As long as there is a winner, there will always be a loser, and we know better than to think that each one had equal opportunities and resources. Call it luck, call it intuition, whatever the case might be, some people gain more from a situation than others simply out of chance and no other reason. If one generous person makes an effort in distributing wealth evenly, his/her endeavors are brutally crushed by two others depraving others of money using lies and treachery. People always find a way to exploit the most "fair" of policies. At the end of the day, it really doesn't matter how you come to the top in this world, what matters is whether you are at the top or not (as long as you keep your hands clean in public), even though this is an outright trespassing of what's "right". Unfortunately, this is what it's all been reduced to - morality has just become something people pretend to follow when observed, and abuse to the core when unseen.

    We know that this kind of thing is seen in nature too - a probability can be ascribed to all events, and momentarily inequality should therefore not be surprising. The thing is, people sustain and perpetuate this inequality to rise personally. To jump, you have to push something down (let's not confuse this with a law of physics). All these things gives some people very strong ground to resort to misanthropy.

    Of course, you shouldn't think of these things as me trying to explain my beliefs as facts, I'm just pointing arguments made by misanthropes (I'm not one of them! [I wouldn't be writing all this if I were]). In case you're wondering, I'm not someone with messed up logic: trust me I hate the way things are just as much as you, and that's why I believe that we must always to do what's in our power to do what's right, to never stop trying (unless you're trying to accelerate a block to light speed). It might be an imperfect world, but it's the only one we have. I'm woefully inexperienced when it comes to life. I'm just a poor observer trying to record empirical data around me and make sense of it, and I already know that this message has a laundry list of defects. Ah, what a long boring drag this post has become. Sorry!
     
  8. Apr 9, 2015 #68

    Siv

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    What long term gains ?
    I have read Steven Pinker's book too ... but my benchmark is not how bad things were centuries ago, my benchmark is how much better it could have been ... and the opportunities we have lost.

    We are destroying the environment, our entire food, health and nutrition industry is riddled with so much corruption, receipt, selfishness and greed that we have medicines which do more harm than good, we believe in health tenets that have no foundation on evidence .... is that what you call long term gains ??
     
  9. Apr 9, 2015 #69

    mheslep

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    Yes, in particular frauds and thieves also occur in government, as do would-be tyrants. One could fill pages with these, the Minerals Management Service scandal, which has since changed its name, comes to mind:

    http://www.nytimes.com/2008/09/11/washington/11royalty.html?_r=0
     
    Last edited: Apr 9, 2015
  10. Apr 9, 2015 #70

    mheslep

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    What's a good example of where that's happened? Venezuela has largely dumped capitalism, with the result that they've run out of toilet paper long with other more critical equipment like medical devices, and have brutally oppressed descent.
     
  11. Apr 9, 2015 #71

    russ_watters

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    No, you didn't. You said "the last two decades [now three decades] of deregulated markets have been a disaster."

    If you were only referring to the real estate market, you would have used a different timeframe that didn't include the S&L crisis and you wouldn't have said "markets" (plural) if you were referring only to one.

    Most of the rest of your post is more dodges of your own claim/refusals to explain. You need to stop asking me questions and explain yourself (and provide evidence): its your claim to develop and prove, not mine.
    It is not necessary to argue over the word "worthy:" you made the comparison, not me. It is incumbent upon you to prove how the last 28 years was a "disaster" like the 1930s was.
    You haven't been asked to document ANY of it: you have been asked to show how the last 28 years was an economic "disaster"., comparable to the 1930s.

    It is not fair to request anything of anyone else that you are unwilling to provide yourself. Did you even read the provided reference?
     
  12. Apr 9, 2015 #72

    russ_watters

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    All of them. You tell me how you'd like to measure it: economic growth? Standard of living? Life expectancy? Several possible measures have already been cited in this thread. The bottom line is that essentially all of the advancement in the human condition has happened in the past 150 years and was driven by capitalist/democratic countries.

    For example:

    life-expectancy-throughout-history-long-trend.gif
     
  13. Apr 9, 2015 #73

    russ_watters

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    Given that you are comparing against a hypothetical, that's probably inherently impossible to prove. Its basically just fantasy.
     
  14. Apr 9, 2015 #74

    lavinia

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    For clarity - and I apologize if I misstated my point - The real estate crash was an economic disaster (or if you don''t like the word disaster use a different one) but in my opinion its seeds were planted much earlier. Plus similar phenomena led to disastrous crashes in at least one other country - namely Japan.

    BTW: I would be interested to know how much the Japan crash affected views on the application of monetary policy in Central Banks generally. I will look for studies done at the Fed. It would not surprise me to find a study somewhere by Bernacke. My anecdotal impression is that Central Bankers took that crash very seriously. In the US there was at least one smaller crash afterwards, the Tech bubble although there was a mini-crash at the end of 1994 which may well have alarmed the Central Banks - not sure. As you remember this crash sank Orange County financially.

    http://www.nytimes.com/1994/12/08/b...w-orange-county-crisis-jolts-bond-market.html

    Alan Greenspan spoke of "irrational exuberance" of the markets and interestingly I think that he feared tightening monetary policy because it could crash the market so he tried to talk it down.

    There was also the crash of some Hedge Funds like Long term Capital Management that required Central Bank intervention.

    http://en.wikipedia.org/wiki/Long-Term_Capital_Management

    I personally ask what the new problems of monetary policy are in the face of unregulated leveraged markets.

    As far as unfair goes, I take that as a subjective opinion since all demand for documentation can be viewed as fair in a scientific forum.

    I will not document what I did not mean to say and I hope my explanation makes what I actually intended clear - but I still think documenting the history of economic growth and regulation is a worthy enterprise and will pursue it.
     
    Last edited: Apr 16, 2015
  15. Apr 10, 2015 #75

    Siv

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    Life expectancy increase is a result of capitalism?? Thats a stretch.

    Louis Pasteur discovered the benefit of washing hands with soap ... and then medicine became scientific ... until the profit motive caught up with it to seriously damage these benefits. Increasing life expectancy has brought a whole host of newer and bigger problems, too many old people living on and on, and being a burden to society and using up precious medical resources that could be used for younger and healthier people. Science was the reason for increased life expectancy, until capitalism caught up with it and spoilt the quality of this increased life span tremendously.

    Agriculture is another so-called boon which has now turned into a bane. The kind of diet most people eat, full of grains, and worse, refined grains and sugars, has resulted in immense nutrition myths and horrible health for everyone. The burger/pizza culture imported from the West has pretty much destroyed the health of a lot of Eastern cultures. And what do we have to thank for that ?? Capitalism, of course !!

    Correlation, by the way, is not causation. Lots of things happened in the last century or so, are they all to be thanked for any improvements during these years ?? :smile:
     
  16. Apr 10, 2015 #76

    lavinia

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    More Documentation


    Here are two articles - one a detailed study of the S&L crisis - which document the effects of deregulation of that industry during the 1980s and sent the country into recession by the early 1990's and cost the US taxpayer large sums to resolve the ruined S&L industry. The FED, in order to stem the recession and finance the resolution of failed banks brought the overnight rate from over 8% to 3% by 1993.

    https://www.fdic.gov/bank/historical/history/167_188.pdf

    http://www.dailyfinance.com/2010/07/03/financial-meltdown-vs-savings-loan-crisis-recession.

    The S&L crisis is parallel in many ways to the recent real estate crisis, particularly in the wide spread of speculation and fraudulent practices in the quest for high returns and in its effect upon the economies of several states. The crisis is commonly called the "S&L Debacle" .
     
    Last edited: Apr 10, 2015
  17. Apr 10, 2015 #77

    lavinia

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  18. Apr 10, 2015 #78

    lavinia

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    More Documentation

    Here are references on the speculative bubble in Japan during the 1980's that triggered an at least one decade recession (The Lost Decade) and some say two decades.

    http://www.thebubblebubble.com/japan-bubble/

    http://en.wikipedia.org/wiki/Lost_Decade_(Japan)

    After World War 2 Japan instituted banking regulations that were stricter even than those in the United States. These regulations were part of a program to nurture the Japanese economy. The policy was considered to be successful but in the mid-1980's significantly because of pressure from the United States and Europe, Japan deregulated its banking system After 1985 the bubble took off.(See the referenced paper below).

    There is an interesting paper written in 1992 by Kenusuke Hotta, a Managing Director at Sumitomo Bank, who strongly favors the deregulation. I could not figure out how to copy the link but it is called "Deregulation of Japanese Financial Markets and the Role of Japanese Banks" Occasional Paper no. 7 ,Occasional Paper Series
    Center on Japanese Economy and Business Graduate School of Business Columbia University
    February 1992
     
  19. Apr 10, 2015 #79

    lavinia

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    More Documentation

    https://www0.gsb.columbia.edu/faculty/fedwards/papers/Hedge_Funds_&_the_Collapse_of_LTCM.pdf

    This paper reviews the collapse of Long Term Capital Management
    It also has a review of Hedge Funds and their trading strategies.

    It also covers the 1998 Russia default on a large amount of its Treasury debt and its cancellation of derivative contracts. This created a cascade of margin calls and asset devaluations. Basically, firms were forced to sell assets in order to meet margin calls thus causing a drop in prices which then triggered more margin calls and so on. Panic led to a flight to quality which widened yield spreads on risky assets generally for instance, B rated corporate bonds. Long Term Capital Management had huge leveraged bets on yields spreads. The spread widening destroyed it and I have heard nearly wiped others hedge funds like D.E. Shaw & Co. Here is a section of the article that discusses the "systemic risk" of its impending bankruptcy and the resulting bailout organized by the Federal Reserve Bank of New York.

    " In early September 1998, LTCM advised the Federal Reserve Bank of New York of its impending difficulties. During the next few weeks, Federal Reserve representatives organized meetings of LTCM's creditors and met with LTCM partners to discuss the situation. On the evening of September 22, the president of the Federal Reserve Bank summoned more than a dozen top executives of the firms that had loaned money to LTCM to an 8 p.m. meeting and warned them that "systemic risk posed by LTCM going into default was 'very real'" (Siconolfi,1998). The next day a 16-member creditor consortium agreed to put in additional capital of $3.625 billion in exchange for 90 percent of the remaining equity in LTCM; ...."
     
    Last edited: Apr 16, 2015
  20. Apr 10, 2015 #80

    WWGD

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    Correlation, Causation? Didn't socialist countries achieve a similar gain in life expectancy (during the years of communism)? I am not arguing in favor of communism, but, how do you explain, e.g. that Cuba's life expectancy is 80.7 years for female, 75.9 for males (World Almanac and Book of Facts, 2015, p.768), similar for former communist block countries (I assume life expectancy does not turn on a dime, that , if the economic system is changed, it may take a long time for the benefits/consequences of this change to take effect.) ?

    Besides, capitalism as we know it today has not been in effect for 150 years. Weren't many of the main discoveries made before today's capitalism was in effect? Vaccination, much of the medicine used to prevent childhood death, etc.? How about the scientific discoveries. And there is the additional fact that most of the people who have ever lived, have lived in the last 150 years, so it makes sense that the more people that are alive (living longer), the more discoveries you have. And there were 100's of important scientific discoveries before the 1900's. And the Soviet Union had some of the best scientists in the world. You may even reasonably argue that a critical mass of discoveries had been reached by the time today's capitalism went into effect.
     
    Last edited: Apr 10, 2015
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