Spanish debt is under the EU average, and, as the part I quoted said, under that of Germany. Spain built up that debt when it was a growing economy - before the crash it was growing faster than Europe in general. So, unless you reject the notion of government debt entirely, which is a bit economically peculiar, we have the situation of one of the most responsible countries in Europe getting into trouble.
As is the case with Italy, bond traders can create a positive feedback situation, where fear increases interest rates which makes it harder to borrow which makes the situation worse. That can be fixed by central bank intervention to cut the legs out from under those who are betting against the bonds. I only heard the news briefly, but that seems to be happening - at last.
Now, as Krugman has repeated over and over, perhaps the root cause is that governments with the ability to set individual economic policies to not have the ability to adjust their currencies to correct problems with them. That is a real problem.
Scandinavia is a terrible example to point to for the success of socialism. They’re small, almost entirely homogeneous countries with capitalist economies. Even a number of their social safety nets(public education for instance) run on market based principles. No, if you want socialism in the US, only socialist systems in places like India, maybe China, or the erstwhile Soviet Union are comparable. And I hope we all know how those socialist systems turned out. It’s not capitalism that needs bashing - it undoubtedly works. It is bad governance that is the culprit.
It’s difficult to tell when the debt crisis will end, since it’s always difficult to say when something will end that hasn’t even started yet. Bump this thread when a debt crisis starts, and we’ll see if we can figure it out then.
While it’s fashionable in the USA these days to call all social programs “socialism,” bldysabba does have a better handle on what “socialism” is than you do. Socialism is the common or state ownership of the means of production.
There are many definitions of communism (and socialism, for that matter). RickJay’s definition of socialism is the marxist one (note for instance that the Soviet Union defined itself as socialist, not communism). In this frame, communism would be the post-socialist phase : social evolution would have made the directing role of the governement useless, and the state would spontaneously decay while the enlightened citizenry would take the matters directly in their hands. Obviously nobody experienced this definition of communism in real-life, but I guess it would be some utopic, mostly anarcho-syndicalist, society.
It depends on what you mean by socialism. Social democratic parties do not call for the state ownership of all enterprises, they call for mixed systems where the state takes over enterprises that the private sector cannot run effectively or that are too important to be run solely by the profit motive (health care, arguably finance in the form of nationalization of the banks, education, etc) and co-ops, but not a wholesale takeover of the economy.
You can’t just ascribe whatever meaning you feel like to terms that are well defined and broadly understood to mean something. Like I said, the failures of recent times have not been of capitalism, but of governance. And your ‘solution’ wants to hand more things over to government. The failure of finance in the last recession was that the line between regulation and financial activity was getting blurred. And you want to (arguably) remove the line. Jeez. I wish the ‘limited government’ and capitalist viewpoint was in better hands than what seems to be a completely fucked up Republican party. It is an important perspective, and for very good reasons. When you take away the profit motive, what do you replace it with? There are good arguments to be made for regulation of sectors like healthcare and finance (inter alia - asymmetries of information, spillover effects), but I don’t know of any for ‘the state taking over’ these sectors.
Wow, great use of the false dichotomy fallacy! You ever imagined that there’s some breathing room between a Randian paradise of pure capitalism and communist Russia? If so, maybe we could point out:
-Scandinavia
-Germany
-France
-Great Britain
…Most of which are kicking the USA’s ass in terms of economic recovery, by the way.
But we don’t want that! You can’t tell the difference between say, “Bankers shouldn’t be able to gamble with socially ensured money” and “the means of production should belong to the people”? Between “Everyone should be able to keep their basic human dignity, even when jobless” and “what’s yours is everyone’s”? Between “we should offer more and better social services to those most threatened by recession and decline” and “HAIL STALIN!”?
We’re not criticizing the market as a whole. It’s a great and wonderful tool, and the free market as a whole was a genius idea, but on its own it has a tendency to shit the bed. We’re criticizing what rightly needs to be criticized: unregulated and unfettered free markets and “pure” capitalism. Which has shown itself to be unreliable, unstable, and prone to booms and busts. Get a clue of what we’re actually asking for, and then ask yourself: “does the picture we have for America’s future look more like Soviet Russia or modern Germany?”
It is off topic, but there is more to socialism than one philosophy. State socialism is not social democracy, their goals are not the same. One may desire state control of the means of production while the other looks to create a social safety net and regulate capitalism so that it is in line with social justice and sustainability. State socialism seems to have been a failure, while social democracy is increasing in power as a philosophy over the world.
I don’t understand your argument about removing the line. The problem is that the financial industry found that the most profitable behaviors were also some of the most risky, until the risk collapsed the system. It has nothing to do with too much collaboration between state and the financial industry, except when the financial industry captured the regulating agencies that were supposed to prevent it from engaging in terrible behavior. The financial industry, at least in the US, captured the government in philosophy and politics and ended up self destructing. How can the solution be limited government to that kind of problem? The solution is to end the revolving door system and to have a government that philosophically feels its goal is to prevent too much risk via strong regulation.
Taiwan has a health care system that has some market principles but is not run for the profit motive and it is largely government run. And they have one of the best systems on earth. The government run VA system has seen massive improvements in quality while prices went down over the last 10-15 years while the private system saw the opposite. etc.
It isn’t a false dichotomy. I’m just saying that people are wrong to knock capitalism as an economic system when the failures are of governance. I used socialism as an example of the most popular alternative economic system to have been tried. None of the examples that you point to are unqualified successes of even the social democrat notion of governance. Each has in the past and most today continue to struggle with a number of issues that their systems of social benefits have wrought. Germany used to struggle with chronically high unemployment and costs in its system until it moved in 2002/03 to reform(reduce) and restructure(incentivise and support finding work) the benefits that it provided. There are many different reasons why the scandinavian countries do well, and you have all your work ahead of you if your claim is that the benefits they provide their citizens are causally related to their countries’ performance.
Yeah I could hold my breath until I turned blue and jump up and down in the aisle as well, but it wouldn’t make my point any stronger.
It would seem you and the amorphous ‘we’ that you keep referring to are the ones that can’t tell the difference. I’d originally just made a statement that expressed surprise at the capitalism bashing and pointed out that socialism as a system fared much worse. In response to which another poster mentioned Scandinavia et al, and you’ve just jumped right in with him. I haven’t ever conflated socialism with the policies of European social democrats . That’s you and your army of ‘we’.
I agree with most of the gist of what you say here, except that I don’t get who the ‘we’ are that I should be listening to. Better and more sensible regulation is definitely required, nor can capitalism function well without an underlying system that ensures products, services (and even people) can be judged on their merits and not by the different sorts of power they possess. I’m just trying to state that the unreliability, instability and booms and busts of capitalism are minor evils compared to alternative systems. Nor would I be so quick as to point to German and European social democracy as a model that’s readily applicable in the context of larger, more diverse countries. In fact, I don’t even agree that an ironclad case can be made for those systems being ‘better’ in any absolute sense.
bldysabba, your first mention of socialism was in response to someone wanting to put “checks and balances” on capitalism. It’s not surprising that people are interpreting what you meant as a false dichotomy.
So when you mean social democracy, say social democracy.
In your post, you mention nationalisation of banks as a solution to finance being run by the profit motive. As I’ve been trying to say, it is not the profit motive that is the problem, it is that there has been poor regulation. And by nationalising something, you make it part and parcel of the same body(the government) that is supposed to regulate it. That is what I mean by ‘removing the line’ and it seems that we would agree this is a bad idea.
Am I saying NO government run systems can function well, and that all market based/capitalist systems will? No. I’m only saying that one is much more likely to do a good job than the other.
ETA: You’re also right, and this definitely is off topic. To the OP, apologies for the hijack, since it was my post that started it off.
Yes, I went back and re-read and discovered that too. Let me clarify by saying that my initial post was based on a sense of attack on capitalism per se, not the ‘checks and balances’ bit. The mention of world government in that post also threw me off I think, as though capitalism were some evil to be fought wherever it may be found.