Previous posts in this discussion:
PostThe Biggest Threat to America Today (Tor Guimaraes, USA, 05/14/18 4:00 am)
I enjoyed reading Paul Pitlick's post of May 12th. It inspired me to come with an axiom about capitalism: capitalism is a wonderful thing, except it might produce too much wealth in the hands of too few people.
The problem becomes that to the few billionaires money is no object, so they can drive up the price of anything they want. Another problem is that super wealthy people think they are special and know better than common folks, so why not use some of their wealth to control legislation, buy the supposedly people's representatives, judges, etc? So they do. That is why I believe the greatest threat to America today is our huge and continuously growing income and wealth inequality. It will make us Americans into zombie slaves in a few generations.
Regarding the question whether or not war is good for the economy. For sure WWII was great for the US economy. Being the arsenal of democracy gave the US a huge advantage which has lasted to today despite the increasing degradation of the American standard of living. It also allowed the US to save Europe from the famine and destruction of WWII.
Colonial empires usually went to war because someone wanted wealth and power. The players may change, the wealthy assets may be different, the power objectives may change, but this truth remains. In the US the industrial/military complex does extremely well with wars and that is why we not had any peace since WWII. They get the money even though our infrastructure is falling apart, our teacher are underpaid, and more people are going hungry and jobless. Paul stated: "from the 1960s on, during which the US has been almost continually at war somewhere, the US economy seems to be moving along." It all depends on how one defines economic growth. I define in terms of American standard of living (SOL). In the 1950s it took a husband's meager salary to support a family. Later on the SOL was higher but two parents at work could easily support a family. Today the American SOL is stagnant at best. The average jobs provide starving wages and many people cannot even afford to have a family even with both parents working.
I want the strongest lean and mean military for self-defense only, not to make special interests richer. I want my tax money used for education and business entrepreneurship. Amen.
JE comments: In the 1950s, Dad came home from the office and smoked his pipe, while Mom served dinner. There was no need to bankroll the toys and technologies we take for granted today. How much of a middle-class income is spent on "connectivity"?
John Heelan (next) has a comment on war profiteering, which is almost as old as human conflict itself.
Capitalism, Oligopolies, and Price-Fixing
(Istvan Simon, USA
05/19/18 5:18 AM)
There are some valid points in Tor Guimaraes's post of May 14, but I disagree with many of his statements.
The concentration of wealth is indeed a problem in our society, but Tor puts the blame on "capitalism" which I think is a mistake. It is clearly not produced by "capitalism," at least if we define "capitalism" as the economic system in all the advanced countries in the world, for example the countries of Europe, the United States, Asian economic powers, like China, Singapore, India, and Israel, Australia, and most countries in the developing world, like Brazil, Argentina, etc. In all these countries there is some form of capitalism, yet they have a large variation of more or less concentration of wealth. If we accept that all these countries have capitalist economic systems, it follows that concentration of wealth is not an inevitable consequence of capitalism, and is produced by other factors than the economic system alone. Probably the most important factor is the political system that governs and regulates the form of capitalism that is allowed in the country.
I think that Tor is fond of sweeping over-generalizations, and his post has some of these. For example he says: "The problem becomes that to the few billionaires money is no object, so they can drive up the price of anything they want. Another problem is that super wealthy people think they are special and know better than common folks, so why not use some of their wealth to control legislation, buy the supposedly people's representatives, judges, etc?"
This describes some of the problems we have in the United States fairly accurately. Nonetheless, a lot of what Tor says above is also false. It is false that the rich can drive up the price of anything they want. This is an absurd statement which goes against one of the main tenets of capitalism, the role of Adam Smith's "invisible hand" of free markets in determining the price of goods and services. The law of supply and demand cannot be revoked. It is not passed by legislation, but is a law of economics. It works and works well as long as there is competition. Monopolies and oligopolies may distort the true worth of products and services. This was noticed in the United States more than a century ago, and anti-trust legislation was passed that regulates businesses, so that markets can do their magic.
Anti-trust legislation shows the importance of the political system to keep markets free. Democracy also has a role in distributing the fruits of the economy and the wealth more widely, rather than concentrating it in the hands of a few super-rich people. A free and independent press and education likewise have important roles for a well-functioning democracy less prone to the distortions that the rich can produce to bribe politicians for legislation favorable to them rather than the public at large. A well-informed public is essential to the working of both free markets and democracy. So Tor is misdirecting his fire when he attributes the distortions to "capitalism."
It is no wonder that the right wing and their puppet president Trump is attacking our institutions, the free press, and public education system with its voucher ideas, promoting public money for religious private schools, the agenda of Secretary of Education DeVos. Trump is methodically nominating criminals like Pruitt to destroy the EPA, Zinke to destroy our public lands, and open them up to greedy exploitation by the oil and mining industry. and numerous other examples of a vast criminal conspiracy directed from the White House. But Trump himself is just an evil figure-head puppet of the puppet-masters behind him.
Consider the roles of Rupert Murdoch and "Faux" News that he owns in the election of this con-man to the White House. Consider the connections of Sean Hannity, now revealed to be a client of Michael Cohen, the "fixer" of all corrupt doings of our president. But even worse, consider the influence of the evil billionaire duo Bob Mercer and his daughter Rebecca Mercer, in the election of Trump and the corruption of the United States that they sponsor. The Mercers own Breitbart "News," and were the employers of most of the criminal gang that surrounded Trump, his vile campaign for the presidency, and many still now in the White House. Here is a partial list of puppet-masters Mercers' puppets: Kelly Anne Conway, Steve Bannon, Paul Manafort, Sebastian Gorka, were all employees of Breitbart "News." What about Cambridge Analytica and the theft of Facebook users' data used in the election of president Trump? Well, the Mercers were the main investors of Cambridge Analytica.
The dominant role of the Mercers in the election of Trump is absolutely amazing. They are behind the strategy that unfortunately succeeded in electing this criminal to the White House. They are also behind the criminal attack of the Trump presidency on the very institutions created to defend the consumers and ordinary folks from the corruption that Tor talks about. The cancer that create the problems that Tor talks about.
Going back to oligopolies, I note that they do not always produce high prices. We have as an example the computer industry, which has only a handful of companies making computers, and yet competition and good engineering has produced constantly falling prices and constantly improved products. On the other, hand consider the oligopoly that controls mobile phone service in the United States. It has produced relatively high prices and inferior products. Prices of the same or better service can be found in other countries for far less. For example my mother has Gigabit Internet Service both down and upstream, she has fiber installed in her apartment in São Paulo, Brazil, which costs about $30 a month. I pay $120 for Gigabit downstream service through cable, and I get only 40 Megabits upstream. So clearly the oligopoly that controls phone service in the United States is inferior both in the quality of high-speed Internet service, and costs far too much in the United States.
Who is to blame? Not capitalism, I think. The blame belongs in Congress that passes legislation favorable to the companies rather than protecting the consumer. So blame the political system and the GOP, not capitalism. The GOP is supposed to be for free markets and capitalism, but that is just propaganda for the credulous. In reality it is a political party that has hardly any integrity left, and it has become the paid agent of the interests of the super-rich.
JE comments: To Istvan Simon's example of Internet connectivity, add a more nefarious culprit of price-fixing: Big Pharma.
Sowing the Seeds of Its Own Destruction?
(Tor Guimaraes, USA
05/21/18 4:18 AM)
In response to Istvan Simon (19 May), many people live partly in a theoretical, imaginary world. In such a world the proponents of Communism thought and still think that Communism is a beautiful thing. Unfortunately for the USSR and other places, it did not work in reality.
As I have discussed before a few times in this forum, Capitalism is no different. It is absolutely beautiful in theory but it will take a lot of energy and intelligent regulations to protect the "free market" underlying the capitalist ideology.
Capitalism also carries the seeds of its own destruction. As companies get rich and powerful, they tend to gobble up weaker competitors, buy government to reduce controls over what they can do legally, manipulate markets, etc. Note that in the US today, every industry sector is dominated by few giants that work very hard to disguise their power over the sector.
Regarding the concentration of wealth throughout the world, it is a no-brainer that the trend is only one way: more and more concentration of wealth and corresponding power. That is built into Capitalism: the smarter, more capable, and many times more devious, get richer. The richer can afford better managers, accountants, lawyers, and legislators. On and on ad nauseam until the word democracy becomes empty, then Capitalism really become rampant to the point of no return.
JE comments: Tim Brown sent an overnight quip that fits: Under Capitalism, the capitalists are rich. Under Communism, the Communists are rich. I would add that in China, under Communism the Capitalists are rich--their Communist cronies, too.
- Sowing the Seeds of Its Own Destruction? (Tor Guimaraes, USA 05/21/18 4:18 AM)