Side-effect of capitalism?

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In summary, the US infrastructure is primitive because it is profit-driven, and it is very difficult to fire or downsize an employee. There are plans to update the system, but they have not yet been prioritized.
  • #1
Monique
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I have always wondered why the infrastructure of certain things in the United States is so primitive.

With that I mean for instance all the electricity cables that are hung from wooden poles, telephone lines above ground, both which get blown down in every storm causing thousands to be without electricity and phone.

And also the banking system seems to be terribly ancient, writing checks is the favorite activity it seems, even at professional institutions.

I was thinking that this may lie in the fact that the US is very profit oriented (with capitalistic tendicies), investing in updating these technologies thus isn't a priority. A more socialistic country would put money aside even if this would mean slowing the economy.

Am I right in thinking along these lines?


(for those wondering, I am not out to blacken the image of the US, since it is a fore-runner in technological advances, but that is why the contrast is so clear).

Also, are there plans to update the system? With an eye on the blackout-of-20-03?
 
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  • #2
Some people want to live in a country...America somehow thinks it can live in an economy. No one wants to ivest in anything, yet they want everything. Profit has replaced citizenship.
 
  • #3
Well, it causes rediculous situations for such a supposidely advanced country. As I said, what I have seen is that after every storm trees get blown down and all the power/phone lines go with them causing literally thousands to be in the dark.

[rant]I myself have been waiting for literally 6 months already for several stupid (but valuable) checks to travel by boat over a fast ocean, first they have to make the checks, send the checks, go to the wrong address, lay around, you track the check, ask them to send it, goes by boat and takes two months floating around, they asked for a signature at receipt of the mail but I have to follow classes whole day long so no one is home to accept the check, fedex is complaining that they will send the check back if it doesn't get delived before the 9th, and probably by the time I get the check it will have expired, I believe they are only valid for like 180 days, with me having to beg them again to pleazzzzzzzzzzzzzzzzze send it electronically, which, ironically, I have asked many times, I also have an account in the US, but, for some reason, strangely, they can only send money by check, wiring is not possible, while 'normally' money is transferred with the push of a button[/rant]

Yeah, that really led me to wonder why the system works in such a way :)
 
  • #4
The flaw in capitalism is that the bottom line replaces actual service. I'm struggling with crappy Internet, but until enough people threaten to disconnect, they will do nothing. If you ever threaten to cancel a service, though, you may find them willing to spend more to keep you, even though it would have been cheaper for them not to have screwed up in the first place.
 
  • #5
Horses for courses

Monique,

In the Netherlands (AFAIK), it is quite difficult to set up a company - it takes a long time, involves a great deal of bureaucracy, etc - and if you hire an employee, it can take a very long time (and cost a great deal of money) to fire/downsize/force-adjust/lay-off/etc that employee, even if they are quite hopeless at their job, even if your business is about to go bust. To the US capitalist, this is far more backward than the fact that she still does a great deal of her financial transactions with such ancient tools as checks/cheques.

The power/telecom/cable TV cables dichotomy (US aerial, 'civilized' countries underground) is partly profit driven, but there are many other factors. Consider that in the Netherlands, there are essentially no 'rural' areas; in the US sub-stations/telephone switching centres (which are called 'central offices' in the US)/head-ends are (on average) much, much further from the customers they serve than in your country. Furthermore, in the Netherlands, local councils (or their equivalents) have the power to force utilities to put their cables underground; in most parts of the US they don't (perhaps Russ, SelfAdjoint, Jonathan, or Zero can tell us why this is so, in the land of democracy).

The persistence of checks in the US is also a very visible reminder of the 'networking effect'. An example: in the early days of telephony, it was discovered that coal-miners, as a group, had a very low take-up of telephone services. Research was done, and the result was 'coal-miners don't have phones because coal-miners don't have phones'; the people they'd most want to pay money to call didn't have a phone, so they saw no reason to get one.

In the US, checks persist because banks use checks. Some brave ones are moving to electronic-based services, but even there they tend to want to charge for these services rather than give them for free. Weird? Yes, totally ridiculous, given that the banks' marginal cost for a check transaction is 10, 100, 1000, ... times higher than that for the equivalent electronic one.

Perhaps Jonathan has an explanation?
 
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  • #6
When Americans demand service, they often abuse the minimum wagers who must bear the brunt of commercial and materialistic desires inculcated by their incompetant managers and greedy executives.
 
  • #7
Hi Nereid, I appreciate your arguments :)

I have no bussiness background, so yeah maybe a socialist country tends to over-protect the rights of empoyees. Not a bad thing I think btw, I have friends in the US who have absolutely no economic security, they can be out on the street without a reason at all and in no time. Especially for immigrants this is hard reality and they thus have to work really hard, good for the economy, yes! but good for the individual?

I also agree that The Netherlands is very densily populated contrary to the US, at least the conditions in major populated areas could be modernized right? That is where the most problems are I imagine.

I didn't get your networking/cheque story (what is the correct spelling btw?)

I think it is really weird that checks still exist in the US, I was stumped when I first saw a check, what to do with that? :) I mean, the system still totally depends on it as in the example I gave.


So you would agree that the deficiencies I noted are caused by the capitalistic nature of the government or not?
 
  • #8
Oh, I think I get the networking example now.

You are saying that setting up electronic banking services is hindered by the fact people aren't aquinted with it. I don't agree since many households have access to internet and software is not difficult to install either, when a computer is already present in a house. Or are you saying that computers and internet are a luxury in the US?

The fact probably is that a lot of money needs to be invested and the government is not contributing in financing to buy the broom to sweep the system clean. Banks have to finance themselves and thus rather stay with what they have and know that works, rather than investing all that money and having to wait many years or so before making profit again from the money saved not having to process cheques.
 
  • #9
not people, banks

You are saying that setting up electronic banking services is hindered by the fact people aren't aquinted with it.
the brake is banks, and to a lesser extent merchants, not people. The key players in the 'check networks' are banks and merchants, not consumers. Think about how all the checks get cleared, how merchants get their $ from the banks, banks settle with each other, and all the way to the money coming out of your bank account.

Credit cards work because there are really juicy profits to grease the wheels (ask your friendly corner store grocer how much she pays to handle each card transaction; those revenues far exceed the costs of running Visa or Mastercard - who owns Visa?). Electronic banking doesn't have that level of profitability built in, it comes only through (operational) cost reduction, which becomes a net positive only after the capital investments have been paid off (or properly accounted for).
 
  • #10
Hard cash, paper money, checks, bank drafts, and other soft money vs. electrons programmed by Bill Gates and the "kids from Redmond?" "In Microsoft We Trust?" In a pig's eye --- cash exists as an alternative to barter in the "black market economy" that is driven by tax rates in this country. Checks leave a trail, but are also a "hard enough" document that they do not disappear when the bank computers crash --- yeah, not as yet has there been such a crash. Money without a trail for the IRS to follow is also quite popular --- a check doesn't include a statement of contract beyond amount to be transferred --- it's then up to the IRS, state, and local revenue agencies to demonstrate any tax liabilities attached to check transfers of funds.

"Electric money" is entirely too accessible to western culture's real thieves, politicians and bankers, to be all that popular an item.
 
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  • #11
I pay MOST of my bills over the internet, but my rent and power aren't online so I have to pay by check.

Telephone/power poles are made of wood because of the abundance of TREES. They are not inherrently less stable than concrete ones - both need support wires at their more vulnerable spots.
 
  • #12
Underground, not on dead trees

Russ, It may that Monique was referring to power/telecoms/cable TV being in underground ducts (vs hung on poles of any kind). Certainly it would seem that poles are used far more often in the US than in the Netherlands ... and it is something which local governments do have a say about.
 
  • #13
I pay MOST of my bills over the internet,
which bank, if you don't mind me asking?
 
  • #14
[rant]I myself have been waiting for literally 6 months already for several stupid (but valuable) checks to travel by boat over a fast ocean, first they have to make the checks, send the checks, go to the wrong address, lay around, you track the check, ask them to send it, goes by boat and takes two months floating around, they asked for a signature at receipt of the mail but I have to follow classes whole day long so no one is home to accept the check, fedex is complaining that they will send the check back if it doesn't get delived before the 9th, and probably by the time I get the check it will have expired, I believe they are only valid for like 180 days, with me having to beg them again to pleazzzzzzzzzzzzzzzzze send it electronically, which, ironically, I have asked many times, I also have an account in the US, but, for some reason, strangely, they can only send money by check, wiring is not possible, while 'normally' money is transferred with the push of a button[/rant]
Monique I think a considerable part of your difficulty is to do with the 'international' nature of your transaction ... this is one area where banks do appear to act like a cartel ... they make very, very nice profits from moving money across borders, and there appears to be very little in the way of competition to force costs down (and even less now GWB wants the CIA to scrutinise every transfer, or am I being too paranoid?)

Incidentally, the introduction of the euro has allowed some of the more extreme (obscene?) behaviour to become clear to all (why does - did - it cost €50 in bank fees to send €100 from Greece to Germany?). This is one of the economic benefits of a currency union (don't tell Adrian :wink: )
 
  • #15
I wonder if your experience with your check had more to do with the nature of the check or the financial transaction? I just don't understand the difficulty. We've had funds transmitted from banks in Germany, london and the phillipines for the last 2 decades and never had any problem other then maybe taking a day or 2 longer then expected. I've been electronically banking using my computer for 6 or 7 years now. Those who I know who don't use it, choose not to for various reasons ranging from lack of knowledge, discomfort with computers, just not being ready to change from the method they are accustomed to and also of course distrust. Also, many older people don't access computerized banking because they are uncomfortable or lack knowledge of computers.
A major reason that people stick with checks is also, as mentioned before, a desire for some privacy in their financial transactions and distrust of government.

As for keeping our lines on poles above ground, there are areas where the towns and communities have chosen to put their wires underground but this is usually for appearances sake. It would be very difficult to lay wire underground where I live as there is a tremendous amount of "ledge" or hard rock that is over a hundred feet deep just under the top soil. Underground cable also has it's own problems, one would be having to dig in order to repair, improve or expand.
 
  • #16
Originally posted by Nereid
Monique I think a considerable part of your difficulty is to do with the 'international' nature of your transaction ... this is one area where banks do appear to act like a cartel ... they make very, very nice profits from moving money across borders, and there appears to be very little in the way of competition to force costs down (and even less now GWB wants the CIA to scrutinise every transfer, or am I being too paranoid?)
No, it is not since they have my US account that I very specifically asked them to transfer the money to (because of the current exchange rates), but they can only issue checks. And yes, it is rediculous how much they charge for international transfer. But the check thing was just an example that raised the question together with the other observations.

Originally posted by KatA major reason that people stick with checks is also, as mentioned before, a desire for some privacy in their financial transactions and distrust of government.
? Checks leave a paper trail and electronic transfers leave an electronic trail, I think checks leave a clearer trail.

So you all are saying that the government has no hand in it, which is exactly my point: a capitalistic government would not be concerned with updating these technologies that would not result in a profit.
 
  • #17
The "Capitalistic Government" doesn't reallly restrict businesses and banks to using checks. They just prefer it that way. A lot of it is just conservatism. I pay my bills online through my bank's website, but it still issue checks to my payees, even though many of them have websites of their own. One of these days that will just "wither away" ans a certain political movement used to say.
 
  • #18
Ok, but what I understand a capitalistic society to be is keeping the influence of the government to a miniumum. As you say, it doesn't restrict, but it ALSO doesn't encourage. Since it doesn't encourage, it conserves.

I am just trying to understand the concept and whether the hypothesis I made is right, or that it is not specific to capitalism and also applies to socialism.
 
  • #19
Originally posted by Monique


? Checks leave a paper trail and electronic transfers leave an electronic trail, I think checks leave a clearer trail.
Monique, I never claimed it to be rational.

So you all are saying that the government has no hand in it, which is exactly my point: a capitalistic government would not be concerned with updating these technologies that would not result in a profit.
I don't think it's really correct to say that it's a capitalistic government..(please, correct me if I'm mistaken) I think that the government would be concerned about it if and when the public becomes concerned enough to have a majority be vocal about it. Privately owned companies become concerned with it when it becomes more profitable to be.
 
  • #20
Originally posted by Monique
Ok, but what I understand a capitalistic society to be is keeping the influence of the government to a miniumum. As you say, it doesn't restrict, but it ALSO doesn't encourage. Since it doesn't encourage, it conserves.

I am just trying to understand the concept and whether the hypothesis I made is right, or that it is not specific to capitalism and also applies to socialism.

If the US government were to lean on banks and businesses to encourage them to switch to electronic transfers from checks, there would be such a hoo-haw as you never saw. Everybody would complaint that the government was interfering with business, that it had no constitutional right do do this*, that the little man was being oppressed. Commentators and bloggers would deride the idea. Caricatures would appear, Dave Letterman would do a ten dumbest ideas of the government skit with electronic transfer as the star, and so on and so on. One thing US citizens cling to their breasts is the right to do things wrong without interference from on high (see US education for example).

* Actually, I think the constitution would support it under the regulation of interstate trade clause.
 
  • #21
Originally posted by Nereid
which bank, if you don't mind me asking?
USAA Federal Savings Bank. Its for military members and most people haven't heard of it.
 
  • #22
Originally posted by selfAdjoint
If the US government were to lean on banks and businesses to encourage them to switch to electronic transfers from checks, there would be such a hoo-haw as you never saw. Everybody would complaint that the government was interfering with business, that it had no constitutional right do do this*, that the little man was being oppressed. Commentators and bloggers would deride the idea. Caricatures would appear, Dave Letterman would do a ten dumbest ideas of the government skit with electronic transfer as the star, and so on and so on. One thing US citizens cling to their breasts is the right to do things wrong without interference from on high (see US education for example).

* Actually, I think the constitution would support it under the regulation of interstate trade clause.
Lol, funny that you say that :P

Actually here in The Netherlands we had a similar situation, where the government REALLY was interferring in bussiness it shouldn't: the minister-president (sp?) of The Netherlands (the highest boss next to the Queen I guess) voiced his opinion that television shows should stop their caricature sketches of the Dutch monarchy family (they have been in the news a lot lately). Ofcourse this caused much stir-up, with even more caricatures and more sarcasm towards the royal family and minister-president broadcasted on television.

Ofcourse, in this example the free press of the media was the topic, and the minister-president later stated that it was his own opinion he voiced and not that of the government..
 
  • #23
capitalism? schmapitalism? socialism?

Monique, your initial question - or some personal interpretation of it in my head - has been bugging me for days. So, to lessen the buzzing somewhat, some thoughts.

The labels - capitalism, socialism, xxx-ism (sounds like porn, neh?) - aren't really all that helpful. Why? Because, with some very important exceptions* [b(] , the major drivers of business are global and have to do with trade. However, every economy/country has its own history and individuality when it comes to how business is conducted, especially including regulations and how they are made and changed.

In some industries (or sectors) such as FMCG (fast-moving consumer goods), it pretty much doesn't matter what country you're in. In others, particularly former regulated monopolies (sometimes government owned, even in the USA) such as electricity generation and transmission, the country to country variations are enormous. Medical care is perhaps another example.

The 'economic inertia' in an industry can be huge - where there are huge capital expenditures just to enter, where there are gigantic 'sunk costs', where there are 'universal access' considerations. This really matters when the sector is opened up to international competition (e.g. steel in the US; agriculture in the EU), is de-regulated (e.g. electricity supply), or where technology starts to bite big time (e.g. telecoms).

In theory, a free market delivers the most efficient allocation of scarce resources to satisfy ever changing demand.

In practice, few markets are very free.

Not surprising then that you get such apparent contradictions as:

- medical care in the US is the most expensive in the world by far, measured by almost every metric imaginable (New Zealand socialism better than US capitalism?)

- FMCG manufacturing in China is the most competitive in the world by far, also by any metric you choose (Chinese socialism better than US capitalism?):smile:

- oh, and the persistence of paper cheques** in the US, vs their virtual disappearance in Hongkong (for example) over a decade ago.

*please note my caveat, esp Adrian, Russ, Zero, dogon; my comments are *not* intended to be universal!

**'check' is the US spelling; 'cheque' the UK one.
What is the preferred spelling in other English-speaking parts of the world? In approx order of 'English-as-mother-tongue' population:
- India
- South Africa
- Pakistan (?)
- Philippines
- Canada
- Australia
 

1. What are the main negative impacts of capitalism on society?

The main negative impacts of capitalism on society include economic inequality, exploitation of labor, and environmental degradation. Capitalism promotes a system where the wealthy few hold a significant amount of power and resources, while the majority of the population struggles to make ends meet. This leads to a widening wealth gap and social stratification, causing social and economic instability. Capitalism also puts a high value on profit and growth, often at the expense of the environment, leading to pollution and depletion of natural resources.

2. How does capitalism contribute to social injustices?

Capitalism perpetuates social injustices by creating and maintaining systems of oppression. This can be seen in the exploitation of marginalized communities for cheap labor and resources. Capitalism also reinforces discrimination and inequality based on race, gender, and class, as those who hold power and wealth tend to maintain their privilege and exclude others from opportunities for advancement.

3. Can capitalism be sustainable in the long term?

Many argue that capitalism is not sustainable in the long term due to its focus on constant growth and consumption. This leads to overproduction and overconsumption, which can strain resources and contribute to environmental degradation. Additionally, the unequal distribution of wealth and resources in a capitalist system can lead to social and economic instability, which can also be unsustainable in the long term.

4. What are some alternatives to capitalism?

There are various alternatives to capitalism that have been proposed, such as socialism, communism, and anarchism. These systems aim to promote economic and social equality by eliminating the private ownership of resources and distributing wealth more evenly among the population. Other alternatives include mixed economies, where there is a combination of private and public ownership, and cooperatives, where workers own and manage their own businesses.

5. How does capitalism affect mental health?

Capitalism can have negative effects on mental health by contributing to stress, anxiety, and depression. The constant pressure to succeed and accumulate wealth can lead to a culture of overwork and burnout. In addition, the emphasis on individualism and competition can create feelings of isolation and inadequacy. The unequal distribution of wealth and resources can also contribute to mental health disparities, as those with lower incomes may struggle to access necessary healthcare and support services.

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