Sunday, November 2, 2008

Why Capitalism is the Best Economics System


Capitalism is an economic system based on private ownership in which activities are primarily determined by the function of a free market rather than by central government planning.1

Be aware that when I speak of capitalism, I am referring to what is known as laissez-faire, meaning 'allow to do'. In other words, an economy with little government intervention. The U.S. is currently under a system known as a mixed economy, which is basically a mixture of capitalism and socialism. Capitalism works well because of the way it deals with self-interest, distributes limited resources, grows standards of living, and provides incentives for excellence. We will discuss these four concepts in detail:


Self-Interest

"It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interests." -Adam Smith

    The prevailing interest among humans in this world is self-interest. Anti-capitalists call it greed. Religion calls it sin. Science calls it survival. In fact, few philosophies refer to self interest in itself as something good, but it is inescapable. You cannot educate people out of self-interest. It is the natural order of human behavior and the only way to tame this beast is to work with it. Dr. Walter E. Williams describes how capitalism works with self-interest:

    "Capitalism is relatively new in human history. Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man." 2

    Don't take this as an argument that capitalism is perfect or produces perfect results. Far from it. However, capitalism is the closest thing to a perfect economic system we will ever see on this earth.


    Limited Resources

    There are a limited number of resources in the world. Therefore, a system is needed that rations out these resources in a manner that benefits all the stakeholders. As we discussed in Gas Shortages previously, prices determined through supply and demand allow resources to be allocated to those who need them most. In the case of a crisis, the person with an empty tank of gas can buy what he currently needs most (because the price will be high enough to deter people who don't really need it).


    Standard of Living

    While political rhetoric often describes dire economic conditions and the woes of class separation, the truth is, people have access to more products and services than ever before. There are many ways to gauge the current standard of living, but let's discuss a few related to "the poor". Robert Rector of the Heritage Foundation3 wrote using 1990 census data:


    • 38 percent of the persons whom the Census Bureau identifies as "poor" own their own homes with a median value of $39,200.
    • 62 percent of "poor" households own a car; 14 percent own two or more cars.
    • Nearly half of all "poor" households have air-conditioning; 31 percent have microwave ovens.
    • Nationwide, some 22,000 "poor" households have heated swimming pools or Jacuzzis.

    Excellence

    Capitalism is the only economic system in the world that promotes voluntary excellence in individuals. Individuals are rewarded based on the amount of value they provide to the market. Capitalism provides incentives to be great and invent things that were never thought possible. It is a system that promotes growth among individuals and society as a whole.


    While it would be impossible here to fully explain all the reasons why capitalism is the best economic system in this post, there are many books devoted to this endeavor. Some of these books include:



    Sources:
    1. Capitalism. Wikipedia.
    2. Capitalism and the Common Man. Walter E. Williams. August 25, 1997.
    3. How "Poor" are America's Poor? Robert Rector. September 21, 1990.


    45 comments:

    Matt said...

    I just found a superb article on capitalism for further reading:

    Capitalism: The Concise Encyclopedia of Economics

    Ken & Carol said...

    Well done Matt. Thanks.

    Matt said...

    Another really good article:

    Capitalism and the Financial Crisis


    Jim said...

    Matt, your post is really informative and solidifies my view
    that capitalism is what makes our
    country great! Mom

    The Black Sphere said...

    Matt, I liked the article and your organization of thought. I especially liked the quote from Dr. Walter Williams, an amazing man,and great conservative! Good job!

    Matt said...

    I agree. Thanks for visiting!

    Wake Up Conservatives said...

    Great Blog, Matt, I will definitely be following your blog for more insight!

    Go Capitalism!

    maribelcaban said...

    Hi Matt:
    Very kewl blog....awesome information and right on the money - oh, btw, didn't Hussein, you know the guy the liberals elected and certainly not us, stated the following "Or that Mr. Spread-the-Wealth raised nearly a billion dollars and did not share one penny of it!"????? Hmmmm....after reading your blog on the same issue - I applaud you! Again, right on the money - although someone hasn't done what he said he would do. Did someone punch Joy Behar yet??? And I wish we can get the interview (video would be kewl) of Bill O'Reily and Hussein!!! Can someone get it...? I'd love to see it....Kudos Matt...it's my sister's blog btw...learning about all this blog stuff since "hussein" got elected...ewwwww!

    Matt said...

    YouTube probably has the video.

    Eden said...

    Capitalism promotes scarcity, and planned inefficiency in products, a necessity for cyclic consumption and a general disregard for any human affairs foreign to the individual who in ignorance seeks their own agenda over the welfare of all others.

    The time has come for man to put away his clubs and spears and focus his lens of examination in science for all human concern & betterment. The necessities of life for all people. Decisions made not by opinion of individual men but the scientific method, as all problems can be analyzed scientifically and overcome.


    The individual trading of temporary access to goods and services for short term gain will lead nowhere but destruction of environment, perpetual consumption and the manipulation necessary to sustain it. There is only a short future for man if he sees only his individual self as relevant to his future survival, it is a false perception. We must see all others as a determinant of our future and share the world alike to meet this. The trading monetary system is paralyzing us, we must remove it.


    This would be far more obvious if there was not such vested interest in preventing such ideas entering the mind of the average consumer. Money is no longer relevant, we have the technology to produce in abundance and live sustainably, we are merely lacking the collective mentality to do so. That is were we step in.

    With ideas of The Venus Project achieved the advent of improvements will encircle and flourish without the paralyzing monetary structure, the lives of all mankind will improve far exceeding the extremely wealthy today.

    www.ZeitgeistMovie.com

    Matt said...

    Eden - That is a pretty risible rant on its face. You can't promote scarcity and Capitalism requires the absence of inefficient, centralized planning. Cyclical consumption is necessary for life to continue. Try to give up eating and see what happens. Ironically, catering to the welfare of others is exactly how one sustains long-term success in a capitalist economy.

    Considering our monetary system is a centralized system controlled by the Federal Reserve that's very existence is an insult to the capitalist system, your complaint against capitalism has zero relevance.

    Eden said...

    "You can't promote scarcity"

    Uhh, yes you can, have you the ability to think? I wonder. Lets see, you can purchase minor companies form a cartel and raise prices above a margin (From which they would have otherwise been averaging lower), you can use inefficient methods of environmental protection to create water supply(Or similar) problems in specific situations, any form of patenting is creates scarcity of ideas for beneficial use, any form of ownership eliminates a rights to stand/walk/live/research in a majority of locations, you can lobby government to arbitrarily outlaw certain materials for public use, you can destroy competing business crops(Or similar) with chemical spraying(Or similar) as far as law permits and destroy diamonds(Or similar) if quantities are found that would threaten the perceived scarcity to sustain large prices.

    "Capitalism requires the absence of inefficient, centralized planning."

    Well any form of regulatory government is centralised planning as corporations have a larger influence on the creation of laws, through lobbying etc, and thus public voting is eventually negated in influence over time. Corporations are "centralised planning" the environment of the market for their gain.

    "Cyclical consumption is necessary for life to continue.Try to give up eating and see what happens."

    The production of inefficient cars are necessary for life to continue? You don't seem to understand the broader potential of words. Consumption is not limited to food and there is variations even within that to, likewise you see obese individuals in grand quantities.

    "Ironically, catering to the welfare of others is exactly how one sustains long-term success in a capitalist economy."

    Well that depends on whether you perceive taking more monetary value from others than you give in return (IE the profit mechanism)"catering". You again have shown little use of cognitive function. The position of your perceived "catering" is only relative to the competition around you.

    "your complaint against capitalism has zero relevance."

    Well actually it has more relevance than any other social system centred around taking from others as a basis for human existence, i.e. the monetary system. Human concern should be at the high of all social debate, your position is highly ironic in this regard. Where you attempt to relay relevance on obtaining individual prosperity in ignorance of monetary prosperity necessitating inequity as the foundation.

    Frank said...

    "There are a limited number of resources in the world."

    This is true, more so than necessary. Throughout the 1980's the federal government subsidized certain farmers not to plant crops, in order to promote scarcity so those crops which were planted would bring a higher profit margin to those farmers who were lucky enough to plant. Meanwhile the farmers who were prevented from planting by government sanctions, starved, and lost their farms. It was so bad, and so ridiculous for so long, that many musicians started a benefit which they dubbed "Farm Aid."

    This former example is just one among many of what we like to refer to as artificial scarcity. Another example of this is found in the oil and gas industry, with the so called fossil fuels.

    The deep water "Horizon" oil rig which blew up recently contaminating the Gulf and the gulf states, by spilling billions of barrles of oil per day, is strong evidence for the the competing theory that oil is naturally produced by the Earth just below the crust, and it seeps up toward the surface through channels till it gets to the much cooler and harder bedrock where it pools into massive amounts.

    In order to account for all the oil that spilled into the Gulf from that one rig, there would have to have been that many more billions of tons of dinosaurs buried below the sea bed deeper than any fossils have ever been found, by at least three fold. It would require more dinosaurs than the entire planet could have ever supported throughout the paleolithic era, just for that one well, in the middle of the ocean. That is a scientific fact.

    Upon this revelation the oil and gas commission, which regulate the oil industry, claimed that the oil they are currently drilling for is from dinosaurs, and therefore a fossil fuel, and in limited supply. All of this, so they can keep the prices high. This is what is known as artificial planned scarcity.

    "Therefore, a system is needed that rations out these resources in a manner that benefits all the stakeholders."

    Because of this planned, and artificial scarcity, the stockholders are the only ones who benefit, from the lie.

    "In the case of a crisis, the person with an empty tank of gas can buy what he currently needs most (because the price will be high enough to deter people who don't really need it)."

    In the case of a crisis the price sky rockets to the point that the only ones who can afford it are those who don't need it most. The poor work a day individual, which accounts for more than 85% of the population can't afford the gas to go to work to make the money to pay the bills which have also gone up, because of the price of gas. But that poor work a day employee, is making anymore money than he was.

    In fact, if you follow the statistics, the cost of living increases over the past century for out weigh the increase in minimum wage, and similarly hourly wages for those who make more than minimum.

    All of this, based on just three statements in one part of you misconceived blog. I'll be back with more later. Meanwhile, feel free to research my points.

    Matt said...

    "Uhh, yes you can, have you the ability to think? I wonder. Lets see, you can purchase minor companies form a cartel and raise prices above a margin (From which they would have otherwise been averaging lower), you can use inefficient methods of environmental protection to create water supply(Or similar) problems in specific situations, any form of patenting is creates scarcity of ideas for beneficial use, any form of ownership eliminates a rights to stand/walk/live/research in a majority of locations, you can lobby government to arbitrarily outlaw certain materials for public use, you can destroy competing business crops(Or similar) with chemical spraying(Or similar) as far as law permits and destroy diamonds(Or similar) if quantities are found that would threaten the perceived scarcity to sustain large prices."

    Most goods are scarce by nature. Capitalism is the only system that can efficiently distribute scarce goods to consumers that want them through the price system. Scarcity is a part of life that can't be changed. There are few examples of non-scarce goods. Your examples have nothing to do with capitalism. For instance, the patent system is anti-capitalist.

    "Well any form of regulatory government is centralised planning as corporations have a larger influence on the creation of laws, through lobbying etc, and thus public voting is eventually negated in influence over time. Corporations are "centralised planning" the environment of the market for their gain."

    Indeed. That is called corporatism - not capitalism.

    "The production of inefficient cars are necessary for life to continue? You don't seem to understand the broader potential of words. Consumption is not limited to food and there is variations even within that to, likewise you see obese individuals in grand quantities."

    Explain to me how you get rid of cyclical consumption. Even the strictest instance of communist society still has cyclical consumption.

    "Well that depends on whether you perceive taking more monetary value from others than you give in return (IE the profit mechanism)"catering". You again have shown little use of cognitive function. The position of your perceived "catering" is only relative to the competition around you."

    Competition is the pillar of capitalism. There is no other economic system in the world that encourages competition more than capitalism. You might want to test your cognitive function on studying the definition and method of profit. It doesn't entail "taking" monetary value from consumers. The only way profit can be achieved in a free market system is to provide a product or service to consumers that value that good more than the cash it takes to purchase it. If the value is worth less to the consumer than the cash he or she has to spend, then they simply keep the cash.

    "Well actually it has more relevance than any other social system centred around taking from others as a basis for human existence, i.e. the monetary system. Human concern should be at the high of all social debate, your position is highly ironic in this regard. Where you attempt to relay relevance on obtaining individual prosperity in ignorance of monetary prosperity necessitating inequity as the foundation."

    The problem is that you don't understand what actually constitutes capitalism. The only social system centered around taking from others as a basis for human existence is one backed by coercive government. Socialism, Corporatism, Communism, and Fascism are all forms of coercive government built on theft.

    You should look up the definition of laissez faire. The only system necessitating the greatest prosperity for society is one steeped in liberty. Capitalism is the only economic system congruous with liberty.

    Matt said...

    "In the case of a crisis the price sky rockets to the point that the only ones who can afford it are those who don't need it most..."A natural crisis is not indefinite. Prices return to normal levels after the shortage is over. Minimum wage is another one of those ill conceived government interventions that hurts the very people that it intends to help by fostering higher unemployment.

    Nearly ever single point you made involves government intervention and the cost it entails on society. Considering this post (or blog) has nothing to do with the benefits of government intervention, your "criticism" is indeed misconceived.

    Ron D said...

    “Capitalism is an economic system based on private ownership in which activities are primarily determined by the function of a free market rather than by central government planning.”
    Does the “rather than” imply that the only other economic system would be regulated by the government? If it is, you are wrong, there are many other economic systems, and that is not excluded to bartering.
    This has to be the most absurd sentence I have read in my entire life: “Capitalism works well because of the way it deals with self-interest, distributes limited resources, grows standards of living, and provides incentives for excellence.”
    Self-interest: I agree entirely with the following explanation of the concept of self-interest-this is not where my opposition lies. But to believe that humanity benefits from the prosperity of capitalism, that is where the absurdity lies. For you see, it is always the few that prosper. Humanity will always desire; and those individuals that appease that desire, shall prosper. But capitalism fails to realize that we reside in a finite world, and that there are numerous other variables to consider other than the desires of the majority.
    Distributes limited resources: Not only must the resources be in demand, but those demanding the resources must also be able to afford the price. For this reason many are left lacking.
    Grows standards of living: You say this as though it is the very purpose of capitalism to improve standards of living. And it fails miserably at the task. In a capitalistic system, the conditions of the population fluctuate with the tides of the market. This is blatantly obvious in contemporary society, you only have to turn on the news to realize how dependent people are upon occupation to maintain their standards of living. And you fail to realize that most people experience practically no change in their standards of living over the course of their life. This is an absurd illusion that you have been taught by the status quo. There is not progress for the many. All the wealth in power resides in the hands of the few.

    Ron D said...

    Provides incentives for excellence: You are talking about one incentive, the profit incentive. Because every other incentive would have been present in every other economic system.
    Permit me to produce a minor list of what excellence this profit incentive motivates:
    1) Planned Obsolescence (self-explanatory)
    2) Exploitation of the desperate (Labor in third world nations)
    3) Commercial and political manipulation (Com/Pol advertising campaigns, corruption of media, war and economic propaganda through media)
    4) Distortion of priorities for economic interests (Television programming, and quality of the arts)
    5) Profitability of atrocity (War for resources and markets, disregard of human suffering in the form of starvation and preventable disease)
    6) Competition (No action is deemed too extreme if it removes your competition)
    “Capitalism made it possible to become wealthy by serving your fellow man.” What you may call serving fellow man, I interpret as the exploitation of man. For the primary priority of any business present in a capitalistic economic system is profit.
    “However, capitalism is the closest thing to a perfect economic system we will ever see on this earth.”
    And this is an absurd assumption as well. Greed and power will rationalize any conduct. It will continue to divide man, pollute the mind, appeal to ignorances and lead to the continued raping and ravaging of the planet. It is not even remotely the best system we have conceived. For, I would consider barbarism an improvement from capitalism if it would improve the treatment of humanity and the planet.
    And I guess this also explains why there are a billion people starving in the world right now, and that figure continues to increase. Has it ever occurred to you, that those people, who need something the most, cannot afford it! Are we to disregard those people who do not have any money? Are we to disregard those people who cannot find work? Are we to disregard those people whose work does not provide sufficiently? The most perplexing assumption is that capitalism distributes resources where it is demanded the most. This is not true. Capitalism distributes resources to those who can pay the most. It is entirely profit driven, not demand driven.

    Ron D said...

    Standard of Living
    Why are you talking about the richest country in the world? Obviously people will have access to more products and services than ever before, since all the god damn wealth enters this country. And that still hasn’t done much to improve the condition of the poor. The boundaries of the world are not marked at the tip of Florida and Alaska.
    And those few statistics you provided only serve to solidify the opposition against capitalism.
    “38 percent of the persons whom the Census Bureau identifies as "poor" own their own homes with a median value of $39,200.”
    Where are these homes located, and in what condition is the home? Living in a home does not imply prosperity or a high standard of living.
    “62 percent of "poor" households own a car; 14 percent own two or more cars.”
    In what condition is this car? My father is an auto-technician; not only is business horrendously poor because people can’t afford to fix their cars, but those people who do arrive do so with very time consuming tasks. People arrive with vehicles valued at 500$ tops, and repairs which will cost at least double the value of the car itself.
    “Nearly half of all "poor" households have air-conditioning; 31 percent have microwave ovens.”
    I find it absurd that a high standard of living is measured through material possessions. Do you know why they have air conditioning? It probably has something to do with the fact that it comes with the residence. And, depending on the climate, if they didn’t have one, they’d probably die from the heat.
    “Nationwide, some 22,000 "poor" households have heated swimming pools or Jacuzzis”
    260 million people in the country, 22,000 poverty stricken people possess heated swimming pools or Jacuzzis. Do I have to express the absurdity of this statement? First of all, how can they afford to maintain a heated swimming pool if they are poor? And, more importantly, what the hell does this statistic have anything to do with poverty. They are poor, what material items they have in their possession is irrelevant. Do they have health care (they should if they’re poor, but there are exceptions)? In what condition do they reside? What foods do they eat? What are their future prospects? Do they have an advanced education? Are they safe?

    Disbelief said...

    Fascism, Communism, Capitalism are all just variations of one another, they all circle centrally around the Monetary System. All that money is is a barrier to lifes necessities.

    Matt said...

    Disbelief: You should read What Has The Government Done to Our Money instead of watching a conspiracy film. You will come out a lot more educated than you are now. If you want to understand the difference between Capitalism, Socialism, and Communism I recommend reading The Law by Frederic Bastiat.

    Matt said...

    To the Zeitgeist cult: Please learn what capitalism is, the history of it, and where it exists today. Educate yourself on what money is and why the current fiat standard is anti-capitalist. You could start by reading the superb information at http://mises.org. Then we might be able to have an intelligent discussion about capitalism.

    Matt said...

    If you want to watch a good movie on the monetary system watch this video instead: Money, Banking, and the Federal Reserve

    Anonymous said...

    Capitalism has resulted in 15% poverty, 25% poverty rate for blacks, 10% who cant get a job, 93% who will never become wealthy, 50% who will never earn more than $33k which gets u a beat up apartment and beat up car, 45 million without health insurance.

    I would say capitalism has been a failure. if u use tax to redistribute income, u would make 100% of the population wealthy and fix all the problems of capitalism.

    Matt said...

    Yes, of course! Redistribution would fix all of our mixed economy's problems! Do tell us about the poverty rates of countries that haven't seen a day of capitalism in their history. I can't wait for this magical communist utopia of 100% wealth.

    Stew said...

    Hi Matt, how can you expect capitalism to flourish when corporatism always seeks to override it? And I wouldn't lay all the blame on what has happen to the money on the governments doorstep, this was a definite collusion between private and government interests that culminated in the Federal reserve act of 1913. Capitalism , the kind sort of Mom and Pop shops, will never exist again in its pure form because the free market is too easily manipulated. The ultimate expression of capitalism will always end in either a monopoly or a cartel.

    Even if we reverse some of the damage (i.e. end the Fed, strip corporations of their legal person hood), the moneyed class would find another way to impose their fiat chains on us.

    Anonymous said...

    Yes, using existing taxes to pay everyone a $20k basic income and every worker another $30k would make everyone wealthy, end poverty, end financial struggle, and improve our quality of life.

    If that somehow makes me a communist, being compassionate, wanting to live in a society that makes sure everyone has the means to live well, then go Karl Marx!

    google basic income, it is something advocated by capitalists from milton friedman to thomas paine. it is the only way to have a humane economic system and the only way to result in a society where 100% are wealthy which should be the goal of any economic system.

    Matt said...

    Stew ~ You are right to a certain extent. Once the wheels of socialism and plunder begin to turn, everyone wants to join in the living at the expense of others. Frederic Bastiat said,

    "Self-preservation and self-development are common aspirations among all people. And if everyone enjoyed the unrestricted use of his faculties and the free disposition of the fruits of his labor, social progress would be ceaseless, uninterrupted, and unfailing.

    But there is also another tendency that is common among people. When they can, they wish to live and prosper at the expense of others. This is no rash accusation. Nor does it come from a gloomy and uncharitable spirit. The annals of history bear witness to the truth of it: the incessant wars, mass migrations, religious persecutions, universal slavery, dishonesty in commerce, and monopolies. This fatal desire has its origin in the very nature of man — in that primitive, universal, and insuppressible instinct that impels him to satisfy his desires with the least possible pain."

    Human nature is not the fault of Capitalism. Implementing Communism or any other economic system will not change human nature. In fact, those other systems foster the increase of plundering.

    Frederic Bastiat's ideas deserve a serious hearing in his famous The Law.

    Matt said...

    Anon ~ Your egalitarian scheme has been tried many times in history already. Before you start cheer leading Marx, you should study the communist societies such as the Soviet Union or China to see if they eliminated poverty. In reality, they have either collapsed or been forced to make market reforms such as China just to survive. Not one communist society ever sustained any lasting economic growth. Not to mention that some of the world's greatest atrocities and mass murders have come at the hands of communist regimes.

    Anonymous said...

    Matt, you think if we used existing tax revenue to pay everyone a dividend so people can live a better life that it would turn us into a poor, unindustrialized, third world nation like China and the Soviet Union used to be where we have no human rights, no property, no individualism, and the govt nationalizes every business!?!

    I think your analysis is a little off. Maybe it is time to take a break from the Mises propaganda?

    Matt said...

    Anon ~ Now I see what you are saying. No it wouldn't make us 100% wealthy to pay everyone a dividend from tax revenues. A healthy, sound economy isn't caused by higher wages and consumer spending. Higher wages and consumer spending is a result of a healthy, sound economy. The cart doesn't come before the horse. If production doesn't improve either by innovation or efficiency, no scheme will do anything to change it. Perhaps, you should study economics instead of calling it propaganda. You could start with The Library of Economics and Liberty.

    Anonymous said...

    Matt, so somehow when some rich guy who got his money by winning the genetic lottery and being born into a rich family, as an example, spends his money, the economy works just fine.

    But when some other guy who got his money from a tax dividend spends his money, the economy somehow cannot produce for him!

    We already have a healthy economy. And it produces enough to give 100% of the population a wealthy lifestyle if income was more evenly distributed.

    I can assure you when you spend your tax dividend, the business is not going to ask where you got that money from before he sells you whatever you wanna buy.

    And if redistribution of income changes the makeup of what we produce so that there is increased demand for 5000 sq ft homes instead of 15000 sq ft homes, tvs instead of antique furniture and mercedes instead of private jets, the economy will adjust without a glitch.

    It is surprising how these "think tanks" have got some people so brainwashed that they actually think that getting a check from the government will not increase their wealth and that spending that money somehow won't work. But like PT Barnum said...

    I looked at that article you gave. At what point do you recognize that the goal of libertarianism is not to have an economy that produces maximum wealth for all but rather to have an economy that is as free of government intervention as possible?

    Matt said...

    It is simple economics. The only way to maximum wealth is to have an economy that is as free of government intervention as possible. Your scheme would not work for the exact same reasons minimum wage doesn't help the poor. If you win the lottery, you will most definitely be richer than you were before. If everyone wins the lottery, then nobody will be richer.

    In The Fatal Conceit, F.A. Hayek said that "[t]he curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

    Anonymous said...

    matt, a basic income is not the same as a minimum wage! It does not interfere with the pricing of labor, so it wouldn't make it more difficult for low skilled workers or anyone else to find a job like your article tried to suggest.

    And your claim that less government will makes us more wealthy is just as inaccurate. Eliminating government and all its programs will increase income disparity, increase uninsured, increase homelessness, decrease home ownership, decrease the amount of people who get educated.

    Since 1975, practically all the gains in household income have gone to the top 20% of households, not surprisingly with reagan's dismantling of every program that doesn't help the rich.

    I know Lew Rockwell didn't pass along the memo to you, but people in countries with more government intervention have a higher standard of living like Norway, Australia, Iceland, Canada, Ireland, Netherlands, Sweden, France, Switzerland, Luxembourg, Japan, Finland.

    And if you just look at economic life, even the people in the Arab Emirates and Kuwait live wealthier lives. The average town in the US looks like a ghetto compared to how they live in Dubai.

    The market should be used as a tool to serve us. We do not serve the market. Preventing people from setting up programs to make up for the things the market cannot accomplish (like a basic income for universal wealth, universal healthcare, universal education and universal home ownership) is not going to make society better. It will make it worse.

    The people telling you we cannot implement programs in addition to a market to create a society that achieves our goals are con artists.

    Matt said...

    Now, who is really buying into propaganda? I recommend picking up a book called Economics in One Lesson by Henry Hazlitt. It is a great book for people struggling to understand the basics.

    Matt said...

    After you have read Hazlitt's Economic in One Lesson, you can move onto something more advanced such as his Man vs. The Welfare State which addresses the negative income tax proposal.

    Anonymous said...

    That book is not an economics education, it is a libertarian manifesto. Libertarianism is a backwards philosophy whose goal is to bring society back to the 1700s.

    That is where we differ. You want to re-live the 18th century, I want to build a society where everyone is wealthy, technology liberates us from jobs and the world is a paradise. And all of that is feasible today BY JUST SIMPLY CHANGING HOW WE SPEND OUR EXISTING TAXES.

    It should be used to pay every adult a $20k per year guaranteed basic income. It gets paid to everyone, rich and poor, employed and unemployed. And then pay every worker a $30k per year worker bonus on top of whatever salary they earn.

    That ends poverty and puts an end to every government welfare program including social security, medicaid and medicare.

    It will give you far greater freedom in lifestyle choices than any libertarian society would. And it would make sure EVERY worker earned a six-figure, upper-class income, and enjoys access to the good life, something only 7% of the population gets to enjoy today.

    This will enable us to abandon the backwards, caveman economic policy of pursuing full employment and instead replace it with the policy of pursuing full automation.

    We should put an end to the job. The only work a human being should do is the kind of work they would be doing if they didn't have a job to go to.

    Our productivity comes from automation. Being able to produce more goods and services using less labor is how we increase our wealth. Increasing automation and eliminating jobs is what makes us wealthy.

    And automation improves our quality of life. It frees us from having to spend our limited time doing tasks nobody has any interest in doing.

    The fact that most of us spend the vast majority of our brief moment in time in this universe working a job is a tragedy. We should use automation to eliminate every job that exists that people only do because they are getting paid to do it.

    Work should be a source of growth and well-being, not a chore.

    People should spend their time being productive in something that inspires them to live, not working some job like a piece of machinery.

    And this is not some star trek techno-utopia. This is possible today.

    100% of our physical wealth comes from just 35 million jobs in mining, utilities, manufacturing, construction, maintenance, and healthcare. That's just 1/5th of the workforce. We can switch to working just 1 day per week without any reduction in our standard of living. Put another way, 80% of the workforce could quit their jobs without any reduction in our standard of living.

    The other 115 million jobs can be automated with existing technology (banking, transportation), are obsolete (retail trade) or are things people volunteer for (music, fire, police, education).

    Hopefully you still have an open mind and are able to consider whether this forward thinking idea serves you and the rest of humanity better than the backwards thinking libertarianism does.

    It will make you wealthier, it will reduce government and it will give you greater freedom than libertarianism will. Libertarianism is only concerned with negative freedoms. This will secure both your negative and positive freedoms.

    Matt said...

    What a nice sounding Utopian paradise. If you want to learn what libertarianism is, you can read a real manifesto here.

    "Our productivity comes from automation. Being able to produce more goods and services using less labor is how we increase our wealth. Increasing automation and eliminating jobs is what makes us wealthy.

    And automation improves our quality of life. It frees us from having to spend our limited time doing tasks nobody has any interest in doing."


    It is more than just automation, but yes, in a nutshell, this is the purpose and function of capitalism. You should definitely read the introduction book to economics along with a real libertarian manifesto. Then you might avoid using a straw man argument. You have a ways to go before understanding capitalism and libertarianism, but a willing mind can learn much.

    Matt said...

    Just out of curiosity, did you consider how much it would cost to provide a $20,000 base salary for 307,006,550 U.S. citizens?

    $6,140,131,000,000

    Total tax revenues in 2009 was $2,105,000,000,000

    There is a small discrepancy there mate. Not only do you have to cut all current federal spending (defense, medicare, etc.) to meet a third of the base salary, but you have to raise an additional $4,035,131,000,000 in tax revenue to meet the bill.

    You should really do some more thinking.

    Anonymous said...

    This is a limited way to explain a complex idea. How can I email you the plan?

    Not only does it show how paying a dividend is the most humane use of our tax money (and the only way to have the economic policy to pursue full automation instead of full employment), it also shows how to have a credit system where you get access to any loan you want without having to pay interest (which eliminates trillions in wasted expense every year and eliminates the number one expense in your life because commercial banking became obsolete with the invention of the connected computer) and how the power of choice, which enables you to wield full control over the economy and forces it to cater to your individual wants and needs, should be extended so that you also have the power to choose between economic models which will enable you to earn up to $365k per year in whatever job you do.

    But to answer your question, the economic plan is based on a national income of $18 trillion which we will reach in about 4 years (if implemented today, it would be 20% less). And it calls for a more fair tax by making the 35% income tax and 15% FICA tax a flat tax that everyone pays on 100% of your income without deductions. That will raise $9 trillion in tax revenue which is enough revenue to pay all 220 million adults a $20,000 yearly Basic Income and all 150 million workers a $30,000 yearly Worker Bonus.

    The federal government, once you eliminate social security, medicaid and medicare, can be paid for with a 4% tax.

    Matt said...

    You may email the plan to mattherb182 (at) yahoo . com

    Matt said...

    If you are interested in what people like me had to say about the "plan," you can check out this thread:
    Economic Utopian Plan

    Anonymous said...

    Matt, I just saw that you posted my economic plan in the mises forum. I posted a bunch of responses there.

    Matt said...

    Great.

    Anonymous said...

    Capitalism sends wealth up the socioeconomic triangle. Capitalism leaves behind the disabled, the elderly, the sick, the homeless, the theoretical scientists, and the students.

    These are just a few of the reasons why pure capitalism doesn't work. The truth is that no one system is perfect and therefore we must combine the best aspects of multiple systems - Keynesian Economics.

    In capitalism, there is a boom and bust cycle. Government must spend and attempt to subsidize or even nationalize industries during busts or else capitalism will fall, as America nearly did in the 1930s.

    Absolute capitalism without regulation ends up as corporatism, just as absolute communism without reform ends up as a bureaucratic nightmare. Keynesian mixed economics is the system adopted by most developed countries (those that are not Communist) and pure capitalism exists only in the poorest nations of the world that have no government.

    http://en.wikipedia.org/wiki/Keynesian_economics#Postwar_Keynesianism

    Matt said...

    You would think after the Great Depression, the 1970s, and the current economic malaise that Keynesian economic prescription would be dead. In mainstream economics post-1970s, it essentially is dead. However, I do have some comments for some common fallacies in message:

    1. Capitalism sends wealth to those (entrepreneurs) who provide the most value to society.

    2. Every economy leaves those groups behind. That is why charity is necessary. The question is whether this charity will be voluntary (non-violent) or involuntary (violent). It's obvious what Keynesian's prescribe.

    3. You're right about one thing - no system is perfect.

    4. Economies are dynamic, therefore, activity always drifts up and down as the players adjust to circumstances. Government intervention makes these corrections more often and severe. Keynesian economics prolonged what could have been a simple recession to one of the greatest depressions. It wasn't until after they slashed government spending post-1945 that we had a recovery. That's precisely the opposite of what Keynesians would have predicted.

    5. Corporatism isn't possible without regulation. Regulation is the lifeblood of political entrepreneurs. They simply cannot compete without government intervention.

    6. The only poor countries with more capitalist characteristics are those that suffered through despotic regimes that ultimately collapsed. They're undeniably better off without them (apples to apples) and may even greatly develop if the coup d'├ętat doesn't assume political control of the country.

    However, history teaches us that any country who develops wealth produces a political class that seeks to protect that wealth. That's where subsidies, protectionism, government contracts, and other such favorable arrangements with government have their genesis.

    Only capitalism or free markets can provide the original economic growth to allow for such a class of people and economic way of thinking.

    Prior to capitalism the same type of people acquired wealth from looting, plundering and enslaving their fellow man.

    7. Keynesian economics didn't create developed nations. It attaches itself to them and slowly destroys them like a parasite.

    Keynes once said "Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." Ironically, he literally became that archetype.