Capitalism

[djoe]

Hi everyone! Im 17 years old, a football player, and a libertarian. In my downtime, like right now unfortunetly on a beautiful saturday night, I read and think about the economy. I like to sort of think of myself as a philosopher. I love debating with people, but usually im only with my friends if we're at school or chillin, and Im not going to talk politics when we're chillin.
Anyway one day I came up with a little theory. Im sure other people are aware of this too, but this was a personal revelation I had. Many people don't understand capitalism. It is human nature for us to fear what we dont understand (as children we are scared of the dark because we dont understand it). As a result of this fear we are easily exploited by politicians who blame things like "greed" "deregulation" and "capitalism" when something bad happens in the economy. As a result of this, more government regulations and interventions are created. In the short run, newspapers will talk about how "a bipartisan effort in Congress defeated greed" or something like that. These regulations hurt more than they help though, but they make people feel better. And then something bad happens again in the same sector of the economy the cycle repeats itself.

Now I've come to this forum to basically talk economics with anyone that wants to. I want to debate, learn and educate others. I think people our age need to know the horrors of government intervention. Basically every problem we have in the economy can be traced back to some sort of government regulation or intervention. Whether it be big issues like Health Care and the housing market, or more everyday issues like rent or the price of food. We've been taught all our lives that capitalism was evil. That the great deppression was caused by capitalism. That evil capitalists were trying to take over the world and that they promote war. And to all this BS I would like to quote Bob Marley, "They say what we know Is just what they teach us." And I think its time we got a fresh perspective.

Thoughts? I would really like to have some good spirited discussion about the economy.

[Balls Deep]

Agreed, regulation and gov. intervention creates more problems.

[djoe]

Agreed, regulation and gov. intervention creates more problems.

Awesome. Its a start.

[Balls Deep]

Well the economy will continue to worsen as gov. intervenes more. The admin. says that they have saved millions of jobs while unemployment is almost at 10% and that they saved the banks while over 100 small banks have gone out of business. The gov. can never control or regulate anything. Name something they have created that hasn't cost a shit load of money, and more then they "expected" it to cost. Amtrak, medicare?

They said they wouldn't get involved with business, while they are cutting paycheck of executives of company. Gov. , can't create jobs or save money or create prosperity, they only spend money.

[djoe]

Just as Milton friedman said, "If the government was in charge of the sahara desert, there would be a shortage of sand."

[rebellious_teen]

Here are some questions for you. What is you opinion regarding monopolies that eventuated from excellent entrepreneurship? Do their existence warrant government interventions?
And do you think the act of dumping, that is, selling a product below market price and possibly (but not necessarily) at a loss in order to eliminate competitors constitute an acceptable act of capitalistic venture?

[iwpoe]

It is human nature for us to fear what we dont understand (as children we are scared of the dark because we dont understand it).

This is why most of us fear the internal combustion engine, cellular telephones, and classical music. This is also why American politicians never appeal to the greatness of capitalism to get votes, because it scares us.

As a result of this fear we are easily exploited by politicians who blame things like "greed" "deregulation" and "capitalism" when something bad happens in the economy. As a result of this, more government regulations and interventions are created. In the short run, newspapers will talk about how "a bipartisan effort in Congress defeated greed" or something like that. These regulations hurt more than they help though, but they make people feel better. And then something bad happens again in the same sector of the economy the cycle repeats itself.

Now I've come to this forum to basically talk economics with anyone that wants to. I want to debate, learn and educate others. I think people our age need to know the horrors of government intervention. Basically every problem we have in the economy can be traced back to some sort of government regulation or intervention. Whether it be big issues like Health Care and the housing market, or more everyday issues like rent or the price of food.

This is ideology (or hints of a future repetition of ideology). Prove it philosopher- from the ground up- from first principles which come together to form not only a valid system but which are also true.

We've been taught all our lives that capitalism was evil. That the great deppression was caused by capitalism. That evil capitalists were trying to take over the world and that they promote war.

I don't remember that class.

Thoughts? I would really like to have some good spirited discussion about the economy.

How about we pick a more general topic. I say we talk about being.

[iwpoe]

Well the economy will continue to worsen as gov. intervenes more. The admin. says that they have saved millions of jobs while unemployment is almost at 10% and that they saved the banks while over 100 small banks have gone out of business. The gov. can never control or regulate anything. Name something they have created that hasn't cost a shit load of money, and more then they "expected" it to cost. Amtrak, medicare?

Who are you talking about? What specific claims were made? How binding were they? You talk about the government like it's one thinking acting being with a singular motive.

They said they wouldn't get involved with business,

Who did? When?

Gov. , can't create jobs

I guess being in the military isn't a job. I mean, I hope you don't mean this directly, since you seem to be asking for total government control (while also bemoaning government control).

or save money

What precisely are you asking of policy makers? And for what reason?

or create prosperity,

The execution of power in an organized manner is one of the necessary conditions for the possibility of prosperity. In our case the state accomplishes precisely that.

[madgeisgod]

It is human nature for us to fear what we dont understand (as children we are scared of the dark because we dont understand it).

Ah, that explains socialism being one of our biggest fears as a society.

[djoe]

Here are some questions for you. What is you opinion regarding monopolies that eventuated from excellent entrepreneurship? Do their existence warrant government interventions?
And do you think the act of dumping, that is, selling a product below market price and possibly (but not necessarily) at a loss in order to eliminate competitors constitute an acceptable act of capitalistic venture?

Monopolies: First we should realize how hard it is for companies to become a monopoly and then maintain it. The market itself often fights against trusts and monopolies. Montgomery Ward involved itself in many sectors and was therefore able to compete with the monopolies. Lets also remember substitutes. If a comapny has a monopoly over beef and is jacking up the prices, then the market will usually respond by buying less beef and more fish. I think we should be more worried about government created monopolies, and anti-trust laws which can be easily abused by lobbyists hoping to bring down a competeing company.
In India after the creation of the Monopolies and Restrictive Trade Practices Act of 1991, many jobs left India.
"Some of India's leading industrialists were prevented from expanding their highly sucessful enterprises, lest they exceed an arbitrary financial limit used to define a 'monopoly'-regardless of how many competitors that 'monopolist' might have" - Thomas Sowell in Basic Economics.
When the Act was repealed some years later foreign and Indian entrepreneurs began establishing and expanding businesses in India. Tax revenue also increased and many people were taken out of poverty.

Dumping: Anti-dumping laws are a form of protectionism. In America, we have anti-dumping laws on steel from Japan and golf carts from Poland. Here's the problem though, how can Washington beureacrats determine the cost of producing steel in Japan or golf carts in Poland. Their only basis for determining that these companies are "dumping" is that they are selling their goods for less than the American companies. Domestic companies often lobby the government to investigate foreign companies for dumping because they are unable to cut costs the same way the foreign company can.

[djoe]

This is also why American politicians never appeal to the greatness of capitalism to get votes, because it scares us.This is ideology (or hints of a future repetition of ideology). Prove it philosopher- from the ground up- from first principles which come together to form not only a valid system but which are also true.I don't remember that class.

First of all, im sure you were around during the bailouts when capitalism was being blamed for every bad thing that had happened.

Okay so step 1: A problem! In my example I will talk about rising costs of housing in many coastal and urban areas (A problem created by zoning laws and "smart growth" policies)

Step 2: Fear! This when the people want the government to "do something."

Step 3: The Government acts. In this case the government did act. The Community Reinvestment Act of 1977 for example. Many banks were forced to loan to people who didnt normally qualify. If they didn't they were sued by HUD. Lets also not forget Fannie Mae and Freddie Mac. Two government sponsored enterprises. They used tax payer money so they didnt need to worry about profit and loss. They were basically told to give out as many loans as they could to people who wouldnt normally qualify for them. ALso the Federal Reserve lowered the interest rate to extremely low levels. When they raised it again, many people who had interest only loans got forcloused on. In a true free market banks would have never given out such risky loans, because they knew that forclousure was a very certain possibilty. But the government (led by H.W. Bush, Clinton, and Bush II) wanted to raise the percentage of homeowner from 64% to 69%. They did this without any knowledge of the ramifications of their actions.

Step 4: Crash. Crap hits the fan and the economy is left in ruin. People from the poor to the upper class are screwed. Fannie Mae, Freddie Mac and many different banks need bailouts. The government, insted of letting capitalism weed out all the bad loans, bails out the banks. In the short run some people are saved. In the long run things will get worse and the cycle will continue until some reforms are made to the Federal Reserve (or abolish it entirely) and repeals of laws/regulations like the CRA happen. People often forget that banks are some of the most regulated industries

Ah, that explains socialism being one of our biggest fears as a society.

Well that is true too, but so often in America we seek the protection of government.

[rebellious_teen]

Monopolies: First we should realize how hard it is for companies to become a monopoly and then maintain it.
The market itself often fights against trusts and monopolies. Lets also remember substitutes. If a comapny has a monopoly over beef and is jacking up the prices, then the market will usually respond by buying less beef and more fish.

For monopolies to exist by definition they do not expose themselves to the problems you have noted, otherwise they wouldn't have existed at all.
More specifically, I am asking what's your view on monopolies when it is producing a good with no close substituites. For example, telecommunication, airport, airline, banks, trains...etc. It's neither easy finding substituites for these goods nor easy to join these markets, and one may well argue that we'd like to have monopolies for these goods. For example, it's better to have just one airport than many airports in a city, or it's better to combine all the phone lines than to have many different compoanies with a small sector of the network.

Do you think these monopolies warrant government interventions?

Dumping: Anti-dumping laws are a form of protectionism. In America, we have anti-dumping laws on steel from Japan and golf carts from Poland. Here's the problem though, how can Washington beureacrats determine the cost of producing steel in Japan or golf carts in Poland. Their only basis for determining that these companies are "dumping" is that they are selling their goods for less than the American companies. Domestic companies often lobby the government to investigate foreign companies for dumping because they are unable to cut costs the same way the foreign company can.

You are merely pointing out that dumping is hard to determine, my question is - whether dumping is acceptable?

[madgeisgod]

but so often in America we seek the protection of government.

True, but I disagree with that being "socialism," or anti-capitalist. I think mixed economies are the best economies.

[Extreme D.]

Capitalism reenforces greed. It's simple really, capitalism puts pressure on people to get alot of money, often at the expense of others, and thus it fosters greed. Greed is defined as the want or need of excess money, and that is just what capitalism shows people, that those people with a big nifty college degree and million dollar salaries are better then those people who work their asses off for no money and no benefits simply because of their money.

A good example of this is the current debate over public health care, which is socialist. If you get to the bottem of this, people are saying no to it simply because they don't want to spend money on anyone but themselves, no matter how much need those people are in. This greed brings people to buy McMansions simply to show off their wealth and pay their way out of any area where they may see the constant reminders of those who have less money, simply because it reminds them of their own greed.

Capitalism also fosters an idea that the richer the person is, the more they have worked to get it. This is absolutly untrue. Many of the hardest workers are the people who work in mines or construction all day, rather then those who sit behind a desk and file papers to come home by 5 and sit on their comfy chairs in front of their big-screen TVs thinking how great they are because their parents left them swimming in money. This is greed.

The government is there to make sure people are treated equally and fairly. It's their JOB to interfere when a company is doing wrong, such as private insurers are now. Without such intervention, the countries would fall apart. To say the government is just there to sit around as puppets as the big corporations control them from their puppet string is not a good idea.

This economic decline has come because people are- get this- greedy. People payed to much and wanted to much. They were nopt willing to settle for decent, but instead binged. The banks acted as if this wonderful economic times would continue forever. The big companies made bad decisions, and overall, we messed up. If this recession has one lesson it is to be careful of the greed that is inharent in capitalism. Without government intervention, this recession would have become a lot worse, and the unemployment rate would be worse. The government needs to be incolved

[djoe]

For monopolies to exist by definition they do not expose themselves to the problems you have noted, otherwise they wouldn't have existed at all.
More specifically, I am asking what's your view on monopolies when it is producing a good with no close substituites. For example, telecommunication, airport, airline, banks, trains...etc. It's neither easy finding substituites for these goods nor easy to join these markets, and one may well argue that we'd like to have monopolies for these goods. For example, it's better to have just one airport than many airports in a city, or it's better to combine all the phone lines than to have many different compoanies with a small sector of the network.

Do you think these monopolies warrant government interventions?

You are merely pointing out that dumping is hard to determine, my question is - whether dumping is acceptable?

Monopolies: I would say monopolies dont warrant government intervention. Airports and train stations can indeed become monopolies. Although even they have substitutes (cars, boats, ferries)

Well I think we have to determine that dumping actually goes on before we can judge whether or not it is acceptable. If it was determined that it actually does go on then I still dont see a need for government intervention. A company can only cut costs for so long before they lost too much money and I doubt they would totally elimante a competitor.