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Capitalism's Fundamental Flaw

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Re: Capitalism's Fundamental Flaw

#81

Post by Xichekolas »

moron4hire wrote: post #63
sethg wrote: post #53

Earlier quoted context omitted.

Expansion of the money supply is not "counterfeit" money, although there are circumstances where it is a bad idea. Counterfeiting is when a private citizen decides to, as it were, expand the money supply with his or her own printing press.

Why should we treat the action of the government differently from the same actions of citizens? Wouldn't it be wrong for a government to murder people with no provocation? Wouldn't it be wrong for a government to kidnap people and hold them captive in a secret location? Why then is it fine for the government to debase the currency, and therefore destroy the value of any accounts held in that currency? This is the cur…

I'm not trying to defend the current setup of the Federal Reserve as it stands... I think there is a lot of room to make it more transparent and to erect barriers such that Goldman executives (or any other bank) can't make a career of moving back and forth between the company, the Federal Reserve, and the White House.

As you put it, the government has the ability to debase a currency (I'm not arguing it's fine to do so, but I agree that it has the ability). Would you prefer to give this ability to private entities (corporations and individuals) as well? That is what commodity-based money gives you. Whoever produces or purchases that commodity has an effect on the money supply.

As an alternative way to think about it, would you want a money supply based on oil? It is also non-renewable, malleable (yay liquids), portable, and hard to counterfeit. How about money based on copper?

I'm sure the folks in the middle east and Chile (respectively) would love to be able to affect our money supply. Also, the cost of driving a car or building a house would go up needlessly, just like the cost of gold for electronics and medical uses is needlessly high because of gold's status as a speculative commodity.

So yeah, if there was a way to have a perfect money supply not subject to manipulation, I'd be all for it... but a commodity-backed system is just as bad (or worse) than a fiat one.

Re: Capitalism's Fundamental Flaw

#82

Post by danek »

chrischen wrote: post #65
megamark16 wrote: post #49

Earlier quoted context omitted.

I think that is what richcollins is saying. What I took away from that article, although I don't think it is quite what the author had in mind, is that Capitalism is flaw by the fact that our government does not allow/force us be purely capitalistic. The safety nets open the doors for greater risk, which require bigger safety nets.

Humans aren't angels. Just as we need laws to protect us from killing each other or stealing we need laws to protect us from ourselves in the economy. Whatever system we have, however much it naturally encourages innovation, someone will try to manipulate it.

Agreed. I think people spend too much time arguing about "capitalism the ideal" when what we should be talking about is "capitalism the implementation."

Re: Capitalism's Fundamental Flaw

#83

Post by gaius »

condor wrote: post #70
gaius wrote: post #40

Earlier quoted context omitted.

these bailed out banks want to hand out billions in bonuses to their non-performing employees If I worked for a bank, and I had nothing whatsoever to do with its subprime business, and had made a trading profit (or was in an unrelated function like IT and had fulfilled all my targets) then damn right I'd expect a bonus, and I'd deserve it too. It's interesting to note here in the UK that the 70% taxpayer-owned RBS ha…

Goldman's business was subsidized by the Government, in the form of funding Goldman's transaction partners, so that they could pay Goldman what was owed. In normal business if my customer goes bankrupt, even if I made the sale and was owed money, I would take a loss on that transaction., and if the loss was large enough it would affect all of my employees, who in turn took the risk of working for me. I took the risk…

Goldman's business was subsidized by the Government, in the form of funding Goldman's transaction partners, so that they could pay Goldman what was owed.

That is as true for them as it is for RBS! My point is that the government isn't doing a very good job of running a bank...

Re: Capitalism's Fundamental Flaw

#84

Post by gaius »

KirinDave wrote: post #68
dantheman wrote: post #51

Earlier quoted context omitted.

Inventing something by itself does not create value, to create value it must solve a problem. If you invent something,self funded it, and then take it to market you will be incredibly rich.

Such as the Theory of Relativity, or inventing the Internet, right? Too bad reality doesn't reflect your sentiment. Even solving a massive problem may not result in becoming rich. Especially with the way network economics has turned the whole scarcity model upside-down for modern internet-based startups.

What you consider "profit" depends on what you are trying to achieve. There are plenty of billionaires who'll be forgotten but in 500 years people will talk about Einstein like we talk about Newton, and about Tim Berner-Lee like we talk about Da Vinci.

Re: Capitalism's Fundamental Flaw

#85

Post by jamesbressi »

AndrewDucker wrote: post #6
jamesbressi wrote: post #3

Earlier quoted context omitted.

If you don't mind me chiming in, I think the lesson is that there really is nothing that can be done to curb it. Why? Two reasons. First, every time we create legislation, laws and other governing to something, the problem either gets worse or creates a whole new set of issues. The problem becomes a snowball -- you can look at the examples there to see some of this. Second, the saying that goes something like "locks…

I disagree strongly. 1) Legislation can change things significantly and effectively. It can also merely shovel things around. Both are possible and doggedly asserting that only one effect ever happens is just ridiculous. 2) Locks keep out thieves very well a lot of the time. They may not keep out every thief, but it keeps out most of them, most of the time.

Very glad you engaged, now on to my rebuttal...

Really?

Show me a piece of legislation that hasn't shoveled things around? And show legislation that actually changed things significantly and effectively without already having legislation in place that it enhanced? Drugs? Education? Prostitution? None of those for sure. I know, gun laws? Nope, not there either.

And in regards to your response to my use of the saying "locks keep out the curious, but not thieves", you have to understand the underlying principle to completely get it. No "locks" (and we aren't talking just physical) keep out thieves, only the curious. Bernie Madoff anyone? The underlying principle to that saying ties with the really corny saying "where there is a will, there is a way". When someone really wants to do something, locks are not a deterrent, they will find a way.

Cheers to you for debating with me, really enjoy it.

Re: Capitalism's Fundamental Flaw

#86

Post by moron4hire »

Xichekolas wrote: post #81
moron4hire wrote: post #63

Earlier quoted context omitted.

Why should we treat the action of the government differently from the same actions of citizens? Wouldn't it be wrong for a government to murder people with no provocation? Wouldn't it be wrong for a government to kidnap people and hold them captive in a secret location? Why then is it fine for the government to debase the currency, and therefore destroy the value of any accounts held in that currency? This is the cur…

I'm not trying to defend the current setup of the Federal Reserve as it stands... I think there is a lot of room to make it more transparent and to erect barriers such that Goldman executives (or any other bank) can't make a career of moving back and forth between the company, the Federal Reserve, and the White House. As you put it, the government has the ability to debase a currency (I'm not arguing it's fine to do…

"That is what commodity-based money gives you. Whoever produces or purchases that commodity has an effect on the money supply."

But in that sense, nothing has changed for fiat currency. Fiat currencies are still produced and purchased just like commodities, with the exception that governments can produce all they want to get a leg up on that game. That's what they use monetary inflation for, to cheat at currency trading and bonds games.

My point is that nobody should be "in charge" of a currency. Currencies came about through consensus in the market, not through government mandate. Nobody has the right to be the final arbiter of all "dollars" any more than anyone has the right to be the final arbiter of "time" (the only truly important resource) or "air and water" (the first truly vital resources). Monopolies are not good, especially monopolies that come about through force, which is as governments are. In a society that is claims to be free and equitable, having a super-citizen government is not equitable.

A single, mandated currency is a borderline oppressive idea. There are laws against "undermining the ubiquity and stability of the dollar". They're used against people who want to mint their own coins of their own design and use them in transactions with people willing to accept them. If people want to use something other than dollars for transactions, then more power to them. Hell, publicly traded corporations already do it, often using their own stock holdings as a medium of trade for merger deals and such. When you look at the plethora of trading (I mean this in the generic sense, not the Wall Street sense) options available to anyone with enough wealth, I think it starts to become clear that financial and monetary laws and regulations are really only meant for the working classes.

Re: Capitalism's Fundamental Flaw

#87

Post by sramana »

jriddycuz wrote: post #46
larryfreeman wrote: post #25

Earlier quoted context omitted.

There's a fundamental flaw in your reasoning too. You can't have capitalism without some form of government and you can't have government without some form of taxation.

Maybe the term capitalism has a different meaning to you than it does to me, but I use almost synonymously with "free markets." And I would actually make the case that you can only have "pure" free-markets without government. What I was suggesting in my comment above is that the failures of a bound and adulterated form of free markets do not indicate that free market principles are themselves flawed. The notion that…

I agree that free market capitalism ended when the government bailed out the banks. I think, the issue on that is what would have happened if the banks were not bailed out? Many believe, the western financial system would have collapsed and we would have been sitting amidst 25-30% unemployment right now. Most economists agree that bailing out the banks was the right thing to do under the circumstances, and faced with the consequences.

But now that we do have a financial system that has not collapsed, we need to rethink how we recover from 10% unemployment and a gaping deficit wound that has been created.

For that to happen, we need more people like Kao, fewer like Soros. Those, after all, just examples. My point is, the system has created incentives for people to be attracted to the Soros-like professions, not the Kao-like professions.

And what we need right now are more the Kao-like innovators (and the Jobs like entrepreneurs, who, to your point, is very wealthy).

But entrepreneurship and innovation are not short-term money-making propositions the way speculation-oriented professions are. And my point is we're diverting the youth in two directions as a result: (a) an entitlement path, where they expect the government to come to their rescue (b) the speculator path, where they are attracted by easy money.

The path that is longer, harder, riskier - the path of building, creating, innovating - is losing out in the process.

Re: Capitalism's Fundamental Flaw

#88

Post by rms »

The fundamental flaw of capitalism is the tendency for wealth to concentrate in the hands of those that already own the capital. There's nothing to be done about it because the fundamental flaw is more like a fundamental feature.

Re: Capitalism's Fundamental Flaw

#89

Post by dgordon »

unalone wrote: post #24
yafujifide wrote: post #15

Earlier quoted context omitted.

I hate to bring this to a general discussion of capitalism/Rand etc., but I have a question: How is Rand's "liberty" supposed to be provided? It seems to me we already live in a universe where people have as much free will as we ever will. Some people use this free will to restrict the free will of others. Sometimes this is a government, sometimes it's a corporation, or sometimes it's a kidnapper. But what hypothetic…

I was going to submit this a few days ago, but I don't like Rand-only discussions. However, I'd like to contribute to the thread with this recent Slate article, which abruptly reversed almost all my remaining positive feelings about Rand: http://www.slate.com/id/2233966/ Not only was she a hypocrite who ignored her own teachings when things got personal, she worshipped a serial killer who raped and dismembered a 12-y…

Considering how much just about every other quote in that article was taken out of context, I would expect that was too.

Re: Capitalism's Fundamental Flaw

#90

Post by unalone »

dgordon wrote: post #89
unalone wrote: post #24

Earlier quoted context omitted.

I was going to submit this a few days ago, but I don't like Rand-only discussions. However, I'd like to contribute to the thread with this recent Slate article, which abruptly reversed almost all my remaining positive feelings about Rand: http://www.slate.com/id/2233966/ Not only was she a hypocrite who ignored her own teachings when things got personal, she worshipped a serial killer who raped and dismembered a 12-y…

Considering how much just about every other quote in that article was taken out of context, I would expect that was too.

The Branden quotes weren't taken out of context. It was the Branden affair that first led me to doubt her words, and that's pretty much as it happened.

Back-up of the mass murdering psychopath bits: http://michaelprescott.net/hickman.htm FTA:

According to Rand scholar Chris Matthew Sciabarra, she deliberately modeled Renahan - intended to be her first sketch of her ideal man - after this same William Edward Hickman. Renahan, she enthuses in another journal entry, "is born with a wonderful, free, light consciousness -- [resulting from] the absolute lack of social instinct or herd feeling. He does not understand, because he has no organ for understanding, the necessity, meaning, or importance of other people ... Other people do not exist for him and he does not understand why they should."

So she modeled her initial Randian Hero after the psychopath.

In the original version of her first novel We the Living: "What are your masses [of humanity] but mud to be ground underfoot, fuel to be burned for those who deserve it?"

Sounds Jokereqsue, no?

Of The Fountainhead's hero, Howard Roark: He "has learned long ago, with his first consciousness, two things which dominate his entire attitude toward life: his own superiority and the utter worthlessness of the world."

And:

The editor also provides the briefest and most detail-free synopsis of Hickman's crime possible: "He was accused of kidnapping and murdering a young girl. He was found guilty and sentenced to death in February of 1928; he was hanged on October 20, 1928."

As far as I can tell, this is the one and only reference to Hickman's victim to be found anywhere in the book. Ayn Rand never mentions the victim at all in any of her journal entries. The closest she comes is a sneering reference to another girl, "who wrote a letter to Hickman [in jail], asking him 'to get religion so that little girls everywhere would stop being afraid of him.'"

Pretty damning. And there's much, much more.

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