The Problem With Capitalism Is That You Eventually Run Out Of Other People's Money...

Or was there some other reason for the credit-crunch that I've missed? 

Original Post by lysistrata:

Trust.  Socialistic government is still government.  It is still "accountable" only to those who have power and influence.  It is still highly corruptible.  It is still, ultimately, about tyranny - using the police force of the state - rather than liberty - "live and let live."

Let's be clear.  If 51% of the population voted that nobody should be allowed to own more than $100,000 in property or receive more than $35,000 income, and anything in excess would be taken away and redistributed among the poor, is that ok?  Morally and practically?

Lys. In functional democracies (again, the US might not realistically be one anymore, granted), the government is accountable to voters.  Yes, they are heavily influenced by those with power and money (especially in the absence of campaign finance regulation), but I don't think it's fair to say that it is not accountable to the population at all.

And 51% of the population voting for something only has teeth in places where referenda are legally binding - like California, if I am correct.  And in Canada, at least, we would all reach communistic equality long before we had to bring income down to 35K or wealth down to 100K, FWIW. 

Original Post by lysistrata:

Hmm, you make it sound like corporations should stand firm to be voluntarily bankrupted by cheap Chinese and Indian labor.  Would that be better for the US economy?

 I'm saying it would be better for the US economy if corporations wouldn't let a temporary 2% drop in profit margin scare them into laying off skilled employees who then have to claim unemployment benefits and decrease their purchase and consumption of goods and services.

Original Post by trustwomen:

Original Post by lysistrata:

Trust.  Socialistic government is still government.  It is still "accountable" only to those who have power and influence.  It is still highly corruptible.  It is still, ultimately, about tyranny - using the police force of the state - rather than liberty - "live and let live."

Let's be clear.  If 51% of the population voted that nobody should be allowed to own more than $100,000 in property or receive more than $35,000 income, and anything in excess would be taken away and redistributed among the poor, is that ok?  Morally and practically?

Lys. In functional democracies (again, the US might not realistically be one anymore, granted), the government is accountable to voters.  Yes, they are heavily influenced by those with power and money (especially in the absence of campaign finance regulation), but I don't think it's fair to say that it is not accountable to the population at all.

And 51% of the population voting for something only has teeth in places where referenda are legally binding - like California, if I am correct.  And in Canada, at least, we would all reach communistic equality long before we had to bring income down to 35K or wealth down to 100K, FWIW. 

Accountable to voters just means run by the mob.  Democracy has just as much potential to be tyrannical as any other form of government.  I majored in Plato and took the execution of Socrates very much to heart. 

Regardless of the form of government, it is important in a free society to have restrictions on what the government can and can't do.  It's why the Magna Carta and the US Constitution were such significant historical documents - it's the individual's only hedge against oppression.  Whether government is "accountable" isn't necessarily the issue.  The government was very "accountable" to the voters in supporting/enabling slavery, among other highly distasteful practices.

Original Post by santonacci:

Original Post by lysistrata:

Hmm, you make it sound like corporations should stand firm to be voluntarily bankrupted by cheap Chinese and Indian labor.  Would that be better for the US economy?

 I'm saying it would be better for the US economy if corporations wouldn't let a temporary 2% drop in profit margin scare them into laying off skilled employees who then have to claim unemployment benefits and decrease their purchase and consumption of goods and services.

Can you give me an example of any company that has been this short-sighted?

Most companies are fully prepared for, and capable of dealing with, short-term drops in their profit margin.  It's only when the drops are substantial (i.e., much, much more than 2%) and expected to be long-term that layoffs are contemplated.

One of the largest employers where I live designs and manufactures fruit-processing equipment for the food industry.  They employ lots of engineers, drafters, economists, and other skilled workers.  The recession hit them extremely hard because the processed food companies are not expanding.  They've had enormous losses for the last 4 quarters in a row.  Eventually they had to cut about 75% of their job force.  It was not something they relished doing, not something they did just to grub more profits out of the building, and not something that is in their long-term interest - after all, when the economy starts turning around, food companies will start buying their product again and they have to go find and train a whole new skilled workforce.  Most of their employees will not be waiting around in the unemployment lines until the recession is over.

Corporations are not interested in cutting their own throats.  They are interested in stability, efficiency and growth.  Laying off your workforce runs counter to those needs.  I simply do not believe it is something any reasonable company does unless the alternative is worse.

Original Post by lysistrata:

Can you give me an example of any company that has been this short-sighted?

 

The one that laid me off in January (so I'll admit to my previous post being a little personal).  All the business indicators they proudly displayed in communications meetings did not show any sign of needing such an adjustment that they would need to let go of over 15% of their workforce. 

Did they have other business reasons, were they lying, or just being greedy?  I don't know, but I do feel it was short sighted.  I thought that they would have learned from previous experience in which the dismissal of their knowledge base almost made them go bankrupt.

on edit:  Is what happened with our economy the result of corporations being interested in "stability and efficiency"?  Really?

Original Post by santonacci:

Original Post by lysistrata:

Can you give me an example of any company that has been this short-sighted?

 

The one that laid me off in January (so I'll admit to my previous post being a little personal).  All the business indicators they proudly displayed in communications meetings did not show any sign of needing such an adjustment that they would need to let go of over 15% of their workforce. 

Did they have other business reasons, were they lying, or just being greedy?  I don't know, but I do feel it was short sighted.  I thought that they would have learned from previous experience in which the dismissal of their knowledge base almost made them go bankrupt.

on edit:  Is what happened with our economy the result of corporations being interested in "stability and efficiency"?  Really?

Well, institutional knowledge doesn't always last long in some companies.

What happened to the economy is complicated (of course), but a lot of it comes down to the ordinary fallout from a bubble bursting.  You think this bubble was bad, read up about Tulipmania.  Bubbles, in my view, tend to prove that humans are not really rational actors, despite what the economists say. 

There was a real estate bubble accompanied by a financial bubble.  A "lending" bubble, if you will.  Lots of reasons why that happened - government policy, low interest rates, an irrational belief that "real estate values never go down," an assumption that owning real property is a basic human right (it's not), improper risk assessment by ratings agencies, greed across the board (the hedge fund managers who bought up mortgage-backed securities were no greedier than the people who bought half-million dollar homes on fraudulent stated-income loans), the optimism of affluence, extreme leveraging, and let's not forget, confusion of wealth with money.

So no, the problem with the economy was the lack of balance - overemphasis on growth, underemphasis on stability and efficiency.  And the corporations were certainly not alone in the imbalance - individuals and governments were happy to go along with the delusion.  That's why it turned into a bubble.

I believe strongly in capitalism, resources are used in an efficient manner unlike in Socialism. Pure capitalism probably exists more in China then it does in the US. Look at roads for example, why are you allowed to drive on that highway for free when you have to pay to get on a subway which costs about the same amount to maintain? In China many highways are private and you must pay a toll to use it. Let's see how fast that gets people to stop driving. 

The credit crisis was caused by our government. We need usury laws in this country. Why do you pay 20-30% interest to the bank on your credit cards when they can borrow for free? We use to believe that you couldn't make more then 10% interest on borrowed money. Here's a secret = that 30% of interest you pay annually - they don't ever expect you to repay them, its nearly impossible because your original loan amount doubles every 3 years. They don't take on the risk of your default loan, they just package it off and sell it some fool in the middle east or your local pension fund. 

This health care debate really saddens me. It's pure fluff to hide the massive amount of money the govt has spent on bailing out banks, probably around 3 trillion dollars. One third of that would buy universal health care, instead of subsidizing the poor decision making of the banks. 

Man oh Man!  I'm just gonna post this link to an idea my husband, Mrpew has.  Its the perfect plan, IMO. 

The Informed Voter System

Original Post by mspw2:

 Its the perfect plan, IMO. 

 No, it is not.

Original Post by inkblue:

The credit crisis was caused by our government.

Well I guess I could see where you are coming from with the big exception that this whole fiasco was not limited to the US. The bankers here had their fair share of shenanigans too.

Original Post by dnrothx:

Original Post by mspw2:

 Its the perfect plan, IMO. 

 No, it is not.

Well, you are no authority on what my opinion is.  But perhaps you were merely expressing your own opinion.

Original Post by inkblue:

 One third of that would buy universal health care, instead of subsidizing the poor decision making of the banks. 

 Yes it would have, but if you'd allowed all your banks to go the same way as Lehmans the economy would have imploded.  No banks, no business, no circulation of wealth.... what we experienced last year was bad but it would have been 10x worse without the cash injection.

The US still has plenty of reserves....  and could support the banks and provide universal health care at the same time.  It's not finances keeping a big percentage of Americans in poor health, it's political dogma of the  'I'm all right Jack' variety.

I say just legalize & regulate marijuana like alcohol.  Tax it nice & high and use that money PLUS the money saved from the budget for Nixon's war on drugs AND the money saved in the public penal system to pay more for federally-subsidized state run & regulated healthcare for the poor, assistance for those who are at the edge of poverty and cannot afford insurance, pay teachers what they are really worth, cut the workday back down to 8, not the current average of 10, get the Informed Voter System running and get rid of corporate lobbying.

The entire system is corrupt.  If voters had a truly democratic voice it would not be like this.  The IFS gives people that voice.  It puts power behind that voice.  As it stands now, America has devolved into a sort-of corporate fascism, with the US government acting as a hand-puppet for the Walmarts and McDonald's of America. 

The only way to breathe health back into the economy is to get money circulating. Small/micro-businesses are what will resuscitate this country's economy.  As long as corporations continue to suck dry the proverbial well, we can all rest assuredly, they will find the bottom and we will all be at it. 

Original Post by gi-jane:

Original Post by inkblue:

 One third of that would buy universal health care, instead of subsidizing the poor decision making of the banks. 

 Yes it would have, but if you'd allowed all your banks to go the same way as Lehmans the economy would have imploded.  No banks, no business, no circulation of wealth.... what we experienced last year was bad but it would have been 10x worse without the cash injection.

The US still has plenty of reserves....  and could support the banks and provide universal health care at the same time.  It's not finances keeping a big percentage of Americans in poor health, it's political dogma of the  'I'm all right Jack' variety.

What we will experience in the future now that the financial sector knows the american taxpayer will bail them out will be much worse than if we had simply let the risk-takers suffer the consequences.

Exactly what reserves are you talking about?  You know that the dollar is a fiat currency, right?