Well, if you could explain this better, I might know what I’m not getting. The industry doesn’t free anyone up that I can see. After all, a house that collapses still needs to be rebuilt by someone. It seems like it unfrees people to do a lot of heavy math all day as best I can tell.
The rest of you make some points as to why insurance, banking, etc. is important under a capitalist system, and I agree whole heartedly. Such efforts would not be required under other systems, and as no one seems to want to argue with that, I feel I’ve made my point.
And, I’m glad to see my solution for Bangladesh, of moving the whole town 5 miles inland, works out OK. It would seem to me that capitalism basically imprisons these people to their land, and that is too bad. Otherwise, I can’t see why anyone would stick around.
I do think South Korea has a more free economy than the Phillipines. Freedom, again, is a good thing, and ultimately leads to more productivity. I’ll be having lunch with some Phillipino friends on Sunday, and will chat it up with them as to what they know and report back. I thought their economy was much more backward than South Korea. Comparing the two Koreas, I think you can clearly see that free economies are better than authoritarian ones.
As far as people going on strike being bad people, because they continue consuming without producing anything, well, I don’t think they are bad since they are simply trying to bring about something better.
I eagerly await your detailed description of these other systems. And no, the Amish system is not going to work as it is cultural specific. If one chooses not to live in that type of culture or ascribe to their religious beliefs it probably wouldn’t work.
WTFAYTA? If capitalism imprisons people then it is not capitalism, but an authoritarian state. They may use markets to varying degrees, but it is not capitalism.
Yeah, and what if you let people have freedom and they choose capitalism? When the Berlin Wall came down most people in East Germany seemed ready to embrace capitalism…or at least the system that was in place in West Germany.
Nope, they are no better than insurance agents. After all they only consume and produce nothing of value. You keep dodging so well I wonder…is this you?
And to be fair so the moderator doesn’t have to put on his hat, this is me.
I think it has been explained sufficently. The whole reason the insurance company is there is to make sure the funds will be available to rebuild. Why that is a tough concept for you to grasp is beyond my comprehension. You think they’d be doing all that heavy math for no good reason?
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This thread asks the question “Is Capitalism Destined to Fail?” As such it is entirely appropriate for us to focus on capitalism instead of other systems. So now it appears as though you see that insurance companies do provide something of value in our current system, how nice. By the way there are other threads that can be started about other systems. I remember your thread about people being slaves to money. You couldn’t come up with a coherant arguement in that thread and you’ve not come up with one in this thread. So what if other systems wouldn’t need insurance or bankers? Those systems suck.
Well, that’s the last time for a while I try to defend something oldscratch says. I really don’t know where he was going with this, and he has yet to show up to elucidate.
Don’t complain now that this was a hijack, MGibson, it takes two you know.
Insurance may not be needed under other systems, but some form of risk management will be, and it will have its own costs and benefits. Or, perhaps there won’t be a good scheme to manage risk, and the economy of that country will suffer as a result. And if you don’t have banks, you have to come up with some other way for people to efficiently store their excess reserves. If you don’t have something like a banking system, they will be far more inefficient, and the economy will again suffer.
One of the reasons Capitalism is NOT destined to fail is because it is *innovative. It adapts. When needs appear, they are filled by the market. Insurance wasn’t a necessary part of capitalism, it was simply an evolutionary mechanism that efficiently solved a problem that exists for all people, whether capitalist or not.
The real danger to Capitalism is government. Much of what Capitalism has been blamed for is actually the result of government interference in the market. But capitalism gets blamed, and people demand yet more government interference.
A good example is the S&L crisis. This has been widely used as an example of the evils of deregulation, when in fact the main problem was government - FDIC insurance coupled with loose regulation of loan requirements led to the abuses of the S&L’s. But Capitalism took the rap, and not the government. The person most responsible for the massive S&L problem was Carter, who raised the FDIC insurance limit from (I think) $25,000 to $75,000. Reagan then removed a bunch of regulatory controls from the S&L’s, opening the door for abuse of the new, higher limits. If there had been no FDIC insurance at all, there could have been no scams.
What is “risk”? Either something catastrophic happens or it does not. And if it does, then deal with it.
You mean like siloes? Um… wait, let me think… I’ve got it! Siloes!
Wasn’t that caused by a lack of interference of the government? The gov. wasn’t regulating enough, and almost no one who bilked got prosecuted for it (outside of a few people involved in a little property flip known as Whitewater).
Anyway, yeah, people in a capitalistic system ideally have the power to be innovative. I think insurance has been around for 350 years, though, and I actually might even have a reference on that at home. I don’t know what major recent systemic innovations have occured.
Risk is when you do something that might fail and the reasons if fails are at least partially out of your control.
For example, you take a risk getting into your car. Sitting in your garage about to turn the key a priori you don’t know if you are going to get into an accident or not. Now you can drive safely, but since other drivers might not be as careful you still face a positive probability of getting into a car accident.
There are a variety of ways of viewing probabilistic events. The frequentist, the logical, the subjective, etc. For example, you probably use subjective probabilities all the time. When you are about to go driving you don’t sit down with some data and a computer and try to calculate what your probability of getting into an accident is. Most likely you figure it is quite small and thus, the benefits of driving more than outweight the expected losses of having an accident.
Hmmm. This isn’t the first time there’s been a movement to deregulate the marketplace. It’s a movement centuries old. The closest we ever came was the liberal revolutions of the 18th and 19th centuries.
The results? Farmers tossed off their land. Six-day/18-hour work-week. Environmental pollution from coal. Unemployment. Child labour. Repression. Popular rebellion.
The free market did not aid the growth of democracy. In most Western nations, it resisted it. In Canada, we had the Rebellion, the movement for responsible government in the 1830’s. In England, there were the riots in the late 18th and early 19th century that lead to the first Election Reform Bill. Very often, the middle class permitted the working class a vote only after popular rebellion.
Around the world now, corporations are getting greater and greater access to governments. This hasn’t resulted in greater freedom. Concentration of media keeps people out of public debate. Corporate lobby groups influence our political leaders.
First we were told that a “global economy” would lead to greater freedom and more wealth, so we had to deregulate and put an end to tariffs. Now we’re told that in a deregulated atmosphere, we have to be competitive. No welfare, no unemployment insurance, cuts to education, cuts to health care, etc.
In the desperation that follows, we have fewer options. Less choice.
My point is that capitalism, while it can exist (if regulated) in a democratic society, seems to support a society where only a small number of people are free. And when I say free, I don’t mean having enough money to buy a face-lift, a ferrari, or a trip to Disneyland. I’m talking about the right to speak one’s mind and be heard. I’m talking the guarantee of basic survival, of not starving and not being left homeless. I’m talking about the right to vote and have it matter.
As for the point of this thread, I don’t think capitalism is destined to fail – because I don’t believe in destiny, religious, Marxist, or any other kind. By this same token, I don’t think globalized, deregulated capitalism is inevitable. We have a choice of economic system.
I call myself a democratic socialist, but I’m prepared to compromise in the form of a mixed economy. Socialism has its own problems, but it seems to me to be the best one, until somebody comes up with something better.
Having participated in similar threads before, I am trying hard to stay ot of this one. I do not understand how anyone can believe insurance provides nothing of value. I wonder then why millions of people voluntarily buy insurance. They are paying money for nothing?
Last year the roof of my back porch was damaged by strong winds and my home insurance paid for the repair. A couple of months ago my boat was hit by lightning and the insurance will hopefully pay for the damage some time soon (They are dragging their feet). To me they provide an invaluable service. I have exchanged the uncertainty of potential losses for the certainty of a concrete expense.
OTOH, if I wanted to assume the risk, I am not forced to buy the insurance. This is what I have chosen to do with health insurance. I have decided I would rather assume the risk myself so I have no health insurance and I pay for my health care costs out of my pocket. I am assuming the risk myself with all that it entails.
The decision on whether to buy or not buy insurance is very personal and depends on many factors but insurance undoubtedly is a service people are willing to pay for.
Just to add some historical perspective… Insurance probably originated with sea commerce. Sea voyages were very risky and the amounts involved were huge. The owner of a medium sail ship had all his fortune riding on his ship. If the ship was lost it could be his ruin and that of his family. In many cases he would be lost with the ship and his family would be left destitute.
Initially, masters of ships at the same home port would form mutual companies where they insured each other. They paid into a common fund that would build to pay out losses but they were obligated personally if the fund would not cover losses. This is how LLoyd’s of London got started. They would only insure up to a certain percentage of the ship’s value so that the master always had a good incentive to try to save the ship if at all possible. Cargo owners also mutualy insured their cargoes.
What happened to insurance is what happened to many other things: people who specialized in that business could do it better and cheaper. Gradually, the insured found they could just buy insurance from an insurance company better than run the insurance scheme themselves. For one thing the insurance company was bigger and could diversify the risk much better than they could as a small group.
The same thing that happened to weaving cloth, or manufacturing pins, happened to insurance: it was cheaper to buy it from a specialized company than to provide for it yourself.
I have seen old insurance policies for commercial shipping and they provide a very interesting insight into the world of sea trade. I believe sea insurance was the first form of commonly used insurance and then spread to other fields.
Insurance developed very rapidly in the 19th century as a way to manage risk and other forms of insurance became common, like fire insurance.
Your post is a good example of what I was talking about when I said Capitalism gets blamed for things, and government takes the credit.
Most of the ‘problems’ in your message were not fixed by government - they were fixed by the capitalist system. But government interfered, took credit for the solution, and over time it looked like the government was necessary when it wasn’t. Or at least, that government had a much bigger effect than it really did.
For example, consider child labor. The modern ‘spin’ on child labor is that government regulation is necessary to prevent it. People point to the horrible days of unfettered Capitalism and claim that evil capitalists made kids work around the clock, until the beneficient government stepped in and saved the children.
The reality is very different. Child labor was once widespread because it was necessary. Families weren’t rich enough to allow children the leisure of spending 18 years in school. So kids went to work.
As the wealth of nations increased because of capitalism it was no longer necessary for children to work for basic survival, and most of them stopped working. Government child labor laws were not in widespread effect until long after child labor ceased to be a universal practice. Government regulation DID have a positive effect in some isolated industries that had a strong tradition of child labor (Chimney Sweeps, for example). But Child Labor Laws didn’t have anything to do with the widespread ending of child labor.
I think both Hamish and Sam Stone have good points. The work in the early part of the century was hard and often dangerous. However, it is not clear it would have continued if the market was left alone.
Also, consider that for many the alternative to working in a factory was working on a farm. That very arduous labor that Sam Stone detailed in an earlier post. Life in most places at the turn of the century was pretty tough…especially with hindsight.
I don’t want to get too bogged down in one point (What about environmental destruction? The right of the poor to vote?) but there was an enormous difference between 14th-century child labour (helping mom with cooking, sweeping, knitting on a peasant-worked farm) and 19th-century child labour (being inserted into a machine to get it working in a smog-choked factory in 19th-century London).
The situation for labour became horrific in the 19th century. Peasant rebellions were relatively rare, but the 19th century was almost one long string of rebellion from the time the Industrial Revolution got heavily underway at the beginning of the 1800’s.
You bring up the improvement in the quality of life. What improvement? Feudalism was a horrible system, but at least under it, the poor had some rights. The owners of the factories saw their wealth grow immensely. None of it “trickled down.”
The situation had become completely desperate by the 1930’s. The booms and busts of pure capitalism were getting more and more extreme. In the middle of one of these busts, after the Stock Market Crash, the population of most Western nations were beginning to gravitate to the extremes of fascism and communism.
Finally, governments compromised a free market ideology with some realism. In the United States, Roosevelt brought in the New Deal. Social programs, make-work projects, and other methods of getting money to reach the poorest segments of society were invented. This stabilized the United States more than any other factor. Similar policies were brought in in Britain and in Canada.
In Germany, however, and in Italy, little or nothing was done. Desperate situations became worse, and political realism lost ground to fanaticism on both the right and the left.
I don’t think it’s a coincidence that political fragmentation, rebellion, and civil war worldwide are on the rise, with the growth of a world-wide, deregulated economy. Capitalism is more likely to compete with, rather than serve democracy. If the public cannot regulate abuses of corporate power, it can’t protect itself from those abuses. The public loses power to an organization, often a foreign one.
People deprived of power to the point where starvation and homelessness don’t roll over and accept it. They become angry, and desperate, and prepared to take action – positive action or brutal action, depending on the person and the situation.
I see this problem even locally. Stalin-type communism is left-wing anarchism are making a comeback with many people I know who feel backed into a corner.
I’m afraid for the future. I’m afraid for the environment. I’m afraid I might not be able to eat, vote, or have a roof over my head in ten years. You may find it irrational of me to admit fear, but from my observation of the world around and my knowledge of history, I think it’s well-founded fear, and a far better attitude than bubbly optimism about a global economy.
It seems to me that by the time that Charles Dickens was writing his descriptions of child labour, the most noted in the language, Britain had already consolidated its hold on India and was one of the richest empires (if not the richest) in the world, which kind of puts the lie to your “wealth of nations” argument.
I don’t think we can give them to much grief for environmental destruction. After all they were completely unaware of the long term affects of burning all that coal to fuel the industrial revolution.
As for child labor I think you paint a pretty picture of 14th century life. Take a look at farm life in the US during the 1800’s. Children worked on the farm beyond helping mom with cooking, sweeping, and knitting. They were out there working in the fields and so were the women in most cases. I doubt the 14th century was any better for farm families.
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We didn’t have peasants in the United States or England in the 19th century having long since abandoned the feudal system.
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I don’t recall any death marches forcing people from the farms to the factories. From their point of view the chance to work in a factory and live in a city must have been a good thing. From our point of view the working conditions were very poor. If they thought it was so poor why did so many of them want factory jobs instead of staying on the farm?
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The GNP of the United States went up every year after the crash of 29 except for two years. And after the New Deal was implemented it didn’t suddenly jump up as if by magic.
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After WWI Germany was economically devasted. Compound that with a crushing war debt that prevented them from prospering and you’ve got a recipe for disaster. Germany was doing poorly before the crash of 29 so I don’t think capitalism is to blame for this one.
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Sounds like business as usual to me. This isn’t anything new.
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What abuses? I see nothing wrong with the government protecting the rights of individuals. So if a corporation feels like using violence to do something then the government should crack down. I even think the government has the right to do something about the amount of pollution spewed into our atmosphere.
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And nations which adopt capitalist principles tend to have less starvation and a better life.
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You’ll always find people on the fringe. I find it odd that there are any Stalin-type commies out there. I mean considering we’ve seen communism fall flat on its face.
Again with this utopian vision of agrarian life. Look - it just wasn’t so! Children on peasant farms worked their asses off. They weren’t cuddling around a warm fire knitting! They were on their hands and knees in rocky soil, hand-digging furrows for their meagre seeds while their stomachs rumbled. They were freezing in cold rain working feverishly to block water flows that threatened to wash away their crops. They were pulling plants by hand 16 hours a day under a hot sun. It was a filthy, difficult existance.
There can be absolutely no question that industrial life was a big improvement for most people. We know that because huge numbers of people voluntarily left their farms to work in factories, and they didn’t go back.
Even in this century farm life was incredibly tough for children. I used to have to get up at 5:30 to do the morning chores, catch the school bus at 8:30, attend school until 3:30, get back to the farm at 4, do 2 hours of chores before supper. After supper we had a ‘golden hour’ where the family would do things together like play a game of cards, then it was off to do homework for another hour, then in bed by 9 or 10 because 5:30 comes awfully quickly.
One 12-year old boy on a farm down the road from us was killed when the tractor he was driving rolled over on him. Another friend of mine ( I was 10 or 11 at the time) was missing his left hand because he got it caught in an auger. The injury rate for children on farms in this century was probably higher than for industrial workers.
This doesn’t mean that the people were worse off under capitalism, but simply that once they had a taste of a better life and saw factory owners living like kings they were no longer content to be poor.
So what rights did the factory workers lose?
In Marx’s lifetime, the average pay for factory workers increased by over 40%. I’d call that ‘trickle down’, wouldn’t you? In fact, the improvement of the worker’s lifestyle was so great that Marx had to revise his own theories because they were no longer true.
No, by the 1930’s people were immensely wealthy by pre-industrial standards. In a sense, Capitalism was a victim of its own successes. People used to be resigned to living as they were born - peasants ramained peasants, the rich stayed rich. Capitalism gave the people power, and the realization that it was possible to improve their lot in life. That leads to dissatisfaction. We still have angry people today dissatisfied with what they earn, even though the poorest of us in North America live better than kings did in feudal times.
‘Most’ western nations? Please list all of the western nations that became Communist. List the ones that became Fascist. Compare and contrast against the vast majority that maintained market democracies.
And economists still argue today whether or not most of those policies helped or hurt. It’s certainly not as clear as you seem to think it is.
Germany was reeling under the weight of severe war reparations. Even so, its economy was recovering. Hitler gained power because the people resented being controlled by outsiders - a nationalist fervor took hold.
I do. The world is in a state of upheaval, because the balance of power after the cold war has shifted. Most of the civil wars that are going on now are happening in Eastern Europe. It’s a mess over there. The void left by the fall of the U.S.S.R left a lot of lunatics in power who no longer had to fear the heavy boot of Mother Russia if they stepped out of line.
Let’s see how things look in 10 years, after all this shakes out.
The countries that have been capitalist for most of this century are not in upheaval - they are growing in stability. The ‘booms and busts’ of Capitalism don’t seem to be happening, employment is higher than its ever been, standards of living are rising all over the world, population is under control, governments are running surpluses instead of deficits, and the future looks incredibly bright.
Nonsense. First of all, we DO regulate ‘abuses of corporate power’. The government regulates it, the people regulate it with their money, and the civil law courts regulate it through tort law.
As for democracy - what can be more democratic than ‘voting’ with your own money to support the things you like and approve of? Capitalism IS democracy. Governments are a gross approximation. In a government, you get to cast a probably meaningless vote once every four years for a narrow range of candidates, who will probably break all their promises to you anyway. But when you vote with your money, it ALWAYS has an effect. If you don’t buy a Benetton shirt because you disapprove of their ads, you make a direct difference to their power, and you give that benefit to their competitor.
You can see the power of money as a democratic tool by the lengths companies go to to try and make you happy. They conduct focus groups, spend zillions on advertising, pay huge dollars for customer support representatives, etc. They KNOW, deep down in their hearts, that their existance depends directly on YOUR happiness. You have much more control over the forces in your life under capitalism than you’ll ever have from your democratic choices in government.
You need to stop hanging out with that hand-wringing negative bunch of leftists who can never see a bright future.
I find it baffling that young people today are so pessimistic about the future. Twenty years ago I was living with the threat of nuclear destruction hanging over my head, unemployment was high, governments were heavily in debt and going deeper every day, population growth was a serious threat, and my generation was being left behind by the Baby Boomers, who had filled all the best jobs and weren’t going anywhere.
Today, population growth has almost stopped, the cold war is over, governments are rolling in money, unemployment is at an all-time low, freedom is breaking out around the planet, the Information Economy promises great new things, the space program is starting to roll again, and there looks to be no end in sight.
You’re living in the greatest times mankind has ever seen. Wake up and smell the Cappucino.
Well Sam Stone, there is that nagging problem of Social Security and Medicare. I was at UCLA’a forecasting conference Wednesday and one of the speakers was Laurence Kotlikoff of Boston University (the portion of the seminar about the US and California forecasts was over and the panel discussion was Social Security). Anyhow, he stated that the government has been less than forthright with its statements about SS and Medicare (big shock). He estimated that to keep both systems solvent the payroll deductions would have to increase almost 40% from 15.3% to 25.3%. Either that or let in 100 million imigrants. With rising medical costs, and the Baby Boomers just a couple of decades away from retirement things are going to get expensive really really fast.
And people complain about Capitalists screwing us poor consumers. Shit…government is going to be taking 1/8th of your income right off the bat. Sheeesh.
j I think that after the detail I’ve put into the various replies I’ve made to this, including analogies, examples, “high-school algebra” and theory, coupled with the patient efforts of the others in this thread, if you still don’t understand, you’re not going to. At least not without someone sitting down with you and using a pen and paper - something which is gonna be tough for me from this side of the Atlantic.
WTF?? Bangladesh is a country. Unbelievable. Even if we consider towns, you’re solution (now let me get this absolutely straight), you’re solution is to pack up bags and shift the whole town 5 miles west??. How? All your possessions are gone. There isn’t anyone to help you, because they’re all in a similar state. I despair. Anyhow, since you seem to be standing alone in your little pool of ignorance here and I’m fairly convinced lurkers will have long since given up on this one, I think I’ll let it go.
Incidentally everyone, don’t get too hung up on the insurance you all buy. Personal lines are a small fraction of the market and are (as you say) personal choice. Business insurance however is not so much a choice (shall we risk it this year? Nah.) as risk management technique that has developed over the last 30 years or so. And it’s huge.
FWIW sailor you’re right to think that insurance began with marine insurance. Shipowners sitting round Edward Lloyd’s coffee house in London in the 17th century searched out rich individuals who were willing to cover their potential losses. (Note jmullaney that without this insurance the jouneys would never have been made and people would have been denied access to the East Indies).
However you’re slightly incorrect to suggest that the free market totally took over here. In fact almost all marine cargo insurance is still taken care of by P&I (protection and indemnity) clubs - mutual organisations of shipowners. And Lloyds of London is still the major marine/aviation insurance power.
No-one seems to have responded to my question about capitalism’s inability to see the bigger picture. I’d really appreciate a well thought-out response to that post. If you could bear in mind my little essay on the benefits of regulation near the beginning of this whole thread too, I’d be grateful.
