Capitalism is wasteful

[Sialina]

You're talking about liability.

Even in the USA, limited liability is a thing. Let's not pretend this can't be handled.



Literally already happens. The only difference is those responsible for making that decision. This is particularly true since companies don't put their entire portfolio on the line when they innovate; they test the waters first.



Again, liability. Same as above. A problem that already has a solution. Also, you're making an error in assigning a dollar value to shares; that wouldn't happen in the system I proposed.



That kind of stuff literally happens, with vulture capitalism, right now. And there's no liability to the executive doing it. They profit off the process, in fact.

Workers doing the same thing just put themselves out of a job. They can't "leave before it goes bankrupt"; that's just quitting your job before the company collapses. It gains you nothing. And again, you're back to talking about liability, when LLCs are already a thing, making it a pretty baseless argument.


To expand on this liability thing, we really need to discuss what kind of liability. If we're talking financial, then the company's assets are what's on the line, not personal property of employees. If we're talking legal, yeah, if the entire staff of a company vote to have the company bribe government officials, all the staff who went along with that should face penalties. I just think it's way less likely that would ever happen, whereas now, a few executives can vote to do so and hide it.

I want to make it clear that I agree with you that the current system has huge problems, I just don't think workers owning the production is a good solution. When a company becomes large enough, yes, liability is nowhere to be seen. Those companies are however owned through means I also disagree should be legal. We also live in different countries and come from different cultures, I'm Chinese living in Sweden, you are Canadian I guess? I think you have a more American version of capitalism over there while both Sweden and China has a slightly more left leaning slant on it.

A privately owned company going bankrupt will put you in personal bankruptcy here and with enough debt you are not likely to ever recover again. As such you take on the risk of starting a company, and at the same time more of the reward. Here even if you go bankrupt the government will guarantee the salary of your employees for work done up until that point, and then give them unemployment benefits from day one for 100% of your salary. The owner however is out on his ass and unlikely to ever see wealth again unless he can get government help to clear his debt, but those take years and years and are hard to get.

One of my favorite solutions I've seen recently was limiting CEO pay to 20 times that of the lowest paid employee, meaning if your company is doing great, you might want to pay your cleaners more to be able to increase your own pay as the CEO.

[Deletedaccount1]

Capitalism is inefficient as fuck and it has a whole class of leeches (bankers) profiting off this inefficiency. If the economy was centrally planned, a well-educated person with a PhD would have used scientific methods to foresee the need for chairs and money would've been distributed to chairmakers in the first place instead of hoping that the market will regulate itself.

Rather than simply telling you to go study economics, I'll just give you the material for yourself. I used these notes for an online macro class and got an A.

http://econfaculty.gmu.edu/bcaplan/e311/mac4.htm
http://econfaculty.gmu.edu/bcaplan/e311/mac5.htm
http://econfaculty.gmu.edu/bcaplan/e311/mac8.htm
http://econfaculty.gmu.edu/bcaplan/e311/mac10.htm
http://econfaculty.gmu.edu/bcaplan/e311/mac11.htm

[Cheesedizzle]

I see a lot of people making some pretty basic errors. The primary one is about basic definitions; "Capitalism", as a concept, is not about free market activity as a price-setting and distributory system. Capitalism is about private ownership of the means of production, and specifically, the ability to profit off said means of production. Market activity predates capitalism, and capitalism has no ownership of the concept.

Another seems to be an inconsistent application of principles. How would you pro-capitalist types feel if, say, the local mayor took 5% of the gross tax revenue in your city, and pocketed it? He's taking a "profit", no? That's the system you like. But when it's an elected official, you don't? He's corrupt and a snake and he's stealing from you? Why isn't the same argument applied to private ownership? Note that I'm asking about basic principles, here. I fully understand that private vs public is legally different, but that's a justification after the fact for the inconsistency on the principle.

I want to address this portition specificly, because it misses a huge point of vulantary transactions. The reason people would be upset if a local mayor took 5% of the gross tax revenue in your city, and pocketed it, is there is zero or little choice in paying taxes. You cannot opt out of the transaction. A private company taking the profit from the company's revenue is fine, beacuse most, if not all of the transactions to generate that revenue were vulantary. No one makes people buy products from a private comany.

I understand that somethings are very important the "choice" to buy something is almost unavoidable. However, market forces tangent with apprioprate regulation should force private enties to vie for the consumer's "choice" for their product.

[Endus]

I want to address this portition specificly, because it misses a huge point of vulantary transactions. The reason people would be upset if a local mayor took 5% of the gross tax revenue in your city, and pocketed it, is there is zero or little choice in paying taxes. You cannot opt out of the transaction. A private company taking the profit from the company's revenue is fine, beacuse most, if not all of the transactions to generate that revenue were vulantary. No one makes people buy products from a private comany.

I disagree that this is a valid counter.

Most people can pick who they rent from, or who they buy food from, but not that they do so. And you can move to a different city, if you want to. I also, critically, was not talking about stealing from city coffers; that's embezzlement, and it's illegal no matter which sector we're talking about. I'm talking about a pseudo-aristocratic system where the elected officials legitimately use public funds for their own personal enrichment.

It's also worse than this, because people actually get a say in who their mayor is. They don't, in determining who owns the local grocery store.

There are cases where the profit incentive is condemned, but it's the egregious ones, like Shkreli, because he chose to profit off human misery and suffering. And the less-egregious but still-profiting-off-misery of the greater US health care system is largely shrugged off.

Regardless, my underlying point was that in the private sector, people see it as "profit" and it's lauded. In the public sector, it's seen as "corruption" and condemned. It's an inconsistency on a base principle, which makes me think that the base principle hasn't really been properly considered for its internal merit.

I do think a profit incentive works, but I'm suggesting we spread that incentive around to all who contribute to its earning, rather than just shareholders, many of whom do nothing besides own those shares. For me, the distinction is that I expect a different caliber of character for the public sector; people who are not pursuing personal enrichment, but public service, for whom direct personal gain is not a major drive in the first place. But I also don't worship at the altar of profiteering, which is why I'm arguing for some measures that would restrict the "fuck the company/customer over long-term for short-term gains" of modern business, not through regulation but out of enlightened self-interest by those making these decisions.

[sam86]

So basically you are advocating for countries to turn into Venezuela? Socialism always works in the beginning.

what about Sweden, Belguim, Norway, and some of most richest and top happiest countries on earth ? U do know they are ranked social liberal system, not capital right?
btw the 2nd and 3rd WORST countries on earth both use 'capitalism' system (egypt and yemen), and the difference in worst 10 countries is too small to even count, I mean North Korea is 'better' than egypt, but i'm sure as hell that life there is still sh8t

Capitalism have had 50 years to fix climate change and so far we have seen nothing done from them. We have known about the problem very well since around 1970 and if you think the speed of change from capitalism isnt fast enough to fix the problem, you are right it isnt fast enough to solve the problem since capitalism dont give a shit about what happens 50 years from now, the current shareholders etc are probably long gone and dead at that point and anything that hurts the bottomline short term is bad for a capitalist run business

agree 100%

[PC2]

what about Sweden, Belguim, Norway, and some of most richest and top happiest countries on earth ? U do know they are ranked social liberal system, not capital right?
btw the 2nd and 3rd WORST countries on earth both use 'capitalism' system (egypt and yemen), and the difference in worst 10 countries is too small to even count, I mean North Korea is 'better' than egypt, but i'm sure as hell that life there is still sh8t


agree 100%

Sweden, Belgium, and Norway all operate under capitalism. The means of production is private and they are profit-driven, but they also use taxes for social programs. Having social programs doesn't somehow take away the capitalistic principles their economy is built on.

[Vash The Stampede]

"Right now too many businesses make money by providing nothing" - patently false. In a free, capitalist society we have the choice of where to spend our hard earned money. If a business truly provided no benefit, they wouldn't exist.

So you're telling me there's no such thing as scams? Wells Fargo didn't scam people multiple times? No Nigerian Prince scams?

"Banks "barrow" money with interest from the Federal reserve to sell it to you with even more interest" - Banks borrow money from us, the depositors, from investment vehicles they offer (like CDs) and from short-term borrowing from the Fed. Banks make money on the spread between the cost to borrow the money and the rate they make on lending out the money. Not sure what is wrong with this? Without banks (and capital markets in general), businesses and individuals would not have an efficient mechanism to access capital. They serve a necessary and useful function in a healthy economy.

Banks borrow money from the federal reserve as well as the money you deposit. Ever notice interest rates for putting money in the bank is next to nothing today? That is a fact, the Federal Reserve gives banks money based on interest.

"Cable companies are allowed to operate without any direct competition and therefore can do and charge what they want" - Again patently false! My building has Starry, which offers wireless internet directly to my building at 200GBs. Many cable companies charge $50 per month for fast internet and then you just stream the content you want using Roku or Fire or Chrome stick or whatever. There are many competitors nowadays, including phone companies offering unlimited data plans.

Why do I get the normies? Wireless internet is not the same as wired. Where I live I can choose between cable and Fios but that's not the majority of the United States.

"Lobbying is legal, which it really shouldn't." Lobbying to influence decision makers is not unique to the US or to capitalism. In the US, it is protected speech under the first amendment, which again has nothing to do with capitalism.

So you're saying that no money is spent in lobbying?

"Stock market is a scam as it's like selling your company without selling your company" - no actually it is not. To suggest that it is simply shows your ignorance of capital markets in general. It is a simply concept really. You sell a portion of your company for access to capital to help grow your business, pay back debt (another form of capital raising), etc.

I get how it works, but companies like Apple don't need it to grow. It's a money circle jerk that companies use to enrich themselves at the consumers expense. It also doesn't line up companies interests with that of the consumer. Hence why companies fire so many employee's lately in order to boost their stock value. It's also why some companies make decisions that sound great for the stock holder but not for the consumer.

[Sharein]

"Stock market is a scam as it's like selling your company without selling your company"

As a tax laywer I'd say that this is probably the dumbest thing I have ever read.

And it is about time that we start seeing the hammer and sickle of communism in the same light as the swastika.

[Th3Scourge]

Sweden, Belgium, and Norway all operate under capitalism. The means of production is private and they are profit-driven, but they also use taxes for social programs. Having social programs doesn't somehow take away the capitalistic principles their economy is built on.

Exactly, they are entirely capitalist and market driven in the economic structure, just with expanded social programs for the small, largely homogeneous population.

You can argue whether the social program are more or less wasteful in public hands rather than private and there's a good case to be made that government expansion is less efficient (lack of a profit motivation to drive efficiency) but those societies have agreed via policy that it is the best strategy for them going forward.

[McFuu]

Let's imagine a situation.

The economy needs x amount of chairs made in a year to satisfy the demand for chairs. Capitalists don't know this in advance since they only have one signal to work with: price. Once the economy feels a scarcity of chairs, their price will go up and incentivize the manufacture of chairs.

While the economy is not feeling a scarcity of chairs and their price has not yet gone up, money is being put to more productive uses. When the economy inevitably realizes that it does, in fact, need chairs, it's already far too late because all of the money is tied up in more productive ventures. That's where the financial system comes in.

Banks, CEOs, CFOs channel money from less productive industries into the chairmaking industry. Chairs are made and everyone is happy. Or are they? While the money was being channeled through banks, paychecks were handed out to their employees and their bosses. That money could have gone to people who were actually manufacturing real goods or providing real services.

Here's the deal:

Capitalism is inefficient as fuck and it has a whole class of leeches (bankers) profiting off this inefficiency. If the economy was centrally planned, a well-educated person with a PhD would have used scientific methods to foresee the need for chairs and money would've been distributed to chairmakers in the first place instead of hoping that the market will regulate itself.

It's stupid to claim that capitalism is efficient when it needs leeches (bankers) to service it lest the entire system collapses. How many people's labor is wasted working in the financial industry creating nothing of value and how much money is wasted on paychecks for those people?

Let's put things in simpler terms:
Communism put a man in space.
Capitalism OBLITERATED the middle class to give the rich banker man a private yacht.

I read the first paragraph and you were already wrong...

[Trassk]

Complains about capitalism.
Fully utilizes it.

This is as hilarious as people who cry about the suffering migrants on tumblr on their smart phone while buying a starbucks.

[Osmeric]

Here is your fatal flaw.

1. You are assuming capitalism at its most corrupt.
2. You are assuming a centrally-planned economy that is run without any corruption at ALL.

Not quite. He's assuming central planning would work even without corruption.

But the only reason the USSR worked as well as it did (which wasn't well at all) was the black market, which provided a kind of market to patch the howling absurdity of the central planning system.

Von Mises pointed out that central planning cannot possibly work back in the 1920s. It took until the collapse of the USSR for socialist economists like Heilbroner to admit that he had been right(1).

(1) Robert Heilbroner, "After Communism". In The New Yorker, Sept. 10, 1990.

[Vash The Stampede]

Complains about capitalism.
Fully utilizes it.

Do you have a choice?

[Trassk]

Do you have a choice?

when people who hate capitalism find out what they would have to give up to be rid of it, they just end up carrying on complaining about it.

[Vash The Stampede]

when people who hate capitalism find out what they would have to give up to be rid of it, they just end up carrying on complaining about it.

Why is it the people who harp about capitalism are also speaking in riddles? Capitalism is inherently evil, and needs regulation. Modern societies need social services. Recognizing the flaws of capitalism does not mean I'm pro communism. Every socialist idea is not communism. The only reason we're not in some RoboCop capitalist apocalypse like society where crime runs rampant is because of democracy.

Do we need to remove capitalism? No, but we need to treat it like a hostile enemy while at the same time we need to appreciate our democracy. Free unbridled capitalism is dangerous and we know this. While you preach about the benefits of capitalism, lots of work is being done to dismantle democracy because democracy is the enemy of capitalism. Democracy keeps it in check and makes sure that it doesn't try to underpay employee's, dump waste, and creates a safe work environment. The weaker our democracy the stronger our capitalism, and we don't want that. Businesses should serve the people first.

[melodramocracy]

There are no economic models in existence that don't wind up with an elite class of some degree or another. I'm not sure why you think the outcome would be any different under any other circumstance.

[Surreality]

There are no economic models in existence that don't wind up with an elite class of some degree or another. I'm not sure why you think the outcome would be any different under any other circumstance.

Everything is corruptible. And you can be damn sure that as human beings, we will find a way. We are a very petty and small minded species.

[Seranthor]

Everything is corruptible. And you can be damn sure that as human beings, we will find a way. We are a very petty and small minded species.

I cant disagree with you... Everyone has a price, the secret is discovering what that price is.

[Low Hanging Fruit]

The chair market is out of control.

[Seranthor]

The chair market is out of control.

we definitely need more federal regulation of chairs