(Resisting the obvious crack at certain members of congress that more closely resemble bags of insects in a flesh suit) Of course, we’re all subject to the same human failings. Ideally though, that’s what career service bureaucrats are there for. To listen to the experts and look at the big picture 10+ years down the road (or at least beyond the next election cycle), in addition to whats happening at the moment.
I don’t think I was.
My first post on it includes this: “Yes, preventing lead in things is clearly a laudable goal. But was this the best way to accomplish it?”
How do you read that as “we should do nothing about lead poisoning”?
Can you explain why you think this is a problem?
We have ample evidence that this is the case. One person can make a stupid mistake, but collectively people’s decisions converge on optimal. Not always, but most of the time. What we see as individual ‘mistakes’ may actually be important to the functioning of the market. In complex systems you often see this - for instance, when ants are attracted to a pheromone trail that leads to food, about a quarter of them will actually start off in the wrong direction. In an evolutionary sense, either being ‘wrong’ some part of the time is healthy for the system (perhaps adding redundancy or randomness), or correcting for the error is so expensive that it’s worth 25% of the ants starting off in the wrong direction.
The vast majority of people manage to buy high quality goods for which they have no real understanding. That’s because the market has evolved mechanisms for this. For example, brands. Brands act as a signal of quality. If you buy a BMW, you can be assured that it will be relatively high quality, because BMW has invested a lot of money in its brand. There’s also word of mouth, internet reviews, magazines like Consumer Reports, insurance-related testing agencies like Underwriter’s Labs, etc.
Consider SCUBA diving. The industry is almost entirely unregulated. The equipment is technical and most people don’t really understand it. And yet, SCUBA is one of the safest sports around, and equipment-related failures are extremely rare. The reason is because absent government regulation, the industry has developed its own regulations, and they are more effective.
But the same holds true for almost all products. You know if you buy a Henkel knife that it’s going to be pretty good, and you don’t have to understand metallurgy to know it. And today, internet reviews put more power in the hands of consumers than ever. So if this was ever a problem, it’s a shrinking one.
That would be nice, and it’s important for products with extremely serious negative externalities, but we should also remember that products can have positive externalities as well. For example, vaccinations give us herd immunity, which is a positive externality. Cars have negative externalities, but also positive ones as even people who don’t drive benefit from the existence of widespread road networks, taxi cabs, and a wide array of goods made possible by trucking.
So it’s not easy to always suss out the externalities, but that’s not a fault of the market. Any government-planned economy would have the same issues.
Individuals may have sub-par thinking abilities, but markets do not. The behavior of markets in general is emergent and doesn’t rely on the thinking abilities of any particular individual.
All the more reason why power should not be centralized and handed over to a small group of people, who do not display emergent intelligence. And the ultimate in centralized power is government, which judging by the current occupants of the House, Senate, and Presidency is not exactly a great filter for keeping the stupids out. In fact, it may attract them. Let’s not concentrate the most venal, corrupt and stupid people in one place and then give them the power to run our lives.
And do you know who really prioritizes short-term thinking? Government. Governments seem to never see past the next election cycle. Long-term planning in a hyper-partisan government has completely gone out the window, and one administration’s plans are routinely scrapped by the next administration to take power.
On the contrary, and in spite of ‘conventional wisdom’, it’s large businesses that take the longer view. IBM bet its entire company on the 360, a machine that wouldn’t show a profit for more than a decade after it was started. The Boeing 747 was the same. There are privately companies out there seriously working on rockets to Mars, inflatable habitats in space, and other hardware that doesn’t have a chance to return its investment for decades.
In the meantime, after the Shuttle NASA planned to go to the moon. Then that was cancelled. Then they were going to go to Mars. Then that was cancelled. Then they were going to fly out and retrieve an asteroid. That was cancelled. Now they’re going to the moon again. If a new administration comes in in 2020, there’s a good chance that will also be cancelled. The Superconducting Supercollider was billions into its development when it was cancelled. The WFIRST mission that’s been worked on for years just got cancelled.
Currently, governments are racking up huge debts that are totally unsustainable. That’s not the sign of an institution that takes the long view.
No, it’s really not. For one thing, there are tort laws that can really punish a producer that hides information that can harm people. Second, there are independent testing labs and users of the product, who in the internet age, can find each other easily. In fact, producers are more focused on quality than ever because a bad review does much more damage to them than it used to.
I have worked in production in various factories and in software for 30 years. Do you know what the major focus is in every place I’ve been to? Quality. Quality, quality, quality. Not only do customers demand it, but if their products are used in other people’s supply chains it’s much easier to find a replacement for you than it used to be. We’ve also learned that higher quality leads to better processes and lower costs due to scrap.
Of course there are people who foist shoddy products on the market. But they don’t tend to last very long unless the low quality is known and baked into the price. There’s always a market for cheaper, lower quality goods. But these days, if a manufacturer tries to hide a quality issue in the product, you can bet it will be found out and probably widely publicised.
And yet people buy highly technology products of high quality every day, with nary a regulation in sight. How is that possible? Did you learn microprocessor design before you bought your phone? Did you study automotive engineering before you bought a car? You certainly didn’t have to, because the market has evolved many mechanisms for discovering quality, and the ability to buy a high quality product you don’t understand is a routine part of life.
Yeah, except governmets SUCK at this too. Some of the worst environmental damage has been done by governments. Low-trust countries with strong central governments tend to be full of environmental problems.
But do you know what allows you to live more cleanly? Wealth. The richer you are, the more of your money can go into cleaner products and environments. And the best engine for creating wealth we’ve ever known is free market capitalism.
Okay, but the dispute is going to be how much of that we really need. I don’t disagree with anything you said above, and yet I think that many regulations go way too far and cost way too much money for the benefit we get from. And that’s because regulations are often the result of politics and not science or economics.
What happens to the children of handful of super-wealthy people is an exaggerated version of what is happening to the much larger population of merely wealthy people and is therefore exactly the yardstick by which we should be measuring the success or failure of capitalism.
People who have no possibility to fail from the day they are born tend to drastically overestimate their own involvement in their success and are the ones making policy for the rest of us based on those experiences.
I’m currently in the process of starting my own company (Not hypothetical. Real world) and until such time that this company is off the ground, my family is seriously tightening their belts. If our politicians genuinely wanted to come up with ways to help small businesses they could. But instead I hear about how I should just get a small million dollar loan from my family.
Perhaps, but millions of people who have real possibilities of failure keep voting for those people, which seems to shift the “problem” to politics instead of economics.
Sure. Our political system is screwed up such that economic policies that would alleviate these problems, and are favored by the majority of Americans, can not get passed. That the political system is screwed up too does not change the fact that the economics are not working.
Cool, thanks for answering. But usually when people complain about capitalism, I say some version of what XT said:
Hey man, I like capitalism! Like I said, I’m starting a company as we speak and I expect to be rewarded for success. I just think we can have our cake and eat it too. We can have capitalism layered on a true meritocracy and do even better. We can have capitalism that helps start companies rather than subsidizing companies that have existed for generations. We can have capitalism that encourages innovation.
Sam, I just wanted to mention that while I don’t necessarily agree with everything you said, I appreciate the thoughtful ,detailed response.
A further point is that markets work as intended, providing we understand what markets are intended to do.
The market is not intended to provide low-cost, high-quality goods and services to everyone. The market is intended, and does, communicate the point at which perceived cost and perceived demand meet. Because the market works off what people want - not what they say they want, not what they should want - what they really want.
Maybe I should want to ride the bus to work instead of driving. Maybe I say I want to ride the bus to work instead of driving. But when confronted with the opportunity and nominal cost of riding the bus vs. driving, I actually drive. Maybe I should care about the mom-and-pop store enough to shop there even though the prices are higher than at Wal-Mart. But I don’t. And if I change my mind, the market will reflect that just like it reflects my decisions now.
As I have said in the past, the market is neither moral nor immoral - it is amoral. Blaming the market for not getting what you want is like blaming the thermometer because it is too cold to go to the beach.
Regards,
Shodan
Absolutely not. We should not be judging capitalism by the richest outliers, but by whether it makes the average person’s life better than any other competing system. And there is no doubt about that - everywhere that has gone from socialist to capitalist has seen the quality of life for the poorest people go up substantially.
Income inequality is a terrible measure, because it doesn’t capture the reality of what is going on. For example, it would be terrible if income inequality meant that the rich are doing way better while everyone else does worse. But if income inequality means that everyone does better but the richer do it faster, that’s not really a problem. And that’s the case in modern free market economies. The poverty line in the U.S. is more than double the world average income. In socialist countries the poor starve. In capitalist countries, the poor get fat, and generally have air conditioners, flat screen TV’s, cars, internet connections, cell phones, and all the other trappings of modern life.
We hear a lot about the ‘shrinking middle class’, but not a lot about how it is shrinking. The way the middle class is shrinking is generally because people are moving UP out of it, not down. We’re at a point where a household with two professionals (engineers, doctors, even teachers and nurses in some places) now have a combined income that puts them in the ‘wealthy’ category. It’s not uncommon for two absolutely normal people with professional careers to have a household income over $300,000.
This is just class envy if the existence of such people is a tiny factor in the economy - which it is. I don’t care if Barron Trump was born with a silver spoon in his mouth. And neither should you. If you took all the money away from all the billionaires, you couldn’t run the federal government for a year. And then you’d have no billionaires. No SpaceX, no Tesla, greatly reduced venture capital for new ideas, etc. These people are just not part of the problem - they’re part of the solution.
Billionaires are great because they can fund alternative ideas that governments can’t or won’t. Billionaires today are pouring huge money into space technology, alternative energy, medicine, science, etc. They are trying innovative ways to help poor Africans, getting around the governmental logjams and bureaucratic thinking of government aid organizations. They act as early adopters for the most expensive new tech, which eventually trickles down to us. Income inequality allows this to happen. Get past the envy of the ‘rich’, and you might see how beneficial it is to all of us to have a multiplicity of innovative people with huge resources rather than the one-stop shop of government.
That said, the fact that rich people have more access to government is a failing of government, not capitalism.
Having run a small business, I want no ‘help’ from the government. I want the government to get out of my way, and I want them to stop ‘helping’ my competitors by subsidizing them. Depending on where you live, the biggest threat to your business is the huge morass of government regulations you’ll have to wade through to get anything done, and you may have to compete against larger businesses who have managed to get government to stack the deck in their favor.
Can you give an example of capitalism as a political system? I can’t think of any. What you seem to be saying is that other political systems use capitalism (which is true) and that makes capitalism part of the political system which…I don’t see. It’s like saying that a boat floats on water, so therefore water is part of the boat. But it isn’t. The boat simply doesn’t function as well, or at all without the water. I don’t understand what the second paragraph there is trying to say wrt the points under discussion. Again, what you seem to be saying is that North Korea would have to change some of it’s communist/socialist aspects to accommodate private wealth and ownership, which is true (to an extent)…but that doesn’t mean capitalism is a political system. That’s them changing their implementation of communism/socialism. Something like China has done…to an extent. They don’t really have a market based system…the party controls everything, including their markets. But they do have a form of private ownership, though it’s basically ‘private ownership with Chinese characteristics’ 
Whom do you think owes you a loan, let alone a million dollar one?
Not to rain on your parade or anything, mate, but your eyes seemed to glaze ever so slightly over during that tirade.
And I mean it’s fine, that’s fine, everything’s fine. I’m sure you’ll do fine. Just, you know. Just blink twice for “I desperately need help, ANY help, oh god, please anyone give me a hand or I might kill myself”.
The arguments here against authoritarianism and state control of the economy are quite valid. It’s a good thing nobody is proposing such state control for the U.S.A.
The American social democrats want single-payer healthcare. Just like most of the world’s developed capitalist countries.
Democrats want to repeal [del]right-to-work[/del] right-to-scab laws. Again, this would bring the U.S. into alignment with the world’s successful capitalist countries.
Large taxpayer subsidies for higher education? For childcare? Again, the model isn’t North Korea or even Venezuela. It’s the successful capitalist countries of Europe.
I suppose some of you have fallen for some FoxNews meme that Sweden, Canada and Holland are socialist hellholes. All three of these hellholes rank above the U.S.A. in contentment indices.
Mitt Romney’s parents, apparently.
My statements about capitalism don’t apply exclusively to capitalism; they apply to all ‘economic systems’. In my view, what we refer to as economic systems aren’t purely economic systems; they’re also political systems - at least partly. In order to have an economy, you need policies first, rules that everyone agrees to play by and rules that are, on paper, enforced equally and consistently.
If a government says we’re going to nationalize our petroleum resources, our water resources, our power companies, they’re not simply saying that the general public and public institutions shall retain control of these resources; they’re also saying that one individual or groups of individuals cannot profit from these resources to inflate their own wealth. Moreover, depending on what’s written into the laws of a specific government, they may be giving those who administer these resources power. Those who hire and fire these ministers have power.
If on the other hand, we have a more capitalistic system, then that power doesn’t disappear; it simply falls into the hands of private individuals who makes these decisions. Again, policies come into play. Economic activity typically involves regulation, which is again political. Even in ‘free’ markets, most countries don’t let power companies run however they please for the simple reason that economic consequences also entail political consequences. But let’s suppose that you have privatization of those resources mentioned in the paragraph above, well now you have private individuals with wealth. And private individuals with wealth can become their own political class, in the same way that political administration can become its own political class.
To answer the OP’s question, I think that capitalism is failing, but it’s not just capitalism that’s failing; the idea of democracy is also failing, and I don’t think it’s coincidental. The idea of self-rule gets questioned from time to time. It’s not a coincidence that fascism was popular around time of the Great Depression, and it’s not surprising that the popularity of authoritarianism has returned in the 10 years since the near collapse of global markets in 2008. As I’ve said, what’s economic is also political.
I think you are confusing roles and also are confused on just what Capitalism is (and isn’t), trying to tie together things that effect each other but aren’t actually coupled. Socialism DOES have both economic and political aspects, but Democracy doesn’t really have an economic aspect…which is why you can have a Democracy with Socialist economics (or any other type) bolted on. Most western democracies do use capitalism as their primary economic system, but that hasn’t always been the case, and each use elements of capitalism along with in many cases socialism (at least social programs) as well. But that doesn’t make capitalism a political system, it just means that several different political systems can and do use it as their economic system, adapted for their specific environment.
Anyway, I’ll leave it there. I’m not a political science major so am probably not really saying this very well, plus it’s a bit of a hijack of the thread.