# What should replace capitalism? **URL:** \ **Category:** Great Debates\ **Created:** [March 20, 2011, 2:39pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357 "2011-03-20T14:39:00Z")\ **Posts on this page:** 20\ **Page:** 17
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [April 7, 2011, 10:52pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/322 "2011-04-07T22:52:40Z")
> [@emacknight](#): > > It doesn’t matter many time you or **Le Jacquelope** say that it doesn’t make it so. But don’t let that stop you from writing it over and over and over and over and over and over. Maybe, just maybe, next time it will magically happen. > > Capitalism is a form of economic policy, [social] democracy is a form of government. You can’t replace one with the other. We could have communism and democracy, or we could have capitalism and dictatorship. Instead we have a rather well functioning system of capitalism and democracy, where each person gets one vote regardless of wealth. > > And despite what you see out your basement window, we have a heavily regulated capitalistic system. But that means you won’t get something for nothing, no matter how much you whine. > > You get as many votes as Warren Buffet. And just because he can afford to flood the airways with political adds doesn’t change the fact that when you go behind the curtain you can vote for who ever you want. > > The fact that wealth is concentrated in the hands of a few should make it even easy to vote the policies that favour you. But for some reason that doesn’t happen. Can you tell me why? Or would you rather just keep yelling plutocracy? > > And just to throw a wrinkle in your plan, I have plenty of wealth, pay plenty of taxes, but can’t vote. Care to explain that? In spite of the view from your safe and secure tower, the sad fact is we have had capitalism taken over long ago. Most of this generation has never experienced competitive capitalism. Companies, gas stations and markets fought for business. Price competition was the norm. Marketers gave out green stamps or dishes to get your business. They fought teach other with price cuts and better service. They don’t have to do that anymore. Can you figure out why? No you can’t. It would not fit into that narrow slice of distorted reality that you live in. There is going to be a billion dollars spent on the next election. The bulk of that will go to TV and radio. Do you think they will fight for public financing of elections? Do you think they have an interest in keeping things as they are? Since 6 corporations own almost all the TV stations. radio stations , magazines and newspapers, do you think it would be easy to get all views presented? GE owns TV networks. Their stations never mentioned the story of the taxes they avoided. Odd isn’t it? Could there be a reason? Wasn’t it a big story? They filter the news to their advantage. They all do it. Since they are owned and operated by the extremely powerful and wealthy, the people don’t get real news or the facts. Hell the tea baggers are financed by extremely wealthy people. They are being used and played for fools. But they will walk into a voting booth and vote against their own interests. That gives you a distorted sense of fair elections. The people on top have no qualms about gaming the system. They have been doing it better and better every year. ---
**Author:** ![Borzo](https://avatars.discourse-cdn.com/v4/letter/b/43a26b/32.png) [@Borzo](https://boards.straightdope.com/u/Borzo)\ **Post date:** [April 7, 2011, 11:48pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/323 "2011-04-07T23:48:56Z")
**emacknight** : In the past big companies ran things like gas stations, department stores, automobile factories, etc… but many of the things that people bought were made by small businesses, or individuals. Now that machinery and computers and technology exists… most of the things we buy (at least our big purchases) are all made by huge - overwhelmingly huge - corporations. Our needs have grown to want more advanced technologies, but this focuses more and more wealth into few and fewer hands (those that own the fewer and fewer big companies). You would say that this is good, right? The big companies are more efficient? Do you believe there are any downsides to this? Don’t you think this naturally leads to corruption, manipulation, etc in both the economic realm and the political realm? Isn’t it getting harder and harder to start up a business from scratch? Isn’t the barrier to entry getting higher and higher as technology and people’s demands increase? Is this good, bad, neutral? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [April 8, 2011, 12:01am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/324 "2011-04-08T00:01:17Z")
Big companies are actually less efficient. They have more layers of management and everything takes longer. that is why IBM went outside to make their first PCs. They had to get it going in a hurry and knew that doing it inside was going to take longer and be more expensive. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [April 8, 2011, 12:07am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/325 "2011-04-08T00:07:09Z")
> [@Le\_Jacquelope](#): > > You know, you are free to keep going with the argument that 7.8% unemployment is better. Yes, I think I will continue to argue that less unemployment is better than more unemployment. I know you might disagree, but I think it’s good to have more people with jobs than fewer people with jobs. I guess it says everything that needs to be said that you’re now saying that less unemployment is NOT better than more unemployment, when for months you’ve been complaining about unemployment. ---
**Author:** ![Borzo](https://avatars.discourse-cdn.com/v4/letter/b/43a26b/32.png) [@Borzo](https://boards.straightdope.com/u/Borzo)\ **Post date:** [April 8, 2011, 12:34am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/326 "2011-04-08T00:34:51Z")
> [@gonzomax](#): > > Big companies are actually less efficient. They have more layers of management and everything takes longer. that is why IBM went outside to make their first PCs. They had to get it going in a hurry and knew that doing it inside was going to take longer and be more expensive. But there are certain technologically advanced things that you need a large-sized company to make possible. Do you disagree? These large companies will concentrate wealth, lobby/bribe politicians, hire wage-labour… and be somewhat inefficient. But who else will make iPods, flatscreen TVs, automobiles, etc? There are certain markets that small companies simply cannot get in to. ETA: And this will only get worse over time (or better, depending on your view): There will be fewer companies, and they will become bigger. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 8, 2011, 12:56am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/327 "2011-04-08T00:56:39Z")
> [@msmith537](#): > > Protectionism didn’t cause the Great Depression, but it certainly didn’t help. [I mean of those conspiracy nuts at The Economist are to be believed.](http://www.economist.com/node/12798595) I believe that there is a difference between the sort of tariffs that Jaq is proposing and the sort of tariffs imposed by Smoot Hawley which raised U.S. tariffs on over 20,000 imported goods to record levels. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [April 8, 2011, 1:03am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/328 "2011-04-08T01:03:47Z")
> [@Borzo](#): > > But there are certain technologically advanced things that you need a large-sized company to make possible. Do you disagree? These large companies will concentrate wealth, lobby/bribe politicians, hire wage-labour… and be somewhat inefficient. But who else will make iPods, flatscreen TVs, automobiles, etc? There are certain markets that small companies simply cannot get in to. > > ETA: And this will only get worse over time (or better, depending on your view): There will be fewer companies, and they will become bigger. I am not saying that all big business is wrong or unneeded. You can not startup an auto company without a huge investment for instance. They of course should be closely watched by regulators. I object when telecom companies are allowed to buy up their competition. Our cell phone coverage is being supplied by fewer and fewer companies. Try shopping around and see how much difference there is. In some European countries their phone service and internet is far better than ours and costs a fraction. they actually have lots of companies competing. That is not the American trend. No merger gets rejected. They just keep swallowing the competitors up until all the coverage and costs are the same, high cost and poor quality. They don’t innovate either. Of course with market concentration go political power. Our elections require huge amounts of money. The door opens for them to supply money for political power. The citizens power diminishes more every year. We are screwed. ---
**Author:** ![Borzo](https://avatars.discourse-cdn.com/v4/letter/b/43a26b/32.png) [@Borzo](https://boards.straightdope.com/u/Borzo)\ **Post date:** [April 8, 2011, 1:33am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/329 "2011-04-08T01:33:22Z")
But look at NASA. There can only be one NASA, since it costs so much. Technology is headed in that direction. Eventually you’ll have only a handful of companies creating everything of significant value - since the investment required will be beyond anything everyone else can put together. What happens then? Doesn’t capitalism need competition to function well? Or if people are being taken advantage of by big companies, they can always just say no, no? I mean, you could just choose to not get a cell phone, for example. Of course that won’t work in practice, since our society is now formed around things like cell phones. I’d hate to come to the conclusion that the only way to do big business is to let a company have a monopoly, and then have government regulate that monopoly. That just sounds terrible for so many reasons and on so many levels. ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [April 8, 2011, 2:32am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/330 "2011-04-08T02:32:14Z")
> [@gonzomax](#): > > In some European countries their phone service and internet is far better than ours and costs a fraction. cite? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [April 8, 2011, 3:31am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/331 "2011-04-08T03:31:05Z")
[Smart Enterprise Exchange -](http://smartenterpriseexchange.com/blogs/TalkingBits/2011/03/31/internet-speed-and-costs-around-the-world-infographic;jsessionid=22676D9DD1B93E42AB19A29D35A36116.node0) This is not new. It has been discussed an cited many times. [http://www.billshrink.com/blog/5787/internet-penetration-costs/](http://www.billshrink.com/blog/5787/internet-penetration-costs/) ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 8, 2011, 2:18pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/332 "2011-04-08T14:18:21Z")
You should have linked to [this](http://dailyinfographic.com/wp-content/uploads/2011/02/the-beauty-of-infographics.jpeg) graphic, and then also understood that this is an AVERAGE. A more interesting graph would be one that parses the US into states or even further parses individual states. Something like [this](http://www.broadbandmap.gov/technology), perhaps. -XT ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [April 8, 2011, 2:51pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/333 "2011-04-08T14:51:04Z")
> [@Borzo](#): > > 1. The poor and financially inept buy the most lottery tickets, while the middle class usually avoids it. This idea of hitting reset, or redistributing wealth, hinges on the transfer of money from the rich (and perhaps financially savvy) to the poor and financially inept. You might as well skip the middle step and give the money directly to the State Lottery Commission. It’s fine to the sympathetic towards the poor. I’ve spent 5 years working with non-profits trying to be more than just sympathetic. But creating a system of blame and deflection doesn’t’ help anyone. So right now, if you took a survey of those earning less than 20%, handed them $1million, how many do you think could pick a profitable piece of land? How many would lose it all to a time share or swamp? Again, I’m going to site 2002-2007 as an example of what happens when you let everyone buy what ever they want. The result is a few people get extremely rich, and the rest [let themselves] get suckered out of everything. Who the hell pays $300k for a shitty 1920’s 1.5 story??? You’ll hear me say that a lot because some asshole tried to sell me one in 2006 and although I feel a little guilty I laughed diabolically when I saw the same house struggle to get $40k at auction in 2008. The lax lending standards between 2002 and 2007 are the best example of why there are rich and poor with such a large gap in between. > [@Borzo](#): > > Is this based on fact, research, studies, surveys, or personal experience and opinion? Other’s personal experience and opinion (including mine) would say it’s more like 20:80 instead. Let’s just say “empirical observation.” Those that were poor and given money remained poor. Those that were rich and lost money soon regained it. Reading _Outliers_ will show you Bill Gates and Steve Jobs _lucked out_ in their teens allowing them to become super rich. But they also had to maintain that. It’s not enough to just write one great soon, you need to put out another in 6months, and every year after that. > [@Borzo](#): > > I disagree. If the standard rate of return at any point in time is 8%, for example… if your proposed business will only return 4%… then you will get NO investors. What if your proposal returns 0%, but is enough to pay yourself a salary? Such a situation would also help give jobs to numerous others as well… but you will still get NO investors. If you’re proposed ROR is less than 4% you shouldn’t do it, there is a reason “no one else will invest.” That should tell you something about the business you have planned. Granted, if your business can generate enough to pay you a salary (let’s say 40K) that’s a sweet freakin return, way above 4% (depending on start up). Remember what we’re talking about: taking money from the rich, giving it to the middle class, so they can start a business. If I give you $100k in cash right now, and the current interest rate 8%, and you said you were going to start a business that will return less than 4%, I would slap you and take back the $100k. Why? Because you are going to lose money to taxes, then to inflation, and at the end of the year you will HAVE LOST MONEY! In simpler terms, if I offered you a CD/bond/savings account with 8%, 4%, or 0% interest, which would you put $100k into? > [@Borzo](#): > > Many would be fine with a low-return self-run business… Which is exactly why they don’t deserve to do it, and why no one will invest in it. They’re trying to run a charity and they’re not even going to be successful at that. A lot of people have been bitching about profits, but you need to have something in the bank for when things go bad. BP is paying out billions for that oil spill, which means they needed to earn billions in profits to cover that loss. The second lesson from the financial crisis is that you can run on zero margin. If it takes all of your earnings (plus bonus) to make your mortgage payments you’re fucked. > [@Borzo](#): > > but this is something they need to invest their own money in, because no one else will invest in such a business. Again, I’m going to say, if no one else will invest in such a business, it’s a pretty good indication that you shouldn’t either. Put your money into something safe and go work for someone more successful. > [@Borzo](#): > > Even if the numbers didn’t change, you’d have better businesses, with better productivity and efficiency… at worst. No, but your own admission you’d have crappy businesses returning less than 4%, which means no productivity and no efficiency. How is that business supposed to grow? Update? Weather a downturn? Next year they’ll need to replace something, anything, and they’ll have no cash to do it. > [@Borzo](#): > > Businesses should be taxed more than people. Especially the ones that can’t leave the country. Except that business will always have an easier time leaving the country, by your logic it’s best to tax those that have the hardest time leaving, ie the middle class. > [@Borzo](#): > > Many middle class do want to work for themselves, at the very least. I don’t buy that. I’m sure most people _say_ they want to work for themselves, but I’ve done it, my father did it, and it ain’t pretty. Few realize what’s actually involved, and most think you can run at zero profit. > [@Borzo](#): > > I have lots of engineering-school friends, and friends who went to business school, and friends who grew up in poverty… so from my perspective, I have trouble finding middle-class people who DON’T want to start their own business… but this makes me a bit biased… so I will think more about this. We seem to have the same friends. A lot of them took layoff packages over the past couple of years to start their own business, and many ended up going back to work while running the business on the side. Those that continued all had one thing in common: spouse working full time and getting health care. You don’t need to replace capitalism, you just need to fix health care and the rest will follow. > [@Borzo](#): > > Either you a) invest capital, or b) be a wage-slave selling your time for money. So what pill do you swallow? What I hear is a lot of people bitching that they can’t get capital, and so they settle to be a wage-slave. Truth is, their a slave to consumerism, hence the term “living pay cheque to pay cheque.” Like you, I have friends that get massive car loans, massive bank loans, massive mortgages, then complain they’re suffering to get ahead. If you want a pay raise but don’t feel like working harder, stop paying $120 per month on cable. And for the love of all that is holy stupid buying lottery tickets. > [@Borzo](#): > > Americans want: electronics (SE Asia), cars (SE Asia, Europe), or cheap disposable crap (China). What do Americans want that’s actually made in America?!? (All I can think of is fast food and other subsidized corn-based products.) Americans don’t want stuff made in America, it costs too much. But all that crap is (was) designed in America. By people that went to school until they were 30. Then went back and got another degree part time. > [@Borzo](#): > > So is the consensus that the reason why the American middle class is stagnating is because their potential wealth is effectively being redistributed to other countries? I guess you could say that. My impression is that the US got extremely wealthy selling to other countries, and that changed. And currently the US hasn’t figured out how to make money now that other countries are developed and functioning on their own. > [@Borzo](#): > > I think you are oversimplifying it. Machinery and technology is making old jobs obsolete, but not necessarily making new ones. Again, the point of machinery isn’t to create jobs, it’s to free up labour and/or reduce the cost of production thereby freeing up capital. New jobs follow as the result of new labour and capital. Old technology should be made obsolete, otherwise I have to make a cliched statement about banging rocks together. > [@Borzo](#): > > Yet you assume that it always does. I’m not sure I can believe this. It always takes less people to make a tractor than it did to manually plow the fields. BUT, you say this frees up their time to do something else with their time… yeah… like collect welfare and wait in the unemployment line. If it helps, then yes. The invention of the tractor meant that it only took a couple of people to get more corn from an acre of land–way more than those few can consume. That means everyone else previously involved can sit around and eat corn for free if they so desire. It also means that they can spend the day learning engineering/science/art instead of harvesting corn. What some refer to as breaking the poverty cycle. > [@Borzo](#): > > I can’t help but see that as technology increases, jobs will irretrievably be lost. Stop saying lost, it’s depressing. Technology frees up labour and reduces costs. > [@Borzo](#): > > People will have less to offer others, since machines do most of the work. No, people now have more to offer because machines are doing more of the work. Productivity is increasing. Americans (as \*\*Le Jacquelope \*\*will remind us soon) are the most productive people in the world, way more productive that people in China. Thanks to technology individuals are offering more. If it used to take 10 people to get 20 bushels of corn from an acre of land, it now takes 1 to get 80. That person has way more to offer now that technology has improved. So instead of getting 20 bushels we can now get 800 from the same 10 people. The problem you’re witnessing is that we don’t need 800, so 5 of those people need to do something else. > [@Borzo](#): > > The land was farmed by locals. Now they work in a sweatshop that was built on their stolen land, and they don’t get enough money to buy the same food they used to make “for free”. That’s one distorted view. What I’ve seen is that their land was ridiculously unproductive, frankly they just weren’t very good at growing stuff. They barely made enough to survive and it wasn’t even their land. Add to that a long rainy season and you ensure poverty for generation after generation. Your impression is based on the belief that everywhere else has agricultural productivity that matches the US. The result is really very different. You won’t see far equipment, you’ll see kids with stuff that looks like it’s from biblical times. > [@Borzo](#): > > Sure, this isn’t a problem with capitalism as much as government corruption, I’ll concede that… but the well propagated myth that sweatshops increase the standard of living for those working in them is a lie. It’s a lie they tell us to make us feel better about buying crap that was built in sweatshops. We shouldn’t feel good about buying crap from sweatshops. But we also should lie in the other direction and ignore benefits that exist. Not everyone wants to be a subsistence farmer. > [@Borzo](#): > > Power does concentrate, and this is a problem, as I see it. Taxes should de-concentrate the power. Strangely, the governments of most nations seem to tax the upper middle class and the lower upper class the most… those at the top are usually immune through whatever loophole lobbying/bribery was able to get them. Which is more your perception than reality. Tax revenue comes from the upper 5%, and frankly I don’t even know why we bother taxes those below $50k, it’s not even worth the cost of printing the tax form. In conclusion: I’m all for taxing the rich (and upper middle class), but good luck figuring out where to redistribute it too. The way I see it, the rich are simply going to figure out new ways to get it back (ie lottery tickets). That’s why there are rich people and poor people. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [April 8, 2011, 4:14pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/334 "2011-04-08T16:14:34Z")
The US is shooting for 4 mps speed in 2020. That is our goal. If we achieve it ,it will make us dead last on the international speed lists. Shooting for the slowest is not a great goal to aim for. But 94 percent of America has access to only 1 or 2 internet ,cable servicers. That is not utilizing competition at all. Yet we placidly sit by when another provider buys up the competitors, claiming larger scale will make them provide faster and better service. Cable companies are always at the bottom of customer satisfaction lists. the service is terrible and will not get better. It has no reason to. [http://news.cnet.com/8301-13578\_3-10317118-38.html](http://news.cnet.com/8301-13578_3-10317118-38.html) ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [April 8, 2011, 5:01pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/335 "2011-04-08T17:01:09Z")
> [@Borzo](#): > > But look at NASA. There can only be one NASA, since it costs so much. That’s not true at all. There is only one NASA because _space exploration doesn’t make any money._ NASA, in the context of big business, is not exceptionally expensive. Last year NASA’s budget was $18 billion. That’s a lot of money, to be sure, but it’s substantially less than Wal Mart spends in four weeks. Toyota’s already spent more than that and then some this year. But those businesses have competition because operating stores and selling cars makes money. If you can spend $18 billion but make $19 billion, people wil lget into that peice of action. If spending $18 billion is guaranteed to lose money why would anyone do it? ---
**Author:** ![Borzo](https://avatars.discourse-cdn.com/v4/letter/b/43a26b/32.png) [@Borzo](https://boards.straightdope.com/u/Borzo)\ **Post date:** [April 8, 2011, 6:38pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/336 "2011-04-08T18:38:19Z")
> [@emacknight](#): > > This idea of hitting reset, or redistributing wealth, hinges on the transfer of money from the rich (and perhaps financially savvy) to the poor and financially inept. You might as well skip the middle step and give the money directly to the State Lottery Commission. > > It’s fine to the sympathetic towards the poor. I’ve spent 5 years working with non-profits trying to be more than just sympathetic. But creating a system of blame and deflection doesn’t’ help anyone. > > So right now, if you took a survey of those earning less than 20%, handed them $1million, how many do you think could pick a profitable piece of land? How many would lose it all to a time share or swamp? > > Again, I’m going to site 2002-2007 as an example of what happens when you let everyone buy what ever they want. The result is a few people get extremely rich, and the rest [let themselves] get suckered out of everything. Who the hell pays $300k for a shitty 1920’s 1.5 story??? You’ll hear me say that a lot because some asshole tried to sell me one in 2006 and although I feel a little guilty I laughed diabolically when I saw the same house struggle to get $40k at auction in 2008. > > The lax lending standards between 2002 and 2007 are the best example of why there are rich and poor with such a large gap in between. Okay, I should have been more clear and precise. The middle class would not be left out of a redistribution. In fact, since there are more working middle class than rich or poor, they would get the vast majority of any redistribution. I don’t mean to focus on the poor, since they are a minority and need services more than they need raw cash. (Many poor and lower middle class people work 70 hours a week, however, and I’m sure a bit of a raise in their earnings would help everyone involved. Those that would squander their money on lottery tickets are certainly in the minority.) But the lower middle class who work long hours would get some extra wealth. They could start their own businesses, finally save up enough to get some retraining, etc. > [@](#): > > If you’re proposed ROR is less than 4% you shouldn’t do it, there is a reason “no one else will invest.” That should tell you something about the business you have planned. Granted, if your business can generate enough to pay you a salary (let’s say 40K) that’s a sweet freakin return, way above 4% (depending on start up). > > Remember what we’re talking about: taking money from the rich, giving it to the middle class, so they can start a business. If I give you $100k in cash right now, and the current interest rate 8%, and you said you were going to start a business that will return less than 4%, I would slap you and take back the $100k. Why? Because you are going to lose money to taxes, then to inflation, and at the end of the year you will HAVE LOST MONEY! If I open a restaurant and make only enough profit to pay myself 40k, that’s not a big return. Most (external) people wouldn’t invest in my business, if I could only give them a few thousand extra back (let’s say, for this example, 4%). Investing in mutual funds could give twice as much, and investing in safe GICs would give equal return with much less risk. But other people would also be employed, and receive jobs (and pay taxes). > [@](#): > > In simpler terms, if I offered you a CD/bond/savings account with 8%, 4%, or 0% interest, which would you put $100k into? If taking 0% meant I could still pay myself a modest 40k, and have my business exactly break even, I would most certainly take the 0%. Most middle-class people I know would do the same. I’d rather have my own business make me 40k than take a wage-slave job for 40k and invest some of that into 8% savings. People want to work for themselves. You see, people would invest their own money in their own business, even if it just broke even (and paid them a modest “salary”). But I’d never be able to convince a stranger to invest in my business. If the going rate is 8% interest, then they won’t give me any money if I project anything less than that. But businesses that have a lower rate of return still: 1. let me run my own business and pay myself, instead of working for another person (even if my income decreases as a result) 2. keep my extra profit for myself, if I want to (if there is any in the future) 3. hire other employees, and offer a service to the economy > [@](#): > > Which is exactly why they don’t deserve to do it, and why no one will invest in it. They’re trying to run a charity and they’re not even going to be successful at that. A lot of people have been bitching about profits, but you need to have something in the bank for when things go bad. BP is paying out billions for that oil spill, which means they needed to earn billions in profits to cover that loss. > > The second lesson from the financial crisis is that you can run on zero margin. If it takes all of your earnings (plus bonus) to make your mortgage payments you’re fucked. “They don’t deserve to do it”? Seriously? Heaven forbid capital helps people out, instead of maximizing some vague faceless “economy”! The economy should function so that it best serves the populace, not the GDP. Are you suggesting that a 4% local business that pays it’s owner 100k, and has 10 employees, is a “waste” when you could have the option to invest in an 8% megacorp that pays people minimum wage and funnels money out of the country and into the hands of a dozen filthy rich individuals? It may be a waste for a faceless investor… but in the case of redistribution, the investor would be the individual citizens themselves, and many would take much less than 8% if it meant they worked for themselves. Also, what are you talking about with regards to “zero margin”? Do corporations have savings in case of trouble? I thought they just get loans and refinance their capital? Please clarify your comment. > [@](#): > > Again, I’m going to say, if no one else will invest in such a business, it’s a pretty good indication that you shouldn’t either. Put your money into something safe and go work for someone more successful. I don’t want to. Many people don’t want to. People want to reap the rewards of their own work (especially in case it turns into a 50% return). Why would I work for someone else… when if my good work results in THEM making hundreds of thousands of dollars and not me?!? > [@](#): > > No, but your own admission you’d have crappy businesses returning less than 4%, which means no productivity and no efficiency. How is that business supposed to grow? Update? Weather a downturn? Next year they’ll need to replace something, anything, and they’ll have no cash to do it. 1. In general, those that make it to the top in 5-25 years are more there because of skill and ingenuity, than those that are there right now, who are just riding the momentum, and slowly killing their own companies. 2. In regards to my other example, a 4% business that pays me 40k+ isn’t crappy to most people, especially if they could only make 40k working for someone else (who is making profit of them to boot). If there’s a downturn, I’ll deal with it the same way larger companies deal with it. 2b) Why does my own self-run business, with for example 3 employees, need to grow? Why? Can someone please explain this economic need for continual growth? I never took more than a couple economics courses, so I don’t understand. If the business pays me and my employee’s salaries, then why does it need to grow? Why does it need to pay 8% instead of 4%? > [@](#): > > Except that business will always have an easier time leaving the country, by your logic it’s best to tax those that have the hardest time leaving, ie the middle class. Companies that can be taxed, should be taxed. Rich individuals should be taxed as well. The lower middle class should be left alone. You mention 50k somewhere below. I agree this is a good place to draw the cutoff line. > [@](#): > > I don’t buy that. I’m sure most people _say_ they want to work for themselves, but I’ve done it, my father did it, and it ain’t pretty. Few realize what’s actually involved, and most think you can run at zero profit. I don’t know how to argue with that. Most people I know, friends, acquaintances, people from elementary school up to graduate school, all want to start their own business and work for themselves. (Either with them as the sole “employee”, or a small business with 3-5 other employees.) They want to profit off of their work, instead of busting their asses, and watching the owner of their small company pull in millions off of their labour while they themselves sit at 50k/year. I mean if there are studies and research to show that most people actually would prefer wage-slave labour, then please provide some reading material. I’d be shocked to find that this is the case (though I’d read it with great interest!). > [@](#): > > You don’t need to replace capitalism, you just need to fix health care and the rest will follow. Redistribution should help fund healthcare. (And schools, and university, …and food if necessary.) > [@](#): > > So what pill do you swallow? What I hear is a lot of people bitching that they can’t get capital, and so they settle to be a wage-slave. Truth is, their a slave to consumerism, hence the term “living pay cheque to pay cheque.” Like you, I have friends that get massive car loans, massive bank loans, massive mortgages, then complain they’re suffering to get ahead. If you want a pay raise but don’t feel like working harder, stop paying $120 per month on cable. And for the love of all that is holy stupid buying lottery tickets. 1. The odds of winning the lottery if you do not buy any tickets is exactly 0. The odds of winning if you buy one, is 1:a-few-million. Therefore, by buying lottery tickets you increase your chances of winning by _infinity_! This logic is flawless, and I stand by it! 2. Yes, consumerism is terrible. I’d fight against it somehow, but it seems to be a failure of the human species, IMHO. I used to think it was mainly a cultural thing… but it seems to be present everywhere. Not everyone falls into it, but most do. 3. Yes, I will concede that most people could live cheap, and save up enough money for a business in a few short years. Would people take loans to start businesses instead of taking loans for cars and homes… ? I don’t know. Would banks give money to a projected 0-4% business when the going rate is 8% though? Probably not. > [@](#): > > I guess you could say that. My impression is that the US got extremely wealthy selling to other countries, and that changed. And currently the US hasn’t figured out how to make money now that other countries are developed and functioning on their own. Problem is, the American middle class is getting relatively poorer for the sake of the developing world’s middle class, which may be getting richer. Some don’t see this as a problem, however. What I think is the problem, however, is that the rich are insulated from this transition, it’s only the American middle class that suffers. > [@](#): > > Again, the point of machinery isn’t to create jobs, it’s to free up labour and/or reduce the cost of production thereby freeing up capital. New jobs follow as the result of new labour and capital. > > Old technology should be made obsolete, otherwise I have to make a cliched statement about banging rocks together. Do you blame the stagnation of the American middle class on lack of ingenuity? Consumerism? Those being put out of work can’t seem to find something to do with themselves. Is education/training to blame? > [@](#): > > Stop saying lost, it’s depressing. Technology frees up labour and reduces costs. But clearly that labour can’t find anything to do right now. Who is to blame? What should be done? > [@](#): > > No, people now have more to offer because machines are doing more of the work. Productivity is increasing. Americans (as \*\*Le Jacquelope \*\*will remind us soon) are the most productive people in the world, way more productive that people in China. Thanks to technology individuals are offering more. If it used to take 10 people to get 20 bushels of corn from an acre of land, it now takes 1 to get 80. That person has way more to offer now that technology has improved. So instead of getting 20 bushels we can now get 800 from the same 10 people. The problem you’re witnessing is that we don’t need 800, so 5 of those people need to do something else. Yet whatever it is they want to offer, someone else (either another country with lower wages, or a megacorp with cheaper products/services) is offering it for less. So what now? This is the problem that I don’t see an answer to. But I would love to find one! > [@](#): > > That’s one distorted view. What I’ve seen is that their land was ridiculously unproductive, frankly they just weren’t very good at growing stuff. They barely made enough to survive and it wasn’t even their land. Add to that a long rainy season and you ensure poverty for generation after generation. Your impression is based on the belief that everywhere else has agricultural productivity that matches the US. The result is really very different. You won’t see far equipment, you’ll see kids with stuff that looks like it’s from biblical times. Are you kidding me? Seriously? :smack: Productivity is irrelevant if people’s standard of living goes down. The GDP can go up all the way to the moon, but if people’s lives are getting worse… what’s the point? If the wealth in a skyrocketing GDP doesn’t “trickle down”, then society is not better off. Who cares if their lives were primitive… they had food on the table, and lived easy-going lives. Now they work 70h/week and have less food on the table than before. > [@](#): > > We shouldn’t feel good about buying crap from sweatshops. But we also should lie in the other direction and ignore benefits that exist. Not everyone wants to be a subsistence farmer. I understand. But farming is often better than sweatshopping. > [@](#): > > Which is more your perception than reality. Tax revenue comes from the upper 5%, and frankly I don’t even know why we bother taxes those below $50k, it’s not even worth the cost of printing the tax form. > > In conclusion: I’m all for taxing the rich (and upper middle class), but good luck figuring out where to redistribute it too. The way I see it, the rich are simply going to figure out new ways to get it back (ie lottery tickets). That’s why there are rich people and poor people. People making below 50k should not be taxed, I agree. It should be redistributed towards free education (not philosophy and art history degrees, mind you, but degrees that industry actually needs). It should provide food for those that can’t afford food. And housing for those that can’t afford housing. People point out the consumerist poor who work minimal hours, or not at all. What about the poor that work 70h/week? Redistribution should help them. It should go to starting new “lower return” businesses that give independence to the working class. If they succeed, they can reap the rewards of their labour… instead of (as presently) the rich guy who owns the company, who’s already rich, and is now richer. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [April 8, 2011, 9:57pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/337 "2011-04-08T21:57:58Z")
> [@Borzo](#): > > If I open a restaurant and make only enough profit to pay myself 40k, that’s not a big return. Most (external) people wouldn’t invest in my business, if I could only give them a few thousand extra back (let’s say, for this example, 4%). Investing in mutual funds could give twice as much, and investing in safe GICs would give equal return with much less risk. But other people would also be employed, and receive jobs (and pay taxes). Now, what if I told you that in order to redistibute the wealth the way you want, providing the services you want, and to avoid taxing the people you like, we instead tax business. Do you still want to start a business if now you can only afford to pay yourself $20k? To avoid waiting to go around in a circle, what you also need to note is that your business isn’t making any money, so what taxes are the government supposed to get? You’ve created a shelter where you avoid business taxes buy paying yourself an exorbitant salary which now isn’t taxed. How do you plan to pay for all those services you promised me? > [@Borzo](#): > > I’d rather have my own business make me 40k than take a wage-slave job for 40k and invest some of that into 8% savings. People want to work for themselves. Which is great, I have nothing against small business. As long as you truly believe all those people working slave-wages now have the skill/desire/luck to run a successful small business. I’ve been to countries where that’s the norm, not sure I prefer it. My only other input here would be to point out how hard it is to do it all yourself. At some point you’d want/need to hire someone, but now everyone is out there starting their own business. I guess we could all be independent contractors. Then each our our “businesses” are earning zero, paying no taxes, but giving us $40k a year. Sucks for the government, but if that’s the society you want I’m on board. > [@Borzo](#): > > But businesses that have a lower rate of return still: I’d still recommend that you avoid a business if your plan can return more than that. You’re better off working for a wage and getting interest off your investment. But you seem intent on having your own business so carry on. > [@Borzo](#): > > 1. let me run my own business and pay myself, instead of working for another person (even if my income decreases as a result) If you’re income decreases, do you consider yourself better off? A lot of people eventually get out of the small business life because the swings are too erratic to cope with. > [@Borzo](#): > > 1. keep my extra profit for myself, if I want to (if there is any in the future) Uh oh, now you’re becoming one of those rich people. I’d like that profit to help the middle class start a business. Without the potential for reward, do you still want a business? > [@Borzo](#): > > 1. hire other employees, and offer a service to the economy You mean wage-slaves? Where do you plan to find these people now that they’re all starting their own business? > [@Borzo](#): > > “They don’t deserve to do it”? Seriously? Heaven forbid capital helps people out, instead of maximizing some vague faceless “economy”! The economy should function so that it best serves the populace, not the GDP. Capitalism is many things, but not altruistic. It might be that helping the faceless economy is actually the best way to help the populace. There are a lot of failed countries that tried avoiding/replacing capitalism, I have yet to see one work. > [@Borzo](#): > > Are you suggesting that a 4% local business that pays it’s owner 100k, and has 10 employees, is a “waste” when you could have the option to invest in an 8% megacorp that pays people minimum wage and funnels money out of the country and into the hands of a dozen filthy rich individuals? Well, I guess if you put it that way I have no choice but to agree with you. But what if, on the other hand, that megacorp brings in foreign investment? And is able to hire 15 employees instead of 10, and offers low low prices with no payment financing? And what happens in a few years when your 100k a year owner is now “filthy rich” and pays people minimum wage. Revolt? > [@Borzo](#): > > Also, what are you talking about with regards to “zero margin”? Do corporations have savings in case of trouble? I thought they just get loans and refinance their capital? Please clarify your comment. Technically speaking, you can’t run a business at a loss for more than a few years before the IRS comes after you. Corporations are expected to return a profit each year, and then expected to provide growth each year. Repaying debt is part of that, and you’ll notice that companies with high debt to earnings ratios get less and less investment. They then use those profits to pay share holders (dividends) or reinvest in the company. If their oil well should blow up, they’ll need cash to pay all those oil soaked birds. That comes out of their profits, hurting their stock. > [@Borzo](#): > > 2b) Why does my own self-run business, with for example 3 employees, need to grow? Why? Can someone please explain this economic need for continual growth? I never took more than a couple economics courses, so I don’t understand. If the business pays me and my employee’s salaries, then why does it need to grow? Why does it need to pay 8% instead of 4%? Because every year your employees are going to demand a 3% salary bump, and a Christmas bonus. The Christmas bonus needs to be bigger each year too. Every year the cost of doing business goes up with inflation, you need your business to grow in response to that. Lastly, if your business is making any money at all, someone else is going to want that. You need growth to protect yourself from the growth of others. Otherwise you get bought out and become some one elses wage-salve. > [@Borzo](#): > > Companies that can be taxed, should be taxed. Rich individuals should be taxed as well. I’m going to remind you that you said that when you are rich and own a company. My guess is you’ll sign a different tune, something along the lines of, "I earned this through hard work and dedication.? > [@Borzo](#): > > The lower middle class should be left alone. You mention 50k somewhere below. I agree this is a good place to draw the cutoff line. And the reality is that’s pretty much how it goes. Look at the stats for the number of Americans not paying any income tax. Look at the list of tax credits and benefits that kick in below $26k. The mess happens when you factor in sales tax which affects the poor disproportionately. Sin taxes, gas taxes, and various flat fees like drivers licenses and vehicle registration. > [@Borzo](#): > > They want to \*\*profit \*\*off of their work, instead of busting their asses, and watching the owner of their small company pull in millions off of their labour while they themselves sit at 50k/year. And what happens if I tell you that I’m taking half your profits to give to someone else? Still interested in being your own boss? What happens if your employees strike and demand that you pay them twice as much? Some times it’s really nice not being the boss. > [@Borzo](#): > > I mean if there are studies and research to show that most people actually would prefer wage-slave labour, then please provide some reading material. I’d be shocked to find that this is the case (though I’d read it with great interest!). I haven’t found any yet. But remember you said yourself people don’t want to work 70 hours a week for very low pay. Which tells me right off the bat they aren’t cut out to be self employed. First thing you learn is that you don’t get to clock out at the end of the day. If you stop your earning potential does too. > [@Borzo](#): > > Redistribution should help fund healthcare. (And schools, and university, …and food if necessary.) Right. > [@Borzo](#): > > 1. Yes, consumerism is terrible. I’d fight against it somehow, but it seems to be a failure of the human species, IMHO. I used to think it was mainly a cultural thing… but it seems to be present everywhere. Not everyone falls into it, but most do. The problem is that consumerism is a double edge sword. It is what drove American society. The freedom to create and subsequently sell, without government intervention spurred innovation. The desire to buy drove people to find new and creative ways to earn income. Personally, it was cheap credit that broke the connection. In the rest of the world cheap credit wasn’t available, so it seemed like growth was slow. But in the US anyone and everyone could have all the credit they wanted, so it seems like growth was high. When the credit ran out the US was fucked and a lot of other places were fine. Case in point, Canada didn’t allow cheap and easy mortgages. This pissed off Canadians because it meant slower economic growth compared to the US. But when the credit crunch hit, US houses lost their value, but Canada continues to have a housing boom. > [@Borzo](#): > > 1. Yes, I will concede that most people could live cheap, and save up enough money for a business in a few short years. Would people take loans to start businesses instead of taking loans for cars and homes… ? I don’t know. Would banks give money to a > projected 0-4% business when the going rate is 8% though? Probably not. You sort of answered two of your own questions. People just aren’t willing to save, they don’t want a small business more than they want to new two year lease on a bigger car. And it’s not that banks won’t lend the money, they just don’t think you’ll be able to pay them back–and they’re right, you probably won’t. > [@Borzo](#): > > Problem is, the \*\*American middle class \*\*is getting relatively poorer for the sake of the **developing world’s middle class** , which may be getting richer. To compare American middle class with the developing world is laughable. The US has a looooong way to go before they’re that poor. I’d recommend going to the developing world, and checking out what “middle class” means. > [@Borzo](#): > > Some don’t see this as a problem, however. What I think is the problem, however, is that the rich are insulated from this transition, it’s only the American middle class that suffers. No, the rich suffer too. There are just fewer of them so you don’t hear their screams. > [@Borzo](#): > > Do you blame the stagnation of the American middle class on lack of ingenuity? Consumerism? Those being put out of work can’t seem to find something to do with themselves. Is education/training to blame? I blame cheap credit, but that’s a very lengthy discussion. I also “blame” the fact that the rest of the world is getting more developed and less dependent on the US. Starbucks stopped growing last year, why do you suppose that is? Market saturation, increased competition, change in demand. The US (and it’s middle class) are facing the same problems. The US as a country now has to compete with dozens of other countries, many of who were bombed to shit during WWII. Or suffered crippling political instability from do-gooders hoping to replace capitalism with something that felt warm and squishy. > [@Borzo](#): > > But clearly that labour can’t find anything to do right now. Who is to blame? What should be done? Well, I guess you could revolt. I suppose it’s too late to suggest saving for a rainy day, but in advance of the next recession that would be my proposal. I’m not going to say any more because it makes people angry. > [@Borzo](#): > > Yet whatever it is they want to offer, someone else (either another country with lower wages, or a megacorp with cheaper products/services) is offering it for less. So what now? > > This is the problem that I don’t see an answer to. But I would love to find one! If megacorp can offer the same product for less you’re screwed, no two ways about it. It might also be that mini-corp can also sell for less. Doesn’t really matter, fact is you aren’t competitive, so you fail. What would like as an alternative? Government protection? You need to be competitive at what you do, be in a small business or your job. > [@Borzo](#): > > Who cares if their lives were primitive… they had food on the table, and lived easy-going lives. Now they work 70h/week and have less food on the table than before. It was anything but easy going. > [@Borzo](#): > > I understand. But farming is often better than sweatshopping. Have you done either? When you picture farming, what do you envision? Riding a tractor on a sunny day? Or pulling a plow in the sweltering heat? Yes, I mean literally pulling a plow, the thing a tractor does. In most of the world people pull the plow because they can’t afford an animal to do it for them (which incidentally would cost someone their job). That’s the alternative to a sweatshop. They aren’t built in places were farming is easy and people are well off. If they weren’t working in the sweatshop they’d be sweatshopping in a rice patty field. (I like that term). And note they still wouldn’t own the field. > [@Borzo](#): > > People making below 50k should not be taxed, I agree. They don’t really, but that’s another thread. > [@Borzo](#): > > It should be redistributed towards free education (not philosophy and art history degrees, mind you, but degrees that industry actually needs). Who is the judge of that? Central Bureau of Training? > [@Borzo](#): > > It should provide food for those that can’t afford food. And housing for those that can’t afford housing. Okay, we do, now what? > [@Borzo](#): > > People point out the consumerist poor who work minimal hours, or not at all. What about the poor that work 70h/week? Redistribution should help them. We do, now what? > [@Borzo](#): > > It should go to starting new “lower return” businesses that give independence to the working class. If they succeed, they can reap the rewards of their labour… instead of (as presently) the rich guy who owns the company, who’s already rich, and is now richer. How sure are you that you want a lot of “lower return” businesses? It means people are still poor. They are still making very little money. What’s your plan then? ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [April 8, 2011, 10:13pm UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/338 "2011-04-08T22:13:42Z")
> [@Borzo](#): > > If I open a restaurant and make only enough profit to pay myself 40k, that’s not a big return. Most (external) people wouldn’t invest in my business, if I could only give them a few thousand extra back (let’s say, for this example, 4%). Investing in mutual funds could give twice as much, and investing in safe GICs would give equal return with much less risk. But other people would also be employed, and receive jobs (and pay taxes). Well, according to your statement below, you don’t want people making less than $50k to pay taxes (I’ll address that notion below). So, for now, I’ll just use the: :dubious: > [@Borzo](#): > > If taking 0% meant I could still pay myself a modest 40k, and have my business exactly break even, I would most certainly take the 0%. Most middle-class people I know would do the same. I’d rather have my own business make me 40k than take a wage-slave job for 40k and invest some of that into 8% savings. People want to work for themselves. I see this argument a lot, especially at my side law firm from potential Clients looking for a break on the rates. I always see this argument as code for ‘people want to be lazy’ (Now, I’m not accusing anyone here of taking that mentality). In addition to my primary job, I own two small businesses. The pay is very modest, but the work is very hard effort-wise. People with no capital, offering only their labor, will way often than not get a better deal working for someone (i.e. the Man) in terms of money, benefits and quality of life than starting their own business, in my experience. I do acknowledge exceptions for those with specialized knowledge or skill. In fact, i find that the more common someone’s labor, the more they feel entitled to things beyond mere wage. However, the bigger point is: do you know how hard it is to save up $100k cash money? Even people in the top 10% (top 5%, not as much, but still somewhat difficult) of America’s wealth would have a difficult time to produce that much cash without a lot of effort or liquidation. Taking that much cash out (by that, I mean, making investment liquid) is taking a lot of risk (and paying taxes). Anyone putting that much cash together, going through that much effort is definitely going to want a ROR better than a government bond. > [@Borzo](#): > > “They don’t deserve to do it”? Seriously? Heaven forbid capital helps people out, instead of maximizing some vague faceless “economy”! The economy should function so that it best serves the populace, not the GDP. Yeah, your outrage should be directed at the government. And, if you want to see results, then you should be willing to open your wallet and pay more taxes. Also, don’t be surprised if people have different standards and different thresholds of what they’re willing to pay. The function of the economy (if there is such a thing) is to efficiently allocate capital and resources. For ease of discussion, capital is money ($), resources are people. So, don’t complain if people don’t have enough capital, they have their own resources. If their resources aren’t valuable or wanted, don’t blame the economy. > [@Borzo](#): > > Are you suggesting that a 4% local business that pays it’s owner 100k, and has 10 employees, is a “waste” when you could have the option to invest in an 8% megacorp that pays people minimum wage and funnels money out of the country and into the hands of a dozen filthy rich individuals? Who employs more people, the local business or the mega corp? Who (in this example) is providing a better rate of return for the capital? > [@Borzo](#): > > I don’t want to. Many people don’t want to. People want to reap the rewards of their own work (especially in case it turns into a 50% return). Why would I work for someone else… when if my good work results in THEM making hundreds of thousands of dollars and not me?!? Do you have your own business now? Why not? If so, did you make more as a sole proprietor/owner (basically, no 3rd party shareholders) or working for the man? > [@Borzo](#): > > 2b) Why does my own self-run business, with for example 3 employees, need to grow? Why? Can someone please explain this economic need for continual growth? I never took more than a couple economics courses, so I don’t understand. If the business pays me and my employee’s salaries, then why does it need to grow? Why does it need to pay 8% instead of 4%? Because you will be automated/out-competed out of a job/business. Inflation will eat into your wealth, unless you are so self-delusional to see that happening. But, in most cases, people you transact with will just take their business to someone cheaper. The reason you grow is because of innovation in delivering more value or reaching more market. If you don’t do it, your competitor will. [That’s the short answer, anyone not familiar with business or economics might have some issues.] > [@Borzo](#): > > I don’t know how to argue with that. Most people I know, friends, acquaintances, people from elementary school up to graduate school, all want to start their own business and work for themselves. (Either with them as the sole “employee”, or a small business with 3-5 other employees.) They want to profit off of their work, instead of busting their asses, and watching the owner of their small company pull in millions off of their labour while they themselves sit at 50k/year. Starting your own business is ridiculously difficult, especially, if it’s not a family business. People always want to do it, but most don’t because of the risk of failure. Again, people realize the extent of their own laziness, so don’t follow through with it as working for The Man provides a better return. > [@Borzo](#): > > Redistribution should help fund healthcare. (And schools, and university, …and food if necessary.) I would call those taxes. See my notion on taxes above. > [@Borzo](#): > > Problem is, the American middle class is getting relatively poorer for the sake of the developing world’s middle class, which may be getting richer. Some don’t see this as a problem, however. What I think is the problem, however, is that the rich are insulated from this transition, it’s only the American middle class that suffers. American middle class, whoever that is, is relatively poorer because their labor is less valuable. Most likely, they are being automated out of a job. In the case of engineers and other technical people I work with, they do a lot of low-level, little value grunt work that can be done more cheaply in India. But, hey, if you can do data modeling, ETL, data migration, actuarial sciences, risk modeling, then there is a high paying job for you. > [@Borzo](#): > > Do you blame the stagnation of the American middle class on lack of ingenuity? Consumerism? Those being put out of work can’t seem to find something to do with themselves. Is education/training to blame? > > But clearly that labour can’t find anything to do right now. Who is to blame? What should be done? My theory is part human psyche and part government. The human psyche part is that wages are sticky, and it’s difficult for a person to uproot and move. The government part is that some laws make it difficult to do business, and government actions or in-actions can cause uncertainty in the business landscape. With as huge as a depression we just had, the effects of these phenomena are definitely going to make things much worse. > [@Borzo](#): > > Are you kidding me? Seriously? :smack: Productivity is irrelevant if people’s standard of living goes down. The GDP can go up all the way to the moon, but if people’s lives are getting worse… what’s the point? If the wealth in a skyrocketing GDP doesn’t “trickle down”, then society is not better off. Ok, look at it this way, if things didn’t go down the toilet in 2007/08, and remained largely the same (normal business cycles) through to today, we would be calling this the best decade ever and George Bush would be hailed as a genius and The. Best. President. Evah!!11!!11 🙂 I had my reservations before the last two recessions. I was right about the extent to one, and was shocked at the magnitude of the latest one. > [@Borzo](#): > > Who cares if their lives were primitive… they had food on the table, and lived easy-going lives. Now they work 70h/week and have less food on the table than before. Yes, you have a distorted view. Life for farmers, until recently with modernized equipment, and subsidization, is hard. Much, much harder than working at the factory. Why do you think so many people went to the factories? > [@Borzo](#): > > I understand. But farming is often better than sweatshopping. I can probably find literally 10 million Chinese or Indians who would disagree with you. Every trip I take to India or China makes me feel better that these people’s lives are getting better. Why aren’t people returning to the farms now? Why is it that it’s mostly migrant workers doing the picking in California? > [@Borzo](#): > > People making below 50k should not be taxed, I agree. And, here is why I responded in the first place. $50k is a lot of money. This is a very high standard of living for any country, and higher than the US. It’s possible to provide this lifestyle to the USA, but there would be no (or next to none) government services – … — Ok, I just did the math, it’s impossible. That’s over 14 trillion dollars. > [@Borzo](#): > > It should be redistributed towards free education (not philosophy and art history degrees, mind you, but degrees that industry actually needs). It should provide food for those that can’t afford food. And housing for those that can’t afford housing. People point out the consumerist poor who work minimal hours, or not at all. What about the poor that work 70h/week? Redistribution should help them. How do you decide value? You don’t. If you could, you would have a crystal ball and for all intents and purposes, telling the future. You might as well run a communist society. I’m all for free education. If you want business to stay in the area, then you have to provide them incentives to stay in the area, and that largely means tax incentives. You better hope they offer valuable work that isn’t manual labor intensive. If you want to risk some planning (and really, who doesn’t), then you better look at strengthening our competitive advantage. > [@Borzo](#): > > It should go to starting new “lower return” businesses that give independence to the working class. If they succeed, they can reap the rewards of their labour… instead of (as presently) the rich guy who owns the company, who’s already rich, and is now richer. And, this doesn’t make any sense. In this case, instead of being outcompeted by other companies, it will be by other companies in other countries. What’s next? Protecting markets and raising tariffs? Good luck with that. At best, you will have a stagnant, slowly crumbling country as the rest of the world passes it by. ---
**Author:** ![randy054](https://avatars.discourse-cdn.com/v4/letter/r/54ee81/32.png) [@randy054](https://boards.straightdope.com/u/randy054)\ **Post date:** [April 9, 2011, 1:16am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/339 "2011-04-09T01:16:54Z")
> [@emacknight](#): > > It doesn’t matter many time you or **Le Jacquelope** say that it doesn’t make it so. But don’t let that stop you from writing it over and over and over and over and over and over. Maybe, just maybe, next time it will magically happen. > > Capitalism is a form of economic policy, [social] democracy is a form of government. You can’t replace one with the other. We could have communism and democracy, or we could have capitalism and dictatorship. Instead we have a rather well functioning system of capitalism and democracy, where each person gets one vote regardless of wealth. > > And despite what you see out your basement window, we have a heavily regulated capitalistic system. But that means you won’t get something for nothing, no matter how much you whine. > > \*\*You get as many votes as Warren Buffet. And just because he can afford to flood the airways with political adds doesn’t change the fact that when you go behind the curtain you can vote for who ever you want. \*\* > > \*\*The fact that wealth is concentrated in the hands of a few should make it even easy to vote the policies that favour you. But for some reason that doesn’t happen. Can you tell me why? Or would you rather just keep yelling plutocracy? > \*\* > And just to throw a wrinkle in your plan, I have plenty of wealth, pay plenty of taxes, but can’t vote. Care to explain that? No, the election system is a scam in this country. We need campaign finance reform so everyone has an equal say and equal power. Those that have more wealth, by extension also have more power to sway public opinion, and does not provide fair and equal power to all American’s to have an equal say. If you say that the funding has no effect on the masses, then why do the majority of the votes in this country go to the parties being heavily funded? Do you believe in the power of marketing? If you don’t then perhaps someone should go tell those corporation’s their wasting millions of dollars a year on fruitless advertising campaigns. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [April 9, 2011, 1:48am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/340 "2011-04-09T01:48:53Z")
[http://www.alternet.org/story/150544/5\_despicable\_things\_about\_at%26t's\_mega-merger\_with\_t-mobile?akid=6806.52542.qupvzJ&rd=1&t=2](http://www.alternet.org/story/150544/5_despicable_things_about_at%26t%27s_mega-merger_with_t-mobile?akid=6806.52542.qupvzJ&rd=1&t=2) Here is an article explaining how mergers result in higher prices , worst service and less innovation . These oligarchies are anathema to capitalism. But some of you are unable to process such a simple truth because you accept the lies of big corporations. Capitalism is dead. The corporations murdered it. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [April 9, 2011, 2:03am UTC](https://boards.straightdope.com/t/what-should-replace-capitalism/575357/341 "2011-04-09T02:03:25Z")
> [@randy054](#): > > No, the election system is a scam in this country. > > We need campaign finance reform so everyone has an equal say and equal power. > > Those that have more wealth, by extension also have more power to sway public opinion, and does not provide fair and equal power to all American’s to have an equal say. Sway public opinion? Sounds like the problem isn’t campaign finance laws but the public at large. It also sounds like you’re bitter, not that opinion is swayed, but that you can’t sway it. that you can’t sway public opinion but someone else can. > [@randy054](#): > > If you say that the funding has no effect on the masses, then why do the majority of the votes in this country go to the parties being heavily funded? Because there are only two parties, where else would the votes go? Perhaps you have a higher opinion of the huddled masses. Personally I don’t think it matters how much you spend, the only thing people give a shit about are guns and abortions, and occasionally everyone comes together to excluded gay people. What other message is there? > [@randy054](#): > > Do you believe in the power of marketing? Yes, and it’s not about how much you spend, it’s about targeting your audience. Think about it this way: let’s pretend the top 1% of Americans have 99% of the wealth. So they spend billions influencing 99% of the electorate? Is it really that hard to convince poor people to vote in their best interest? Some how they turn out in droves to do just the opposite. Search for the thread “why do poor people vote Republican.” How did you manage to end up with two parties that only represent 1% of society. The problem isn’t the marketing, it’s the audience. > [@randy054](#): > > If you don’t then perhaps someone should go tell those corporation’s their wasting millions of dollars a year on fruitless advertising campaigns. And that’s just it, they don’t waste a penny of it. Every cent is specifically targeted to exactly the group they’re trying to influence. [Previous page](https://boards.straightdope.com/t/what-should-replace-capitalism/575357.md?page=16) [Next page](https://boards.straightdope.com/t/what-should-replace-capitalism/575357.md?page=18)