"People's Capitalism": Is this a good idea?

Great Debates
41

There are glimmers here and there, but this plan is like Marxism, or libertariansim, its a hot-house flower, an intellectual construct in poltical science.

I have no clear idea how the economic system we are searching to build will actually function. But the institutions that endure are those that reflect how the people change, what values they will support. I certainly think we need a national discussion about what it is about “work” we value. Is it actually production, doing good for the collective nation, or is it just about the willingness to do something tedious and awful because if we don’t, we don’t deserve a decent life. It may be obvious to a stockbroker or a tax attorney why he is more valuable than a policeman or a teacher, but I’m damned if I see why.

And I see a lot of potential in a worker-ownership paradigm. We don’t have to educate workers to the point where they can make big financial decisions, they just have to be smart enough to hire someone to do that. Someone who will be working for them, rather than the other way around.

Anyway, this plan isn’t much of a plan, best I can tell. It springs from honorable intentions, but isn’t “people grounded”. When the people lead, the leaders will follow. And if that doesn’t work, well, maybe then we send a few oppressors of the working class to The Wall. To encourage the others.

42

Since we’ve been talking Reagan today, this reminds me of one of his quotes:

“Well, the trouble with our liberal friends is not that they’re ignorant; it’s just that they know so much that isn’t so.”

The ‘fact’ that the middle class is shrinking, implying that more people are being impoverished while the rich get richer, just isn’t so.

First, whether the middle class is ‘shrinking’ depends entirely on how you define it. Tendentious pundits who want to raise gloom and doom will define it by some arbitrary measure such as the share of national income going to the top 1% or something. They’ll find some measure that works for them, then unilaterally declare that to be the only reasonable measure for what defines the middle class.

Another, more accurate way to look at the middle class would be in terms of lifestyle and values. Broadly speaking, the middle class is that group of citizens who have stable employment in decent jobs, a decent home or apartment, the basic staples of middle class life (TV, computer, washer/dryer, microwave, etc). They are not reliant on charity or government support to survive. They have access to decent schools and live in decent neighborhoods.

By that standard, the size of the middle class has exploded since the 1950’s.

Or, we could look at it by defining the classes on either side of it: The ‘rich’, would be people who would not have to work for a living if they so choose, who have personal attendants and servants to do their mundane work for them, and who have substantial net worth sufficient to send their children to any college.

The poor are those people living below the poverty line, who exist with significant government and social aid. They do not have substantial savings, and work in unfulfilling jobs because of necessity if they work at all.

The middle class is everyone in between.

The interesting thing about ‘middle class shrinkage’ is that the poverty rate has actually declined from 23% in 1960 to 12.3% in 2006, according to the Census Bureau (I’m sure the recession has pushed it up since then, but hopefully that’s a temporary thing).

Even if we look at those dreaded Republican-dominated years from 1980 to 2006, the poverty rate has declined by about 2%.

That means if the middle class is shrinking, it’s not because people are becoming poor - it’s because they’re becoming rich.

What has actually happened to the middle class is that two income professional households have moved into the upper classes. In addition, the population has aged, and net wealth increases with age, pushing upper-middle class households with children in 1990 into upper class households with no children today.

IF the middle class is smaller, it’s only because more people have moved UP out of it.

And in any event, nothing is happening FAST. We’re talking about a change of a fraction of a percent per year.

43

Mark Twain.

44

Wrong, wrong, absolutely WRONG.

Let’s not even get into the situation now. Let’s go back to the roaring Bush Boom Years.

Fact Check has been confirming the rise in the ranks of the poor and the decline in the ranks of the above-middle-class group for years. This chart shows 2003.

The ranks of the poor grew by 1.1 million in just 2004alone. The poverty rate jumped to 12.7%. How many more rich people were there during that time period?

So what if the poverty rate was 23% in 1960? We’re supposed to be moving forward and since Bush got into office we have not been doing that.

Only ONE YEAR in the last decade did the ranks of the poor decline, and that was 2005-2006. By four-tenths of a percent, to 12.3. It went back to 12.5 in 2007, 13.2% in 2008, and from there it was up, up and away.
The distribution of wealth toward the top few has gone off the charts. The top 20% earn an average of 1500 times what the bottom 20% earns - this is a record amount. No time in history has this level of disparity been present in America.

Two thirds of all money from economic growth went to the top 1%.

Worse than that, your claim that people are moving more into the upper class than into the ranks of the poor, is totally contradicted by this:

http://finance.yahoo.com/tech-ticker/the-u.s.-middle-class-is-being-wiped-out-here’s-the-stats-to-prove-it-520657.html?tickers=^DJI,^GSPC,SPY,MCD,WMT,XRT,DIA
• 83 percent of all U.S. stocks are in the hands of 1 percent of the people.
• 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
• 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
• 36 percent of Americans say that they don’t contribute anything to retirement savings.
• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
• 24 percent of American workers say that they have postponed their planned retirement age in the past year.
• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
• Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
• For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
• In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
• As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
• The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
• Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
• In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
• The top 1 percent of U.S. households own nearly twice as much of America’s corporate wealth as they did just 15 years ago.
• In America today, the average time needed to find a job has risen to a record 35.2 weeks.
• More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
• For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
• Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
• The top 10 percent of Americans now earn around 50 percent of our national income.
In addition, the ongoing disappearance of mid-level jobs is making it harder for the poor to cross the gap into the middle class, and then the ranks of the rich: http://www.pittsburghlive.com/x/pittsburghtrib/news/breaking/s_698351.html

Another reason why your argument doesn’t hold? Look to the future.

The Government projects 15.3 million jobs created between now and 2018. Best case scenario.

We have 14.9 million unemployed right now. The number of underemployed is 26 million.

Oh yeah and: seniors are retiring later.

The rich ain’t growing as fast as the ranks of the poor. Not happening. Hasn’t been happening for years.

45

If you actually bothered to read the OP, I was outlining a proposal which could provide an income for everyone by a means that was independent of taxation. This could make it more politically palatable to some people. The Federal Reserve would loan all of us a sum of money to invest in Mutual Funds, and eventually the investment would be able to pay itself off. Over a long enough time span (decades, at least) the dividends would be able to provide a modest income for everyone. We’d all be Owners, simply getting the dividends that are rightfully owed to us.

Coercion comes in more than just one form. Taxing is coercive. But there’s another form of coercion that Libertarians/Objectivists completely dismiss. Owning the Means of Production when other people own nothing forces other people into Wage Slavery. The days of homesteading are long gone. I can’t just plop down on a plot of land and start farming like in the old days. If I start hunting and gathering (which humans have done throughout the bulk of their history) to survive, the Park Rangers would arrest me. In order to keep a roof over my head and food in my belly, I am forced to sell myself to an employer just to survive. That’s the way the system is set up. If I don’t have a realistic option of refusing to sell myself to an employer then I am a slave, only I get a little bit more room to pick my Master. Ultimately it’s just as coercive as putting a gun to someone’s head.

46

It’s communism. Pretty sure it turned out that wasn’t a good idea.

47

Communism was implemented in a different way, with the government micromanaging the economy and dictating exactly how much of each item would be made, assigning people to work at certain places, etc. It was a failure. But this is not the communism that was envisioned by Karl Marx. The government may own substantial chunks of the economy but it’s not directly involved in the day to day operations of the corporations. And when it buys stock, It’s not leading the market, but following the market. I’m thinking something more along the lines of a giant Index Fund. We don’t have to limit ourselves to the U.S economy either, we could buy Index Funds of international stocks as well.

48

The communism envisioned by Karl Marx required the apparatus of the State to gradually wither away. Since neither he nor anyone else was able to figure out by what mechanism that would be accomplished, it’s kind of pointless to bring it up.

Besides, the point raised on the first page remains: who decides what to buy?

49

It could be government bureaucrats (which I suspect is what the detractors would find must unpalatable). We could set up dozens of different mutual funds to avoid putting all of our eggs in one basket and have some requirements that no single industry takes up more than X percentage of any mutual fund’s portfolio, but other than that the mutual fund managers operate independently of central government control.

Or another possible answer that I’ve brought up is we just buy into a giant index fund that simply duplicates what the market it doing without trying to control the market.

50

Here’s a nice little chart (Figure 2, scroll down a bit) showing what’s projected for People’s Capitalism using different assumptions for a rate of return on investment.

51

By it’s very nature it will exert influence on the market. You are pinning your hopes on something that can’t exist.

52

Ok, but maybe it’s still worth trying anyway. We can’t know 100% it’ll fail unless we try it, right? What, you don’t want to gamble the nation’s future away on a pie in the sky utopian dream? What’s the hell is the matter with you?! :smiley:

By the way, I misspelled the author’s name in the OP. His name is James S. Albus. This guy has actually done some very respectable work in robotics. Admitedly, this appeal to authority might seem rather weak because this is economics we’re talking about and not robotics. But his plan anticipates that advances in technology will render much of human labor obsolete and thus we should gradually start shifting our reliance on incomes from wage income to capital income to avoid massive unemployment.

53

This is supposed to be a Straight Dope message board and yet regulars are throwing out words like “communism” without even the level of nuanced knowledge you’d get from … er… looks around nah, I might get moderated.

Thanks for clearing this one up, Blaron. Didn’t Karl Marx even talk about the disappearance of the state?

This right here needs to be re-quoted.
To all libertarians, hippies and everyone who talks about freedom. (Me included.) You, sir, understand REAL freedom. You really and truly honest to God get it.

54

I LOVE this post! It cracks me up! Classic misdirection:

"Oh, just ignore that historically huge shift of wealth to the top 1 or 2 percent that’s been going on for the last few decades. It’s not important. Really, the middle class is not going away because, you know, rich people buy this sort of things and middle class people buy that sort of things and poor people buy these other sort of things. Be happy! Everything will come out all right in the end …

yah, Sam. For the top 1 or 2 percent. For the rest … the future is not nearly so assured.

55

The fact is, more people in America live middle class lifestyles than ever before. The percentage of citizens below the poverty line has been steadily declining for decades (it ticks up in recessions, of course, but the general trend is down). The average and median family incomes have been steadily increasing, etc.

By any real-world measure of quality of life, people have it better today (recession aside) than they ever have.

It’s your side that has to manufacture gloom and doom scenarios to rile up the middle classes and convince them they are in danger so you can gain political power. The whole subtext of “the shrinking middle class” is that people are falling out of the middle class and into poverty. And that’s just not happening.

While it’s true that the ranks of ‘the rich’ are growing, and that income inequality is growing, that’s not the same thing as saying people in the middle class are doing worse. They’re doing better - just not as fast. And the ranks of the rich are growing people people are moving UP out of the middle class, which is what we’re all supposed to want, right? I’m middle class, and I sure hope my kid becomes rich. I’m doing everything in my power to help her achieve that. Don’t you do the same for yours? So why is it bad if people are moving out of the middle class into the wealthy classes?

56

Indeed, that is what we are “supposed to want”. We have been diligently instructed to want that. About the only people who aren’t cheerfully determined to turn our world’s resources into loud, shiny crap are a bunch of dirty fucking hippies, and who listens to them?

But I would be remiss not to commend Sam for, once again, keeping his argument to simple, bald, declarative sentences unencumbered by the cites and data offered by lesser minds. I’m looking at you,** Le Jack**! You could lean a lot about the arts of persuasion from someone who eschews the petty obfuscation of facts.

57

Such as that computer you are using to type this post on, right? :stuck_out_tongue: When was the last time you bathed…?

The Straight Dope. Irony so thick you could float a battleship on it…

-XT

58

I don’t think you want to get into a pissing contest with **Sam **over who has the higher cite to post ratio.

59

Am I the only one who sees the potential for a Swiftian “modest proposal” in the o.p.?

Aside from the fallacy that automation reduces overall employment, there remains the issue that having a large population of permanently unemployed, uninvested people engenders petty and serious crime, fiscal malfeasance, and a lack of societal coherence. Want an example? Look at the Lyndon Johnson’s “Great Society” welfare projects, which were such an utter disaster despite support by Democrats under the Johnson Administration and expansion by the Nixon and Ford Administrations that there was virtually no opposition to dismantling them in the 'Nineties, (ironically under the most liberal Democrat Administration since Kennedy and Johnson, albeit with the political spectrum substantially redshifted and Clinton resembling a Goldwater-esque Republican).

Even if we didn’t need the labor of the population, we would have to create some kind of jobs in order to keep people occupied and the economy adequately stimulated. In fact, we already have the middle class version of that; the “McJobs” in which overeducated white collar workers perform mindless administrative and clerical tasks that are unneeded, unproductive, and do little to contribute to the bottom line of a company, but do serve to make a company look well-populated. (Look at the prospectus of any public company and the first thing they boast of over last quarter’s profits is the number of people employed. They also provide a nice bit of fat to carve away by a new CEO to demonstrate his commitment to cost-cutting and short-term inflation of apparent profitability.)

From a purely economic standpoint, as others have pointed out this isn’t anything like capitalism; it is communalism in a transparent guise of investment of capital, specifically, that the capital comes from taxation of actual profitable enterprise. Only Milo Minderbender could make this sound like a good idea, and then, only by going through a convoluted chain of reasoning and then insisting that it’s all a part of the syndicate and everybody has a share.

Stranger

60

So in other words, you can’t name one that was closed.

A-76 studies were a weak, half-hearted initiative, since discontinued, to do efficiency studies inside of agencies. There was never any chance of any agency ceasing to exist because of them. Most government employees “payed” little attention to them.

Oh, well, then, that settles it. No more to see here.

In one major federal agency, 98% of all employees recently received a performance rating of “exceeds expectations,” the highest possible rate. Do you see the possible problem of agencies evaluating themselves?

Good. Then name a few government agencies that have been closed down.