# Problems with Capitalism?

1. Jul 1, 2015

### Digitalism

You obviously did not read or look at the references I provided, so do you think providing more will help? The argument goes like this poverty affects cognitive development in multiple ways. It increases stressors, it affects grey matter formation and ability to self regulate emotion, it affects self confidence due to being treated poorly which affects performance, it increases likelihood of a range of social ills that also act as a block to performance such as drug/alcohol abuse, teen pregnancy etc. The money itself is a factor because real wages have been stagnant for 35 years while tuition has gone up markedly in comparison. The poor run through a cycle of striving to overcome their problems due to lack of resources and then being blamed for them. Conversely the rich do not suffer these negative circumstances, in addition they are praised for performing well though largely that is a condition of their birth and they actively game the system to their advantage. There are increased signs of narcissism/sociopathy correlated with income. In addition, they are tied to social networks that actively exclude the poor as is seen in both the financial sector and in the ivy league. In addition racial issues are a factor with less qualified whites more likely to receive management and ivy league acceptance over their peers due to subconscious racism. I can provide referencesfor everyrhing I have said, meanwhile you are just saying "I don't believe you." Without providing a counter argument.

2. Jul 3, 2015

### Czcibor

I think that you are preocupied with external factors, while Russ with internal, like values that people may have. I think that he haven't brought a good study yet, so I finally have something:

Cohort Profile: The Adventist Health Study-2:
"Females lived 4.4 years and males 7.3 years longer when compared with the general California population"
http://ije.oxfordjournals.org/content/37/2/260.full

Explain that as a matter of income ;)

And more seriously there is there is a problem where is exactly the border. And how to model values being transferred - on my example - my parents don't smoke and practically don't drink alcohol (actually rather unenthusiastic about religion). I never smoked and total amount of alcohol that I drank during my life would not be enough to make one person unconscious. So we can't use the argument that's thanks to money spent on fighting addiction. ;) Values? Good habits? Or would we just explain as matter of having both parents with higher education?

Here I fully agree with the pathology of US system

Quite possible. If you have a success that's caused by internal factors, if you failed - by external factors. ;) Just why you haven't brought studies showing how interesting explanation people can get for their failures?

Damn, I think I've seen somewhere stats showing that race is no longer an issue (which meant that rich Black kids did as well as White rich kids, and poor as bad). Possible? Shall I run a fact check on that?

3. Jul 5, 2015

### lavinia

Here are a few articles - several by Krugman - on fiscal austerity.

Much here reminds me of the debates over monetary policy, whether it softens economic swings or actually makes them worse. That debate still goes on. The debate on austerity seems to have intensified since 2008 and may well continue.

All except one of these articles - the nasty article in the Economist on Argentina - questions the imposition of austerity measures on countries. I choose these because the criticism of austerity seems to me to be a new thesis among economists. The future of this debate may change international lending.

The Krugman article on austerity in Italy is reposted because it warns that austerity can lead to political extremism.

Some of my colleagues on the trading floor began to think that in any loan, the lender should share equally in the risk with the borrower. This would lessen unwise lending and would protect both parties from a painful aftermath. One could argue that increased risk to the lender would slow the pace of lending and I do not doubt that that is probably true. What the right balance is still seems to be under debate.

http://www.voxeu.org/debates/commentaries/fallacy-austerity-based-fiscal-consolidation
http://www.sciencedirect.com/science/article/pii/S0277953614002433
http://www.forbes.com/sites/richard...t-iii-why-government-spending-retards-growth/
http://www.ft.com/intl/cms/s/0/73219452-7f49-11e2-89ed-00144feabdc0.html#axzz3f1OT22Iu
http://www.washingtonpost.com/blogs...s-much-worse-for-the-economy-than-we-thought/
http://www.bloomberg.com/news/articles/2015-02-13/one-hundred-years-of-austerity
http://www.economist.com/node/702434
http://www.ft.com/intl/cms/s/0/1fd77e84-0920-11e5-b643-00144feabdc0.html#axzz3f1OT22Iu
http://www.nytimes.com/2013/02/25/opinion/krugman-austerity-italian-style.html

Last edited: Jul 5, 2015
4. Jul 5, 2015

### Czcibor

You quoted more pro austerity articles, like ex:
http://www.forbes.com/sites/richard...t-iii-why-government-spending-retards-growth/
(actually this one is too pro austerity by my subjective tastes... :D )

New thing? I'd say it existed from at least 1936 John Maynard Keynes book "The General Theory of Employment, Interest and Money". (or a bit earlier less famous essays by Michał Kalecki)

The part "making austerity during crises causes deepening depression" - I agree, it's basic macroeconomics. Just there is an awkward part:
Would you like to invest money in gov debt where you share serious risk? Or maybe you'd look for a different, safer investment? Just say how would you do with your own money?

5. Jul 5, 2015

Staff Emeritus
I looked at my portfolio to answer exactly that question. I have about $11 invested in Greek sovereign debt, which to me seems to be about$11 too much. (Of greater concern is that I have about $2500 in Japanese debt) 6. Jul 6, 2015 ### lavinia 7. Jul 7, 2015 ### lavinia The following paper from the Center for Economic Policy Research in Washington DC reviews the effect of the IMF's Structural Adjustments on several African countries. Stuctural Adjustments include austerity measures. The paper argues that they have hurt these African economies. http://www.cepr.net/documents/publications/debt_1999_04.htm#RESOURCES FOR MORE INFORMATION Here is the description of Sturcutral Adjustments in the paper. "What is Structural Adjustment and ESAF? The Enhanced Structural Adjustment Facility (ESAF) is the IMF's concessional lending facility for the least developed countries. Unlike other IMF programs, which lend at market rates, ESAF offers low interest rates (0.5%) and repayment terms of five and a half to ten years. It was established in 1987, although its predecessor, the Structural Adjustment Facility (SAF), began its operations in 1986. As a condition of receiving these loans, countries must agree to adopt IMF structural adjustment programs. Structural adjustment programs generally require countries to adopt policies such as: • Reductions in government spending; • Monetary tightening (high interest rates and/or reduced access to credit); • Elimination of government subsidies for food and other items of popular consumption; • Privatization of enterprises previously owned or operated by the government; and • Reductions in barriers to trade, as well as to foreign investment and ownership. These policies and the IMF's role in implementing them have been criticized by developing country governments and development organizations as having worsened the situation of poor and lower-income people, as well as contributing to the degradation of the natural environment. ESAF and the HIPC Initiative The IMF and World Bank, in response to demands for action to address the external debt crisis of poor countries, introduced the Highly Indebted Poor Countries (HIPC) initiative in September 1996. In order to qualify for debt relief under HIPC, countries must participate in an IMF-designed structural adjustment program. The HIPC program has come under fire for providing little actual debt relief and providing it too slowly. It has also been criticized for requiring the implementation of IMF structural adjustment programs. Many proposals to "reform" HIPC would give more resources to HIPC without requiring that HIPC be delinked from ESAF and structural adjustment. Since IMF policies have increased debt while hampering economic growth and spending on health care and education, such proposals, if enacted, are likely to do more harm than good." The countries examined - using the IMF's data - are Uganda, the Ivory Coast, Mozambique, and Zimbabwe. 8. Jul 7, 2015 ### excubi Well I have not read through the eternity of posts but will throw in my 2 cents. First for me it is a problem of unrestrained wealth acquisition(power). When ever a system supports an individual gaining and maintaining wealth control(power) it never works entirely. Now although different in many ways form Socialism and Communism as a economic structure, Capitalism still produces unrestrained resource control by a few, although not meant to it does. Yes fluctuating markets are a necessity to keep prices down as supply and demand dictate, but the drive for market share is no longer distributed over enough businesses to maintain a place for new business to compete. Now when there was enough monetary funds spread out more could potentially gain market shares. Yes this still occurs but usually because of innovation not gaining a place in a already saturated market with out innovation. Also acquisition, mergers ect.. do not promote enough wealth exchange, capitalism only works when wealth is exchanged not kept as applied over the broader field of social economics. Capitalism is supposed to support wealth exchange not the hoarding of wealth, yet as humans do we keep what we have to insure our own survival which for the wealthy is a way of life not survival, yet I see the mechanism arising from same instinctual meme. Capitalism is not bad it does work when wealth is transferred back and fourth not through conglomerates but through communities, individuals, ect... We are now seeing a break in the Capitalistic structure for a few reasons, unrestrained wealth acquisition, hoarding of unrestrained wealth, and continual profit driven expansion. The reality we physically live in (Earth) has a finite amount of resources and cannot support biological functions if continual expansion continues in certain industries. Now I will also say our banking system is also at fault not due to fractional reserve banking but inflation. Why, well the money supply is expanded not by markets but by debt. This would work fine if there was a correlating expansion of the money supply dictated by the markets themselves not someone needing a loan. This means we make money no matter how the economy is doing, this mathematically is disastrous over a long run. So when market are down and no new job creation less loans are taken this constricts expansions and therefore hurts world wide economies. This is usually offset by stimulus spending and works over a short one yet since the market(goods and services) at the time is actually say no we do not need more money we create more and than inflation hits later and whole problem arises again. There is also the dilemma of political systems as well, all three Capitalism, Banking, and Politics all share a blame of our failing social economics not just capitalism as many blame. Why politics, well for one there should be no separation of the government and it's people in a true democracy. We the people of a democracy are the government, it is up to us to make politician remember this. I know this isn't exact and I think it was George Washington who said it, " A little rebellion is good for a country, it gives those who think they are in power a reminder they do not." I will admit I maybe mistaken on who said this. A peaceful protest should never ever be stopped in a democracy if anything it needs to be listen to and considered and big business needs to stop being put ahead of the welfare of people. We are the consumers, voters, ect... but if you do not stand up and show where the real power is it will only get worse. We have ability to adapt and change, yet are creatures of habit and generally resist change until forced upon by situation. Can we not apply foresight and recognize the mistakes of the past. There is not one civilization still around that had vast wealth in only a few hands ever at all, this is unbiased reality of human civilization and does not matter what we label it as. So long as trends toward big business maintain and wealth is not exchanged no system will work no matter how idealistic it may sound nor be. I should note I am not for Communism nor Socialism by any stretch yet things are not black and white in reality ,so there is some good in those why not use it mixed in with Capitalism. We are first and four most we are social organism and need each other to survive, this applies to all facet of our society and needs to be in my opinion the guiding principle above all else. 9. Jul 7, 2015 ### excubi I am typo king. I know my grammatical skills lack but honestly that only matters to me when I am submitting something formal not in a debate or discussion. 10. Jul 15, 2015 ### votingmachine I have not read this thread but did read an interesting economic/historic fact recently. We all have a basic understanding of Adam Smith's "invisible hand". People making rational choices in their own self-interest will produce things, and sell for a profit, leading to a prosperous economy. The general welfare is improved by the flow of goods and services. A flaw in capitalism can be seen in Adam Smith's own life story. After he wrote his great work "The Wealth of Nations", in which he wrote of the benefits of free trade, and open markets, for the general benefit ... after that, Adam Smith took a new job. He became a customs officer. Although a firm believer in free trade, he spent a dozen years enforcing the customs laws. The lure of a government job at 600 pounds per year was too strong. Which does go to show that enlightened self-interest can be relied upon to drive anyone to make choices which may or may not be good, and may or may not lead to general prosperity. I found the irony a bit funny. 11. Dec 26, 2015 ### Brunelli If you repeat a lie often enough it will end as a truth and as a normal state of things. It would be incorporated into the culture's mental or cognitive schemes and as such it feels natural. It becomes part of the collective "archetype". Did not a Nazi already said this? Well, plain logic dictates that no human can alone, by its own work, produce so much that it can make him billionaire by own means. Indeed, the riches are thieves when defined this way. Of course, some thieves are good persons and others are not. Many of these thieves are just prisoners of their time, a product of their culture. The riches and capitalism is a brake for further development at some point. Imagine exotic technology: it would cause panic among the thieves or the elite. We already got what I think will go to history as the point when all started: internet. People started to exchange things with each other (less money for the sellers and others). What will happen the day we get a nano-technological Harry Potter magic wand or a magic 3D printer? Changes in society are tied to technology. Those that wants status quo, they will throw us into war and death before giving up their privileges. There are studies that shows that, at the group level, rich people are narcissistic and have a grandiose self image, and think they deserve their position because they worked hard for it and did the work alone (seems the others are then seem as objects or means to get rich). If an infant is abandoned in the jungle, and if it is lucky enough to be adopted by wolves, it will act as wolves act and the child will grow up and believe he/she is a wolf. That's the power of the enviroment programming our brains. The same rule applies to our believes but with a difference: we are better geared to make changes in the program -as initially the program was more sophisticated than the tools the infant got from the wolves. Well, yes, not all of us can take advantage of better tools :) 12. Dec 26, 2015 ### WWGD I have no real interest in defending all billionaires, but a valid explanation may be a given society's poorly-designed reward system or a willingness to sacrifice all aspects of one's life towards making money. 13. Dec 26, 2015 ### jim hardy On the other hand, a very thoughtful workingman observed “The passion for equality is partly a passion for anonymity: to be one thread of the many which make up a tunic; one thread not distinguishable from the others. No one can then point us out, measure us against others and expose our inferiority.” Eric Hoffer Do you resent successful people? 14. Dec 26, 2015 ### WWGD I resent those who become successful without making contributions, those who game the system in their favor to make it harder for others to rise. But success itself, however measured, no. Ultimately, the stability of a system depends on whether the average person considers the rewards, the system itself to be fair (according to each person's definition). With all his flaws, FWIW , I respect Steve Jobs more than I do Gates, whose interest seemed to be only in winning at any cost, while Jobs wanted to win, while producing something that elicited a sense of wonder, and was willing -- and did -- pay the price he had to pay in order to see his vision through. 15. Dec 26, 2015 ### votingmachine That is not true. Especially in this day and age. A Rolling Stones album will lead to a Rolling Stones Tour. The "Steel Wheels" tour had over a$billion in ticket sales, and large sales of every digital copy of the album.

JK Rowling created and wrote the Harry Potter stories, alone, single-handedly. She sold the books, and sold the rights to movies, and now to them parks. JK Rowling has a net worth exceeding $1 billion, and the "Harry Potter" brand is estimate to be worth$15 billion, if she was to decide to sell that.

Logic does not say that a human cannot alone produces so much as to be worth \$1 billion. If you start to bring in the people also working on the Harry Potter stuff, for example ... don't forget they are paid. Daniel Radcliffe was paid extremely well for his role, which also made him rich.

16. Dec 26, 2015

### WWGD

I think it is only fair to ask you: do you automatically approve of anyone who is successful?

17. Dec 27, 2015

### Staff: Mentor

I find your choice very interesting and curious, considering that Jobs was generally considered an ultra-selfish a-hole (and so much of a selfish nut that he probably caused his own death), whereas Gates basically retired in 2006 to become a full-time philanthropist.

But Jobs did make trendy ("insanely great!") products, I guess -- at least that's what I've heard; I've never bought one, since he overcharged for them.

18. Dec 27, 2015

### WWGD

You're right, I should have said along this particular dimension. I don't condone the way Jobs treated people, though I have heard that Gates was not much better in that respect. And Jobs' (meaning Apple's) record in China is questionable.
Gates' selfishness ended when he decided to become a philanthropist. Before that, his purpose was to win no matter what. He consistently put out products of questionable quality. You would most likely have s**t phones and no music , many other features in computers without Jobs' contribution.

Bill Gates grew up with a rich father who would bail him out of any mistake, with privileged access to technology by age 15, and despite all of this made no real contributions. His is a record of winning by playing hardball , consistently putting out products of questionable quality. Those who, like me, lack a strong technical background do not have a real option of using Lynux or some other alternative OS; selling to non-technically-savvy people like myself (though this has changed by now) is the means by which microsoft became rich and powerful . So, Gates is a bored rich guy, who never took any real risk, who played to win no-matter-what, who never made any real original contribution. I do give him credit for being a philanthropist, but being one when you have been rich all your life, never taken any real risk, and wining by playing hardball makes his philanthropic record seem less impressive to me.

Jobs, yes, an a-hole, but he came up from a humble position, had a vision and paid a personal price to see it through -- though he also made others pay for that . He made many original contributions.

Note that I don't resent Gates being born wealthy, more the fact that he did not make any real sacrifice to give back. I respect the fact that , e.g., George Bush Sr served voluntarily , and so did JFK. And both ran for the presidency. So they did make real sacrifices and gave back. Unlike Gates.

Last edited: Dec 27, 2015