Wednesday, September 2, 2009

Why Capitalism is Broke

Yes, someone who generally defends the principle of capitalism, most companies who haven't broken the law, and are not complete dickholes, just started a post with the above title.

It was my post on the application of my principles, driven by the relentless discussions on the health care/insurance problems that served as the catalyst of the day, that got me to thinking (mainly because many of my more liberal readers have lots of problems with capitalism).

Now to clarify, I still believe that the system is the only practical method in a free society to allow maximum freedom. But like many things, the reasons for its slide toward collapse (and the rise of more collective societies) has many causes:

Dependence - Corporations, from a legal standpoint, are an individual entity. But behind the veil, there are people with their human weakness. And one of our greatest weaknesses is that when given things instead of having to bust our asses for them, we tend to want to coast. Corporations are just as bad as individuals, except they can do it and pay lobbyists to talk the government into giving them even more. The problem should be checked here. However....

The Government (codependence)
- When politicians realize they can "buy" votes my giving away free stuff, they begin to lose any claim on ideals, morals, and principles. When you get enough of those politicians flat-out addicted to that sweet mother's milk of politics (cash) without having to really go out and work to raise it, the check on capitalism begins to break. In addition, the politicians and the corporations become codependent, one needing money for votes, the other needing twisted laws and redistributed money in return. And this doesn't change because of....

Apathy - We stopped paying attention to anything important a long time ago in this country. And even in an age where we're not limited by geography or news provider (hello, the Internet you lazy bastards!) we find ourselves unequal to the task of even examining the people we elect. And then, because we don't hold them accountable, they can be steered by interests who will hold them accountable if they don't get a payoff. And the loudest voices against corporate interests in Washington blame the corporations and not the people who have the power to enable the corruption. And we stopped caring because...

The Death of Morality - This is a tough one, because it deals with virtue, faith, religion, and the morality of the country itself. When the country was founded, one expectation that the Founding Fathers had was that we would remain a country of faith and morals. Not to any particular faith or religion or specific code of morality, but to a general concept summed up in the Golden Rule (not the "He who has the gold, rules" one, but that "do unto others" thing); an adherence to a clear definition of right and wrong; an expectation that most others would live by this code and not tolerate failings of such in others. This we have lost in a petty selfishness, a convenient dishonesty, and an blame-free existence. It's the underpinnings of a society that, when lost, lead to its collapse. And in a capitalist economic system, the economy is first to burn.

Damn, that was bleak.

Now this is not an absolute statement, but a trend that, if it were to continue unchecked, would lead to either the radical change or the destruction of the United States.

Being the the agent of finding solutions, I do have the "fix" in mind for this problem as well.

And at the risk of sounding redundantly repetitive (again), it comes back to less government and more personal responsibility.

More specifically, we need to do two things: Hold politicians and companies accountable, and expect less from both.

Now I know that sounds contradictory, but it makes perfect sense. There are areas where we should expect certain things, but not an attempt to intrude into areas that aren't relevant. Because this allows us to trade freedom (and the associated responsibilities and pitfalls) for the security that others provide. And it's this undue dependence on others (rather than the healthy give and take of pure capitalism) that has hobbled us:


TAO said...

So, after a generation of irresponsible people running amuck, after a generation of looking at everything from the perspective of 'how does it benefit me?', after a generation of being told that you can have whatever you want, whenever you want it, and don't worry about paying for it...

All of the sudden you think that these folks are going to do an about face and take responsibility, feel an obiligation to a higher principle, and understand the concept of sacrifice?

Come on Patrick, not going to happen, once you have tasted the forbidden fruit of believing that the world is centered around your a**hole, folks aren't going back to the good ol' days...

Not until reality lands flat on top of their heads....

rockync said...

Patrick, While I agree with your analysis, I think TAO makes a clear case against your solution.
It would be great if everyone would stand up, do the right thing and take personal responsibility. I've even done a post on a group of young men who would probably uphold your solution, but the majority of Americans? Not gonna happen I'm afraid.

Patrick M said...

Tao, Rocky: I didn't say it was likely. In blunt fact, I suspect we're going to take it in the ass a while longer, and possibly lose the country as a result.

But I notice that neither of you disagree. You just say it's not probable. But we have to begin somewhere (and not either lionize OR demonize capitalism), by working to fix the system, not scrap it further.

And Tao, you don't have to star out asshole. Feel free to put any expletive in front of "hole" you choose.

TRUTH 101 said...

You gave Patrick a hard time for "naievity" TAO. I comment him for it. It shows his true inner liberal.

Of course we all know this shit ain't gonna happen. But it's still nice to think that maybe someday a "Mr. Smith Goes to Washington" story may come true.

In the end I can't argue against TAO's cynacism. The man is wise.

dmarks said...

It can all feed back to itself. Government is an often big factor in making corporations monopolistic. This includes regulations that the big companies can meet just fine, but wipe out the smaller companies.

Or the crazy results when government agencies (Fannie Mae and Freddie Mac) encouraged and subsidized private banks to lend to people who did not deserve loans and could not pay them back.

Walmart's minimum wage is a few dollars above the federal minimum age, They don't object to inreases in the minimum wage. Why should they? These increases force tiny competitors out of business.

Anonymous said...


You always believe any evil begins somehow with governmnent; as if if government did not exist somehow we would have avoided our disasters.

Government is not a CREATOR but rather a CREATION. One can look at your favorite example of Fannie Mae and Freddie Mac, as an example, initially they were a great idea, they made it possible for banks to lend money to homeowners and then 'sell' that loan to Fannie Mae and Freddie Mac so that they in turn would have more money to lend out again and again and again...

No one said this program was designed to lend to people with poor credit or bad credit; it was never intended to allow banks to lower their lending standards but you want to believe that Fannie Mae and Freddie Mac ordered banks to lower their standards at the point of a gun.

Of course in your mind it was those Liberal congress critters who forced this on our poor banking system...but don't forget banks benefitted dramatically from this, and they set up Mortgage Brokers to be able to skirt around the laws on banks, developers made a killing with home price appreciation, and investment firms made out like bandits because they could take these mortgages bundle them up and sell them to investors...

Most analysis shows that it was investors hungry for the high safe and guaranteed return from CBO's that drove this frenzy not anything Fannie Mae and or Freddie Mac decided to do.

In the end a whole lot of money changed hands and only the homeowners and taxpayers seemed to have gotten burned.

The boys that came up with this idea are still hauling in big bonuses and the investors are still throwing money around...

I am sorry but I find it hard to believe that a group like ACORN has as much power and clout in Washington as does the Wall Street firms....

Anonymous said...

Decent people still make up a little more than half of Americans.

Sadly we have folks who believe that they themselves are more deserving than others. There is no way you can justify the pay and bonuses of most CEO's in comparsion to the vast majority of their employees. You cannot justify, after the financial meltdown we have had, why no CEO's were fired. You cannot claim that capitalism is a system that rewards the best and the brightest and punishes failure because we have lived through a time when this was proven untrue.

Its as if the boardroom, Wall Street, and Washington DC is a parallel universe from our own; from the one that most of us live in.

We don't speak the same language and we do not share the same values.

Sadly, to be successful you have to adapt and more and more folks are adapting...get along to get ahead.

Can't really blame them...its a fad. You got religious folks running around championing hate and anger and then getting defrocked...You got politicians saying one thing and then living another. Then you have a whole financial system that actually worshipped at the alter of Bernie Madoff....all the while the majority of Americans are just trying to work, take care of their family, and enjoy the simpler things in life...

Sadly we are all on the same train and those of us who would like to get off can't....

So much for the concept of individualism and being responsible...yadda, yadda, yadda....

dmarks said...

Tao said: "You always believe any evil begins somehow with governmnent"

It wasn't clear in my comment, but I am very well aware that monopoly problems can happen in the free market. I generally am favor of government intervention against this in the form of anti-trust.

Some government regulation is needed. But there are too many times when government regulation is rushed through without giving it any sort of "smell test" or giving any consideration to the side effects that result when the regulation ends up encouraging or discouraging certain types of behavior.

We need to be a lot more careful. Government is a hammer that should be used to hit some things, but not to smash everything in reach.

" but you want to believe that Fannie Mae and Freddie Mac ordered banks to lower their standards at the point of a gun."

No, they did not force companies to do this. But they encouraged it. They became a sort of sump sump-pump that made it so companies could merrily leak all they wanted. (A leaky basement analogy!) And this is how the government caused the big economic meltdown.

"...but don't forget banks benefitted dramatically from this"

Of course. That is why they lunged for the incentives for bad behavior the govenrment created here.

"Of course in your mind it was those Liberal congress critters who forced this on our poor banking system"

They did, actually. The situation was caused by Congressional regulation.

"I am sorry but I find it hard to believe that a group like ACORN has as much power and clout in Washington as does the Wall Street firms...."

Well, ACORN is on the street engaging in large-scale voter fraud. I have yet to hear of Wall Street assaulting democracy this way.

"There is no way you can justify the pay and bonuses of most CEO's in comparsion to the vast majority of their employees"

Well, typically people get paid for the worth of their work. Some jobs are worth a whole lot more than others. This isn't to say that sometimes bad CEOS get overpaid (just as bad low-level workers sometimes are overpaid).

"You cannot justify, after the financial meltdown we have had, why no CEO's were fired."

Well, the idiotic no-strings attached bailouts started by Bush and continued by Obama help remove any sort of accountability at the top. More bad government intervention.

Why does a company need to bother to get rid of the deadwood (including the deadwood at the top) when the top CEOs who wrecked the company can secure and keep getting fat on government bailouts?

dmarks said...

final point: "So much for the concept of individualism and being responsible...yadda, yadda, yadda...."

And the Fannie Mae etc policy made it soooo easy for banks to get away with being irresponsible.

Beth said...

If nobody disagrees with the basic point here, that once people get used to entitlements it is near impossible to take them away from people, then why are some of those same people wanting to give the government MORE control by providing health care? It's a Pandora's box, which will be very hard to close if ever.

TAO said...

Once again dmarks, everything in your response points to the fact that government of its own and on its own decided to initiate policies and 'gimmicks' (that is my term) to entice various systems and companies to self destruct. I am sorry but I find it hard to believe that government does anything on an active basis but rather does everything on a reactive basis.
Then on one side you have ACORN with its big street rallies (I have never seen them but I will assume that they have them) vs. hundred of millions of dollars in campaign contributions, hiring of staff, friends, relatives by lobby firms...and you want us to believe that ACORN has greater influence and is a bigger threat? So, you never saw Wall Street out on the streets? Ever hear the expression "Shit Walks and money talks?" Well it fits...

165 million dollars in the last three months is what has gone to congress critters from lobbyists for input on healthcare reform...want me to believe that that 165 million had no strings attached and no expectations?

Get real....if money didn't talk then the flow of money to Washington would have stopped along time ago...kind of like the marches on Washington stopped when people realized that they did not achieve their goals...but the money hasn't stopped but the marching has...

(O)CT(O)PUS said...

Oh, WOW! Everything these days are considered socialism. The fire department is socialism. Police protection is socialism. Public education is socialism. Dammit, civilization is socialism.

Maybe gummint should just step aside and let all those gr8 American companies take over, cut wages, cut services, and make more mega-millions for their mega-millionaires.

What a gr8 idea! Think of all those missed profit opportunities: Fire, first aid, police. Think franchise.

You can corner the market on fire departments and hold your neighbors hostage.

Granny just had a heart attack? Watch as they deliver her to someone’s kitchen while a new refrigerator shows up at the emergency room, because there was a mix-up in the merger and acquisitions department.

And don’t forget: Rape kits can be turned into a profit center (just ask Sarah). When all else fails: Outsource!

You want to spout certitudes and platitudes about codependence, apathy, and morality? What about equality as in equal protection and equal treatment under law, equality of opportunity, equal access to essential services such as fire, first aid, and police … and yes … even healthcare. Or is this too much socialism for you?

Remember, modern economies are mixed economies. Do you know why? Because a little socialism keeps angry men carrying guns and pitchforks from beating down your front door.

dmarks said...

Tao: I am well aware of good intentions. I doubt very much that those in Congress who crafted the bad loan policies intended the result of what happened.

There are some who do. Some who think that it was a diabolical plot. I know that is not the case. I know it is much more a case of Congress enacting a policy with little regard to the side effects.

As for the healthcare lobbyist donations, what has the result been? Not bad, really. More and more people in Congress, especially Democrats, have started to take their office seriously. Instead of ramming through this damaging bill without a thought to it. They are now taking the public interest into account, and the "public option" (a possible future avenue to destring health care with "single payer") is now off the table.

Octo: Want a dictionary?

TAO said...

dmarks, I just LOVE you! You are the most ideology consistent human being I have ever seen!

Thanks to lobbyists money we now have democrats who will THINK before passing legislation and take the public interest into consideration....

I am sure that the healthcare lobbyists paid the millions just for that reason...

Its like locking the medicare into a big fat contract for prescription drugs with no right to negiogate pricing and then turning around and demanding and getting a big tax break for their efforts?

Want me to believe that the health insurers and the medical profession pumped 165 million into congress for nothing more than alturistic reasons like to get congress critters to take the public interest into consideration when reforming healthcare?

Yeah, right! Bet the reason we don't get tort reform is because the big nasty trial lawyers don't give money to congress to think about the public interest....

dmarks said...

That "thanks to lobbyists" was a poor choice of wording, and I did not think it through properly.

I just wanted to say that, for whatever the reason, many Democrats in Congress started to act in the public interest in regards to the healthcare bill.

And they also have tens of millions in money coming in from SEIU, which favors an aggressive healthcare reform bill.

The SEIU spent more than $100 million on lobbying in 2008 (mostly in efforts against workers' rights). They are spending at a similar rate, and now healthcare is a big issue for them. Yet, you don't seem be concerned with the money from the special interests backs the bill.

Anyway, I am more concerned with whether or not Congress actually makes wise decisions, and less concerned about such matters as lobbying money coming from those who want to protect healthcare industry profits or those who want to take away workers rights so more of them are forced into unions.